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H.B. 496 Enrolled

             1     

TECHNOLOGY AND LIFE SCIENCE ECONOMIC

             2     
DEVELOPMENT ACT AND RELATED TAX CREDITS

             3     
2011 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: David Clark

             6     
Senate Sponsor: Curtis S. Bramble

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill enacts the Technology and Life Science Economic Development Act and
             11      provides for income tax credits related to certain technology and life science
             12      companies.
             13      Highlighted Provisions:
             14          This bill:
             15          .    enacts a nonrefundable income tax credit related to certain capital gain transactions
             16      related to a life science establishment;
             17          .    enacts a nonrefundable income tax credit related to the purchase of an ownership
             18      interest in certain life science establishments;
             19          .    enacts a refundable income tax credit for certain business entities that generate an
             20      increase in state tax revenues;
             21          .    enacts the Technology and Life Science Economic Development Act, including:
             22              .    defining terms;
             23              .    granting rulemaking authority;
             24              .    authorizing the Governor's Office of Economic Development to enter into an
             25      agreement with certain persons;
             26              .    establishing procedures to certify a tax credit and issue a tax credit certificate;
             27      and
             28              .    requiring certain reports and studies; and
             29          .    makes technical and conforming changes.


             30      Money Appropriated in this Bill:
             31          This bill appropriates:
             32          .    to the Governor's Office of Economic Development - Administration as a one-time
             33      appropriation:
             34              .    from the General Fund, $200,000, subject to intent language stating that the
             35      appropriation shall be used to administer the tax credits enacted in this bill.
             36      Other Special Clauses:
             37          This bill provides effective dates.
             38          This bill provides for retrospective operation.
             39      Utah Code Sections Affected:
             40      ENACTS:
             41          59-7-614.6, Utah Code Annotated 1953
             42          59-10-1025, Utah Code Annotated 1953
             43          59-10-1026, Utah Code Annotated 1953
             44          59-10-1109, Utah Code Annotated 1953
             45          63M-1-2901, Utah Code Annotated 1953
             46          63M-1-2902, Utah Code Annotated 1953
             47          63M-1-2903, Utah Code Annotated 1953
             48          63M-1-2904, Utah Code Annotated 1953
             49          63M-1-2905, Utah Code Annotated 1953
             50          63M-1-2906, Utah Code Annotated 1953
             51          63M-1-2907, Utah Code Annotated 1953
             52          63M-1-2908, Utah Code Annotated 1953
             53          63M-1-2909, Utah Code Annotated 1953
             54          63M-1-2910, Utah Code Annotated 1953
             55          63M-1-2911, Utah Code Annotated 1953
             56     
             57      Be it enacted by the Legislature of the state of Utah:


             58          Section 1. Section 59-7-614.6 is enacted to read:
             59          59-7-614.6. Refundable tax credit for certain business entities generating state tax
             60      revenue increases.
             61          (1) As used in this section:
             62          (a) "Eligible business entity" is as defined in Section 63M-1-2902 .
             63          (b) "Office" means the Governor's Office of Economic Development.
             64          (c) "Pass-through entity" is as defined in Section 59-10-1402 .
             65          (d) "Pass-through entity taxpayer" is as defined in Section 59-10-1402 .
             66          (2) Subject to the other provisions of this section, an eligible business entity may:
             67          (a) claim a refundable tax credit as provided in Subsection (3); or
             68          (b) if the eligible business entity is a pass-through entity, pass through to one or more
             69      pass-through entity taxpayers of the pass-through entity, in accordance with Chapter 10, Part
             70      14, Pass-through Entities and Pass-through Entity Taxpayers Act, a refundable tax credit that
             71      the eligible business entity could otherwise claim under this section.
             72          (3) (a) Except as provided in Subsection (3)(b), the amount of the tax credit an eligible
             73      business entity may claim or pass through is the amount listed on the tax credit certificate that
             74      the office issues to the eligible business entity for a taxable year in accordance with Section
             75      63M-1-2908 .
             76          (b) A tax credit under this section may not exceed the eligible new state tax revenues
             77      generated by an eligible business entity for the taxable year for which the eligible business
             78      entity claims a tax credit under this section.
             79          (4) An eligible business entity may only claim or pass through a tax credit under this
             80      section:
             81          (a) for a taxable year for which the eligible business entity holds a tax credit certificate
             82      issued in accordance with Section 63M-1-2908 ; and
             83          (b) subject to obtaining a tax credit certificate for each taxable year as required by
             84      Subsection (4)(a):
             85          (i) for the taxable year in which the eligible business entity first generates eligible new


             86      state tax revenues; and
             87          (ii) for two taxable years immediately following the year described in Subsection
             88      (4)(b)(i).
             89          (5) An eligible business entity may not:
             90          (a) carry forward or carry back a tax credit under this section; or
             91          (b) claim or pass through a tax credit in an amount greater than the amount listed on a
             92      tax credit certificate issued in accordance with Section 63M-1-2908 for a taxable year.
             93          Section 2. Section 59-10-1025 is enacted to read:
             94          59-10-1025. Nonrefundable tax credit for investment in certain life science
             95      establishments.
             96          (1) As used in this section:
             97          (a) "Commercial domicile" means the principal place from which the trade or business
             98      of a Utah small business corporation is directed or managed.
             99          (b) "Eligible claimant, estate, or trust" is as defined in Section 63M-1-2902 .
             100          (c) "Life science establishment" means an establishment described in one of the
             101      following NAICS codes of the 2007 North American Industry Classification System of the
             102      federal Executive Office of the President, Office of Management and Budget:
             103          (i) NAICS Code 33911, Medical Equipment and Supplies Manufacturing;
             104          (ii) NAICS Code 334510, Electromedical and Electrotherapeutic Apparatus
             105      Manufacturing; or
             106          (iii) NAICS Code 334517, Irradiation Apparatus Manufacturing.
             107          (d) "Office" means the Governor's Office of Economic Development.
             108          (e) "Pass-through entity" is as defined in Section 59-10-1402 .
             109          (f) "Pass-through entity taxpayer" is as defined in Section 59-10-1402 .
             110          (g) "Qualifying ownership interest" means an ownership interest that is:
             111          (i) (A) common stock;
             112          (B) preferred stock; or
             113          (C) an ownership interest in a pass-through entity;


             114          (ii) originally issued to:
             115          (A) an eligible claimant, estate, or trust; or
             116          (B) a pass-through entity if the eligible claimant, estate, or trust that claims a tax credit
             117      under this section was a pass-through entity taxpayer of the pass-through entity on the day on
             118      which the qualifying ownership interest was issued and remains a pass-through entity taxpayer
             119      of the pass-through entity until the last day of the taxable year for which the eligible claimant,
             120      estate, or trust claims a tax credit under this section; and
             121          (iii) issued:
             122          (A) by a Utah small business corporation;
             123          (B) on or after January 1, 2011; and
             124          (C) for money or other property, except for stock or securities.
             125          (h) (i) Except as provided in Subsection (1)(h)(ii), "Utah small business corporation" is
             126      as defined in Section 59-10-1022 .
             127          (ii) For purposes of this section, a corporation under Section 1244(c)(3)(A), Internal
             128      Revenue Code, is considered to include a pass-through entity.
             129          (2) Subject to the other provisions of this section, for a taxable year beginning on or
             130      after January 1, 2011, an eligible claimant, estate, or trust that holds a tax credit certificate
             131      issued to the eligible claimant, estate, or trust in accordance with Section 63M-1-2908 for that
             132      taxable year may claim a nonrefundable tax credit in an amount up to 35% of the purchase
             133      price of a qualifying ownership interest in a Utah small business corporation by the claimant,
             134      estate, or trust if:
             135          (a) the qualifying ownership interest is issued by a Utah small business corporation that
             136      is a life science establishment;
             137          (b) the qualifying ownership interest in the Utah small business corporation is
             138      purchased for at least $25,000;
             139          (c) the eligible claimant, estate, or trust owned less than 30% of the qualifying
             140      ownership interest of the Utah small business corporation at the time of the purchase of the
             141      qualifying ownership interest; and


             142          (d) on each day of the taxable year of the purchase of the qualifying ownership interest,
             143      the Utah small business corporation described in Subsection (2)(a) has at least 50% of its
             144      employees in the state.
             145          (3) Subject to Subsection (4), the tax credit under Subsection (2):
             146          (a) may only be claimed by the eligible claimant, estate, or trust:
             147          (i) for a taxable year for which the eligible claimant, estate, or trust holds a tax credit
             148      certificate issued in accordance with Section 63M-1-2908 ; and
             149          (ii) subject to obtaining a tax credit certificate for each taxable year as required by
             150      Subsection (3)(a)(i), for a period of three taxable years as follows:
             151          (A) the tax credit in the taxable year of the purchase of the qualifying ownership
             152      interest may not exceed 10% of the purchase price of the qualifying ownership interest;
             153          (B) the tax credit in the taxable year after the taxable year described in Subsection
             154      (3)(a)(ii)(A) may not exceed 10% of the purchase price of the qualifying ownership interest;
             155      and
             156          (C) the tax credit in the taxable year two years after the taxable year described in
             157      Subsection (3)(a)(ii)(A) may not exceed 15% of the purchase price of the qualifying ownership
             158      interest; and
             159          (b) may not exceed the lesser of:
             160          (i) the amount listed on the tax credit certificate issued in accordance with Section
             161      63M-1-2908 ; or
             162          (ii) $350,000 in a taxable year.
             163          (4) An eligible claimant, estate, or trust may not claim a tax credit under this section
             164      for a taxable year if the eligible claimant, estate, or trust:
             165          (a) has sold any of the qualifying ownership interest during the taxable year; or
             166          (b) does not hold a tax credit certificate for that taxable year that is issued to the
             167      eligible claimant, estate, or trust by the office in accordance with Section 63M-1-2908 .
             168          (5) If a Utah small business corporation in which an eligible claimant, estate, or trust
             169      purchases a qualifying ownership interest fails, dissolves, or otherwise goes out of business, the


             170      eligible claimant, estate, or trust may not claim both the tax credit provided in this section and
             171      a capital loss on the qualifying ownership interest.
             172          (6) A claimant, estate, or trust may not carry forward or carry back a tax credit under
             173      this section.
             174          Section 3. Section 59-10-1026 is enacted to read:
             175           59-10-1026. Nonrefundable tax credit for capital gain transactions related to a
             176      life science establishment.
             177          (1) As used in this section:
             178          (a) (i) "Capital gain transaction" means a transaction that results in a short-term capital
             179      gain or long-term capital gain.
             180          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             181      commission may by rule define the term "transaction."
             182          (b) "Commercial domicile" means the principal place from which the trade or business
             183      of a Utah small business corporation is directed or managed.
             184          (c) "Eligible claimant, estate, or trust" is as defined in Section 63M-1-2902 .
             185          (d) "Life science establishment" means an establishment described in one of the
             186      following NAICS codes of the 2007 North American Industry Classification System of the
             187      federal Executive Office of the President, Office of Management and Budget:
             188          (i) NAICS Code 33911, Medical Equipment and Supplies Manufacturing;
             189          (ii) NAICS Code 334510, Electromedical and Electrotherapeutic Apparatus
             190      Manufacturing; or
             191          (iii) NAICS Code 334517, Irradiation Apparatus Manufacturing.
             192          (e) "Long-term capital gain" is as defined in Section 1222, Internal Revenue Code.
             193          (f) "Office" means the Governor's Office of Economic Development.
             194          (g) "Pass-through entity" is as defined in Section 59-10-1402 .
             195          (h) "Pass-through entity taxpayer" is as defined in Section 59-10-1402.
             196          (i) "Qualifying ownership interest" means an ownership interest that is:
             197          (i) (A) common stock;


             198          (B) preferred stock; or
             199          (C) an ownership interest in a pass-through entity;
             200          (ii) originally issued to:
             201          (A) an eligible claimant, estate, or trust; or
             202          (B) a pass-through entity if the eligible claimant, estate, or trust that claims a tax credit
             203      under this section was a pass-through entity taxpayer of the pass-through entity on the day on
             204      which the qualifying ownership interest was issued and remains a pass-through entity taxpayer
             205      of the pass-through entity until the last day of the taxable year for which the eligible claimant,
             206      estate, or trust claims a tax credit under this section; and
             207          (iii) issued:
             208          (A) by a Utah small business corporation;
             209          (B) on or after January 1, 2011; and
             210          (C) for money or other property, except for stock or securities.
             211          (j) "Short-term capital gain" is as defined in Section 1222, Internal Revenue Code.
             212          (k) (i) Except as provided in Subsection (1)(k)(ii), "Utah small business corporation" is
             213      as defined in Section 59-10-1022 .
             214          (ii) For purposes of this section, a corporation under Section 1244(c)(3)(A), Internal
             215      Revenue Code, is considered to include a pass-through entity.
             216          (2) Subject to the other provisions of this section, for a taxable year beginning on or
             217      after January 1, 2011, an eligible claimant, estate, or trust that holds a tax credit certificate
             218      issued to the eligible claimant, estate, or trust in accordance with Section 63M-1-2908 for that
             219      taxable year and meets the requirements of Subsection (3) may claim a nonrefundable tax
             220      credit equal to the lesser of:
             221          (a) the amount shown on the tax credit certificate issued to the eligible claimant, estate,
             222      or trust by the office in accordance with Section 63M-1-2908 ; or
             223          (b) the product of:
             224          (i) the total amount of the eligible claimant's, estate's, or trust's short-term capital gain
             225      or long-term capital gain on a capital gain transaction that occurs on or after January 1, 2011;


             226      and
             227          (ii) the tax rate imposed under Subsection 59-10-104 (2)(b).
             228          (3) An eligible claimant, estate, or trust may claim the nonrefundable tax credit
             229      allowed by Subsection (2) if:
             230          (a) the gross proceeds of the capital gain transaction result from the sale of a qualifying
             231      ownership interest:
             232          (i) held for at least two taxable years before the sale of the qualifying ownership
             233      interest; and
             234          (ii) in a Utah small business corporation that is a life science establishment; and
             235          (b) on each day of the taxable year of the capital gain transaction, the Utah small
             236      business corporation described in Subsection (3)(a)(ii) has at least 50% of its employees in the
             237      state.
             238          (4) An eligible claimant, estate, or trust may not:
             239          (a) carry forward or carry back a tax credit under this section; or
             240          (b) claim a tax credit for a taxable year for which the eligible claimant, estate, or trust
             241      does not hold a tax credit certificate issued to the eligible claimant, estate, or trust for that
             242      taxable year by the office in accordance with Section 63M-1-2908 .
             243          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             244      commission may make rules:
             245          (a) defining the term "gross proceeds"; and
             246          (b) prescribing the circumstances under which an eligible claimant, estate, or trust has
             247      a qualifying ownership interest in a Utah small business corporation.
             248          Section 4. Section 59-10-1109 is enacted to read:
             249          59-10-1109. Refundable tax credit for certain business entities generating state tax
             250      revenue increases.
             251          (1) As used in this section:
             252          (a) "Eligible business entity" is as defined in Section 63M-1-2902 .
             253          (b) "Eligible new state tax revenues" is as defined in Section 63M-1-2902 .


             254          (c) "Office" means the Governor's Office of Economic Development.
             255          (d) "Pass-through entity" is as defined in Section 59-10-1402 .
             256          (e) "Pass-through entity taxpayer" is as defined in Section 59-10-1402 .
             257          (2) Subject to the other provisions of this section, an eligible business entity may:
             258          (a) claim a refundable tax credit as provided in Subsection (3); or
             259          (b) if the eligible business entity is a pass-through entity, pass through to one or more
             260      pass-through entity taxpayers of the pass-through entity, in accordance with Chapter 10, Part
             261      14, Pass-through Entities and Pass-through Entity Taxpayers Act, a refundable tax credit that
             262      the eligible business entity could otherwise claim under this section.
             263          (3) (a) Except as provided in Subsection (3)(b), the amount of the tax credit is:
             264          (i) for an eligible business entity, an amount up to the amount listed on the tax credit
             265      certificate that the office issues to the eligible business entity for the taxable year in accordance
             266      with Section 63M-1-2908 ; or
             267          (ii) for a pass-through entity taxpayer, an amount up to the amount of a tax credit that
             268      an eligible business entity passes through to the pass-through entity taxpayer of the
             269      pass-through entity in accordance with Subsection (2)(b) or Subsection 59-7-614.6 (2)(b).
             270          (b) A tax credit under this section may not exceed the eligible new state tax revenues
             271      generated by an eligible business entity for the taxable year for which the eligible business
             272      entity claims a tax credit under this section.
             273          (4) An eligible business entity or pass-through entity taxpayer to which an eligible
             274      business entity passes through a tax credit in accordance with Subsection (2)(b) or Subsection
             275      59-7-614.6 (2)(b) may only claim or pass through a tax credit under this section for:
             276          (a) a taxable year for which the eligible business entity holds a tax credit certificate
             277      issued in accordance with Section 63M-1-2908 ; and
             278          (b) subject to obtaining a tax credit certificate for each taxable year as required by
             279      Subsection (4)(a):
             280          (i) the taxable year in which the eligible business entity first generates eligible new
             281      state tax revenues; and


             282          (ii) two taxable years following the year described in Subsection (4)(b)(i).
             283          (5) An eligible business entity or a pass-through entity taxpayer may not:
             284          (a) carry forward or carry back a tax credit under this section; or
             285          (b) claim a tax credit under both this section and Section 59-7-614.6 .
             286          Section 5. Section 63M-1-2901 is enacted to read:
             287     
Part 29. Technology and Life Science Economic Development Act

             288          63M-1-2901. Title.
             289          This part is known as the "Technology and Life Science Economic Development Act."
             290          Section 6. Section 63M-1-2902 is enacted to read:
             291          63M-1-2902. Definitions.
             292          As used in this part:
             293          (1) "Board" means the Governor's Office of Economic Development Board of
             294      Directors.
             295          (2) "Claimant" is as defined in Section 59-10-1002 .
             296          (3) "Eligible business entity" means a person that:
             297          (a) enters into an agreement with the office in accordance with this part to receive a tax
             298      credit certificate for a tax credit under Section 59-7-614.6 or 59-10-1109 ;
             299          (b) is:
             300          (i) a life science establishment; or
             301          (ii) described in NAICS Code 334413, Semiconductor and Related Device
             302      Manufacturing, of the 2007 North American Industry Classification System of the federal
             303      Executive Office of the President, Office of Management and Budget;
             304          (c) has at least 50% of its employees in the state for each day of a taxable year the
             305      eligible business entity claims a tax credit under Section 59-7-614.6 or 59-10-1109 ; and
             306          (d) receives a tax credit certificate from the office in accordance with this part.
             307          (4) "Eligible claimant, estate, or trust" means a claimant, estate, or trust that:
             308          (a) enters into an agreement with the office in accordance with this part to receive a tax
             309      credit certificate for a tax credit under Section 59-10-1025 or 59-10-1026 ; and


             310          (b) receives a tax credit certificate from the office in accordance with this part.
             311          (5) "Eligible new state tax revenues" means an increased amount of tax revenues
             312      generated as a result of an eligible product or project by an eligible business entity or a new
             313      incremental job within the state under the following:
             314          (a) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
             315          (b) Title 59, Chapter 10, Individual Income Tax Act; and
             316          (c) Title 59, Chapter 12, Sales and Use Tax Act.
             317          (6) "Eligible product or project" means any product or project produced by an eligible
             318      business entity that was not produced prior to the date of an agreement with the office under
             319      Section 63M-1-2908 :
             320          (a) by the eligible business entity; and
             321          (b) within the state.
             322          (7) "Life science establishment" is as defined in Section 59-10-1025 .
             323          (8) "New incremental job within the state" means, with respect to an eligible business
             324      entity, an employment position that:
             325          (a) did not exist within the state before:
             326          (i) the eligible business entity entered into an agreement with the office in accordance
             327      with this part; and
             328          (ii) the eligible product was produced or the eligible project began;
             329          (b) is not shifted from one location in the state to another location in the state; and
             330          (c) is established to the satisfaction of the office, including by amounts paid or
             331      withheld by the eligible business entity under Title 59, Chapter 10, Individual Income Tax Act.
             332          (9) "Office" means the Governor's Office of Economic Development.
             333          (10) "Tax credit" means a tax credit under:
             334          (a) Section 59-7-614.6 ;
             335          (b) Section 59-10-1025 ;
             336          (c) Section 59-10-1026 ; or
             337          (d) Section 59-10-1109 .


             338          (11) "Tax credit applicant" means a person that applies to the office to receive a tax
             339      credit certificate under this part.
             340          (12) "Tax credit certificate" means a certificate issued by the office that:
             341          (a) lists the name of the tax credit certificate recipient;
             342          (b) lists the tax credit certificate recipient's taxpayer identification number;
             343          (c) lists the amount of the tax credit certificate recipient's tax credits authorized under
             344      this part for a taxable year; and
             345          (d) includes other information as determined by the office.
             346          (13) "Tax credit certificate recipient" means:
             347          (a) an eligible business entity that receives a tax credit certificate in accordance with
             348      this part for a tax credit under Section 59-7-614.6 or 59-10-1109 ; or
             349          (b) an eligible claimant, estate, or trust that receives a tax credit certificate in
             350      accordance with this part for a tax credit under Section 59-10-1025 or 59-10-1026 .
             351          Section 7. Section 63M-1-2903 is enacted to read:
             352          63M-1-2903. Tax credits issued by office.
             353          (1) The office may issue tax credit certificates under this part only to the extent that the
             354      Legislature expressly sets aside money for the office to issue the tax credit certificates under
             355      this part.
             356          (2) For fiscal year 2011-12 only, the office may issue a total of $1,300,000 in tax credit
             357      certificates in accordance with this part.
             358          (3) If the total amount of tax credit certificates the office issues in a fiscal year is less
             359      than the amount of tax credit certificates the office may issue under this part in a fiscal year, the
             360      office may issue the remaining amount of tax credit certificates in a fiscal year after the fiscal
             361      year for which there is a remaining amount of tax credit certificates.
             362          Section 8. Section 63M-1-2904 is enacted to read:
             363          63M-1-2904. Person may not claim or pass through a tax credit without tax credit
             364      certificate.
             365          A person may not claim or pass through a tax credit unless the person has received a tax


             366      credit certificate from the office for the taxable year for which the person claims or passes
             367      through the tax credit.
             368          Section 9. Section 63M-1-2905 is enacted to read:
             369          63M-1-2905. Application process.
             370          (1) A tax credit applicant may annually apply to the office to receive a tax credit
             371      certificate by filing an application with the office:
             372          (a) on or before July 1; and
             373          (b) on a form and in the manner prescribed by the office.
             374          (2) The application shall include:
             375          (a) tax return information as required by the office that is necessary for the office to
             376      determine eligibility for and the amount of a tax credit; and
             377          (b) other documentation as required by the office.
             378          (3) As part of the application required by this section, a tax credit applicant shall sign a
             379      separate document that expressly directs and authorizes the State Tax Commission to disclose
             380      to the office the tax credit certificate recipient's tax returns and other information concerning
             381      the tax credit certificate that:
             382          (a) would otherwise be subject to confidentiality under Section 59-1-403 or Section
             383      6103, Internal Revenue Code; and
             384          (b) are necessary for the office to determine eligibility for and the amount of a tax
             385      credit under this part.
             386          (4) Upon receipt of the document described in Subsection (3), the State Tax
             387      Commission shall provide the office with the tax returns and other information requested by
             388      the office that the tax credit applicant directed or authorized the State Tax Commission to
             389      provide to the office, including information necessary to determine eligibility for the amount of
             390      a tax credit.
             391          (5) If the office determines that the information a tax credit applicant provides is
             392      inadequate to provide a reasonable justification for authorizing a tax credit, the office shall:
             393          (a) deny the tax credit; or


             394          (b) inform the tax credit applicant that the information is inadequate and ask the tax
             395      credit applicant to submit new or additional documentation.
             396          Section 10. Section 63M-1-2906 is enacted to read:
             397          63M-1-2906. Criteria for tax credits.
             398          (1) A tax credit applicant shall establish as part of the application required by Section
             399      63M-1-2905 that the tax credit applicant:
             400          (a) meets all of the criteria to receive the tax credit for which the tax credit applicant
             401      applies, except for the requirement to obtain a tax credit certificate; and
             402          (b) will provide a long-term economic benefit to the state.
             403          (2) The office may not issue a tax credit certificate to a tax credit applicant that fails to
             404      meet the requirements of Subsection (1)(a).
             405          Section 11. Section 63M-1-2907 is enacted to read:
             406          63M-1-2907. Rulemaking authority.
             407          The office shall, by rule, made in accordance with Title 63G, Chapter 3, Utah
             408      Administrative Rulemaking Act, establish:
             409          (1) criteria to prioritize the issuance of tax credits amongst tax credit applicants in a
             410      manner consistent with this part; and
             411          (2) procedures for documenting the office's application of the criteria described in
             412      Subsection (1).
             413          Section 12. Section 63M-1-2908 is enacted to read:
             414          63M-1-2908. Agreement between tax credit applicant and office -- Tax credit
             415      certificate.
             416          (1) Subject to the other provisions of this part, the office, with advice from the board,
             417      shall determine on or before the August 1 immediately following the July 1 described in
             418      Subsection 63M-1-2905 (1):
             419          (a) the tax credit applicant or applicants to which a tax credit certificate may be
             420      provided; and
             421          (b) the amount of tax credit a tax credit applicant may receive.


             422          (2) The office, with advice from the board, may enter into an agreement to grant a tax
             423      credit certificate to a tax credit applicant selected in accordance with this part, if the tax credit
             424      applicant meets the conditions established in the agreement and under this part.
             425          (3) The agreement described in Subsection (2) shall:
             426          (a) detail the requirements that the tax credit applicant shall meet prior to receiving a
             427      tax credit certificate;
             428          (b) require the tax credit certificate recipient to retain records supporting a claim for a
             429      tax credit for at least four years after the tax credit certificate recipient claims a tax credit under
             430      this part; and
             431          (c) require the tax credit certificate recipient to submit to audits for verification of the
             432      tax credit claimed, including audits by the office and by the State Tax Commission.
             433          Section 13. Section 63M-1-2909 is enacted to read:
             434          63M-1-2909. Issuance of tax credit certificates.
             435          (1) For a tax credit applicant that seeks to claim a tax credit under Section 59-7-614.6 ,
             436      59-10-1025 , or 59-10-1109 , the office may issue a tax credit certificate to the tax credit
             437      applicant:
             438          (a) for the first taxable year for which the tax credit applicant qualifies for the tax credit
             439      and enters into an agreement with the office; and
             440          (b) for two taxable years immediately following the taxable year described in
             441      Subsection (1)(a).
             442          (2) For a tax credit applicant that seeks to claim a tax credit under Section 59-10-1026 ,
             443      the office may issue a tax credit certificate to the tax credit applicant only for the taxable year
             444      for which the tax credit applicant qualifies for the tax credit and enters into an agreement with
             445      the office.
             446          (3) The office shall provide a duplicate copy of each tax credit certificate to the State
             447      Tax Commission.
             448          Section 14. Section 63M-1-2910 is enacted to read:
             449          63M-1-2910. Report to the Legislature -- Study by legislative committees.


             450          (1) The office shall annually report to the Workforce Services and Community and
             451      Economic Development Interim Committee and Revenue and Taxation Interim Committee
             452      describing:
             453          (a) the total amount listed on tax credit certificates the office issues under this part;
             454          (b) the criteria that the office uses in prioritizing the issuance of tax credits amongst tax
             455      credit applicants under this part; and
             456          (c) the economic impact on the state related to providing tax credits under this part.
             457          (2) (a) On or before November 1, 2011, and every five years after November 1, 2011,
             458      the Workforce Services and Community and Economic Development Interim Committee and
             459      Revenue and Taxation Interim Committee shall:
             460          (i) study the tax credits allowed under Sections 59-7-614.6 , 59-10-1025 , 59-10-1026 ,
             461      and 59-10-1109 ; and
             462          (ii) make recommendations concerning whether the tax credits should be continued,
             463      modified, or repealed.
             464          (b) The study under Subsection (2)(a) shall include an evaluation of:
             465          (i) the cost of the tax credits under Sections 59-7-614.6 , 59-10-1025 , 59-10-1026 , and
             466      59-10-1109 ;
             467          (ii) the purposes and effectiveness of the tax credits; and
             468          (iii) the extent to which the state benefits from the tax credits.
             469          Section 15. Section 63M-1-2911 is enacted to read:
             470          63M-1-2911. Reports of tax credits.
             471          (1) Before December 1 of each year, the office shall submit a report to the Governor's
             472      Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the Division of
             473      Finance identifying:
             474          (a) the total amount listed on tax credit certificates the office issues under this part; and
             475          (b) the criteria that the office uses in prioritizing the issuance of tax credits amongst tax
             476      credit applicants.
             477          (2) By the first business day of each month, the office shall submit a report to the


             478      Governor's Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the
             479      Division of Finance identifying:
             480          (a) each new agreement entered into by the office since the last report;
             481          (b) the total amount listed on tax credit certificates the office issues under this part; and
             482          (c) the criteria that the office uses in prioritizing the issuance of tax credits amongst tax
             483      credit applicants.
             484          Section 16. Appropriation.
             485          Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, the
             486      following sums of money are appropriated from resources not otherwise appropriated out of the
             487      funds or accounts indicated for the fiscal year beginning July 1, 2011 and ending June 30,
             488      2012. These are additions to amounts previously appropriated for fiscal year 2012.
             489          To Governor's Office of Economic Development - Administration
             490              From General Fund - One-time
$200,000

             491              Schedule of Programs:
             492                  Governor's Office of Economic Development    $200,000
             493          It is the intent of the Legislature that the appropriation be spent to administer the tax
             494      credits enacted in this bill.
             495          Section 17. Effective date -- Retrospective operation.
             496          (1) Except as provided in Subsection (2), this bill takes effect on May 10, 2011.
             497          (2) The amendments to and enactments of the following sections have retrospective
             498      operation for a taxable year beginning on or after January 1, 2011:
             499          (a) Section 59-7-614.6 ;
             500          (b) Section 59-10-1025 ;
             501          (c) Section 59-10-1026 ; and
             502          (d) Section 59-10-1109 .


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