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Second Substitute H.B. 496

Senator Curtis S. Bramble proposes the following substitute bill:


             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 business entities;
             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 for effective dates.
             38      Utah Code Sections Affected:
             39      ENACTS:
             40          59-7-614.6, Utah Code Annotated 1953
             41          59-10-1025, Utah Code Annotated 1953
             42          59-10-1026, Utah Code Annotated 1953
             43          59-10-1109, Utah Code Annotated 1953
             44          63M-1-2901, Utah Code Annotated 1953
             45          63M-1-2902, Utah Code Annotated 1953
             46          63M-1-2903, Utah Code Annotated 1953
             47          63M-1-2904, Utah Code Annotated 1953
             48          63M-1-2905, Utah Code Annotated 1953
             49          63M-1-2906, Utah Code Annotated 1953
             50          63M-1-2907, Utah Code Annotated 1953
             51          63M-1-2908, Utah Code Annotated 1953
             52          63M-1-2909, Utah Code Annotated 1953
             53          63M-1-2910, Utah Code Annotated 1953
             54          63M-1-2911, Utah Code Annotated 1953
             55     
             56      Be it enacted by the Legislature of the state of Utah:


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


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


             119      estate, or trust claims a tax credit under this section; and
             120          (iii) issued:
             121          (A) by a Utah small business corporation;
             122          (B) on or after January 1, 2011; and
             123          (C) for money or other property, except for stock or securities.
             124          (h) (i) Except as provided in Subsection (1)(h)(ii), "Utah small business corporation" is
             125      as defined in Section 59-10-1022 .
             126          (ii) For purposes of this section, a corporation under Section 1244(c)(3)(A), Internal
             127      Revenue Code, is considered to include a pass-through entity.
             128          (2) Subject to the other provisions of this section, for a taxable year beginning on or
             129      after January 1, 2011, an eligible claimant, estate, or trust that holds a tax credit certificate
             130      issued to the eligible claimant, estate, or trust in accordance with Section 63M-1-2908 for that
             131      taxable year may claim a nonrefundable tax credit in an amount up to 35% of the purchase
             132      price of a qualifying ownership interest in a Utah small business corporation by the claimant,
             133      estate, or trust if:
             134          (a) the qualifying ownership interest is issued by a Utah small business corporation that
             135      is a life science establishment;
             136          (b) the qualifying ownership interest in the Utah small business corporation is
             137      purchased for at least $25,000;
             138          (c) the eligible claimant, estate, or trust owned less than 30% of the qualifying
             139      ownership interest of the Utah small business corporation at the time of the purchase of the
             140      qualifying ownership interest; and
             141          (d) on each day of the taxable year of the purchase of the qualifying ownership interest,
             142      the Utah small business corporation described in Subsection (2)(a) has at least 50% of its
             143      employees in the state.
             144          (3) Subject to Subsection (4), the tax credit under Subsection (2):
             145          (a) may only be claimed by the eligible claimant, estate, or trust:
             146          (i) for a taxable year for which the eligible claimant, estate, or trust holds a tax credit
             147      certificate issued in accordance with Section 64M-1-2908 ; and
             148          (ii) subject to obtaining a tax credit certificate for each taxable year as required by
             149      Subsection (3)(a)(i), for a period of three taxable years as follows:


             150          (A) the tax credit in the taxable year of the purchase of the qualifying ownership
             151      interest may not exceed 10% of the purchase price of the qualifying ownership interest;
             152          (B) the tax credit in the taxable year after the taxable year described in Subsection
             153      (3)(a)(ii)(A) may not exceed 10% of the purchase price of the qualifying ownership interest;
             154      and
             155          (C) the tax credit in the taxable year two years after the taxable year described in
             156      Subsection (3)(a)(ii)(A) may not exceed 15% of the purchase price of the qualifying ownership
             157      interest; and
             158          (b) may not exceed the lesser of:
             159          (i) the amount listed on the tax credit certificate issued in accordance with Section
             160      63M-1-2908 ; or
             161          (ii) $350,000 in a taxable year.
             162          (4) An eligible claimant, estate, or trust may not claim a tax credit under this section
             163      for a taxable year if the eligible claimant, estate, or trust:
             164          (a) has sold any of the qualifying ownership interest during the taxable year; or
             165          (b) does not hold a tax credit certificate for that taxable year that is issued to the
             166      eligible claimant, estate, or trust by the office in accordance with Section 63M-1-2908 .
             167          (5) If a Utah small business corporation in which an eligible claimant, estate, or trust
             168      purchases a qualifying ownership interest fails, dissolves, or otherwise goes out of business, the
             169      eligible claimant, estate, or trust may not claim both the tax credit provided in this section and
             170      a capital loss on the qualifying ownership interest.
             171          (6) A claimant, estate, or trust may not carry forward or carry back a tax credit under
             172      this section.
             173          Section 3. Section 59-10-1026 is enacted to read:
             174           59-10-1026. Nonrefundable tax credit for capital gain transactions related to a
             175      life science establishment.
             176          (1) As used in this section:
             177          (a) (i) "Capital gain transaction" means a transaction that results in a short-term capital
             178      gain or long-term capital gain.
             179          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             180      commission shall by rule define the term "transaction."


             181          (b) "Commercial domicile" means the principal place from which the trade or business
             182      of a Utah small business corporation is directed or managed.
             183          (c) "Eligible claimant, estate, or trust" is as defined in Section 63M-1-2902 .
             184          (d) "Life science establishment" means an establishment described in one of the
             185      following NAICS codes of the 2007 North American Industry Classification System of the
             186      federal Executive Office of the President, Office of Management and Budget:
             187          (i) NAICS Code 33911, Medical Equipment and Supplies Manufacturing;
             188          (ii) NAICS Code 334510, Electromedical and Electrotherapeutic Apparatus
             189      Manufacturing; or
             190          (iii) NAICS Code 334517, Irradiation Apparatus Manufacturing.
             191          (e) "Long-term capital gain" is as defined in Section 1222, Internal Revenue Code.
             192          (f) "Office" means the Governor's Office of Economic Development.
             193          (g) "Pass-through entity" is as defined in Section 59-10-1402 .
             194          (h) "Pass-through entity taxpayer" is as defined in Section 59-10-1402.
             195          (i) "Qualifying ownership interest" means an ownership interest that is:
             196          (i) (A) common stock;
             197          (B) preferred stock; or
             198          (C) an ownership interest in a pass-through entity;
             199          (ii) originally issued to:
             200          (A) an eligible claimant, estate, or trust; or
             201          (B) a pass-through entity if the eligible claimant, estate, or trust that claims a tax credit
             202      under this section was a pass-through entity taxpayer of the pass-through entity on the day on
             203      which the qualifying ownership interest was issued and remains a pass-through entity taxpayer
             204      of the pass-through entity until the last day of the taxable year for which the eligible claimant,
             205      estate, or trust claims a tax credit under this section; and
             206          (iii) issued:
             207          (A) by a Utah small business corporation;
             208          (B) on or after January 1, 2011; and
             209          (C) for money or other property, except for stock or securities.
             210          (j) "Short-term capital gain" is as defined in Section 1222, Internal Revenue Code.
             211          (k) (i) Except as provided in Subsection (1)(k)(ii), "Utah small business corporation" is


             212      as defined in Section 59-10-1022 .
             213          (ii) For purposes of this section, a corporation under Section 1244(c)(3)(A), Internal
             214      Revenue Code, is considered to include a pass-through entity.
             215          (2) Subject to the other provisions of this section, for a taxable year beginning on or
             216      after January 1, 2011, an eligible claimant, estate, or trust that holds a tax credit certificate
             217      issued to the eligible claimant, estate, or trust in accordance with Section 63M-1-2908 for that
             218      taxable year and meets the requirements of Subsection (3) may claim a nonrefundable tax
             219      credit equal to the lesser of:
             220          (a) the amount shown on the tax credit certificate issued to the eligible claimant, estate,
             221      or trust by the office in accordance with Section 63M-1-2908 ; or
             222          (b) the product of:
             223          (i) the total amount of the eligible claimant's, estate's, or trust's short-term capital gain
             224      or long-term capital gain on a capital gain transaction that occurs on or after January 1, 2011;
             225      and
             226          (ii) the tax rate imposed under Subsection 59-10-104 (2)(b).
             227          (3) An eligible claimant, estate, or trust may claim the nonrefundable tax credit
             228      allowed by Subsection (2) if:
             229          (a) the gross proceeds of the capital gain transaction result from the sale of a qualifying
             230      ownership interest:
             231          (i) held for at least two taxable years before the sale of the qualifying ownership
             232      interest; and
             233          (ii) in a Utah small business corporation that is a life science establishment; and
             234          (b) on each day of the taxable year of the capital gain transaction, the Utah small
             235      business corporation described in Subsection (3)(a) has at least 50% of its employees in the
             236      state.
             237          (4) An eligible claimant, estate, or trust may not:
             238          (a) carry forward or carry back a tax credit under this section; or
             239          (b) claim a tax credit for a taxable year for which the eligible claimant, estate, or trust
             240      does not hold a tax credit certificate issued to the eligible claimant, estate, or trust for that
             241      taxable year by the office in accordance with Section 63M-1-2908 .
             242          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the


             243      commission shall make rules:
             244          (a) defining the term "gross proceeds"; and
             245          (b) prescribing the circumstances under which an eligible claimant, estate, or trust has
             246      a qualifying ownership interest in a Utah small business corporation.
             247          Section 4. Section 59-10-1109 is enacted to read:
             248          59-10-1109. Refundable tax credit for certain business entities generating state tax
             249      revenue increases.
             250          (1) As used in this section:
             251          (a) "Eligible business entity" is as defined in Section 63M-1-2902 .
             252          (b) "Eligible new state tax revenues" is as defined in Section 63M-1-2902 .
             253          (c) "Office" means the Governor's Office of Economic Development.
             254          (d) "Pass-through entity" is as defined in Section 59-10-1402 .
             255          (e) "Pass-through entity taxpayer" is as defined in Section 59-10-1402 .
             256          (2) Subject to the other provisions of this section, an eligible business entity may:
             257          (a) claim a refundable tax credit as provided in Subsection (3); or
             258          (b) if the eligible business entity is a pass-through entity, pass through to one or more
             259      pass-through entity taxpayers of the pass-through entity, in accordance with Chapter 10, Part
             260      14, Pass-through Entities and Pass-through Entity Taxpayers Act, a refundable tax credit that
             261      the eligible business entity could otherwise claim under this section.
             262          (3) (a) Except as provided in Subsection (3)(b), the amount of the tax credit is:
             263          (i) for an eligible business entity, an amount up to the amount listed on the tax credit
             264      certificate that the office issues to the eligible business entity for the taxable year in accordance
             265      with Section 63M-1-2908 ; or
             266          (ii) for a pass-through entity taxpayer, an amount up to the amount of a tax credit that
             267      an eligible business entity passes through to the pass-through entity taxpayer of the
             268      pass-through entity in accordance with Subsection (2)(b) or Subsection 59-7-614.6 (2)(b).
             269          (b) A tax credit under this section may not exceed the eligible new state tax revenues
             270      generated by an eligible business entity for the taxable year for which the eligible business
             271      entity claims a tax credit under this section.
             272          (4) An eligible business entity or pass-through entity taxpayer to which an eligible
             273      business entity passes through a tax credit in accordance with Subsection (2)(b) or Subsection


             274      59-7-614.6 (2)(b) may only claim or pass through a tax credit under this section for:
             275          (a) a taxable year for which the eligible business entity holds a tax credit certificate
             276      issued in accordance with Section 63M-1-2908 ; and
             277          (b) subject to obtaining a tax credit certificate for each taxable year as required by
             278      Subsection (4)(a):
             279          (i) the taxable year in which the eligible business entity first generates eligible new
             280      state tax revenues; and
             281          (ii) two taxable years following the year described in Subsection (4)(b)(i).
             282          (5) An eligible business entity or a pass-through entity taxpayer may not:
             283          (a) carry forward or carry back a tax credit under this section; or
             284          (b) claim a tax credit under both this section and Section 59-7-614.6 .
             285          Section 5. Section 63M-1-2901 is enacted to read:
             286     
Part 29. Technology and Life Science Economic Development Act

             287          63M-1-2901. Title.
             288          This part is known as the "Technology and Life Science Economic Development Act."
             289          Section 6. Section 63M-1-2902 is enacted to read:
             290          63M-1-2902. Definitions.
             291          As used in this part:
             292          (1) "Board" means the Governor's Office of Economic Development Board of
             293      Directors.
             294          (2) "Claimant" is as defined in Section 59-10-1002 .
             295          (3) "Eligible business entity" means a person that:
             296          (a) enters into an agreement with the office in accordance with this part to receive a tax
             297      credit certificate for a tax credit under Section 59-7-614.6 or 59-10-1109 ;
             298          (b) is:
             299          (i) a life science establishment; or
             300          (ii) described in NAICS Code 334413, Semiconductor and Related Device
             301      Manufacturing, of the 2007 North American Industry Classification System of the federal
             302      Executive Office of the President, Office of Management and Budget;
             303          (c) has at least 50% of its employees in the state for each day of a taxable year the
             304      eligible business entity claims a tax credit under Section 59-7-614.6 or 59-10-1109 ; and


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


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


             367          Section 9. Section 63M-1-2905 is enacted to read:
             368          63M-1-2905. Application process.
             369          (1) A tax credit applicant may annually apply to the office to receive a tax credit
             370      certificate by filing an application with the office:
             371          (a) on or before July 1; and
             372          (b) on a form and in the manner prescribed by the office.
             373          (2) The application shall include:
             374          (a) tax return information as required by the office that is necessary for the office to
             375      determine eligibility for and the amount of a tax credit; and
             376          (b) other documentation as required by the office.
             377          (3) As part of the application required by this section, a tax credit applicant shall sign a
             378      separate document that expressly directs and authorizes the State Tax Commission to disclose
             379      to the office the tax credit certificate recipient's tax returns and other information concerning
             380      the tax credit certificate that:
             381          (a) would otherwise be subject to confidentiality under Section 59-1-403 or Section
             382      6103, Internal Revenue Code; and
             383          (b) are necessary for the office to determine eligibility for and the amount of a tax
             384      credit under this part.
             385          (4) Upon receipt of the document described in Subsection (3), the State Tax
             386      Commission shall provide the office with the tax returns and other information requested by
             387      the office that the tax credit applicant directed or authorized the State Tax Commission to
             388      provide to the office, including information necessary to determine eligibility for the amount of
             389      a tax credit.
             390          (5) If the office determines that the information a tax credit applicant provides is
             391      inadequate to provide a reasonable justification for authorizing a tax credit, the office shall:
             392          (a) deny the tax credit; or
             393          (b) inform the tax credit applicant that the information is inadequate and ask the tax
             394      credit applicant to submit new or additional documentation.
             395          Section 10. Section 63M-1-2906 is enacted to read:
             396          63M-1-2906. Criteria for tax credits.
             397          (1) A tax credit applicant shall establish as part of the application required by Section


             398      63M-1-2905 that the tax credit applicant:
             399          (a) meets all of the criteria to receive the tax credit for which the tax credit applicant
             400      applies, except for the requirement to obtain a tax credit certificate; and
             401          (b) will provide a long-term economic benefit to the state.
             402          (2) The office may not issue a tax credit certificate to a tax credit applicant that fails to
             403      meet the requirements of Subsection (1)(a).
             404          Section 11. Section 63M-1-2907 is enacted to read:
             405          63M-1-2907. Rulemaking authority.
             406          The office shall, by rule, made in accordance with Title 63G, Chapter 3, Utah
             407      Administrative Rulemaking Act, establish:
             408          (1) criteria to prioritize the issuance of tax credits amongst tax credit applicants in a
             409      manner consistent with this part; and
             410          (2) procedures for documenting the office's application of the criteria described in
             411      Subsection (1).
             412          Section 12. Section 63M-1-2908 is enacted to read:
             413          63M-1-2908. Agreement between tax credit applicant and office -- Tax credit
             414      certificate.
             415          (1) Subject to the other provisions of this part, the office, with advice from the board,
             416      shall determine on or before the August 1 immediately following the July 1 described in
             417      Subsection 63M-1-2905 (1):
             418          (a) the tax credit applicant or applicants to which a tax credit certificate may be
             419      provided; and
             420          (b) the amount of tax credit a tax credit applicant may receive.
             421          (2) The office, with advice from the board, may enter into an agreement to grant a tax
             422      credit certificate to a tax credit applicant selected in accordance with this part, if the tax credit
             423      applicant meets the conditions established in the agreement and under this part.
             424          (3) The agreement described in Subsection (2) shall:
             425          (a) detail the requirements that the tax credit applicant shall meet prior to receiving a
             426      tax credit certificate;
             427          (b) require the tax credit certificate recipient to retain records supporting a claim for a
             428      tax credit for at least four years after the tax credit certificate recipient claims a tax credit under


             429      this part; and
             430          (c) require the tax credit certificate recipient to submit to audits for verification of the
             431      tax credit claimed, including audits by the office and by the State Tax Commission.
             432          Section 13. Section 63M-1-2909 is enacted to read:
             433          63M-1-2909. Issuance of tax credit certificates.
             434          (1) For a tax credit applicant that seeks to claim a tax credit under Section 59-7-614.6 ,
             435      59-10-1025 , or 59-10-1109 , the office may issue a tax credit certificate to the tax credit
             436      applicant:
             437          (a) for the first taxable year for which the tax credit applicant qualifies for the tax credit
             438      and enters into an agreement with the office; and
             439          (b) for two taxable years immediately following the taxable year described in
             440      Subsection (1)(a).
             441          (2) For a tax credit applicant that seeks to claim a tax credit under Section 59-10-1026 ,
             442      the office may issue a tax credit certificate to the tax credit applicant only for the taxable year
             443      for which the tax credit applicant qualifies for the tax credit and enters into an agreement with
             444      the office.
             445          (3) The office shall provide a duplicate copy of each tax credit certificate to the State
             446      Tax Commission.
             447          Section 14. Section 63M-1-2910 is enacted to read:
             448          63M-1-2910. Report to the Legislature -- Study by legislative committees.
             449          (1) The office shall annually report to the Workforce Services and Community and
             450      Economic Development Interim Committee and Revenue and Taxation Interim Committee
             451      describing:
             452          (a) the total amount listed on tax credit certificates the office issues under this part;
             453          (b) the criteria that the office uses in prioritizing the issuance of tax credits amongst tax
             454      credit applicants under this part; and
             455          (c) the economic impact on the state related to providing tax credits under this part.
             456          (2) (a) On or before November 1, 2011, and every five years after November 1, 2011,
             457      the Workforce Services and Community and Economic Development Interim Committee and
             458      Revenue and Taxation Interim Committee shall:
             459          (i) study the tax credits allowed under Sections 59-7-614.6 , 59-10-1025 , 59-10-1026 ,


             460      and 59-10-1109 ; and
             461          (ii) make recommendations concerning whether the tax credits should be continued,
             462      modified, or repealed.
             463          (b) The study under Subsection (2)(a) shall include an evaluation of:
             464          (i) the cost of the tax credits under Sections 59-7-614.6 , 59-10-1025 , 59-10-1026 , and
             465      59-10-1109 ;
             466          (ii) the purposes and effectiveness of the tax credits; and
             467          (iii) the extent to which the state benefits from the tax credits.
             468          Section 15. Section 63M-1-2911 is enacted to read:
             469          63M-1-2911. Reports of tax credits.
             470          (1) Before December 1 of each year, the office shall submit a report to the Governor's
             471      Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the Division of
             472      Finance identifying:
             473          (a) the total amount listed on tax credit certificates the office issues under this part; and
             474          (b) the criteria that the office uses in prioritizing the issuance of tax credits amongst tax
             475      credit applicants.
             476          (2) By the first business day of each month, the office shall submit a report to the
             477      Governor's Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the
             478      Division of Finance identifying:
             479          (a) each new agreement entered into by the office since the last report;
             480          (b) the total amount listed on tax credit certificates the office issues under this part; and
             481          (c) the criteria that the office uses in prioritizing the issuance of tax credits amongst tax
             482      credit applicants.
             483          Section 16. Appropriation.
             484          Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, the
             485      following sums of money are appropriated from resources not otherwise appropriated out of the
             486      funds or accounts indicated for the fiscal year beginning July 1, 2011 and ending June 30,
             487      2012. These are additions to amounts previously appropriated for fiscal year 2012.
             488          To Governor's Office of Economic Development - Administration
             489              From General Fund - One-time
$200,000

             490              Schedule of Programs:


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


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