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S.B. 44

             1     

STATE COMMISSION AMENDMENTS

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Margaret Dayton

             5     
House Sponsor: Gregory H. Hughes

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies provisions relating to certain state commissions.
             10      Highlighted Provisions:
             11          This bill:
             12          .    modifies the duties of the Utah Tax Review Commission;
             13          .    transfers some duties of the Utah Tax Review Commission to the Revenue and
             14      Taxation Interim Committee;
             15          .    modifies the duties of the Utah Constitutional Revision Commission;
             16          .    modifies a provision relating to the staffing of the Utah Constitutional Revision
             17      Commission; and
             18          .    makes technical changes.
             19      Money Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          59-1-903, as last amended by Laws of Utah 2002, Chapter 144
             26          59-1-904, as enacted by Laws of Utah 1990, Chapter 237
             27          59-1-905, as last amended by Laws of Utah 2010, Chapter 286


             28          59-5-102, as last amended by Laws of Utah 2010, Chapter 323
             29          59-7-612, as last amended by Laws of Utah 2008, Chapters 4 and 382
             30          59-7-613, as last amended by Laws of Utah 2008, Chapters 4 and 382
             31          59-7-614, as last amended by Laws of Utah 2009, Chapter 344
             32          59-7-614.2, as last amended by Laws of Utah 2010, Chapter 164
             33          59-7-614.3, as enacted by Laws of Utah 2008, Chapter 389
             34          59-7-614.5, as last amended by Laws of Utah 2010, Chapter 278
             35          59-10-1012, as last amended by Laws of Utah 2008, Chapters 4 and 382
             36          59-10-1013, as last amended by Laws of Utah 2008, Chapters 4 and 382
             37          59-10-1014, as last amended by Laws of Utah 2009, Chapter 344
             38          59-10-1024, as enacted by Laws of Utah 2008, Chapter 389
             39          59-10-1106, as last amended by Laws of Utah 2009, Chapter 344
             40          59-10-1107, as last amended by Laws of Utah 2010, Chapter 164
             41          59-10-1108, as last amended by Laws of Utah 2010, Chapter 278
             42          59-12-103.1, as last amended by Laws of Utah 2006, Chapter 253
             43          59-12-104.5, as last amended by Laws of Utah 2009, Chapter 203
             44          63I-3-203, as last amended by Laws of Utah 2010, Chapter 25
             45          63I-3-204, as renumbered and amended by Laws of Utah 2008, Chapter 382
             46          63I-3-207, as renumbered and amended by Laws of Utah 2008, Chapter 382
             47          63J-1-205, as enacted by Laws of Utah 2008, Chapter 138
             48          63M-1-1805, as last amended by Laws of Utah 2009, Chapter 135
             49          63M-1-2406, as enacted by Laws of Utah 2008, Chapter 372
             50          63M-1-2806, as last amended by Laws of Utah 2010, Chapter 45
             51     
             52      Be it enacted by the Legislature of the state of Utah:
             53          Section 1. Section 59-1-903 is amended to read:
             54           59-1-903. Duties.
             55          [(1)] The review commission shall[: (a) establish an ongoing and comprehensive
             56      review of: (i) the tax laws of this state and the political subdivisions of this state; and (ii) all
             57      issues related to revenue and taxation; and (b)] make recommendations to the governor and the
             58      Legislature on[: (i)] specific tax issues[; and], as requested by:


             59          [(ii) tax policy of the state and the political subdivisions.]
             60          [(2) The review commission may advise the governor, the Legislature, and political
             61      subdivisions on any proposed change of tax laws or tax policy.]
             62          (1) the Legislature in a joint resolution of the Legislature; or
             63          (2) the Legislative Management Committee.
             64          Section 2. Section 59-1-904 is amended to read:
             65           59-1-904. Public hearings.
             66          The review commission may hold public hearings it considers advisable and in various
             67      locations within the state so that all interested persons who are citizens of this state may be
             68      afforded an opportunity to appear and present their views in respect to any subject relating to
             69      the work of the review commission under Section 59-1-903 .
             70          Section 3. Section 59-1-905 is amended to read:
             71           59-1-905. Per diem and travel expenses.
             72          [(1)] A member may not receive compensation or benefits for the member's service,
             73      but may receive per diem and travel expenses in accordance with:
             74          [(a)] (1) Section 63A-3-106 ;
             75          [(b)] (2) Section 63A-3-107 ; and
             76          [(c)] (3) rules made by the Division of Finance pursuant to Sections 63A-3-106 and
             77      63A-3-107 .
             78          [(2) Prior to the convening of the Legislature in annual general session, the review
             79      commission shall submit its recommendations to the members of the Legislature and to the
             80      governor.]
             81          Section 4. Section 59-5-102 is amended to read:
             82           59-5-102. Severance tax -- Rate -- Computation -- Annual exemption -- Tax credit
             83      -- Tax rate reduction -- Study by Revenue and Taxation Interim Committee.
             84          (1) Each person owning an interest, working interest, royalty interest, payments out of
             85      production, or any other interest, in oil or gas produced from a well in the state, or in the
             86      proceeds of the production, shall pay to the state a severance tax on the basis of the value
             87      determined under Section 59-5-103.1 of the oil or gas:
             88          (a) produced; and
             89          (b) (i) saved;


             90          (ii) sold; or
             91          (iii) transported from the field where the substance was produced.
             92          (2) (a) Subject to Subsection (2)(d), the severance tax rate for oil is as follows:
             93          (i) 3% of the value of the oil up to and including the first $13 per barrel for oil; and
             94          (ii) 5% of the value of the oil from $13.01 and above per barrel for oil.
             95          (b) Subject to Subsection (2)(d), the severance tax rate for natural gas is as follows:
             96          (i) 3% of the value of the natural gas up to and including the first $1.50 per MCF for
             97      gas; and
             98          (ii) 5% of the value of the natural gas from $1.51 and above per MCF for gas.
             99          (c) Subject to Subsection (2)(d), the severance tax rate for natural gas liquids is 4% of
             100      the value of the natural gas liquids.
             101          (d) (i) On or before December 15, 2004, the Office of the Legislative Fiscal Analyst
             102      and the Governor's Office of Planning and Budget shall prepare a revenue forecast estimating
             103      the amount of revenues that:
             104          (A) would be generated by the taxes imposed by this part for the calendar year
             105      beginning on January 1, 2004 had 2004 General Session S.B. 191 not taken effect; and
             106          (B) will be generated by the taxes imposed by this part for the calendar year beginning
             107      on January 1, 2004.
             108          (ii) Effective on January 1, 2005, the tax rates described in Subsections (2)(a) through
             109      (c) shall be:
             110          (A) increased as provided in Subsection (2)(d)(iii) if the amount of revenues estimated
             111      under Subsection (2)(d)(i)(B) is less than the amount of revenues estimated under Subsection
             112      (2)(d)(i)(A); or
             113          (B) decreased as provided in Subsection (2)(d)(iii) if the amount of revenues estimated
             114      under Subsection (2)(d)(i)(B) is greater than the amount of revenues estimated under
             115      Subsection (2)(d)(i)(A).
             116          (iii) For purposes of Subsection (2)(d)(ii):
             117          (A) subject to Subsection (2)(d)(iv)(B):
             118          (I) if an increase is required under Subsection (2)(d)(ii)(A), the total increase in the tax
             119      rates shall be by the amount necessary to generate for the calendar year beginning on January 1,
             120      2005 revenues equal to the amount by which the revenues estimated under Subsection


             121      (2)(d)(i)(A) exceed the revenues estimated under Subsection (2)(d)(i)(B); or
             122          (II) if a decrease is required under Subsection (2)(d)(ii)(B), the total decrease in the tax
             123      rates shall be by the amount necessary to reduce for the calendar year beginning on January 1,
             124      2005 revenues equal to the amount by which the revenues estimated under Subsection
             125      (2)(d)(i)(B) exceed the revenues estimated under Subsection (2)(d)(i)(A); and
             126          (B) an increase or decrease in each tax rate under Subsection (2)(d)(ii) shall be in
             127      proportion to the amount of revenues generated by each tax rate under this part for the calendar
             128      year beginning on January 1, 2003.
             129          (iv) (A) The commission shall calculate any tax rate increase or decrease required by
             130      Subsection (2)(d)(ii) using the best information available to the commission.
             131          (B) If the tax rates described in Subsections (2)(a) through (c) are increased or
             132      decreased as provided in this Subsection (2)(d), the commission shall mail a notice to each
             133      person required to file a return under this part stating the tax rate in effect on January 1, 2005
             134      as a result of the increase or decrease.
             135          (3) If oil or gas is shipped outside the state:
             136          (a) the shipment constitutes a sale; and
             137          (b) the oil or gas is subject to the tax imposed by this section.
             138          (4) (a) Except as provided in Subsection (4)(b), if the oil or gas is stockpiled, the tax is
             139      not imposed until the oil or gas is:
             140          (i) sold;
             141          (ii) transported; or
             142          (iii) delivered.
             143          (b) Notwithstanding Subsection (4)(a), if oil or gas is stockpiled for more than two
             144      years, the oil or gas is subject to the tax imposed by this section.
             145          (5) A tax is not imposed under this section upon:
             146          (a) stripper wells, unless the exemption prevents the severance tax from being treated
             147      as a deduction for federal tax purposes;
             148          (b) the first 12 months of production for wildcat wells started after January 1, 1990; or
             149          (c) the first six months of production for development wells started after January 1,
             150      1990.
             151          (6) (a) Subject to Subsections (6)(b) and (c), a working interest owner who pays for all


             152      or part of the expenses of a recompletion or workover may claim a nonrefundable tax credit
             153      equal to 20% of the amount paid.
             154          (b) The tax credit under Subsection (6)(a) for each recompletion or workover may not
             155      exceed $30,000 per well during each calendar year.
             156          (c) If any amount of tax credit a taxpayer is allowed under this Subsection (6) exceeds
             157      the taxpayer's tax liability under this part for the calendar year for which the taxpayer claims
             158      the tax credit, the amount of tax credit exceeding the taxpayer's tax liability for the calendar
             159      year may be carried forward for the next three calendar years.
             160          (7) A 50% reduction in the tax rate is imposed upon the incremental production
             161      achieved from an enhanced recovery project.
             162          (8) The taxes imposed by this section are:
             163          (a) in addition to all other taxes provided by law; and
             164          (b) delinquent, unless otherwise deferred, on June 1 next succeeding the calendar year
             165      when the oil or gas is:
             166          (i) produced; and
             167          (ii) (A) saved;
             168          (B) sold; or
             169          (C) transported from the field.
             170          (9) With respect to the tax imposed by this section on each owner of oil or gas or in the
             171      proceeds of the production of those substances produced in the state, each owner is liable for
             172      the tax in proportion to the owner's interest in the production or in the proceeds of the
             173      production.
             174          (10) The tax imposed by this section shall be reported and paid by each producer that
             175      takes oil or gas in kind pursuant to agreement on behalf of the producer and on behalf of each
             176      owner entitled to participate in the oil or gas sold by the producer or transported by the
             177      producer from the field where the oil or gas is produced.
             178          (11) Each producer shall deduct the tax imposed by this section from the amounts due
             179      to other owners for the production or the proceeds of the production.
             180          (12) (a) The [Tax Review Commission] Revenue and Taxation Interim Committee
             181      shall review the applicability of the tax provided for in this chapter to coal-to-liquids, oil shale,
             182      and tar sands technology on or before the October 2011 interim meeting.


             183          (b) The [Tax Review Commission] Revenue and Taxation Interim Committee shall
             184      address in its review the cost and benefit of not applying the tax provided for in this chapter to
             185      coal-to-liquids, oil shale, and tar sands technology.
             186          (c) The [Tax Review Commission] Revenue and Taxation Interim Committee shall
             187      report its findings and recommendations under this Subsection (12) to the [Revenue and
             188      Taxation Interim] Legislative Management Committee on or before the November 2011
             189      interim meeting.
             190          Section 5. Section 59-7-612 is amended to read:
             191           59-7-612. Tax credits for research activities conducted in the state -- Carry
             192      forward -- Commission to report modification or repeal of certain federal provisions --
             193      Revenue and Taxation Interim Committee study.
             194          (1) (a) A taxpayer meeting the requirements of this section may claim the following
             195      nonrefundable tax credits:
             196          (i) a research tax credit of 5% of the taxpayer's qualified research expenses for the
             197      current taxable year that exceed the base amount provided for under Subsection (4);
             198          (ii) a tax credit for a payment to a qualified organization for basic research as provided
             199      in Section 41(e), Internal Revenue Code, of 5% for the current taxable year that exceed the
             200      base amount provided for under Subsection (4); and
             201          (iii) a tax credit equal to:
             202          (A) for the taxable year beginning on or after January 1, 2008, but beginning on or
             203      before December 31, 2008, 5% of the taxpayer's qualified research expenses for the current
             204      taxable year;
             205          (B) for the taxable year beginning on or after January 1, 2009, but beginning on or
             206      before December 31, 2009, 6.3% of the taxpayer's qualified research expenses for the current
             207      taxable year; or
             208          (C) for taxable years beginning on or after January 1, 2010, 9.2% of the taxpayer's
             209      qualified research expenses for the current taxable year.
             210          (b) Subject to Subsection (5), a taxpayer may claim a tax credit under:
             211          (i) Subsection (1)(a)(i) or (1)(a)(iii), for the taxable year for which the taxpayer incurs
             212      the qualified research expenses; or
             213          (ii) Subsection (1)(a)(ii), for the taxable year for which the taxpayer makes the payment


             214      to the qualified organization.
             215          (c) The tax credits provided for in this section do not include the alternative
             216      incremental credit provided for in Section 41(c)(4), Internal Revenue Code.
             217          (2) For purposes of claiming a tax credit under this section, a unitary group as defined
             218      in Section 59-7-101 is considered to be one taxpayer.
             219          (3) Except as specifically provided for in this section:
             220          (a) the tax credits authorized under Subsection (1) shall be calculated as provided in
             221      Section 41, Internal Revenue Code; and
             222          (b) the definitions provided in Section 41, Internal Revenue Code, apply in calculating
             223      the tax credits authorized under Subsection (1).
             224          (4) For purposes of this section:
             225          (a) the base amount shall be calculated as provided in Sections 41(c) and 41(h),
             226      Internal Revenue Code, except that:
             227          (i) the base amount does not include the calculation of the alternative incremental
             228      credit provided for in Section 41(c)(4), Internal Revenue Code;
             229          (ii) a taxpayer's gross receipts include only those gross receipts attributable to sources
             230      within this state as provided in Part 3, Allocation and Apportionment of Income -- Utah
             231      UDITPA Provisions; and
             232          (iii) notwithstanding Section 41(c), Internal Revenue Code, for purposes of calculating
             233      the base amount, a taxpayer:
             234          (A) may elect to be treated as a start-up company as provided in Section 41(c)(3)(B)
             235      regardless of whether the taxpayer meets the requirements of Section 41(c)(3)(B)(i)(I) or (II);
             236      and
             237          (B) may not revoke an election to be treated as a start-up company under Subsection
             238      (4)(a)(iii)(A);
             239          (b) "basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             240      that the term includes only basic research conducted in this state;
             241          (c) "qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             242      that the term includes only qualified research conducted in this state;
             243          (d) "qualified research expenses" is as defined and calculated in Section 41(b), Internal
             244      Revenue Code, except that the term includes only:


             245          (i) in-house research expenses incurred in this state; and
             246          (ii) contract research expenses incurred in this state; and
             247          (e) a tax credit provided for in this section is not terminated if a credit terminates under
             248      Section 41, Internal Revenue Code.
             249          (5) (a) If the amount of a tax credit claimed by a taxpayer under Subsection (1)(a)(i) or
             250      (ii) exceeds the taxpayer's tax liability under this chapter for a taxable year, the amount of the
             251      tax credit exceeding the tax liability:
             252          (i) may be carried forward for a period that does not exceed the next 14 taxable years;
             253      and
             254          (ii) may not be carried back to a taxable year preceding the current taxable year.
             255          (b) A taxpayer may not carry forward the tax credit allowed by Subsection (1)(a)(iii).
             256          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             257      commission may make rules for purposes of this section prescribing a certification process for
             258      qualified organizations to ensure that amounts paid to the qualified organizations are for basic
             259      research conducted in this state.
             260          (7) If a provision of Section 41, Internal Revenue Code, is modified or repealed, the
             261      commission shall report the modification or repeal to the [Utah Tax Review Commission]
             262      Revenue and Taxation Interim Committee within 60 days after the day on which the
             263      modification or repeal becomes effective.
             264          (8) (a) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             265      shall review the tax credits provided for in this section on or before October 1 of the year after
             266      the year in which the commission reports under Subsection (7) a modification or repeal of a
             267      provision of Section 41, Internal Revenue Code.
             268          (b) Notwithstanding Subsection (8)(a), the [Utah Tax Review Commission] Revenue
             269      and Taxation Interim Committee is not required to review the tax credits provided for in this
             270      section if the only modification to a provision of Section 41, Internal Revenue Code, is the
             271      extension of the termination date provided for in Section 41(h), Internal Revenue Code.
             272          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             273      shall address in a review under this section:
             274          (i) the cost of the tax credits provided for in this section;
             275          (ii) the purpose and effectiveness of the tax credits provided for in this section;


             276          (iii) whether the tax credits provided for in this section benefit the state; and
             277          (iv) whether the tax credits provided for in this section should be:
             278          (A) continued;
             279          (B) modified; or
             280          (C) repealed.
             281          (d) If the [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             282      reviews the tax credits provided for in this section, the [Utah Tax Review Commission]
             283      committee shall report its findings to the [Revenue and Taxation Interim] Legislative
             284      Management Committee on or before the November interim meeting of the year in which the
             285      [Utah Tax Review Commission] Revenue and Taxation Interim Committee reviews the tax
             286      credits.
             287          Section 6. Section 59-7-613 is amended to read:
             288           59-7-613. Tax credits for machinery, equipment, or both primarily used for
             289      conducting qualified research or basic research -- Carry forward -- Commission to report
             290      modification or repeal of certain federal provisions -- Revenue and Taxation Interim
             291      Committee study.
             292          (1) As used in this section:
             293          (a) "Basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             294      that the term includes only basic research conducted in this state.
             295          (b) "Equipment" includes:
             296          (i) a computer;
             297          (ii) computer equipment; and
             298          (iii) computer software.
             299          (c) "Purchase price":
             300          (i) includes the cost of installing an item of machinery or equipment; and
             301          (ii) does not include a tax imposed under Chapter 12, Sales and Use Tax Act, on an
             302      item of machinery or equipment.
             303          (d) "Qualified organization" is as defined in Section 41(e)(6), Internal Revenue Code.
             304          (e) "Qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             305      that the term includes only qualified research conducted in this state.
             306          (2) (a) Except as provided in Subsection (2)(c), for taxable years beginning on or after


             307      January 1, 1999, but beginning before December 31, 2010, a taxpayer meeting the requirements
             308      of this section may claim the following nonrefundable tax credits:
             309          (i) a tax credit of 6% of the purchase price of machinery, equipment, or both:
             310          (A) purchased by the taxpayer during the taxable year;
             311          (B) that is subject to a tax under Chapter 12, Sales and Use Tax Act; and
             312          (C) that is primarily used to conduct qualified research in this state; and
             313          (ii) a tax credit of 6% of the purchase price of machinery, equipment, or both:
             314          (A) purchased by the taxpayer during the taxable year;
             315          (B) that is subject to a tax under Chapter 12, Sales and Use Tax Act;
             316          (C) that is donated to a qualified organization; and
             317          (D) that is primarily used to conduct basic research in this state.
             318          (b) Subject to Subsection (5), a taxpayer may claim a tax credit under this section for
             319      the taxable year for which the taxpayer purchases the machinery, equipment, or both.
             320          (c) If a taxpayer qualifies for a tax credit under Subsection (2)(a) for a purchase of
             321      machinery, equipment, or both, the taxpayer may not claim the tax credit or carry the tax credit
             322      forward if the machinery, equipment, or both, is primarily used to conduct qualified research in
             323      the state for a time period that is less than 12 consecutive months.
             324          (3) For purposes of claiming a tax credit under this section, a unitary group as defined
             325      in Section 59-7-101 is considered to be one taxpayer.
             326          (4) Notwithstanding Section 41(h), Internal Revenue Code, a tax credit provided for in
             327      this section is not terminated if a credit terminates under Section 41, Internal Revenue Code.
             328          (5) If the amount of a tax credit claimed by a taxpayer under this section exceeds the
             329      taxpayer's tax liability under this chapter for a taxable year, the amount of the tax credit
             330      exceeding the tax liability:
             331          (a) may be carried forward for a period that does not exceed the next 14 taxable years;
             332      and
             333          (b) may not be carried back to a taxable year preceding the current taxable year.
             334          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             335      commission may make rules for purposes of this section prescribing a certification process for
             336      qualified organizations to ensure that machinery, equipment, or both provided to the qualified
             337      organization is to be primarily used to conduct basic research in this state.


             338          (7) If a provision of Section 41, Internal Revenue Code, is modified or repealed, the
             339      commission shall report the modification or repeal to the [Utah Tax Review Commission]
             340      Revenue and Taxation Interim Committee within 60 days after the day on which the
             341      modification or repeal becomes effective.
             342          (8) (a) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             343      shall review the tax credits provided for in this section on or before October 1 of the year after
             344      the year in which the commission reports under Subsection (7) a modification or repeal of a
             345      provision of Section 41, Internal Revenue Code.
             346          (b) Notwithstanding Subsection (8)(a), the [Utah Tax Review Commission] Revenue
             347      and Taxation Interim Committee is not required to review the tax credits provided for in this
             348      section if the only modification to a provision of Section 41, Internal Revenue Code, is the
             349      extension of the termination date provided for in Section 41(h), Internal Revenue Code.
             350          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             351      shall address in a review under this section the:
             352          (i) cost of the tax credits provided for in this section;
             353          (ii) purpose and effectiveness of the tax credits provided for in this section;
             354          (iii) whether the tax credits provided for in this section benefit the state; and
             355          (iv) whether the tax credits provided for in this section should be:
             356          (A) continued;
             357          (B) modified; or
             358          (C) repealed.
             359          (d) If the [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             360      reviews the tax credits provided for in this section, the [Utah Tax Review Commission]
             361      committee shall report its findings to the [Revenue and Taxation Interim] Legislative
             362      Management Committee on or before the November interim meeting of the year in which the
             363      [Utah Tax Review Commission] Revenue and Taxation Interim Committee reviews the tax
             364      credits.
             365          Section 7. Section 59-7-614 is amended to read:
             366           59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
             367      Certification -- Rulemaking authority.
             368          (1) As used in this section:


             369          (a) "Active solar system":
             370          (i) means a system of equipment capable of collecting and converting incident solar
             371      radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
             372      by a separate apparatus to storage or to the point of use; and
             373          (ii) includes water heating, space heating or cooling, and electrical or mechanical
             374      energy generation.
             375          (b) "Biomass system" means any system of apparatus and equipment for use in
             376      converting material into biomass energy, as defined in Section 59-12-102 , and transporting that
             377      energy by separate apparatus to the point of use or storage.
             378          (c) "Business entity" means any sole proprietorship, estate, trust, partnership,
             379      association, corporation, cooperative, or other entity under which business is conducted or
             380      transacted.
             381          (d) "Commercial energy system" means any active solar, passive solar, geothermal
             382      electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
             383      biomass system used to supply energy to a commercial unit or as a commercial enterprise.
             384          (e) "Commercial enterprise" means a business entity whose purpose is to produce
             385      electrical, mechanical, or thermal energy for sale from a commercial energy system.
             386          (f) (i) "Commercial unit" means any building or structure that a business entity uses to
             387      transact its business.
             388          (ii) Notwithstanding Subsection (1)(f)(i):
             389          (A) in the case of an active solar system used for agricultural water pumping or a wind
             390      system, each individual energy generating device shall be a commercial unit; and
             391          (B) if an energy system is the building or structure that a business entity uses to
             392      transact its business, a commercial unit is the complete energy system itself.
             393          (g) "Direct-use geothermal system" means a system of apparatus and equipment
             394      enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
             395      that is contained in the earth to meet energy needs, including heating a building, an industrial
             396      process, and aquaculture.
             397          (h) "Geothermal electricity" means energy contained in heat that continuously flows
             398      outward from the earth that is used as a sole source of energy to produce electricity.
             399          (i) "Geothermal heat-pump system" means a system of apparatus and equipment


             400      enabling the use of thermal properties contained in the earth at temperatures well below 100
             401      degrees Fahrenheit to help meet heating and cooling needs of a structure.
             402          (j) "Hydroenergy system" means a system of apparatus and equipment capable of
             403      intercepting and converting kinetic water energy into electrical or mechanical energy and
             404      transferring this form of energy by separate apparatus to the point of use or storage.
             405          (k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
             406      59-10-103 and an individual as defined in Section 59-10-103 .
             407          (l) "Passive solar system":
             408          (i) means a direct thermal system that utilizes the structure of a building and its
             409      operable components to provide for collection, storage, and distribution of heating or cooling
             410      during the appropriate times of the year by utilizing the climate resources available at the site;
             411      and
             412          (ii) includes those portions and components of a building that are expressly designed
             413      and required for the collection, storage, and distribution of solar energy.
             414          (m) "Residential energy system" means any active solar, passive solar, biomass,
             415      direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
             416      supply energy to or for any residential unit.
             417          (n) "Residential unit" means any house, condominium, apartment, or similar dwelling
             418      unit that serves as a dwelling for a person, group of persons, or a family but does not include
             419      property subject to a fee under:
             420          (i) Section 59-2-404 ;
             421          (ii) Section 59-2-405 ;
             422          (iii) Section 59-2-405.1 ;
             423          (iv) Section 59-2-405.2 ; or
             424          (v) Section 59-2-405.3 .
             425          (o) "Utah Geological Survey" means the Utah Geological Survey established in Section
             426      79-3-201 .
             427          (p) "Wind system" means a system of apparatus and equipment capable of intercepting
             428      and converting wind energy into mechanical or electrical energy and transferring these forms of
             429      energy by a separate apparatus to the point of use, sale, or storage.
             430          (2) (a) (i) For taxable years beginning on or after January 1, 2007, a business entity that


             431      purchases and completes or participates in the financing of a residential energy system to
             432      supply all or part of the energy required for a residential unit owned or used by the business
             433      entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
             434      Subsection (2)(a).
             435          (ii) (A) A business entity is entitled to a tax credit equal to 25% of the reasonable costs
             436      of each residential energy system installed with respect to each residential unit it owns or uses,
             437      including installation costs, against any tax due under this chapter for the taxable year in which
             438      the energy system is completed and placed in service.
             439          (B) The total amount of each credit under this Subsection (2)(a) may not exceed $2,000
             440      per residential unit.
             441          (C) The credit under this Subsection (2)(a) is allowed for any residential energy system
             442      completed and placed in service on or after January 1, 2007.
             443          (iii) If a business entity sells a residential unit to an individual taxpayer before making
             444      a claim for the tax credit under this Subsection (2)(a), the business entity may:
             445          (A) assign its right to this tax credit to the individual taxpayer; and
             446          (B) if the business entity assigns its right to the tax credit to an individual taxpayer
             447      under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
             448      individual taxpayer had completed or participated in the costs of the residential energy system
             449      under Section 59-10-1014 .
             450          (b) (i) For taxable years beginning on or after January 1, 2007, a business entity that
             451      purchases or participates in the financing of a commercial energy system situated in Utah is
             452      entitled to a refundable tax credit as provided in this Subsection (2)(b) if the commercial
             453      energy system does not use wind, geothermal electricity, or biomass equipment capable of
             454      producing a total of 660 or more kilowatts of electricity, and:
             455          (A) the commercial energy system supplies all or part of the energy required by
             456      commercial units owned or used by the business entity; or
             457          (B) the business entity sells all or part of the energy produced by the commercial
             458      energy system as a commercial enterprise.
             459          (ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs
             460      of any commercial energy system installed, including installation costs, against any tax due
             461      under this chapter for the taxable year in which the commercial energy system is completed and


             462      placed in service.
             463          (B) Notwithstanding Subsection (2)(b)(ii)(A), the total amount of the credit under this
             464      Subsection (2)(b) may not exceed $50,000 per commercial unit.
             465          (C) The credit under this Subsection (2)(b) is allowed for any commercial energy
             466      system completed and placed in service on or after January 1, 2007.
             467          (iii) A business entity that leases a commercial energy system installed on a
             468      commercial unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can
             469      confirm that the lessor irrevocably elects not to claim the credit.
             470          (iv) Only the principal recovery portion of the lease payments, which is the cost
             471      incurred by a business entity in acquiring a commercial energy system, excluding interest
             472      charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
             473          (v) A business entity that leases a commercial energy system is eligible to use the tax
             474      credit under this Subsection (2)(b) for a period no greater than seven years from the initiation
             475      of the lease.
             476          (vi) A tax credit allowed by this Subsection (2)(b) may not be carried forward or
             477      carried back.
             478          (c) (i) For taxable years beginning on or after January 1, 2007, a business entity that
             479      owns a commercial energy system situated in Utah using wind, geothermal electricity, or
             480      biomass equipment capable of producing a total of 660 or more kilowatts of electricity is
             481      entitled to a refundable tax credit as provided in this Subsection (2)(c) if:
             482          (A) the commercial energy system supplies all or part of the energy required by
             483      commercial units owned or used by the business entity; or
             484          (B) the business entity sells all or part of the energy produced by the commercial
             485      energy system as a commercial enterprise.
             486          (ii) (A) A business entity is entitled to a tax credit under this section equal to the
             487      product of:
             488          (I) 0.35 cents; and
             489          (II) the kilowatt hours of electricity produced and either used or sold during the taxable
             490      year.
             491          (B) (I) The credit calculated under Subsection (2)(c)(ii)(A) may be claimed for
             492      production occurring during a period of 48 months beginning with the month in which the


             493      commercial energy system is placed in commercial service.
             494          (II) The credit allowed by this Subsection (2)(c) for each year may not be carried
             495      forward or carried back.
             496          (C) The credit under this Subsection (2)(c) is allowed for any commercial energy
             497      system completed and placed in service on or after January 1, 2007.
             498          (iii) A business entity that leases a commercial energy system installed on a
             499      commercial unit is eligible for the tax credit under this Subsection (2)(c) if the lessee can
             500      confirm that the lessor irrevocably elects not to claim the credit.
             501          (d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year
             502      in which the energy system is completed and placed in service.
             503          (ii) Additional energy systems or parts of energy systems may be claimed for
             504      subsequent years.
             505          (iii) If the amount of a tax credit under Subsection (2)(a) exceeds a business entity's tax
             506      liability under this chapter for a taxable year, the amount of the credit exceeding the liability
             507      may be carried forward for a period which does not exceed the next four taxable years.
             508          (3) (a) Except as provided in Subsection (3)(b), the tax credits provided for under
             509      Subsection (2) are in addition to any tax credits provided under the laws or rules and
             510      regulations of the United States.
             511          (b) A purchaser of one or more solar units that claims a tax credit under Section
             512      59-7-614.3 for the purchase of the one or more solar units may not claim a tax credit under this
             513      section for that purchase.
             514          (c) (i) The Utah Geological Survey may set standards for residential and commercial
             515      energy systems claiming a credit under Subsections (2)(a) and (b) that cover the safety,
             516      reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the systems
             517      eligible for the tax credit use the state's renewable and nonrenewable energy resources in an
             518      appropriate and economic manner.
             519          (ii) The Utah Geological Survey may set standards for residential and commercial
             520      energy systems that establish the reasonable costs of an energy system, as used in Subsections
             521      (2)(a)(ii)(A) and (2)(b)(ii)(A), as an amount per unit of energy production.
             522          (iii) A tax credit may not be taken under Subsection (2) until the Utah Geological
             523      Survey has certified that the energy system has been completely installed and is a viable system


             524      for saving or production of energy from renewable resources.
             525          (d) The Utah Geological Survey and the commission may make rules in accordance
             526      with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, that are necessary to
             527      implement this section.
             528          (4) (a) On or before October 1, 2012, and every five years thereafter, the [Utah Tax
             529      Review Commission] Revenue and Taxation Interim Committee shall review each tax credit
             530      provided by this section and [make] report its recommendations to the [Revenue and Taxation
             531      Interim] Legislative Management Committee concerning whether the credit should be
             532      continued, modified, or repealed.
             533          (b) The [Utah Tax Review Commission's] Revenue and Taxation Interim Committee's
             534      report under Subsection (4)(a) shall include information concerning the cost of the credit, the
             535      purpose and effectiveness of the credit, and the state's benefit from the credit.
             536          Section 8. Section 59-7-614.2 is amended to read:
             537           59-7-614.2. Refundable economic development tax credit.
             538          (1) As used in this section:
             539          (a) "Business entity" means a taxpayer that meets the definition of "business entity" as
             540      defined in Section 63M-1-2403 or 63M-1-2803 .
             541          (b) "Community development and renewal agency" is as defined in Section 17C-1-102 .
             542          (c) "Local government entity" is as defined in Section 63M-1-2403 .
             543          (d) "Office" means the Governor's Office of Economic Development.
             544          (2) Subject to the other provisions of this section, a business entity, local government
             545      entity, or community development and renewal agency may claim a refundable tax credit for
             546      economic development.
             547          (3) The tax credit under this section is the amount listed as the tax credit amount on the
             548      tax credit certificate that the office issues to the business entity, local government entity, or
             549      community development and renewal agency for the taxable year.
             550          (4) A community development and renewal agency may claim a tax credit under this
             551      section only if a local government entity assigns the tax credit to the community development
             552      and renewal agency in accordance with Section 63M-1-2404 .
             553          (5) (a) In accordance with any rules prescribed by the commission under Subsection
             554      (5)(b), the commission shall make a refund to the following that claim a tax credit under this


             555      section:
             556          (i) a local government entity;
             557          (ii) a community development and renewal agency; or
             558          (iii) a business entity if the amount of the tax credit exceeds the business entity's tax
             559      liability for a taxable year.
             560          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             561      commission may make rules providing procedures for making a refund to a business entity,
             562      local government entity, or community development and renewal agency as required by
             563      Subsection (5)(a).
             564          (6) (a) On or before October 1, 2013, and every five years after October 1, 2013, the
             565      [Utah Tax Review Commission] Revenue and Taxation Interim Committee shall study the tax
             566      credit allowed by this section and make recommendations to the [Revenue and Taxation
             567      Interim] Legislative Management Committee and the Workforce Services and Community and
             568      Economic Development Interim Committee concerning whether the tax credit should be
             569      continued, modified, or repealed.
             570          (b) For purposes of the study required by this Subsection (6), the office shall provide
             571      the following information to the [Utah Tax Review Commission] Revenue and Taxation
             572      Interim Committee:
             573          (i) the amount of tax credit that the office grants to each business entity, local
             574      government entity, or community development and renewal agency for each calendar year;
             575          (ii) the criteria that the office uses in granting a tax credit;
             576          (iii) (A) for a business entity, the new state revenues generated by the business entity
             577      for the calendar year; or
             578          (B) for a local government entity, regardless of whether the local government entity
             579      assigns the tax credit in accordance with Section 63M-1-2404 , the new state revenues
             580      generated as a result of a new commercial project within the local government entity for each
             581      calendar year;
             582          (iv) the information contained in the office's latest report to the Legislature under
             583      Section 63M-1-2406 or 63M-1-2806 ; and
             584          (v) any other information that the [Utah Tax Review Commission] Revenue and
             585      Taxation Interim Committee requests.


             586          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             587      shall ensure that its recommendations under Subsection (6)(a) include an evaluation of:
             588          (i) the cost of the tax credit to the state;
             589          (ii) the purpose and effectiveness of the tax credit; and
             590          (iii) the extent to which the state benefits from the tax credit.
             591          Section 9. Section 59-7-614.3 is amended to read:
             592           59-7-614.3. Nonrefundable tax credit for qualifying solar projects.
             593          (1) As used in this section:
             594          (a) "Active solar system" is as defined in Section 59-7-614 .
             595          (b) "Purchaser" means a taxpayer that purchases one or more solar units from a
             596      qualifying political subdivision.
             597          (c) "Qualifying political subdivision" means:
             598          (i) a city or town in this state;
             599          (ii) an interlocal entity created under Title 11, Chapter 13, Interlocal Cooperation Act;
             600      or
             601          (iii) a special service district created under Title 17D, Chapter 1, Special Service
             602      District Act.
             603          (d) "Qualifying solar project" means the portion of an active solar system:
             604          (i) that a qualifying political subdivision:
             605          (A) constructs;
             606          (B) controls; or
             607          (C) owns;
             608          (ii) with respect to which the qualifying political subdivision described in Subsection
             609      (1)(c)(i) sells one or more solar units; and
             610          (iii) that generates electrical output that is furnished:
             611          (A) to one or more residential units; or
             612          (B) for the benefit of one or more residential units.
             613          (e) "Residential unit" is as defined in Section 59-7-614 .
             614          (f) "Solar unit" means a portion of the electrical output:
             615          (i) of a qualifying solar project;
             616          (ii) that a qualifying political subdivision sells to a purchaser; and


             617          (iii) the purchase of which requires that the purchaser agree to bear a proportionate
             618      share of the expense of the qualifying solar project:
             619          (A) in accordance with a written agreement between the purchaser and the qualifying
             620      political subdivision;
             621          (B) in exchange for a credit on the purchaser's electrical bill; and
             622          (C) as determined by a formula established by the qualifying political subdivision.
             623          (2) Subject to Subsection (3), for taxable years beginning on or after January 1, 2008, a
             624      purchaser may claim a nonrefundable tax credit equal to the product of:
             625          (a) the amount the purchaser pays to purchase one or more solar units during the
             626      taxable year; and
             627          (b) 25%.
             628          (3) For a taxable year, a tax credit under this section may not exceed $2,000 on a
             629      return.
             630          (4) A purchaser may carry forward a tax credit under this section for a period that does
             631      not exceed the next four taxable years if:
             632          (a) the purchaser is allowed to claim a tax credit under this section for a taxable year;
             633      and
             634          (b) the amount of the tax credit exceeds the purchaser's tax liability under this chapter
             635      for that taxable year.
             636          (5) Subject to Section 59-7-614 , a tax credit under this section is in addition to any
             637      other tax credit allowed by this chapter.
             638          (6) (a) On or before October 1, 2012, and every five years after October 1, 2012, the
             639      [Utah Tax Review Commission] Revenue and Taxation Interim Committee shall review the tax
             640      credit allowed by this section and [make] report its recommendations to the [Revenue and
             641      Taxation Interim] Legislative Management Committee concerning whether the tax credit
             642      should be continued, modified, or repealed.
             643          (b) The [Utah Tax Review Commission's] Revenue and Taxation Interim Committee's
             644      report under Subsection (6)(a) shall include information concerning the cost of the tax credit,
             645      the purpose and effectiveness of the tax credit, and the state's benefit from the tax credit.
             646          Section 10. Section 59-7-614.5 is amended to read:
             647           59-7-614.5. Refundable motion picture tax credit.


             648          (1) As used in this section:
             649          (a) "Motion picture company" means a taxpayer that meets the definition of a motion
             650      picture company under Section 63M-1-1802 .
             651          (b) "Office" means the Governor's Office of Economic Development.
             652          (c) "State-approved production" has the same meaning as defined in Subsection
             653      63M-1-1802 (10).
             654          (2) For taxable years beginning on or after January 1, 2009, a motion picture company
             655      may claim a refundable tax credit for a state-approved production.
             656          (3) The tax credit under this section is the amount listed as the tax credit amount on the
             657      tax credit certificate that the office issues to a motion picture company under Section
             658      63M-1-1803 for the taxable year.
             659          (4) (a) In accordance with any rules prescribed by the commission under Subsection
             660      (4)(b), the commission shall make a refund to a motion picture company that claims a tax
             661      credit under this section if the amount of the tax credit exceeds the motion picture company's
             662      tax liability for a taxable year.
             663          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             664      commission may make rules providing procedures for making a refund to a motion picture
             665      company as required by Subsection (4)(a).
             666          (5) (a) On or before October 1, 2014, and every five years after October 1, 2014, the
             667      [Utah Tax Review Commission] Revenue and Taxation Interim Committee shall study the tax
             668      credit allowed by this section and make recommendations to the [Revenue and Taxation
             669      Interim] Legislative Management Committee and the Workforce Services and Community and
             670      Economic Development Interim Committee concerning whether the tax credit should be
             671      continued, modified, or repealed.
             672          (b) For purposes of the study required by this Subsection (5), the office shall provide
             673      the following information to the [Utah Tax Review Commission] Revenue and Taxation
             674      Interim Committee:
             675          (i) the amount of tax credit that the office grants to each motion picture company for
             676      each calendar year;
             677          (ii) the criteria that the office uses in granting the tax credit;
             678          (iii) the dollars left in the state, as defined in Subsection 63M-1-1802 (2), by each


             679      motion picture company for each calendar year;
             680          (iv) the information contained in the office's latest report to the Legislature under
             681      Section 63M-1-1805 ; and
             682          (v) any other information requested by the [Utah Tax Review Commission] Revenue
             683      and Taxation Interim Committee.
             684          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             685      shall ensure that its recommendations under Subsection (5)(a) include an evaluation of:
             686          (i) the cost of the tax credit to the state;
             687          (ii) the effectiveness of the tax credit; and
             688          (iii) the extent to which the state benefits from the tax credit.
             689          Section 11. Section 59-10-1012 is amended to read:
             690           59-10-1012. Tax credits for research activities conducted in the state -- Carry
             691      forward -- Commission to report modification or repeal of certain federal provisions --
             692      Revenue and Taxation Interim Committee study.
             693          (1) (a) A claimant, estate, or trust meeting the requirements of this section may claim
             694      the following nonrefundable tax credits:
             695          (i) a research tax credit of 5% of the claimant's, estate's, or trust's qualified research
             696      expenses for the current taxable year that exceed the base amount provided for under
             697      Subsection (3);
             698          (ii) a tax credit for a payment to a qualified organization for basic research as provided
             699      in Section 41(e), Internal Revenue Code of 5% for the current taxable year that exceed the base
             700      amount provided for under Subsection (3); and
             701          (iii) a tax credit equal to:
             702          (A) for the taxable year beginning on or after January 1, 2008, but beginning on or
             703      before December 31, 2008, 5% of the claimant's, estate's, or trust's qualified research expenses
             704      for the current taxable year;
             705          (B) for the taxable year beginning on or after January 1, 2009, but beginning on or
             706      before December 31, 2009, 6.3% of the claimant's, estate's, or trust's qualified research
             707      expenses for the current taxable year; or
             708          (C) for taxable years beginning on or after January 1, 2010, 9.2% of the claimant's,
             709      estate's, or trust's qualified research expenses for the current taxable year.


             710          (b) Subject to Subsection (4), a claimant, estate, or trust may claim a tax credit under:
             711          (i) Subsection (1)(a)(i) or (1)(a)(iii), for the taxable year for which the claimant, estate,
             712      or trust incurs the qualified research expenses; or
             713          (ii) Subsection (1)(a)(ii), for the taxable year for which the claimant, estate, or trust
             714      makes the payment to the qualified organization.
             715          (c) The tax credits provided for in this section do not include the alternative
             716      incremental credit provided for in Section 41(c)(4), Internal Revenue Code.
             717          (2) Except as specifically provided for in this section:
             718          (a) the tax credits authorized under Subsection (1) shall be calculated as provided in
             719      Section 41, Internal Revenue Code; and
             720          (b) the definitions provided in Section 41, Internal Revenue Code, apply in calculating
             721      the tax credits authorized under Subsection (1).
             722          (3) For purposes of this section:
             723          (a) the base amount shall be calculated as provided in Sections 41(c) and 41(h),
             724      Internal Revenue Code, except that:
             725          (i) the base amount does not include the calculation of the alternative incremental
             726      credit provided for in Section 41(c)(4), Internal Revenue Code;
             727          (ii) a claimant's, estate's, or trust's gross receipts include only those gross receipts
             728      attributable to sources within this state as provided in Section 59-10-118 ; and
             729          (iii) notwithstanding Section 41(c), Internal Revenue Code, for purposes of calculating
             730      the base amount, a claimant, estate, or trust:
             731          (A) may elect to be treated as a start-up company as provided in Section 41(c)(3)(B)
             732      regardless of whether the claimant, estate, or trust meets the requirements of Section
             733      41(c)(3)(B)(i)(I) or (II); and
             734          (B) may not revoke an election to be treated as a start-up company under Subsection
             735      (3)(a)(iii)(A);
             736          (b) "basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             737      that the term includes only basic research conducted in this state;
             738          (c) "qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             739      that the term includes only qualified research conducted in this state;
             740          (d) "qualified research expenses" is as defined and calculated in Section 41(b), Internal


             741      Revenue Code, except that the term includes only:
             742          (i) in-house research expenses incurred in this state; and
             743          (ii) contract research expenses incurred in this state; and
             744          (e) a tax credit provided for in this section is not terminated if a credit terminates under
             745      Section 41, Internal Revenue Code.
             746          (4) (a) If the amount of a tax credit claimed by a claimant, estate, or trust under
             747      Subsection (1)(a)(i) or (ii) exceeds the claimant's, estate's, or trust's tax liability under this
             748      chapter for a taxable year, the amount of the tax credit exceeding the tax liability:
             749          (i) may be carried forward for a period that does not exceed the next 14 taxable years;
             750      and
             751          (ii) may not be carried back to a taxable year preceding the current taxable year.
             752          (b) A claimant, estate, or trust may not carry forward the tax credit allowed by
             753      Subsection (1)(a)(iii).
             754          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             755      commission may make rules for purposes of this section prescribing a certification process for
             756      qualified organizations to ensure that amounts paid to the qualified organizations are for basic
             757      research conducted in this state.
             758          (6) If a provision of Section 41, Internal Revenue Code, is modified or repealed, the
             759      commission shall report the modification or repeal to the [Utah Tax Review Commission]
             760      Revenue and Taxation Interim Committee within 60 days after the day on which the
             761      modification or repeal becomes effective.
             762          (7) (a) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             763      shall review the tax credits provided for in this section on or before October 1 of the year after
             764      the year in which the commission reports under Subsection (6) a modification or repeal of a
             765      provision of Section 41, Internal Revenue Code.
             766          (b) Notwithstanding Subsection (7)(a), the [Utah Tax Review Commission] Revenue
             767      and Taxation Interim Committee is not required to review the tax credits provided for in this
             768      section if the only modification to a provision of Section 41, Internal Revenue Code, is the
             769      extension of the termination date provided for in Section 41(h), Internal Revenue Code.
             770          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             771      shall address in a review under this section:


             772          (i) the cost of the tax credits provided for in this section;
             773          (ii) the purpose and effectiveness of the tax credits provided for in this section;
             774          (iii) whether the tax credits provided for in this section benefit the state; and
             775          (iv) whether the tax credits provided for in this section should be:
             776          (A) continued;
             777          (B) modified; or
             778          (C) repealed.
             779          (d) If the [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             780      reviews the tax credits provided for in this section, the [Utah Tax Review Commission]
             781      committee shall report its findings to the [Revenue and Taxation Interim] Legislative
             782      Management Committee on or before the November interim meeting of the year in which the
             783      [Utah Tax Review Commission] Revenue and Taxation Interim Committee reviews the tax
             784      credits.
             785          Section 12. Section 59-10-1013 is amended to read:
             786           59-10-1013. Tax credits for machinery, equipment, or both primarily used for
             787      conducting qualified research or basic research -- Carry forward -- Commission to report
             788      modification or repeal of certain federal provisions -- Revenue and Taxation Interim
             789      Committee study.
             790          (1) As used in this section:
             791          (a) "Basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             792      that the term includes only basic research conducted in this state.
             793          (b) "Equipment" includes:
             794          (i) a computer;
             795          (ii) computer equipment; and
             796          (iii) computer software.
             797          (c) "Purchase price":
             798          (i) includes the cost of installing an item of machinery or equipment; and
             799          (ii) does not include a tax imposed under Chapter 12, Sales and Use Tax Act, on an
             800      item of machinery or equipment.
             801          (d) "Qualified organization" is as defined in Section 41(e)(6), Internal Revenue Code.
             802          (e) "Qualified research" is as defined in Section 41(d), Internal Revenue Code, except


             803      that the term includes only qualified research conducted in this state.
             804          (2) (a) Except as provided in Subsection (2)(c), for taxable years beginning on or after
             805      January 1, 1999, but beginning before December 31, 2010, a claimant, estate, or trust meeting
             806      the requirements of this section may claim the following nonrefundable tax credits:
             807          (i) a tax credit of 6% of the purchase price of machinery, equipment, or both:
             808          (A) purchased by the claimant, estate, or trust during the taxable year;
             809          (B) that is subject to a tax under Chapter 12, Sales and Use Tax Act; and
             810          (C) that is primarily used to conduct qualified research in this state; and
             811          (ii) a tax credit of 6% of the purchase price paid by the claimant, estate, or trust for
             812      machinery, equipment, or both:
             813          (A) purchased by the claimant, estate, or trust during the taxable year;
             814          (B) that is subject to a tax under Chapter 12, Sales and Use Tax Act;
             815          (C) that is donated to a qualified organization; and
             816          (D) that is primarily used to conduct basic research in this state.
             817          (b) Subject to Subsection (4), a claimant, estate, or trust may claim a tax credit under
             818      this section for the taxable year for which the claimant, estate, or trust purchases the machinery,
             819      equipment, or both.
             820          (c) If a claimant, estate, or trust qualifies for a tax credit under Subsection (2)(a) for a
             821      purchase of machinery, equipment, or both, the claimant, estate, or trust may not claim the tax
             822      credit or carry the tax credit forward if the machinery, equipment, or both, is primarily used to
             823      conduct qualified research in the state for a time period that is less than 12 consecutive months.
             824          (3) Notwithstanding Section 41(h), Internal Revenue Code, a tax credit provided for in
             825      this section is not terminated if a credit terminates under Section 41, Internal Revenue Code.
             826          (4) If the amount of a tax credit claimed by a claimant, estate, or trust under this section
             827      exceeds a claimant's, estate's, or trust's tax liability under this chapter for a taxable year, the
             828      amount of the tax credit exceeding the tax liability:
             829          (a) may be carried forward for a period that does not exceed the next 14 taxable years;
             830      and
             831          (b) may not be carried back to a taxable year preceding the current taxable year.
             832          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             833      commission may make rules for purposes of this section prescribing a certification process for


             834      qualified organizations to ensure that machinery, equipment, or both provided to the qualified
             835      organization is to be primarily used to conduct basic research in this state.
             836          (6) If a provision of Section 41, Internal Revenue Code, is modified or repealed, the
             837      commission shall report the modification or repeal to the [Utah Tax Review Commission]
             838      Revenue and Taxation Interim Committee within 60 days after the day on which the
             839      modification or repeal becomes effective.
             840          (7) (a) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             841      shall review the tax credits provided for in this section on or before October 1 of the year after
             842      the year in which the commission reports under Subsection (6) a modification or repeal of a
             843      provision of Section 41, Internal Revenue Code.
             844          (b) Notwithstanding Subsection (7)(a), the [Utah Tax Review Commission] Revenue
             845      and Taxation Interim Committee is not required to review the tax credits provided for in this
             846      section if the only modification to a provision of Section 41, Internal Revenue Code, is the
             847      extension of the termination date provided for in Section 41(h), Internal Revenue Code.
             848          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             849      shall address in a review under this section the:
             850          (i) cost of the tax credits provided for in this section;
             851          (ii) purpose and effectiveness of the tax credits provided for in this section;
             852          (iii) whether the tax credits provided for in this section benefit the state; and
             853          (iv) whether the tax credits provided for in this section should be:
             854          (A) continued;
             855          (B) modified; or
             856          (C) repealed.
             857          (d) If the [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             858      reviews the tax credits provided for in this section, the [Utah Tax Review Commission]
             859      committee shall report its findings to the [Revenue and Taxation Interim] Legislative
             860      Management Committee on or before the November interim meeting of the year in which the
             861      [Utah Tax Review Commission] Revenue and Taxation Interim Committee reviews the tax
             862      credits.
             863          Section 13. Section 59-10-1014 is amended to read:
             864           59-10-1014. Renewable energy systems tax credit -- Definitions -- Limitations --


             865      Certification -- Rulemaking authority.
             866          (1) As used in this part:
             867          (a) "Active solar system":
             868          (i) means a system of equipment capable of collecting and converting incident solar
             869      radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
             870      by a separate apparatus to storage or to the point of use; and
             871          (ii) includes water heating, space heating or cooling, and electrical or mechanical
             872      energy generation.
             873          (b) "Biomass system" means any system of apparatus and equipment for use in
             874      converting material into biomass energy, as defined in Section 59-12-102 , and transporting that
             875      energy by separate apparatus to the point of use or storage.
             876          (c) "Business entity" means any entity under which business is conducted or transacted.
             877          (d) "Direct-use geothermal system" means a system of apparatus and equipment
             878      enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
             879      that is contained in the earth to meet energy needs, including heating a building, an industrial
             880      process, and aquaculture.
             881          (e) "Geothermal electricity" means energy contained in heat that continuously flows
             882      outward from the earth that is used as a sole source of energy to produce electricity.
             883          (f) "Geothermal heat-pump system" means a system of apparatus and equipment
             884      enabling the use of thermal properties contained in the earth at temperatures well below 100
             885      degrees Fahrenheit to help meet heating and cooling needs of a structure.
             886          (g) "Hydroenergy system" means a system of apparatus and equipment capable of
             887      intercepting and converting kinetic water energy into electrical or mechanical energy and
             888      transferring this form of energy by separate apparatus to the point of use or storage.
             889          (h) "Passive solar system":
             890          (i) means a direct thermal system that utilizes the structure of a building and its
             891      operable components to provide for collection, storage, and distribution of heating or cooling
             892      during the appropriate times of the year by utilizing the climate resources available at the site;
             893      and
             894          (ii) includes those portions and components of a building that are expressly designed
             895      and required for the collection, storage, and distribution of solar energy.


             896          (i) "Residential energy system" means any active solar, passive solar, biomass,
             897      direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
             898      supply energy to or for any residential unit.
             899          (j) "Residential unit" means any house, condominium, apartment, or similar dwelling
             900      unit that serves as a dwelling for a person, group of persons, or a family but does not include
             901      property subject to a fee under:
             902          (i) Section 59-2-404 ;
             903          (ii) Section 59-2-405 ;
             904          (iii) Section 59-2-405.1 ;
             905          (iv) Section 59-2-405.2 ; or
             906          (v) Section 59-2-405.3 .
             907          (k) "Utah Geological Survey" means the Utah Geological Survey established in Section
             908      79-3-201 .
             909          (l) "Wind system" means a system of apparatus and equipment capable of intercepting
             910      and converting wind energy into mechanical or electrical energy and transferring these forms of
             911      energy by a separate apparatus to the point of use or storage.
             912          (2) For taxable years beginning on or after January 1, 2007, a claimant, estate, or trust
             913      may claim a nonrefundable tax credit as provided in this section if:
             914          (a) a claimant, estate, or trust that is not a business entity purchases and completes or
             915      participates in the financing of a residential energy system to supply all or part of the energy for
             916      the claimant's, estate's, or trust's residential unit in the state; or
             917          (b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to
             918      another claimant, estate, or trust that is not a business entity before making a claim for a tax
             919      credit under Subsection (6) or Section 59-7-614 ; and
             920          (ii) the claimant, estate, or trust that is a business entity assigns its right to the tax credit
             921      to the claimant, estate, or trust that is not a business entity as provided in Subsection (6)(c) or
             922      Subsection 59-7-614 (2)(a)(iii).
             923          (3) (a) The tax credit described in Subsection (2) is equal to 25% of the reasonable
             924      costs of each residential energy system, including installation costs, against any income tax
             925      liability of the claimant, estate, or trust under this chapter for the taxable year in which the
             926      residential energy system is completed and placed in service.


             927          (b) The total amount of each tax credit under this section may not exceed $2,000 per
             928      residential unit.
             929          (c) The tax credit under this section is allowed for any residential energy system
             930      completed and placed in service on or after January 1, 2007.
             931          (4) (a) The tax credit provided for in this section shall be claimed in the return for the
             932      taxable year in which the residential energy system is completed and placed in service.
             933          (b) Additional residential energy systems or parts of residential energy systems may be
             934      similarly claimed in returns for subsequent taxable years as long as the total amount claimed
             935      does not exceed $2,000 per residential unit.
             936          (c) If the amount of the tax credit under this section exceeds the income tax liability of
             937      the claimant, estate, or trust claiming the tax credit under this section for that taxable year, then
             938      the amount not used may be carried over for a period that does not exceed the next four taxable
             939      years.
             940          (5) (a) A claimant, estate, or trust that is not a business entity that leases a residential
             941      energy system installed on a residential unit is eligible for the residential energy tax credit if
             942      that claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax
             943      credit.
             944          (b) Only the principal recovery portion of the lease payments, which is the cost
             945      incurred by the claimant, estate, or trust in acquiring the residential energy system excluding
             946      interest charges and maintenance expenses, is eligible for the tax credits.
             947          (c) A claimant, estate, or trust described in this Subsection (5) may use the tax credits
             948      for a period that does not exceed seven years from the initiation of the lease.
             949          (6) (a) A claimant, estate, or trust that is a business entity that purchases and completes
             950      or participates in the financing of a residential energy system to supply all or part of the energy
             951      required for a residential unit owned or used by the claimant, estate, or trust that is a business
             952      entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
             953      Subsection (6).
             954          (b) (i) For taxable years beginning on or after January 1, 2007, a claimant, estate, or
             955      trust that is a business entity is entitled to a nonrefundable tax credit equal to 25% of the
             956      reasonable costs of a residential energy system installed with respect to each residential unit it
             957      owns or uses, including installation costs, against any tax due under this chapter for the taxable


             958      year in which the energy system is completed and placed in service.
             959          (ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000
             960      per residential unit.
             961          (iii) The tax credit under this Subsection (6) is allowed for any residential energy
             962      system completed and placed in service on or after January 1, 2007.
             963          (c) If a claimant, estate, or trust that is a business entity sells a residential unit to a
             964      claimant, estate, or trust that is not a business entity before making a claim for the tax credit
             965      under this Subsection (6), the claimant, estate, or trust that is a business entity may:
             966          (i) assign its right to this tax credit to the claimant, estate, or trust that is not a business
             967      entity; and
             968          (ii) if the claimant, estate, or trust that is a business entity assigns its right to the tax
             969      credit to a claimant, estate, or trust that is not a business entity under Subsection (6)(c)(i), the
             970      claimant, estate, or trust that is not a business entity may claim the tax credit as if that claimant,
             971      estate, or trust that is not a business entity had completed or participated in the costs of the
             972      residential energy system under this section.
             973          (7) (a) A tax credit under this section may be claimed for the taxable year in which the
             974      residential energy system is completed and placed in service.
             975          (b) Additional residential energy systems or parts of residential energy systems may be
             976      claimed for subsequent years.
             977          (c) If the amount of a tax credit under this section exceeds the tax liability of the
             978      claimant, estate, or trust claiming the tax credit under this section for a taxable year, the amount
             979      of the tax credit exceeding the tax liability may be carried over for a period which does not
             980      exceed the next four taxable years.
             981          (8) (a) Except as provided in Subsection (8)(b), tax credits provided for under this
             982      section are in addition to any tax credits provided under the laws or rules and regulations of the
             983      United States.
             984          (b) A purchaser of one or more solar units that claims a tax credit under Section
             985      59-10-1024 for the purchase of the one or more solar units may not claim a tax credit under this
             986      section for that purchase.
             987          (9) (a) The Utah Geological Survey may set standards for residential energy systems
             988      that cover the safety, reliability, efficiency, leasing, and technical feasibility of the systems to


             989      ensure that the systems eligible for the tax credit use the state's renewable and nonrenewable
             990      energy resources in an appropriate and economic manner.
             991          (b) The Utah Geological Survey may set standards for residential and commercial
             992      energy systems that establish the reasonable costs of an energy system, as used in Subsections
             993      (3)(a) and (6)(b)(i), as an amount per unit of energy production.
             994          (c) A tax credit may not be taken under this section until the Utah Geological Survey
             995      has certified that the energy system has been completely installed and is a viable system for
             996      saving or production of energy from renewable resources.
             997          (10) The Utah Geological Survey and the commission may make rules in accordance
             998      with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, that are necessary to
             999      implement this section.
             1000          (11) (a) On or before October 1, 2012, and every five years thereafter, the [Utah Tax
             1001      Review Commission] Revenue and Taxation Interim Committee shall review each tax credit
             1002      provided by this section and [make] report its recommendations to the [Revenue and Taxation
             1003      Interim] Legislative Management Committee concerning whether the credit should be
             1004      continued, modified, or repealed.
             1005          (b) The [Utah Tax Review Commission's] Revenue and Taxation Interim Committee's
             1006      report under Subsection (11)(a) shall include information concerning the cost of the credit, the
             1007      purpose and effectiveness of the credit, and the state's benefit from the credit.
             1008          Section 14. Section 59-10-1024 is amended to read:
             1009           59-10-1024. Nonrefundable tax credit for qualifying solar projects.
             1010          (1) As used in this section:
             1011          (a) "Active solar system" is as defined in Section 59-10-1014 .
             1012          (b) "Purchaser" means a claimant, estate, or trust that purchases one or more solar units
             1013      from a qualifying political subdivision.
             1014          (c) "Qualifying political subdivision" means:
             1015          (i) a city or town in this state;
             1016          (ii) an interlocal entity created under Title 11, Chapter 13, Interlocal Cooperation Act;
             1017      or
             1018          (iii) a special service district created under Title 17D, Chapter 1, Special Service
             1019      District Act.


             1020          (d) "Qualifying solar project" means the portion of an active solar system:
             1021          (i) that a qualifying political subdivision:
             1022          (A) constructs;
             1023          (B) controls; or
             1024          (C) owns;
             1025          (ii) with respect to which the qualifying political subdivision described in Subsection
             1026      (1)(c)(i) sells one or more solar units; and
             1027          (iii) that generates electrical output that is furnished:
             1028          (A) to one or more residential units; or
             1029          (B) for the benefit of one or more residential units.
             1030          (e) "Residential unit" is as defined in Section 59-10-1014 .
             1031          (f) "Solar unit" means a portion of the electrical output:
             1032          (i) of a qualifying solar project;
             1033          (ii) that a qualifying political subdivision sells to a purchaser; and
             1034          (iii) the purchase of which requires that the purchaser agree to bear a proportionate
             1035      share of the expense of the qualifying solar project:
             1036          (A) in accordance with a written agreement between the purchaser and the qualifying
             1037      political subdivision;
             1038          (B) in exchange for a credit on the purchaser's electrical bill; and
             1039          (C) as determined by a formula established by the qualifying political subdivision.
             1040          (2) Subject to Subsection (3), for taxable years beginning on or after January 1, 2009, a
             1041      purchaser may claim a nonrefundable tax credit equal to the product of:
             1042          (a) the amount the purchaser pays to purchase one or more solar units during the
             1043      taxable year; and
             1044          (b) 25%.
             1045          (3) For a taxable year, a tax credit under this section may not exceed $2,000 on a
             1046      return.
             1047          (4) A purchaser may carry forward a tax credit under this section for a period that does
             1048      not exceed the next four taxable years if:
             1049          (a) the purchaser is allowed to claim a tax credit under this section for a taxable year;
             1050      and


             1051          (b) the amount of the tax credit exceeds the purchaser's tax liability under this chapter
             1052      for that taxable year.
             1053          (5) Subject to Section 59-10-1014 , a tax credit under this section is in addition to any
             1054      other tax credit allowed by this chapter.
             1055          (6) (a) On or before October 1, 2012, and every five years after October 1, 2012, the
             1056      [Utah Tax Review Commission] Revenue and Taxation Interim Committee shall review the tax
             1057      credit allowed by this section and [make] report its recommendations to the [Revenue and
             1058      Taxation Interim] Legislative Management Committee concerning whether the tax credit
             1059      should be continued, modified, or repealed.
             1060          (b) The [Utah Tax Review Commission's] Revenue and Taxation Interim Committee's
             1061      report under Subsection (6)(a) shall include information concerning the cost of the tax credit,
             1062      the purpose and effectiveness of the tax credit, and the state's benefit from the tax credit.
             1063          Section 15. Section 59-10-1106 is amended to read:
             1064           59-10-1106. Refundable renewable energy tax credit.
             1065          (1) As used in this section:
             1066          (a) "Active solar system" is as defined in Section 59-10-1014 .
             1067          (b) "Biomass system" is as defined in Section 59-10-1014 .
             1068          (c) "Business entity" is as defined in Section 59-10-1014 .
             1069          (d) "Commercial energy system" means any active solar, passive solar, geothermal
             1070      electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
             1071      biomass system used to supply energy to a commercial unit or as a commercial enterprise.
             1072          (e) "Commercial enterprise" means a business entity that:
             1073          (i) is a claimant, estate, or trust; and
             1074          (ii) has the purpose of producing electrical, mechanical, or thermal energy for sale from
             1075      a commercial energy system.
             1076          (f) (i) "Commercial unit" means any building or structure that a business entity that is a
             1077      claimant, estate, or trust uses to transact its business.
             1078          (ii) Notwithstanding Subsection (1)(f)(i):
             1079          (A) in the case of an active solar system used for agricultural water pumping or a wind
             1080      system, each individual energy generating device shall be a commercial unit; and
             1081          (B) if an energy system is the building or structure that a business entity that is a


             1082      claimant, estate, or trust uses to transact its business, a commercial unit is the complete energy
             1083      system itself.
             1084          (g) "Direct-use geothermal system" is as defined in Section 59-10-1014 .
             1085          (h) "Geothermal electricity" is as defined in Section 59-10-1014 .
             1086          (i) "Geothermal heat-pump system" is as defined in Section 59-10-1014 .
             1087          (j) "Hydroenergy system" is as defined in Section 59-10-1014 .
             1088          (k) "Passive solar system" is as defined in Section 59-10-1014 .
             1089          (l) "Utah Geological Survey" means the Utah Geological Survey established in Section
             1090      79-3-201 .
             1091          (m) "Wind system" is as defined in Section 59-10-1014 .
             1092          (2) (a) (i) A business entity that is a claimant, estate, or trust that purchases or
             1093      participates in the financing of a commercial energy system situated in Utah is entitled to a
             1094      refundable tax credit as provided in this Subsection (2)(a) if the commercial energy system
             1095      does not use wind, geothermal electricity, or biomass equipment capable of producing a total of
             1096      660 or more kilowatts of electricity and:
             1097          (A) the commercial energy system supplies all or part of the energy required by
             1098      commercial units owned or used by the business entity that is a claimant, estate, or trust; or
             1099          (B) the business entity that is a claimant, estate, or trust sells all or part of the energy
             1100      produced by the commercial energy system as a commercial enterprise.
             1101          (ii) (A) A business entity that is a claimant, estate, or trust is entitled to a tax credit of
             1102      up to 10% of the reasonable costs of any commercial energy system installed, including
             1103      installation costs, against any tax due under this chapter for the taxable year in which the
             1104      commercial energy system is completed and placed in service.
             1105          (B) Notwithstanding Subsection (2)(a)(ii)(A), the total amount of the credit under this
             1106      Subsection (2)(a) may not exceed $50,000 per commercial unit.
             1107          (C) The credit under this Subsection (2)(a) is allowed for any commercial energy
             1108      system completed and placed in service on or after January 1, 2007.
             1109          (iii) A business entity that is a claimant, estate, or trust that leases a commercial energy
             1110      system installed on a commercial unit is eligible for the tax credit under this Subsection (2)(a)
             1111      if the lessee can confirm that the lessor irrevocably elects not to claim the credit.
             1112          (iv) Only the principal recovery portion of the lease payments, which is the cost


             1113      incurred by a business entity that is a claimant, estate, or trust in acquiring a commercial energy
             1114      system, excluding interest charges and maintenance expenses, is eligible for the tax credit
             1115      under this Subsection (2)(a).
             1116          (v) A business entity that is a claimant, estate, or trust that leases a commercial energy
             1117      system is eligible to use the tax credit under this Subsection (2)(a) for a period no greater than
             1118      seven years from the initiation of the lease.
             1119          (b) (i) A business entity that is a claimant, estate, or trust that owns a commercial
             1120      energy system situated in Utah using wind, geothermal electricity, or biomass equipment
             1121      capable of producing a total of 660 or more kilowatts of electricity is entitled to a refundable
             1122      tax credit as provided in this section if:
             1123          (A) the commercial energy system supplies all or part of the energy required by
             1124      commercial units owned or used by the business entity that is a claimant, estate, or trust; or
             1125          (B) the business entity that is a claimant, estate, or trust sells all or part of the energy
             1126      produced by the commercial energy system as a commercial enterprise.
             1127          (ii) A business entity that is a claimant, estate, or trust is entitled to a tax credit under
             1128      this Subsection (2)(b) equal to the product of:
             1129          (A) 0.35 cents; and
             1130          (B) the kilowatt hours of electricity produced and either used or sold during the taxable
             1131      year.
             1132          (iii) The credit allowed by this Subsection (2)(b):
             1133          (A) may be claimed for production occurring during a period of 48 months beginning
             1134      with the month in which the commercial energy system is placed in service; and
             1135          (B) may not be carried forward or back.
             1136          (iv) A business entity that is a claimant, estate, or trust that leases a commercial energy
             1137      system installed on a commercial unit is eligible for the tax credit under this section if the
             1138      lessee can confirm that the lessor irrevocably elects not to claim the credit.
             1139          (3) The tax credits provided for under this section are in addition to any tax credits
             1140      provided under the laws or rules and regulations of the United States.
             1141          (4) (a) The Utah Geological Survey may set standards for commercial energy systems
             1142      claiming a tax credit under Subsection (2)(a) that cover the safety, reliability, efficiency,
             1143      leasing, and technical feasibility of the systems to ensure that the systems eligible for the tax


             1144      credit use the state's renewable and nonrenewable energy resources in an appropriate and
             1145      economic manner.
             1146          (b) A tax credit may not be taken under this section until the Utah Geological Survey
             1147      has certified that the commercial energy system has been completely installed and is a viable
             1148      system for saving or production of energy from renewable resources.
             1149          (5) The Utah Geological Survey and the commission may make rules in accordance
             1150      with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, that are necessary to
             1151      implement this section.
             1152          (6) (a) On or before October 1, 2012, and every five years thereafter, the [Utah Tax
             1153      Review Commission] Revenue and Taxation Interim Committee shall review each tax credit
             1154      provided by this section and [make] report its recommendations to the [Revenue and Taxation
             1155      Interim] Legislative Management Committee concerning whether the credit should be
             1156      continued, modified, or repealed.
             1157          (b) The [Utah Tax Review Commission's] Revenue and Taxation Interim Committee's
             1158      report under Subsection (6)(a) shall include information concerning the cost of the credit, the
             1159      purpose and effectiveness of the credit, and the state's benefit from the credit.
             1160          Section 16. Section 59-10-1107 is amended to read:
             1161           59-10-1107. Refundable economic development tax credit.
             1162          (1) As used in this section:
             1163          (a) "Business entity" means a claimant, estate, or trust that meets the definition of
             1164      "business entity" as defined in Section 63M-1-2403 or 63M-1-2803 .
             1165          (b) "Office" means the Governor's Office of Economic Development.
             1166          (2) Subject to the other provisions of this section, a business entity may claim a
             1167      refundable tax credit for economic development.
             1168          (3) The tax credit under this section is the amount listed as the tax credit amount on the
             1169      tax credit certificate that the office issues to the business entity for the taxable year.
             1170          (4) (a) In accordance with any rules prescribed by the commission under Subsection
             1171      (4)(b), the commission shall make a refund to a business entity that claims a tax credit under
             1172      this section if the amount of the tax credit exceeds the business entity's tax liability for a
             1173      taxable year.
             1174          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the


             1175      commission may make rules providing procedures for making a refund to a business entity as
             1176      required by Subsection (4)(a).
             1177          (5) (a) On or before October 1, 2013, and every five years after October 1, 2013, the
             1178      [Utah Tax Review Commission] Revenue and Taxation Interim Committee shall study the tax
             1179      credit allowed by this section and make recommendations to the [Revenue and Taxation
             1180      Interim] Legislative Management Committee and the Workforce Services and Community and
             1181      Economic Development Interim Committee concerning whether the tax credit should be
             1182      continued, modified, or repealed.
             1183          (b) For purposes of the study required by this Subsection (5), the office shall provide
             1184      the following information to the [Utah Tax Review Commission] Revenue and Taxation
             1185      Interim Committee:
             1186          (i) the amount of tax credit the office grants to each taxpayer for each calendar year;
             1187          (ii) the criteria the office uses in granting a tax credit;
             1188          (iii) the new state revenues generated by each taxpayer for each calendar year;
             1189          (iv) the information contained in the office's latest report to the Legislature under
             1190      Section 63M-1-2406 or 63M-1-2806 ; and
             1191          (v) any other information that the [Utah Tax Review Commission] Revenue and
             1192      Taxation Interim Committee requests.
             1193          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             1194      shall ensure that its recommendations under Subsection (5)(a) include an evaluation of:
             1195          (i) the cost of the tax credit to the state;
             1196          (ii) the purpose and effectiveness of the tax credit; and
             1197          (iii) the extent to which the state benefits from the tax credit.
             1198          Section 17. Section 59-10-1108 is amended to read:
             1199           59-10-1108. Refundable motion picture tax credit.
             1200          (1) As used in this section:
             1201          (a) "Motion picture company" means a claimant, estate, or trust that meets the
             1202      definition of a motion picture company under Section 63M-1-1802 .
             1203          (b) "Office" means the Governor's Office of Economic Development.
             1204          (c) "State-approved production" has the same meaning as defined in Subsection
             1205      63M-1-1802 (10).


             1206          (2) For taxable years beginning on or after January 1, 2009, a motion picture company
             1207      may claim a refundable tax credit for a state-approved production.
             1208          (3) The tax credit under this section is the amount listed as the tax credit amount on the
             1209      tax credit certificate that the office issues to a motion picture company under Section
             1210      63M-1-1803 for the taxable year.
             1211          (4) (a) In accordance with any rules prescribed by the commission under Subsection
             1212      (4)(b), the commission shall make a refund to a motion picture company that claims a tax
             1213      credit under this section if the amount of the tax credit exceeds the motion picture company's
             1214      tax liability for the taxable year.
             1215          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             1216      commission may make rules providing procedures for making a refund to a motion picture
             1217      company as required by Subsection (4)(a).
             1218          (5) (a) On or before October 1, 2014, and every five years after October 1, 2014, the
             1219      [Utah Tax Review Commission] Revenue and Taxation Interim Committee shall study the tax
             1220      credit allowed by this section and make recommendations to the [Revenue and Taxation
             1221      Interim] Legislative Management Committee and the Workforce Services and Community and
             1222      Economic Development Interim Committee concerning whether the tax credit should be
             1223      continued, modified, or repealed.
             1224          (b) For purposes of the study required by this Subsection (5), the office shall provide
             1225      the following information to the [Utah Tax Review Commission] Revenue and Taxation
             1226      Interim Committee:
             1227          (i) the amount of tax credit the office grants to each taxpayer for each calendar year;
             1228          (ii) the criteria the office uses in granting a tax credit;
             1229          (iii) the dollars left in the state, as defined in Subsection 63M-1-1802 (2), by each
             1230      motion picture company for each calendar year;
             1231          (iv) the information contained in the office's latest report to the Legislature under
             1232      Section 63M-1-1805 ; and
             1233          (v) any other information requested by the [Utah Tax Review Commission] Revenue
             1234      and Taxation Interim Committee.
             1235          (c) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             1236      shall ensure that its recommendations under Subsection (5)(a) include an evaluation of:


             1237          (i) the cost of the tax credit to the state;
             1238          (ii) the effectiveness of the tax credit; and
             1239          (iii) the extent to which the state benefits from the tax credit.
             1240          Section 18. Section 59-12-103.1 is amended to read:
             1241           59-12-103.1. Action by Supreme Court of the United States authorizing or action
             1242      by Congress permitting a state to require certain sellers to collect a sales or use tax --
             1243      Collection of tax by commission -- Commission report to Revenue and Taxation Interim
             1244      Committee -- Revenue and Taxation Interim Committee study.
             1245          (1) Except as provided in Section 59-12-107.1 , a seller shall remit a tax to the
             1246      commission as provided in Section 59-12-107 if:
             1247          (a) the Supreme Court of the United States issues a decision authorizing a state to
             1248      require a seller that does not meet one or more of the criteria described in Subsection
             1249      59-12-107 (1)(a) to collect a sales or use tax; or
             1250          (b) Congress permits the state to require a seller that does not meet one or more of the
             1251      criteria described in Subsection 59-12-107 (1)(a) to collect a sales or use tax.
             1252          (2) The commission shall:
             1253          (a) collect the tax described in Subsection (1) from the seller:
             1254          (i) to the extent:
             1255          (A) authorized by the Supreme Court of the United States; or
             1256          (B) permitted by Congress; and
             1257          (ii) beginning on the first day of a calendar quarter as prescribed by the [Utah Tax
             1258      Review Commission] Revenue and Taxation Interim Committee; and
             1259          (b) make a report to the [Utah Tax Review Commission] Revenue and Taxation
             1260      Interim Committee:
             1261          (i) regarding the actions taken by:
             1262          (A) the Supreme Court of the United States; or
             1263          (B) Congress; and
             1264          (ii) at the [Utah Tax Review Commission] Revenue and Taxation Interim Committee
             1265      meeting immediately following the day on which the Supreme Court of the United States' or
             1266      Congress' actions become effective.
             1267          (3) The [Utah Tax Review Commission] Revenue and Taxation Interim Committee


             1268      shall after hearing the commission's report under Subsection (2)(b):
             1269          (a) review the actions taken by:
             1270          (i) the Supreme Court of the United States; or
             1271          (ii) Congress;
             1272          (b) direct the commission regarding the day on which the commission is required to
             1273      collect the tax described in Subsection (1); and
             1274          (c) make recommendations to the [Revenue and Taxation Interim] Legislative
             1275      Management Committee:
             1276          (i) regarding whether as a result of the Supreme Court of the United States' or
             1277      Congress' actions any provisions of this chapter should be amended or repealed; and
             1278          (ii) within a one-year period after the day on which the commission makes a report
             1279      under Subsection (2)(b).
             1280          Section 19. Section 59-12-104.5 is amended to read:
             1281           59-12-104.5. Revenue and Taxation Interim Committee review of sales and use
             1282      taxes.
             1283          [(1) The Utah Tax Review Commission, in cooperation with the governor's office and
             1284      the commission, shall review the sales and use tax system of the state as provided in this
             1285      section.]
             1286          [(2) (a) Beginning with the 2009 interim, and one or more times every 10 years after
             1287      the 2009 interim, the Utah Tax Review Commission shall make findings and recommendations
             1288      as to whether:]
             1289          [(i) the sales and use tax is broadly based;]
             1290          [(ii) the sales and use tax base reflects the overall economy;]
             1291          [(iii) the sales and use tax mitigates regressive impacts;]
             1292          [(iv) the sales and use tax is administratively simple; and]
             1293          [(v) the sales and use tax promotes compliance.]
             1294          [(b) On or before the November interim meeting of the year in which the Utah Tax
             1295      Review Commission makes the findings and recommendations required by Subsection (2)(a),
             1296      the Utah Tax Review Commission shall report its findings and recommendations made in
             1297      accordance with Subsection (2)(a) to:]
             1298          [(i) the governor; and]


             1299          [(ii) the Revenue and Taxation Interim Committee.]
             1300          [(3) Notwithstanding Subsection (2):]
             1301          [(a) the Utah Tax Review Commission] The Revenue and Taxation Interim Committee
             1302      shall:
             1303          (1) review Subsection 59-12-104 (28) before October 1 of the year after the year in
             1304      which Congress permits a state to participate in the special supplemental nutrition program
             1305      under 42 U.S.C. Sec. 1786 even if state or local sales taxes are collected within the state on
             1306      purchases of food under that program;
             1307          [(b) the Utah Tax Review Commission shall] (2) review Subsection 59-12-104 (21)
             1308      before October 1 of the year after the year in which Congress permits a state to participate in
             1309      the food stamp program under the Food Stamp Act, 7 U.S.C. Sec. 2011 et seq., even if state or
             1310      local sales taxes are collected within the state on purchases of food under that program; and
             1311          [(c) the Utah Tax Review Commission shall] (3) review Subsection 59-12-104 (62)
             1312      before the October 2011 interim meeting.
             1313          Section 20. Section 63I-3-203 is amended to read:
             1314           63I-3-203. Duties.
             1315          [(1) Subject to Subsection (2), the Utah Constitutional Revision Commission shall:]
             1316          [(a) conduct a comprehensive examination of the Utah Constitution, as amended, and
             1317      make recommendations to the governor and the Legislature as to specific proposed
             1318      constitutional amendments to implement the commission's recommendations for changes in the
             1319      constitution; and]
             1320          [(b) upon request of the governor, president of the Senate, speaker of the House of
             1321      Representatives, minority leader of the Senate, minority leader of the House, or the legislative
             1322      sponsor of a resolution to amend the Utah Constitution, advise the governor and the Legislature
             1323      on any proposed constitutional amendment or revision.]
             1324          [(2) The commission may not make a recommendation on a proposed constitutional
             1325      amendment after both houses of the Legislature have taken final action on it, unless requested
             1326      to do so by the governor, the president of the Senate, or the speaker of the House of
             1327      Representatives.]
             1328          (1) The commission shall advise the Legislature on proposals to amend the Utah
             1329      Constitution as the Legislature requests in a joint resolution of the Legislature.


             1330          [(3)] (2) The commission shall select a chair and a vice chair from among its members.
             1331          Section 21. Section 63I-3-204 is amended to read:
             1332           63I-3-204. The commission may invite testimony.
             1333          In performing its duties [and responsibilities] under Subsection 63I-3-203 (1), the
             1334      commission may invite testimony from the governor, state agencies, members of the Utah
             1335      Legislature, and responsible members of the public.
             1336          Section 22. Section 63I-3-207 is amended to read:
             1337           63I-3-207. Appointment of staff.
             1338          The Office of Legislative Research and General Counsel shall, in consultation with the
             1339      chair and vice chair, provide staffing for the commission. [The office shall employ other staff
             1340      members as the commission considers desirable or necessary.]
             1341          Section 23. Section 63J-1-205 is amended to read:
             1342           63J-1-205. Revenue volatility report.
             1343          (1) Beginning in 2011 and continuing every three years after 2011, the Legislative
             1344      Fiscal Analyst and the Governor's Office of Planning and Budget shall, by December 20,
             1345      submit a joint revenue volatility report to the Executive Appropriations Committee [and Tax
             1346      Review Commission].
             1347          (2) The Legislative Fiscal Analyst and the Governor's Office of Planning and Budget
             1348      shall ensure that the report:
             1349          (a) discusses the tax base and the tax revenue volatility of the revenue streams that
             1350      provide the source of funding for the state budget;
             1351          (b) identifies the balances in the General Fund Budget Reserve Account and the
             1352      Education Fund Budget Reserve Account; and
             1353          (c) analyzes the adequacy of the balances in the General Fund Budget Reserve Account
             1354      and the Education Fund Budget Reserve Account in relation to the volatility of the revenue
             1355      streams.
             1356          Section 24. Section 63M-1-1805 is amended to read:
             1357           63M-1-1805. Annual report.
             1358          The office shall report annually to the Legislature's Workforce Services and Community
             1359      and Economic Development Interim Committee [and the Utah Tax Review Commission]
             1360      describing:


             1361          (1) its success in attracting within-the-state production of television series,
             1362      made-for-television movies, and motion pictures, including feature films and independent
             1363      films;
             1364          (2) the amount of incentive commitments made by the office under this part and the
             1365      period of time over which the incentives will be paid; and
             1366          (3) the economic impact on the state related to:
             1367          (a) dollars left in the state; and
             1368          (b) providing motion picture incentives under this part.
             1369          Section 25. Section 63M-1-2406 is amended to read:
             1370           63M-1-2406. Report to the Legislature.
             1371          The office shall report annually to the Legislature's Workforce Services and Community
             1372      and Economic Development Interim Committee [and the Utah Tax Review Commission]
             1373      describing:
             1374          (1) its success in attracting new commercial projects to development zones under this
             1375      part and the corresponding increase in new incremental jobs;
             1376          (2) the estimated amount of tax credit commitments made by the office and the period
             1377      of time over which tax credits will be paid; and
             1378          (3) the economic impact on the state related to generating new state revenues and
             1379      providing tax credits under this part.
             1380          Section 26. Section 63M-1-2806 is amended to read:
             1381           63M-1-2806. Report to the Legislature.
             1382          The office shall report annually to the Legislature's Workforce Services and Community
             1383      and Economic Development Interim Committee [and the Utah Tax Review Commission]
             1384      describing:
             1385          (1) its success in attracting alternative energy projects to alternative energy
             1386      development zones under this part and the corresponding increase in new increment jobs;
             1387          (2) the amount of tax credits promised and the period of time over which the tax credits
             1388      will be paid; and
             1389          (3) the economic impact on the state related to generating new state revenues and
             1390      providing tax credits under this part.






Legislative Review Note
    as of 1-17-11 7:07 AM


Office of Legislative Research and General Counsel


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