This document includes Senate Committee Amendments incorporated into the bill on Fri, Jan 30, 2015 at 11:10 AM by lpoole.
1     
INCOME TAX AMENDMENTS

2     
2015 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Deidre M. Henderson

5     
House Sponsor: Daniel McCay

6     

7     LONG TITLE
8     Committee Note:
9          The Revenue and Taxation Interim Committee recommended this bill.
10     General Description:
11          This bill repeals and amends provisions related to income taxes.
12     Highlighted Provisions:
13          This bill:
14          ▸     repeals provisions related to corporate and individual income tax credits;
15          ▸     exempts a tax credit for a combat related death from certain provisions that require
16     the State Tax Commission to remove a tax credit from a tax return and prohibit a
17     taxpayer from claiming or carrying forward a tax credit;
18          ▸     repeals provisions related to individual income tax contributions; and
19          ▸     makes technical and conforming changes.
20     Money Appropriated in this Bill:
21          None
22     Other Special Clauses:
23          This bill provides a special effective date.
24          This bill provides for retrospective operation.
25     Utah Code Sections Affected:
26     AMENDS:
27          23-14-13, as last amended by Laws of Utah 2010, Chapter 278
28          59-7-105, as last amended by Laws of Utah 2010, Chapters 6 and 198
29          59-7-106, as last amended by Laws of Utah 2014, Chapter 273
30          59-7-614, as last amended by Laws of Utah 2014, Chapter 407
31          59-10-1002.1, as renumbered and amended by Laws of Utah 2008, Chapter 389
32          59-10-1304, as last amended by Laws of Utah 2013, Chapters 235 and 338
33          63M-1-1102, as renumbered and amended by Laws of Utah 2008, Chapter 382
34     REPEALS:
35          59-7-602, as last amended by Laws of Utah 2011, Chapter 366
36          59-7-603, as enacted by Laws of Utah 1993, Chapter 169
37          59-7-608, as last amended by Laws of Utah 2003, Chapter 198
38     Ŝ→ [     59-7-609, as enacted by Laws of Utah 1995, Chapter 42] ←Ŝ
39          59-7-614.3, as last amended by Laws of Utah 2011, Chapter 384
40          59-10-1011, as last amended by Laws of Utah 2011, Chapter 366
41          59-10-1305, as renumbered and amended by Laws of Utah 2008, Chapter 389
42     

43     Be it enacted by the Legislature of the state of Utah:
44          Section 1. Section 23-14-13 is amended to read:
45          23-14-13. Wildlife Resources Account.
46          (1) There is created a restricted account within the General Fund known as the
47     "Wildlife Resources Account."
48          (2) The following money shall be deposited into the Wildlife Resources Account:
49          (a) revenue from the sale of licenses, permits, tags, and certificates of registration
50     issued under this title or a rule or proclamation of the Wildlife Board, except as otherwise
51     provided by this title;
52          (b) revenue from the sale, lease, rental, or other granting of rights of real or personal
53     property acquired with revenue specified in Subsection (2)(a);
54          (c) revenue from fines and forfeitures for violations of this title or any rule,
55     proclamation, or order of the Wildlife Board, minus court costs not to exceed the schedule
56     adopted by the Judicial Council;
57          (d) funds appropriated from the General Fund by the Legislature pursuant to Section
58     23-19-39;
59          (e) other money received by the division under any provision of this title, except as
60     otherwise provided by this title; and
61          [(f) contributions made in accordance with Section 59-10-1305; and]
62          [(g)] (f) interest, dividends, or other income earned on account money.
63          (3) Money in the Wildlife Resources Account shall be used for the administration of
64     this title.
65          Section 2. Section 59-7-105 is amended to read:
66          59-7-105. Additions to unadjusted income.
67          In computing adjusted income the following amounts shall be added to unadjusted
68     income:
69          (1) interest from bonds, notes, and other evidences of indebtedness issued by any state
70     of the United States, including any agency and instrumentality of a state of the United States;
71          (2) the amount of any deduction taken on a corporation's federal return for taxes paid
72     by a corporation:
73          (a) to Utah for taxes imposed by this chapter; and
74          (b) to another state of the United States, a foreign country, a United States possession,
75     or the Commonwealth of Puerto Rico for taxes imposed for the privilege of doing business, or
76     exercising its corporate franchise, including income, franchise, corporate stock and business
77     and occupation taxes;
78          (3) the safe harbor lease adjustment required under Subsections 59-7-111(1)(a) and
79     (2)(a);
80          (4) capital losses that have been deducted on a Utah corporate return in previous years;
81          (5) any deduction on the federal return that has been previously deducted on the Utah
82     return;
83          [(6) the amount of contributions claimed as a tax credit pursuant to Section 59-7-602;]
84          [(7) the amount of the deduction taken pursuant to Section 59-7-603 for sophisticated
85     technological equipment;]
86          [(8)] (6) charitable contributions, to the extent deducted on the federal return when
87     determining federal taxable income;
88          [(9)] (7) the amount of gain or loss determined under Section 59-7-114 relating to a
89     target corporation under Section 338, Internal Revenue Code, unless such gain or loss has
90     already been included in the unadjusted income of the target corporation;
91          [(10)] (8) the amount of gain or loss determined under Section 59-7-115 relating to
92     corporations treated for federal purposes as having disposed of its assets under Section 336(e),
93     Internal Revenue Code, unless such gain or loss has already been included in the unadjusted
94     income of the target corporation;
95          [(11)] (9) adjustments to gains, losses, depreciation expense, amortization expense, and
96     similar items due to a difference between basis for federal purposes and basis as computed
97     under Section 59-7-107;
98          [(12)] (10) the amount withdrawn under Title 53B, Chapter 8a, Utah Educational
99     Savings Plan, from the account of a corporation that is an account owner as defined in Section
100     53B-8a-102, for the taxable year for which the amount is withdrawn, if that amount withdrawn
101     from the account of the corporation that is the account owner:
102          (a) is not expended for:
103          (i) higher education costs as defined in Section 53B-8a-102; or
104          (ii) a payment or distribution that qualifies as an exception to the additional tax for
105     distributions not used for educational expenses provided in Sections 529(c) and 530(d),
106     Internal Revenue Code; and
107          (b) is subtracted by the corporation:
108          (i) that is the account owner; and
109          (ii) in accordance with Subsection 59-7-106 (1)(r); and
110          [(13)] (11) the amount of the deduction for dividends paid, as defined in Section 561,
111     Internal Revenue Code, that is allowed under Section 857(b)(2)(B), Internal Revenue Code, in
112     computing the taxable income of a captive real estate investment trust, if that captive real estate
113     investment trust is subject to federal income taxation.
114          Section 3. Section 59-7-106 is amended to read:
115          59-7-106. Subtractions from unadjusted income.
116          (1) In computing adjusted income the following amounts shall be subtracted from
117     unadjusted income:
118          (a) the foreign dividend gross-up included in gross income for federal income tax
119     purposes under Section 78, Internal Revenue Code;
120          (b) subject to Subsection (2), the net capital loss, as defined for federal purposes, if the
121     taxpayer elects to deduct the net capital loss on the return filed under this chapter for the
122     taxable year for which the net capital loss is incurred;
123          (c) the decrease in salary expense deduction for federal income tax purposes due to
124     claiming the federal work opportunity credit under Section 51, Internal Revenue Code;
125          (d) the decrease in qualified research and basic research expense deduction for federal
126     income tax purposes due to claiming the federal credit for increasing research activities under
127     Section 41, Internal Revenue Code;
128          (e) the decrease in qualified clinical testing expense deduction for federal income tax
129     purposes due to claiming the federal credit for clinical testing expenses for certain drugs for
130     rare diseases or conditions under Section 45C, Internal Revenue Code;
131          (f) any decrease in any expense deduction for federal income tax purposes due to
132     claiming any other federal credit;
133          (g) the safe harbor lease adjustment required under Subsections 59-7-111(1)(b) and
134     (2)(b);
135          (h) any income on the federal corporation income tax return that has been previously
136     taxed by Utah;
137          (i) an amount included in federal taxable income that is due to a refund of a tax,
138     including a franchise tax, an income tax, a corporate stock and business tax, or an occupation
139     tax:
140          (i) if that tax is imposed for the privilege of:
141          (A) doing business; or
142          (B) exercising a corporate franchise;
143          (ii) if that tax is paid by the corporation to:
144          (A) Utah;
145          (B) another state of the United States;
146          (C) a foreign country;
147          (D) a United States possession; or
148          (E) the Commonwealth of Puerto Rico; and
149          (iii) to the extent that tax was added to unadjusted income under Section 59-7-105;
150          (j) a charitable contribution, to the extent the charitable contribution is allowed as a
151     subtraction under Section 59-7-109;
152          (k) subject to Subsection (3), 50% of a dividend considered to be received or received
153     from a subsidiary that:
154          (i) is a member of the unitary group;
155          (ii) is organized or incorporated outside of the United States; and
156          (iii) is not included in a combined report under Section 59-7-402 or 59-7-403;
157          (l) subject to Subsection (4) and Section 59-7-401, 50% of the adjusted income of a
158     foreign operating company;
159          (m) the amount of gain or loss that is included in unadjusted income but not recognized
160     for federal purposes on stock sold or exchanged by a member of a selling consolidated group as
161     defined in Section 338, Internal Revenue Code, if an election has been made in accordance
162     with Section 338(h)(10), Internal Revenue Code;
163          (n) the amount of gain or loss that is included in unadjusted income but not recognized
164     for federal purposes on stock sold, exchanged, or distributed by a corporation in accordance
165     with Section 336(e), Internal Revenue Code, if an election under Section 336(e), Internal
166     Revenue Code, has been made for federal purposes;
167          (o) subject to Subsection (5), an adjustment to the following due to a difference
168     between basis for federal purposes and basis as computed under Section 59-7-107:
169          (i) an amortization expense;
170          (ii) a depreciation expense;
171          (iii) a gain;
172          (iv) a loss; or
173          (v) an item similar to Subsections (1)(o)(i) through (iv);
174          (p) an interest expense that is not deducted on a federal corporation income tax return
175     under Section 265(b) or 291(e), Internal Revenue Code;
176          (q) 100% of dividends received from a subsidiary that is an insurance company if that
177     subsidiary that is an insurance company is:
178          (i) exempt from this chapter under Subsection 59-7-102(1)(c); and
179          (ii) under common ownership;
180          (r) subject to Subsection 59-7-105[(12)](10), the amount of a qualified investment as
181     defined in Section 53B-8a-102 that:
182          (i) a corporation that is an account owner as defined in Section 53B-8a-102 makes
183     during the taxable year;
184          (ii) the corporation described in Subsection (1)(r)(i) does not deduct on a federal
185     corporation income tax return; and
186          (iii) does not exceed the maximum amount of the qualified investment that may be
187     subtracted from unadjusted income for a taxable year in accordance with Subsection
188     53B-8a-106(1);
189          (s) for purposes of income included in a combined report under Part 4, Combined
190     Reporting, the entire amount of the dividends a member of a unitary group receives or is
191     considered to receive from a captive real estate investment trust; and
192          (t) the increase in income for federal income tax purposes due to claiming a:
193          (i) qualified tax credit bond credit under Section 54A, Internal Revenue Code; or
194          (ii) qualified zone academy bond under Section 1397E, Internal Revenue Code.
195          (2) For purposes of Subsection (1)(b):
196          (a) the subtraction shall be made by claiming the subtraction on a return filed:
197          (i) under this chapter for the taxable year for which the net capital loss is incurred; and
198          (ii) by the due date of the return, including extensions; and
199          (b) a net capital loss for a taxable year shall be:
200          (i) subtracted for the taxable year for which the net capital loss is incurred; or
201          (ii) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
202     Code.
203          (3) (a) For purposes of calculating the subtraction provided for in Subsection (1)(k), a
204     taxpayer shall first subtract from a dividend considered to be received or received an expense
205     directly attributable to that dividend.
206          (b) For purposes of Subsection (3)(a), the amount of an interest expense that is
207     considered to be directly attributable to a dividend is calculated by multiplying the interest
208     expense by a fraction:
209          (i) the numerator of which is the taxpayer's average investment in the dividend paying
210     subsidiaries; and
211          (ii) the denominator of which is the taxpayer's average total investment in assets.
212          (c) (i) For purposes of calculating the subtraction allowed by Subsection (1)(k), in
213     determining income apportionable to this state, a portion of the factors of a foreign subsidiary
214     that has dividends that are partially subtracted under Subsection (1)(k) shall be included in the
215     combined report factors as provided in this Subsection (3)(c).
216          (ii) For purposes of Subsection (3)(c)(i), the portion of the factors of a foreign
217     subsidiary that has dividends that are partially subtracted under Subsection (1)(k) that shall be
218     included in the combined report factors is calculated by multiplying each factor of the foreign
219     subsidiary by a fraction:
220          (A) not to exceed 100%; and
221          (B) (I) the numerator of which is the amount of the dividend paid by the foreign
222     subsidiary that is included in adjusted income; and
223          (II) the denominator of which is the current year earnings and profits of the foreign
224     subsidiary as determined under the Internal Revenue Code.
225          (4) (a) For purposes of Subsection (1)(l), a taxpayer may not make a subtraction under
226     Subsection (1)(l):
227          (i) if the taxpayer elects to file a worldwide combined report as provided in Section
228     59-7-403; or
229          (ii) for the following:
230          (A) income generated from intangible property; or
231          (B) a capital gain, dividend, interest, rent, royalty, or other similar item that is
232     generated from an asset held for investment and not from a regular business trading activity.
233          (b) In calculating the subtraction provided for in Subsection (1)(l), a foreign operating
234     company:
235          (i) may not subtract an amount provided for in Subsection (1)(k) or (l); and
236          (ii) prior to determining the subtraction under Subsection (1)(l), shall eliminate a
237     transaction that occurs between members of a unitary group.
238          (c) For purposes of the subtraction provided for in Subsection (1)(l), in determining
239     income apportionable to this state, the factors for a foreign operating company shall be
240     included in the combined report factors in the same percentages as the foreign operating
241     company's adjusted income is included in the combined adjusted income.
242          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
243     commission may by rule define what constitutes:
244          (i) income generated from intangible property; or
245          (ii) a capital gain, dividend, interest, rent, royalty, or other similar item that is
246     generated from an asset held for investment and not from a regular business trading activity.
247          (5) (a) For purposes of the subtraction provided for in Subsection (1)(o), the amount of
248     a reduction in basis shall be allowed as an expense for the taxable year in which a federal tax
249     credit is claimed if:
250          (i) there is a reduction in federal basis for a federal tax credit; and
251          (ii) there is no corresponding tax credit allowed in this state.
252          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
253     commission may by rule define what constitutes an item similar to Subsections (1)(o)(i)
254     through (iv).
255          Section 4. Section 59-7-614 is amended to read:
256          59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
257     Certification -- Rulemaking authority.
258          (1) As used in this section:
259          (a) "Active solar system":
260          (i) means a system of equipment capable of collecting and converting incident solar
261     radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
262     by a separate apparatus to storage or to the point of use; and
263          (ii) includes water heating, space heating or cooling, and electrical or mechanical
264     energy generation.
265          (b) "Biomass system" means any system of apparatus and equipment for use in
266     converting material into biomass energy, as defined in Section 59-12-102, and transporting that
267     energy by separate apparatus to the point of use or storage.
268          (c) "Business entity" means any sole proprietorship, estate, trust, partnership,
269     association, corporation, cooperative, or other entity under which business is conducted or
270     transacted.
271          (d) "Commercial energy system" means any active solar, passive solar, geothermal
272     electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
273     biomass system used to supply energy to a commercial unit or as a commercial enterprise.
274          (e) "Commercial enterprise" means a business entity whose purpose is to produce
275     electrical, mechanical, or thermal energy for sale from a commercial energy system.
276          (f) (i) "Commercial unit" means any building or structure that a business entity uses to
277     transact its business.
278          (ii) Notwithstanding Subsection (1)(f)(i):
279          (A) in the case of an active solar system used for agricultural water pumping or a wind
280     system, each individual energy generating device shall be a commercial unit; and
281          (B) if an energy system is the building or structure that a business entity uses to
282     transact its business, a commercial unit is the complete energy system itself.
283          (g) "Direct-use geothermal system" means a system of apparatus and equipment
284     enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
285     that is contained in the earth to meet energy needs, including heating a building, an industrial
286     process, and aquaculture.
287          (h) "Geothermal electricity" means energy contained in heat that continuously flows
288     outward from the earth that is used as a sole source of energy to produce electricity.
289          (i) "Geothermal heat-pump system" means a system of apparatus and equipment
290     enabling the use of thermal properties contained in the earth at temperatures well below 100
291     degrees Fahrenheit to help meet heating and cooling needs of a structure.
292          (j) "Hydroenergy system" means a system of apparatus and equipment capable of
293     intercepting and converting kinetic water energy into electrical or mechanical energy and
294     transferring this form of energy by separate apparatus to the point of use or storage.
295          (k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
296     59-10-103 and an individual as defined in Section 59-10-103.
297          (l) "Office" means the Office of Energy Development created in Section 63M-4-401.
298          (m) "Passive solar system":
299          (i) means a direct thermal system that utilizes the structure of a building and its
300     operable components to provide for collection, storage, and distribution of heating or cooling
301     during the appropriate times of the year by utilizing the climate resources available at the site;
302     and
303          (ii) includes those portions and components of a building that are expressly designed
304     and required for the collection, storage, and distribution of solar energy.
305          (n) "Residential energy system" means any active solar, passive solar, biomass,
306     direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
307     supply energy to or for any residential unit.
308          (o) "Residential unit" means any house, condominium, apartment, or similar dwelling
309     unit that serves as a dwelling for a person, group of persons, or a family but does not include
310     property subject to a fee under:
311          (i) Section 59-2-404;
312          (ii) Section 59-2-405;
313          (iii) Section 59-2-405.1;
314          (iv) Section 59-2-405.2; or
315          (v) Section 59-2-405.3.
316          (p) "Wind system" means a system of apparatus and equipment capable of intercepting
317     and converting wind energy into mechanical or electrical energy and transferring these forms of
318     energy by a separate apparatus to the point of use, sale, or storage.
319          (2) (a) (i) A business entity that purchases and completes or participates in the
320     financing of a residential energy system to supply all or part of the energy required for a
321     residential unit owned or used by the business entity and located in the state may claim a
322     nonrefundable tax credit as provided in this Subsection (2)(a).
323          (ii) (A) The tax credit is equal to 25% of the reasonable costs of each residential energy
324     system installed with respect to each residential unit the business entity owns or uses, including
325     installation costs, against any tax due under this chapter for the taxable year in which the
326     energy system is completed and placed in service.
327          (B) The total amount of each tax credit under this Subsection (2)(a) may not exceed
328     $2,000 per residential unit.
329          (C) The tax credit under this Subsection (2)(a) is allowed for any residential energy
330     system completed and placed in service on or after January 1, 2007.
331          (iii) If a business entity sells a residential unit to an individual taxpayer before making
332     a claim for the tax credit under this Subsection (2)(a), the business entity may:
333          (A) assign its right to this tax credit to the individual taxpayer; and
334          (B) if the business entity assigns its right to the tax credit to an individual taxpayer
335     under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
336     individual taxpayer had completed or participated in the costs of the residential energy system
337     under Section 59-10-1014.
338          (b) (i) A business entity that purchases or participates in the financing of a commercial
339     energy system situated in Utah may claim a refundable tax credit as provided in this Subsection
340     (2)(b) if the commercial energy system does not use wind, geothermal electricity, solar, or
341     biomass equipment capable of producing a total of 660 or more kilowatts of electricity or if the
342     commercial energy system does not use solar equipment capable of producing 2,000 or more
343     kilowatts of electricity, and:
344          (A) the commercial energy system supplies all or part of the energy required by
345     commercial units owned or used by the business entity; or
346          (B) the business entity sells all or part of the energy produced by the commercial
347     energy system as a commercial enterprise.
348          (ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs
349     of any commercial energy system installed, including installation costs, against any tax due
350     under this chapter for the taxable year in which the commercial energy system is completed and
351     placed in service.
352          (B) Notwithstanding Subsection (2)(b)(ii)(A), the total amount of the tax credit under
353     this Subsection (2)(b) may not exceed $50,000 per commercial unit.
354          (C) The tax credit under this Subsection (2)(b) is allowed for any commercial energy
355     system completed and placed in service on or after January 1, 2007.
356          (iii) A business entity that leases a commercial energy system installed on a
357     commercial unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can
358     confirm that the lessor irrevocably elects not to claim the tax credit.
359          (iv) Only the principal recovery portion of the lease payments, which is the cost
360     incurred by a business entity in acquiring a commercial energy system, excluding interest
361     charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
362          (v) A business entity that leases a commercial energy system is eligible to use the tax
363     credit under this Subsection (2)(b) for a period no greater than seven years from the initiation
364     of the lease.
365          (vi) A tax credit allowed by this Subsection (2)(b) may not be carried forward or
366     carried back.
367          (c) (i) A business entity that owns a commercial energy system located in the state
368     using wind, geothermal electricity, or biomass equipment capable of producing a total of 660 or
369     more kilowatts of electricity may claim a refundable tax credit as provided in this Subsection
370     (2)(c) if:
371          (A) the commercial energy system supplies all or part of the energy required by
372     commercial units owned or used by the business entity; or
373          (B) the business entity sells all or part of the energy produced by the commercial
374     energy system as a commercial enterprise.
375          (ii) (A) A business entity may claim a tax credit under this section equal to the product
376     of:
377          (I) 0.35 cents; and
378          (II) the kilowatt hours of electricity produced and either used or sold during the taxable
379     year.
380          (B) (I) The tax credit calculated under Subsection (2)(c)(ii)(A) may be claimed for
381     production occurring during a period of 48 months beginning with the month in which the
382     commercial energy system is placed in commercial service.
383          (II) The tax credit allowed by this Subsection (2)(c) for each year may not be carried
384     forward or carried back.
385          (C) The tax credit under this Subsection (2)(c) is allowed for any commercial energy
386     system completed and placed in service on or after January 1, 2007.
387          (iii) A business entity that leases a commercial energy system installed on a
388     commercial unit is eligible for the tax credit under this Subsection (2)(c) if the lessee can
389     confirm that the lessor irrevocably elects not to claim the tax credit.
390          (d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year
391     in which the energy system is completed and placed in service.
392          (ii) Additional energy systems or parts of energy systems may be claimed for
393     subsequent years.
394          (iii) If the amount of a tax credit under Subsection (2)(a) exceeds a business entity's tax
395     liability under this chapter for a taxable year, the amount of the tax credit exceeding the
396     liability may be carried forward for a period that does not exceed the next four taxable years.
397          (3) (a) A business entity that owns a commercial energy system located in the state that
398     uses solar equipment capable of producing a total of 660 or more kilowatts of electricity may
399     claim a refundable tax credit as provided in this Subsection (3) if:
400          (i) (A) the commercial energy system supplies all or part of the energy required by
401     commercial units owned or used by the business entity; or
402          (B) the business entity sells all or part of the energy produced by the commercial
403     energy system as a commercial enterprise; and
404          (ii) the business entity does not claim a tax credit under Subsection (2)(b).
405          (b) A business entity may claim a tax credit under this section equal to the product of:
406          (i) 0.35 cents; and
407          (ii) the kilowatt hours of electricity produced and either used or sold during the taxable
408     year.
409          (c) The tax credit under this Subsection (3) may be claimed for production occurring
410     during a period of 48 months beginning with the month in which the commercial energy
411     system is placed in commercial service.
412          (d) The tax credit under this Subsection (3) may not be carried forward or carried back.
413          (e) The tax credit under this Subsection (3) is allowed for a commercial energy system
414     completed and placed in service on or after January 1, 2015.
415          (f) A business entity that leases a commercial energy system installed on a commercial
416     unit may claim a tax credit under this Subsection (3) if the business entity that is the lessee can
417     confirm that the lessor irrevocably elects not to claim the tax credit.
418          (4) (a) [Except as provided in Subsection (4)(b), the] The tax credits provided for
419     under Subsection (2) or (3) are in addition to any tax credits provided under the laws or rules
420     and regulations of the United States.
421          [(b) A purchaser of one or more solar units that claims a tax credit under Section
422     59-7-614.3 for the purchase of the one or more solar units may not claim a tax credit under this
423     section for that purchase.]
424          [(c)] (b) (i) The office may set standards for residential and commercial energy systems
425     claiming a tax credit under Subsections (2)(a) and (b) that cover the safety, reliability,
426     efficiency, leasing, and technical feasibility of the systems to ensure that the systems eligible
427     for the tax credit use the state's renewable and nonrenewable energy resources in an appropriate
428     and economic manner.
429          (ii) The office may set standards for residential and commercial energy systems that
430     establish the reasonable costs of an energy system, as used in Subsections (2)(a)(ii)(A) and
431     (2)(b)(ii)(A), as an amount per unit of energy production.
432          (iii) A tax credit may not be taken under Subsection (2) or (3) until the office has
433     certified that the energy system has been completely installed and is a viable system for saving
434     or production of energy from renewable resources.
435          [(d)] (c) The office and the commission may make rules in accordance with Title 63G,
436     Chapter 3, Utah Administrative Rulemaking Act, that are necessary to implement this section.
437          (5) (a) On or before October 1, 2012, and every five years thereafter, the Revenue and
438     Taxation Interim Committee shall review each tax credit provided by this section and report its
439     recommendations to the Legislative Management Committee concerning whether the tax credit
440     should be continued, modified, or repealed.
441          (b) The Revenue and Taxation Interim Committee's report under Subsection (5)(a)
442     shall include information concerning the cost of the tax credit, the purpose and effectiveness of
443     the tax credit, and the state's benefit from the tax credit.
444          Section 5. Section 59-10-1002.1 is amended to read:
445          59-10-1002.1. Removal of tax credit from tax return and prohibition on claiming
446     or carrying forward a tax credit -- Conditions for removal and prohibition on claiming or
447     carrying forward a tax credit -- Exception -- Commission reporting requirements.
448          (1) As used in this section, "tax return" means a tax return filed in accordance with this
449     chapter.
450          (2) [Beginning] Except as provided in Subsection (4), beginning two taxable years
451     after the requirements of Subsection (3) are met:
452          (a) the commission shall remove a tax credit allowed under this part from each tax
453     return on which the tax credit appears; and
454          (b) a claimant, estate, or trust filing a tax return may not claim or carry forward the tax
455     credit.
456          (3) [The] Except as provided in Subsection (4), the commission shall remove a tax
457     credit allowed under this part from a tax return and a claimant, estate, or trust filing a tax return
458     may not claim or carry forward the tax credit as provided in Subsection (2) if:
459          (a) the total amount of the tax credit claimed or carried forward by all claimants,
460     estates, or trusts filing tax returns is less than $10,000 per year for three consecutive taxable
461     years beginning on or after January 1, 2002; and
462          (b) less than 10 claimants, estates, and trusts per year for the three consecutive taxable
463     years described in Subsection (3)(a), file a tax return claiming or carrying forward the tax
464     credit.
465          (4) This section does not apply to a tax credit under Section 59-10-1027.
466          [(4)] (5) The commission shall, on or before the November interim meeting of the year
467     after the taxable year in which the requirements of Subsection (3) are met:
468          (a) report to the Revenue and Taxation Interim Committee that in accordance with this
469     section:
470          (i) the commission is required to remove a tax credit from each tax return on which the
471     tax credit appears; and
472          (ii) a claimant, estate, or trust filing a tax return may not claim or carry forward the tax
473     credit; and
474          (b) notify each state agency required by statute to assist in the administration of the tax
475     credit that in accordance with this section:
476          (i) the commission is required to remove a tax credit from each tax return on which the
477     tax credit appears; and
478          (ii) a claimant, estate, or trust filing a tax return may not claim or carry forward the tax
479     credit.
480          Section 6. Section 59-10-1304 is amended to read:
481          59-10-1304. Removal of designation and prohibitions on collection for certain
482     contributions on income tax return -- Conditions for removal and prohibitions on
483     collection -- Commission reporting requirements.
484          (1) (a) If a contribution or combination of contributions described in Subsection (1)(b)
485     generate less than $30,000 per year for three consecutive years, the commission shall remove
486     the designation for the contribution from the individual income tax return and may not collect
487     the contribution from a resident or nonresident individual beginning two taxable years after the
488     three-year period for which the contribution generates less than $30,000 per year.
489          (b) The following contributions apply to Subsection (1)(a):
490          [(i) the contribution provided for in Section 59-10-1305;]
491          [(ii)] (i) the contribution provided for in Section 59-10-1306;
492          [(iii)] (ii) the sum of the contributions provided for in Subsection 59-10-1307(1);
493          [(iv)] (iii) the contribution provided for in Section 59-10-1308;
494          [(v)] (iv) the contribution provided for in Section 59-10-1310;
495          [(vi)] (v) the contribution provided for in Section 59-10-1315;
496          [(vii)] (vi) the sum of the contributions provided for in:
497          (A) Section 59-10-1316; and
498          (B) Section 59-10-1317; or
499          [(viii)] (vii) the contribution provided for in Section 59-10-1318.
500          (2) If the commission removes the designation for a contribution under Subsection (1),
501     the commission shall report to the Revenue and Taxation Interim Committee that the
502     commission removed the designation on or before the November interim meeting of the year in
503     which the commission determines to remove the designation.
504          Section 7. Section 63M-1-1102 is amended to read:
505          63M-1-1102. Definitions.
506          As used in this part:
507          (1) "Composting" means the controlled decay of landscape waste or sewage sludge and
508     organic industrial waste, or a mixture of these, by the action of bacteria, fungi, molds, and other
509     organisms.
510          (2) "Postconsumer waste material" means any product generated by a business or
511     consumer that has served its intended end use, and that has been separated from solid waste for
512     the purposes of collection, recycling, and disposition and that does not include secondary waste
513     material.
514          (3) (a) "Recovered materials" means waste materials and by-products that have been
515     recovered or diverted from solid waste.
516          (b) "Recovered materials" does not include those materials and by-products generated
517     from, and commonly reused within, an original manufacturing process.
518          (4) (a) "Recycling" means the diversion of materials from the solid waste stream and
519     the beneficial use of the materials and includes a series of activities by which materials that
520     would become or otherwise remain waste are diverted from the waste stream for collection,
521     separation, and processing, and are used as raw materials or feedstocks in lieu of or in addition
522     to virgin materials in the manufacture of goods sold or distributed in commerce or the reuse of
523     the materials as substitutes for goods made from virgin materials.
524          (b) "Recycling" does not include burning municipal solid waste for energy recovery.
525          (5) "Recycling market development zone" or "zone" means an area designated by the
526     office as meeting the requirements of this part.
527          (6) (a) "Secondary waste material" means industrial by-products that go to disposal
528     facilities and waste generated after completion of a manufacturing process.
529          (b) "Secondary waste material" does not include internally generated scrap commonly
530     returned to industrial or manufacturing processes, such as home scrap and mill broke.
531          (7) ["State tax incentives," "tax incentives," or "tax benefits"] "Tax incentive" means
532     [the] a nonrefundable tax [credits] credit available under [Sections 59-7-608 and] Section
533     59-7-610 or 59-10-1007.
534          Section 8. Repealer.
535          This bill repeals:
536          Section 59-7-602, Credit for cash contributions to sheltered workshops.
537          Section 59-7-603, Credit for sophisticated technological equipment donated to
538     schools.
539          Section 59-7-608, Targeted jobs tax credit.
540          Ŝ→ [Section 59-7-609, Historic preservation credit.] ←Ŝ
541          Section 59-7-614.3, Nonrefundable tax credit for qualifying solar projects.
542          Section 59-10-1011, Tutoring tax credits for dependents with a disability.
543          Section 59-10-1305, Nongame wildlife contribution -- Credit to Wildlife Resources
544     Account.
545          Section 9. Effective date.
546          (1) Except as provided in Subsection (2), this bill takes effect on May 12, 2015.
547          (2) The actions affecting the following have retrospective operation for a taxable year
548     beginning on or after January 1, 2015:
549          (a) Section 59-7-105;
550          (b) Section 59-7-106;
551          (c) Section 59-7-602;
552          (d) Section 59-7-603;
553          (e) Section 59-7-608;
554          Ŝ→ [(f) Section 59-7-609;] ←Ŝ
555          (g) Section 59-7-614;
556          (h) Section 59-7-614.3;
557          (i) Section 59-10-1002.1;
558          (j) Section 59-10-1011;
559          (k) Section 59-10-1304;
560          (l) Section 59-10-1305; and
561          (m) Section 63M-1-1102.




Legislative Review Note
     as of 11-20-14 2:34 PM

Office of Legislative Research and General Counsel