1     
RENEWABLE ENERGY TAX CREDIT AMENDMENTS

2     
2015 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Ralph Okerlund

5     
House Sponsor: Brad L. Dee

6     

7     LONG TITLE
8     General Description:
9          This bill addresses renewable energy tax credits.
10     Highlighted Provisions:
11          This bill:
12          ▸     defines terms;
13          ▸     addresses renewable energy tax credits; and
14          ▸     makes technical and conforming changes.
15     Money Appropriated in this Bill:
16          None
17     Other Special Clauses:
18          This bill provides a special effective date.
19          This bill provides for retrospective operation.
20          This bill provides a coordination clause.
21     Utah Code Sections Affected:
22     AMENDS:
23          59-2-102, as last amended by Laws of Utah 2014, Chapters 65 and 411
24          59-7-614, as last amended by Laws of Utah 2014, Chapter 407
25          59-10-1014, as last amended by Laws of Utah 2012, Chapter 37
26          59-10-1106, as last amended by Laws of Utah 2012, Chapter 37
27     Utah Code Sections Affected by Coordination Clause:
28          59-7-614, as last amended by Laws of Utah 2014, Chapter 407

29     

30     Be it enacted by the Legislature of the state of Utah:
31          Section 1. Section 59-2-102 is amended to read:
32          59-2-102. Definitions.
33          As used in this chapter and title:
34          (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
35     engaging in dispensing activities directly affecting agriculture or horticulture with an
36     airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
37     rotorcraft's use for agricultural and pest control purposes.
38          (2) "Air charter service" means an air carrier operation which requires the customer to
39     hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
40     trip.
41          (3) "Air contract service" means an air carrier operation available only to customers
42     who engage the services of the carrier through a contractual agreement and excess capacity on
43     any trip and is not available to the public at large.
44          (4) "Aircraft" is as defined in Section 72-10-102.
45          (5) (a) Except as provided in Subsection (5)(b), "airline" means an air carrier that:
46          (i) operates:
47          (A) on an interstate route; and
48          (B) on a scheduled basis; and
49          (ii) offers to fly one or more passengers or cargo on the basis of available capacity on a
50     regularly scheduled route.
51          (b) "Airline" does not include an:
52          (i) air charter service; or
53          (ii) air contract service.
54          (6) "Assessment roll" means a permanent record of the assessment of property as
55     assessed by the county assessor and the commission and may be maintained manually or as a
56     computerized file as a consolidated record or as multiple records by type, classification, or
57     categories.
58          (7) (a) "Certified revenue levy" means a property tax levy that provides an amount of
59     ad valorem property tax revenue equal to the sum of:
60          (i) the amount of ad valorem property tax revenue to be generated statewide in the
61     previous year from imposing a school minimum basic tax rate, as specified in Subsection
62     53A-17a-135(1)(a), or multicounty assessing and collecting levy, as specified in Section
63     59-2-1602; and
64          (ii) the product of:
65          (A) new growth, as defined in:
66          (I) Section 59-2-924; and
67          (II) rules of the commission; and
68          (B) the school minimum basic tax rate or multicounty assessing and collecting levy
69     certified by the commission for the previous year.
70          (b) For purposes of this Subsection (7), "ad valorem property tax revenue" does not
71     include property tax revenue received by a taxing entity from personal property that is:
72          (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
73          (ii) semiconductor manufacturing equipment.
74          (c) For purposes of calculating the certified revenue levy described in this Subsection
75     (7), the commission shall use:
76          (i) the taxable value of real property assessed by a county assessor contained on the
77     assessment roll;
78          (ii) the taxable value of real and personal property assessed by the commission; and
79          (iii) the taxable year end value of personal property assessed by a county assessor
80     contained on the prior year's assessment roll.
81          (8) "County-assessed commercial vehicle" means:
82          (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
83     Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
84     property in furtherance of the owner's commercial enterprise;
85          (b) any passenger vehicle owned by a business and used by its employees for
86     transportation as a company car or vanpool vehicle; and
87          (c) vehicles that are:
88          (i) especially constructed for towing or wrecking, and that are not otherwise used to
89     transport goods, merchandise, or people for compensation;
90          (ii) used or licensed as taxicabs or limousines;
91          (iii) used as rental passenger cars, travel trailers, or motor homes;
92          (iv) used or licensed in this state for use as ambulances or hearses;
93          (v) especially designed and used for garbage and rubbish collection; or
94          (vi) used exclusively to transport students or their instructors to or from any private,
95     public, or religious school or school activities.
96          (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801,
97     "designated tax area" means a tax area created by the overlapping boundaries of only the
98     following taxing entities:
99          (i) a county; and
100          (ii) a school district.
101          (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
102     by the overlapping boundaries of:
103          (i) the taxing entities described in Subsection (9)(a); and
104          (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
105     and the boundaries of the city or town are identical; or
106          (B) a special service district if the boundaries of the school district under Subsection
107     (9)(a) are located entirely within the special service district.
108          (10) "Eligible judgment" means a final and unappealable judgment or order under
109     Section 59-2-1330:
110          (a) that became a final and unappealable judgment or order no more than 14 months
111     prior to the day on which the notice required by Section 59-2-919.1 is required to be mailed;
112     and
113          (b) for which a taxing entity's share of the final and unappealable judgment or order is
114     greater than or equal to the lesser of:
115          (i) $5,000; or
116          (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
117     previous fiscal year.
118          (11) (a) "Escaped property" means any property, whether personal, land, or any
119     improvements to the property, subject to taxation and is:
120          (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
121     to the wrong taxpayer by the assessing authority;
122          (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
123     comply with the reporting requirements of this chapter; or
124          (iii) undervalued because of errors made by the assessing authority based upon
125     incomplete or erroneous information furnished by the taxpayer.
126          (b) Property that is undervalued because of the use of a different valuation
127     methodology or because of a different application of the same valuation methodology is not
128     "escaped property."
129          (12) "Fair market value" means the amount at which property would change hands
130     between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
131     and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
132     market value" shall be determined using the current zoning laws applicable to the property in
133     question, except in cases where there is a reasonable probability of a change in the zoning laws
134     affecting that property in the tax year in question and the change would have an appreciable
135     influence upon the value.
136          (13) "Farm machinery and equipment," for purposes of the exemption provided under
137     Section 59-2-1101, means tractors, milking equipment and storage and cooling facilities, feed
138     handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
139     tools, scales, combines, spreaders, sprayers, haying equipment, including balers and cubers,
140     and any other machinery or equipment used primarily for agricultural purposes; but does not
141     include vehicles required to be registered with the Motor Vehicle Division or vehicles or other
142     equipment used for business purposes other than farming.
143          (14) "Geothermal fluid" means water in any form at temperatures greater than 120
144     degrees centigrade naturally present in a geothermal system.
145          (15) "Geothermal resource" means:
146          (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
147     and
148          (b) the energy, in whatever form, including pressure, present in, resulting from, created
149     by, or which may be extracted from that natural heat, directly or through a material medium.
150          (16) (a) "Goodwill" means:
151          (i) acquired goodwill that is reported as goodwill on the books and records:
152          (A) of a taxpayer; and
153          (B) that are maintained for financial reporting purposes; or
154          (ii) the ability of a business to:
155          (A) generate income:
156          (I) that exceeds a normal rate of return on assets; and
157          (II) resulting from a factor described in Subsection (16)(b); or
158          (B) obtain an economic or competitive advantage resulting from a factor described in
159     Subsection (16)(b).
160          (b) The following factors apply to Subsection (16)(a)(ii):
161          (i) superior management skills;
162          (ii) reputation;
163          (iii) customer relationships;
164          (iv) patronage; or
165          (v) a factor similar to Subsections (16)(b)(i) through (iv).
166          (c) "Goodwill" does not include:
167          (i) the intangible property described in Subsection (20)(a) or (b);
168          (ii) locational attributes of real property, including:
169          (A) zoning;
170          (B) location;
171          (C) view;
172          (D) a geographic feature;
173          (E) an easement;
174          (F) a covenant;
175          (G) proximity to raw materials;
176          (H) the condition of surrounding property; or
177          (I) proximity to markets;
178          (iii) value attributable to the identification of an improvement to real property,
179     including:
180          (A) reputation of the designer, builder, or architect of the improvement;
181          (B) a name given to, or associated with, the improvement; or
182          (C) the historic significance of an improvement; or
183          (iv) the enhancement or assemblage value specifically attributable to the interrelation
184     of the existing tangible property in place working together as a unit.
185          (17) "Governing body" means:
186          (a) for a county, city, or town, the legislative body of the county, city, or town;
187          (b) for a local district under Title 17B, Limited Purpose Local Government Entities -
188     Local Districts, the local district's board of trustees;
189          (c) for a school district, the local board of education; or
190          (d) for a special service district under Title 17D, Chapter 1, Special Service District
191     Act:
192          (i) the legislative body of the county or municipality that created the special service
193     district, to the extent that the county or municipal legislative body has not delegated authority
194     to an administrative control board established under Section 17D-1-301; or
195          (ii) the administrative control board, to the extent that the county or municipal
196     legislative body has delegated authority to an administrative control board established under
197     Section 17D-1-301.
198          (18) (a) For purposes of Section 59-2-103:
199          (i) "household" means the association of persons who live in the same dwelling,
200     sharing its furnishings, facilities, accommodations, and expenses; and
201          (ii) "household" includes married individuals, who are not legally separated, that have
202     established domiciles at separate locations within the state.
203          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
204     commission may make rules defining the term "domicile."
205          (19) (a) Except as provided in Subsection (19)(c), "improvement" means a building,
206     structure, fixture, fence, or other item that is permanently attached to land, regardless of
207     whether the title has been acquired to the land, if:
208          (i) (A) attachment to land is essential to the operation or use of the item; and
209          (B) the manner of attachment to land suggests that the item will remain attached to the
210     land in the same place over the useful life of the item; or
211          (ii) removal of the item would:
212          (A) cause substantial damage to the item; or
213          (B) require substantial alteration or repair of a structure to which the item is attached.
214          (b) "Improvement" includes:
215          (i) an accessory to an item described in Subsection (19)(a) if the accessory is:
216          (A) essential to the operation of the item described in Subsection (19)(a); and
217          (B) installed solely to serve the operation of the item described in Subsection (19)(a);
218     and
219          (ii) an item described in Subsection (19)(a) that:
220          (A) is temporarily detached from the land for repairs; and
221          (B) remains located on the land.
222          (c) Notwithstanding Subsections (19)(a) and (b), "improvement" does not include:
223          (i) an item considered to be personal property pursuant to rules made in accordance
224     with Section 59-2-107;
225          (ii) a moveable item that is attached to land:
226          (A) for stability only; or
227          (B) for an obvious temporary purpose;
228          (iii) (A) manufacturing equipment and machinery; or
229          (B) essential accessories to manufacturing equipment and machinery;
230          (iv) an item attached to the land in a manner that facilitates removal without substantial
231     damage to:
232          (A) the land; or
233          (B) the item; or
234          (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
235     transportable factory-built housing unit is considered to be personal property under Section
236     59-2-1503.
237          (20) "Intangible property" means:
238          (a) property that is capable of private ownership separate from tangible property,
239     including:
240          (i) money;
241          (ii) credits;
242          (iii) bonds;
243          (iv) stocks;
244          (v) representative property;
245          (vi) franchises;
246          (vii) licenses;
247          (viii) trade names;
248          (ix) copyrights; and
249          (x) patents;
250          (b) a low-income housing tax credit;
251          (c) goodwill; or
252          (d) a renewable energy tax credit or incentive, including:
253          (i) a federal renewable energy production tax credit under Section 45, Internal Revenue
254     Code;
255          (ii) a federal energy credit for qualified renewable electricity production facilities under
256     Section 48, Internal Revenue Code;
257          (iii) a federal grant for a renewable energy property under American Recovery and
258     Reinvestment Act of 2009, Pub. L. No. 111-5, Section 1603; and
259          (iv) a tax credit under Subsection 59-7-614[(2)(c)](5).
260          (21) "Livestock" means:
261          (a) a domestic animal;
262          (b) a fur-bearing animal;
263          (c) a honeybee; or
264          (d) poultry.
265          (22) "Low-income housing tax credit" means:
266          (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
267     or
268          (b) a low-income housing tax credit under:
269          (i) Section 59-7-607; or
270          (ii) Section 59-10-1010.
271          (23) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
272          (24) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
273     valuable mineral.
274          (25) "Mining" means the process of producing, extracting, leaching, evaporating, or
275     otherwise removing a mineral from a mine.
276          (26) (a) "Mobile flight equipment" means tangible personal property that is:
277          (i) owned or operated by an:
278          (A) air charter service;
279          (B) air contract service; or
280          (C) airline; and
281          (ii) (A) capable of flight;
282          (B) attached to an aircraft that is capable of flight; or
283          (C) contained in an aircraft that is capable of flight if the tangible personal property is
284     intended to be used:
285          (I) during multiple flights;
286          (II) during a takeoff, flight, or landing; and
287          (III) as a service provided by an air charter service, air contract service, or airline.
288          (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
289     engine that is rotated:
290          (A) at regular intervals; and
291          (B) with an engine that is attached to the aircraft.
292          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
293     commission may make rules defining the term "regular intervals."
294          (27) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts,
295     sand, rock, gravel, and all carboniferous materials.
296          (28) "Part-year residential property" means property that is not residential property on
297     January 1 of a calendar year but becomes residential property after January 1 of the calendar
298     year.
299          (29) "Personal property" includes:
300          (a) every class of property as defined in Subsection (30) that is the subject of
301     ownership and not included within the meaning of the terms "real estate" and "improvements";
302          (b) gas and water mains and pipes laid in roads, streets, or alleys;
303          (c) bridges and ferries;
304          (d) livestock; and
305          (e) outdoor advertising structures as defined in Section 72-7-502.
306          (30) (a) "Property" means property that is subject to assessment and taxation according
307     to its value.
308          (b) "Property" does not include intangible property as defined in this section.
309          (31) "Public utility," for purposes of this chapter, means the operating property of a
310     railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
311     company, electrical corporation, telephone corporation, sewerage corporation, or heat
312     corporation where the company performs the service for, or delivers the commodity to, the
313     public generally or companies serving the public generally, or in the case of a gas corporation
314     or an electrical corporation, where the gas or electricity is sold or furnished to any member or
315     consumers within the state for domestic, commercial, or industrial use. Public utility also
316     means the operating property of any entity or person defined under Section 54-2-1 except water
317     corporations.
318          (32) (a) Subject to Subsection (32)(b), "qualifying exempt primary residential rental
319     personal property" means household furnishings, furniture, and equipment that:
320          (i) are used exclusively within a dwelling unit that is the primary residence of a tenant;
321          (ii) are owned by the owner of the dwelling unit that is the primary residence of a
322     tenant; and
323          (iii) after applying the residential exemption described in Section 59-2-103, are exempt
324     from taxation under this chapter in accordance with Subsection 59-2-1115(2).
325          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
326     commission may by rule define the term "dwelling unit" for purposes of this Subsection (32)
327     and Subsection (35).
328          (33) "Real estate" or "real property" includes:
329          (a) the possession of, claim to, ownership of, or right to the possession of land;
330          (b) all mines, minerals, and quarries in and under the land, all timber belonging to
331     individuals or corporations growing or being on the lands of this state or the United States, and
332     all rights and privileges appertaining to these; and
333          (c) improvements.
334          (34) "Relationship with an owner of the property's land surface rights" means a
335     relationship described in Subsection 267(b), Internal Revenue Code:
336          (a) except that notwithstanding Subsection 267(b), Internal Revenue Code, the term
337     25% shall be substituted for the term 50% in Subsection 267(b), Internal Revenue Code; and
338          (b) using the ownership rules of Subsection 267(c), Internal Revenue Code, for
339     determining the ownership of stock.
340          (35) (a) Subject to Subsection (35)(b), "residential property," for the purposes of the
341     reductions and adjustments under this chapter, means any property used for residential
342     purposes as a primary residence.
343          (b) Subject to Subsection (35)(c), "residential property":
344          (i) except as provided in Subsection (35)(b)(ii), includes household furnishings,
345     furniture, and equipment if the household furnishings, furniture, and equipment are:
346          (A) used exclusively within a dwelling unit that is the primary residence of a tenant;
347     and
348          (B) owned by the owner of the dwelling unit that is the primary residence of a tenant;
349     and
350          (ii) does not include property used for transient residential use.
351          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
352     commission may by rule define the term "dwelling unit" for purposes of Subsection (32) and
353     this Subsection (35).
354          (36) "Split estate mineral rights owner" means a person who:
355          (a) has a legal right to extract a mineral from property;
356          (b) does not hold more than a 25% interest in:
357          (i) the land surface rights of the property where the wellhead is located; or
358          (ii) an entity with an ownership interest in the land surface rights of the property where
359     the wellhead is located;
360          (c) is not an entity in which the owner of the land surface rights of the property where
361     the wellhead is located holds more than a 25% interest; and
362          (d) does not have a relationship with an owner of the land surface rights of the property
363     where the wellhead is located.
364          (37) (a) "State-assessed commercial vehicle" means:
365          (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
366     to transport passengers, freight, merchandise, or other property for hire; or
367          (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
368     transports the vehicle owner's goods or property in furtherance of the owner's commercial
369     enterprise.
370          (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
371     are specified in Subsection (8)(c) as county-assessed commercial vehicles.
372          (38) "Taxable value" means fair market value less any applicable reduction allowed for
373     residential property under Section 59-2-103.
374          (39) "Tax area" means a geographic area created by the overlapping boundaries of one
375     or more taxing entities.
376          (40) "Taxing entity" means any county, city, town, school district, special taxing
377     district, local district under Title 17B, Limited Purpose Local Government Entities - Local
378     Districts, or other political subdivision of the state with the authority to levy a tax on property.
379          (41) "Tax roll" means a permanent record of the taxes charged on property, as extended
380     on the assessment roll and may be maintained on the same record or records as the assessment
381     roll or may be maintained on a separate record properly indexed to the assessment roll. It
382     includes tax books, tax lists, and other similar materials.
383          Section 2. Section 59-7-614 is amended to read:
384          59-7-614. Renewable energy systems tax credits -- Definitions -- Certification --
385     Rulemaking authority -- Revenue and Taxation Interim Committee study.
386          (1) As used in this section:
387          (a) (i) "Active solar system"[: (i)] means a system of equipment that is capable of:
388          (A) collecting and converting incident solar radiation into thermal, mechanical, or
389     electrical energy[,]; and
390          (B) transferring [these forms] a form of energy described in Subsection (1)(a)(i)(A) by
391     a separate apparatus to storage or to the point of use[; and].
392          (ii) "Active solar system" includes water heating, space heating or cooling, and
393     electrical or mechanical energy generation.
394          (b) "Biomass system" means [any] a system of apparatus and equipment for use in:
395          (i) converting material into biomass energy, as defined in Section 59-12-102[,]; and
396          (ii) transporting [that] the biomass energy by separate apparatus to the point of use or
397     storage.
398          [(c) "Business entity" means any sole proprietorship, estate, trust, partnership,
399     association, corporation, cooperative, or other entity under which business is conducted or
400     transacted.]
401          [(d)] (c) "Commercial energy system" means [any active solar, passive solar,
402     geothermal electricity, direct-use geothermal, geothermal heat-pump system, wind,
403     hydroenergy, or biomass system used] a system that is:
404          (i) (A) an active solar system;
405          (B) a biomass system;
406          (C) a direct use geothermal system;
407          (D) a geothermal electricity system;
408          (E) a geothermal heat pump system;
409          (F) a hydroenergy system;
410          (G) a passive solar system; or
411          (H) a wind system;
412          (ii) located in the state; and
413          (iii) used:
414          (A) to supply energy to a commercial unit; or
415          (B) as a commercial enterprise.
416          [(e)] (d) "Commercial enterprise" means [a business] an entity [whose], the purpose of
417     which is to produce electrical, mechanical, or thermal energy for sale from a commercial
418     energy system.
419          [(f)] (e) (i) "Commercial unit" means [any] a building or structure that [a business] an
420     entity uses to transact [its] business.
421          (ii) Notwithstanding Subsection (1)[(f)](e)(i):
422          (A) [in the case of] with respect to an active solar system used for agricultural water
423     pumping or a wind system, each individual energy generating device [shall] is considered to be
424     a commercial unit; [and] or
425          (B) if an energy system is the building or structure that [a business] an entity uses to
426     transact [its] business, a commercial unit is the complete energy system itself.
427          [(g)] (f) "Direct use geothermal system" means a system of apparatus and equipment
428     [enabling] that enables the direct use of [thermal] geothermal energy[, generally between 100
429     and 300 degrees Fahrenheit, that is contained in the earth] to meet energy needs, including
430     heating a building, an industrial process, and aquaculture.
431          [(h)] (g) "Geothermal electricity" means energy that is:
432          (i) contained in heat that continuously flows outward from the earth [that is]; and
433          (ii) used as a sole source of energy to produce electricity.
434          (h) "Geothermal energy" means energy generated by heat that is contained in the earth.
435          (i) "Geothermal heat pump system" means a system of apparatus and equipment
436     [enabling] that:
437          (i) enables the use of thermal properties contained in the earth at temperatures well
438     below 100 degrees Fahrenheit [to help]; and
439          (ii) helps meet heating and cooling needs of a structure.
440          (j) "Hydroenergy system" means a system of apparatus and equipment that is capable
441     of:
442          (i) intercepting and converting kinetic water energy into electrical or mechanical
443     energy; and
444          (ii) transferring this form of energy by separate apparatus to the point of use or storage.
445          [(k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
446     59-10-103 and an individual as defined in Section 59-10-103.]
447          [(l)] (k) "Office" means the Office of Energy Development created in Section
448     63M-4-401.
449          [(m)] (l) (i) "Passive solar system"[: (i)] means a direct thermal system that utilizes the
450     structure of a building and its operable components to provide for collection, storage, and
451     distribution of heating or cooling during the appropriate times of the year by utilizing the
452     climate resources available at the site[; and].
453          (ii) "Passive solar system" includes those portions and components of a building that
454     are expressly designed and required for the collection, storage, and distribution of solar energy.
455          (m) (i) "Principal recovery portion" means the portion of a lease payment that
456     constitutes the cost a person incurs in acquiring a commercial energy system.
457          (ii) "Principal recovery portion" does not include:
458          (A) an interest charge; or
459          (B) a maintenance expense.
460          (n) "Residential energy system" means [any active solar, passive solar, biomass,
461     direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system] the
462     following used to supply energy to or for [any] a residential unit[.]:
463          (i) an active solar system;
464          (ii) a biomass system;
465          (iii) a direct use geothermal system;
466          (iv) a geothermal heat pump system;
467          (v) a hydroenergy system;
468          (vi) a passive solar system; or
469          (vii) a wind system.
470          (o) (i) "Residential unit" means [any] a house, condominium, apartment, or similar
471     dwelling unit that:
472          (A) is located in the state; and
473          (B) serves as a dwelling for a person, group of persons, or a family [but].
474          (ii) "Residential unit" does not include property subject to a fee under:
475          [(i)] (A) Section 59-2-404;
476          [(ii)] (B) Section 59-2-405;
477          [(iii)] (C) Section 59-2-405.1;
478          [(iv)] (D) Section 59-2-405.2; or
479          [(v)] (E) Section 59-2-405.3.
480          (p) "Wind system" means a system of apparatus and equipment that is capable of:
481          (i) intercepting and converting wind energy into mechanical or electrical energy; and
482          (ii) transferring these forms of energy by a separate apparatus to the point of use, sale,
483     or storage.
484          [(2) (a) (i) A business entity that purchases and completes or participates in the
485     financing of a residential energy system to supply all or part of the energy required for a
486     residential unit owned or used by the business entity and located in the state may claim a
487     nonrefundable tax credit as provided in this Subsection (2)(a).]
488          (2) A taxpayer may claim an energy system tax credit as provided in this section
489     against a tax due under this chapter for a taxable year.
490          (3) (a) Subject to the other provisions of this Subsection (3), a taxpayer may claim a
491     nonrefundable tax credit under this Subsection (3) with respect to a residential unit the taxpayer
492     owns or uses if:
493          (i) the taxpayer:
494          (A) purchases and completes a residential energy system to supply all or part of the
495     energy required for the residential unit; or
496          (B) participates in the financing of a residential energy system to supply all or part of
497     the energy required for the residential unit;
498          (ii) the residential energy system is completed and placed in service on or after January
499     1, 2007; and
500          (iii) the taxpayer obtains a written certification from the office in accordance with
501     Subsection (7).
502          [(ii) (A) The] (b) (i) Subject to Subsections (3)(b)(ii) through (v), the tax credit is equal
503     to 25% of the reasonable costs of each residential energy system installed with respect to each
504     residential unit the [business entity] taxpayer owns or uses[, including].
505          (ii) A tax credit under this Subsection (3) may include installation costs[, against any
506     tax due under this chapter].
507          (iii) A taxpayer may claim a tax credit under this Subsection (3) for the taxable year in
508     which the residential energy system is completed and placed in service.
509          (iv) If the amount of a tax credit under this Subsection (3) exceeds a taxpayer's tax
510     liability under this chapter for a taxable year, the amount of the tax credit exceeding the
511     liability may be carried forward for a period that does not exceed the next four taxable years.
512          [(B)] (v) The total amount of [each] tax credit a taxpayer may claim under this
513     Subsection [(2)(a)] (3) may not exceed $2,000 per residential unit.
514          [(C) The tax credit under this Subsection (2)(a) is allowed for any residential energy
515     system completed and placed in service on or after January 1, 2007.]
516          [(iii)] (c) If a [business entity] taxpayer sells a residential unit to [an individual
517     taxpayer] another person before [making a claim for] the taxpayer claims the tax credit under
518     this Subsection [(2)(a)] (3)[, the business entity may]:
519          [(A)] (i) the taxpayer may assign [its right to this] the tax credit to the [individual
520     taxpayer] other person; and
521          [(B)] (ii) (A) [if the business entity assigns its right to the tax credit to an individual
522     taxpayer under Subsection (2)(a)(iii)(A), the individual taxpayer] if the other person files a
523     return under this chapter, the other person may claim the tax credit under this section as if the
524     [individual taxpayer had completed or participated in the costs of the residential energy system
525     under Section 59-10-1014.] other person had met the requirements of this section to claim the
526     tax credit; or
527          (B) if the other person files a return under Chapter 10, Individual Income Tax Act, the
528     other person may claim the tax credit under Section 59-10-1014 as if the other person had met
529     the requirements of Section 59-10-1014 to claim the tax credit.
530          [(b) (i) A business entity that purchases or participates in the financing of a commercial
531     energy system situated in Utah may claim a refundable tax credit as provided in this Subsection
532     (2)(b) if the commercial energy system does not use wind, geothermal electricity, solar, or
533     biomass equipment capable of producing a total of 660 or more kilowatts of electricity or if the
534     commercial energy system does not use solar equipment capable of producing 2,000 or more
535     kilowatts of electricity, and:]
536          (4) (a) Subject to the other provisions of this Subsection (4), a taxpayer may claim a
537     refundable tax credit under this Subsection (4) with respect to a commercial energy system if:
538          (i) the commercial energy system does not use:
539          (A) wind, geothermal electricity, solar, or biomass equipment capable of producing a
540     total of 660 or more kilowatts of electricity; or
541          (B) solar equipment capable of producing 2,000 or more kilowatts of electricity;
542          (ii) the taxpayer purchases or participates in the financing of the commercial energy
543     system;
544          (iii) (A) the commercial energy system supplies all or part of the energy required by
545     commercial units owned or used by the [business entity] taxpayer; or
546          (B) the [business entity] taxpayer sells all or part of the energy produced by the
547     commercial energy system as a commercial enterprise[.];
548          (iv) the commercial energy system is completed and placed in service on or after
549     January 1, 2007; and
550          (v) the taxpayer obtains a written certification from the office in accordance with
551     Subsection (7).
552          [(ii) (A) A business entity is entitled to a] (b) (i) Subject to Subsections (4)(b)(ii)
553     through (v), the tax credit [of up] is equal to 10% of the reasonable costs of [any] the
554     commercial energy system [installed, including].
555          (ii) A tax credit under this Subsection (4) may include installation costs[, against any
556     tax due under this chapter].
557          (iii) A taxpayer may claim a tax credit under this Subsection (4) for the taxable year in
558     which the commercial energy system is completed and placed in service.
559          (iv) A tax credit under this Subsection (4) may not be carried forward or carried back.
560          [(B) Notwithstanding Subsection (2)(b)(ii)(A), the]
561          (v) The total amount of [the] tax credit a taxpayer may claim under this Subsection
562     [(2)(b)] (4) may not exceed $50,000 per commercial unit.
563          [(C) The tax credit under this Subsection (2)(b) is allowed for any commercial energy
564     system completed and placed in service on or after January 1, 2007.]
565          [(iii)] (c) (i) [A business entity that leases] Subject to Subsections (4)(c)(ii) and (iii), a
566     taxpayer that is a lessee of a commercial energy system installed on a commercial unit [is
567     eligible for the] may claim a tax credit under this Subsection [(2)(b)] (4) if the [lessee can
568     confirm] taxpayer confirms that the lessor irrevocably elects not to claim the tax credit.
569          [(iv) Only] (ii) A taxpayer described in Subsection (4)(c)(i) may claim as a tax credit
570     under this Subsection (4) only the principal recovery portion of the lease payments[, which is
571     the cost incurred by a business entity in acquiring a commercial energy system, excluding
572     interest charges and maintenance expenses, is eligible for the tax credit under this Subsection
573     (2)(b)].
574          [(v) A business entity that leases a commercial energy system is eligible to use the]
575          (iii) A taxpayer described in Subsection (4)(c)(i) may claim a tax credit under this
576     Subsection [(2)(b)] (4) for a period [no greater than] that does not exceed seven taxable years
577     [from the initiation of the lease] after the date the lease begins, as stated in the lease agreement.
578          [(vi) A tax credit allowed by this Subsection (2)(b) may not be carried forward or
579     carried back.]
580          [(c) (i) A business entity that owns a commercial energy system located in the state
581     using wind, geothermal electricity, or biomass equipment capable of producing a total of 660 or
582     more kilowatts of electricity may claim a refundable tax credit as provided in this Subsection
583     (2)(c) if:]
584          (5) (a) Subject to the other provisions of this Subsection (5), a taxpayer may claim a
585     refundable tax credit under this Subsection (5) with respect to a commercial energy system if:
586          (i) the commercial energy system uses wind, geothermal electricity, or biomass
587     equipment capable of producing a total of 660 or more kilowatts of electricity;
588          (ii) (A) the commercial energy system supplies all or part of the energy required by
589     commercial units owned or used by the [business entity] taxpayer; or
590          (B) the [business entity] taxpayer sells all or part of the energy produced by the
591     commercial energy system as a commercial enterprise[.];
592          (iii) the commercial energy system is completed and placed in service on or after
593     January 1, 2007; and
594          (iv) the taxpayer obtains a written certification from the office in accordance with
595     Subsection (7).
596          [(ii) (A) A business entity may claim]
597          (b) (i) Subject to Subsections (5)(b)(ii) and (iii), a tax credit under this [section]
598     Subsection (5) is equal to the product of:
599          [(I)] (A) 0.35 cents; and
600          [(II)] (B) the kilowatt hours of electricity produced and [either] used or sold during the
601     taxable year.
602          [(B) (I) The tax credit calculated under Subsection (2)(c)(ii)(A)]
603          (ii) A tax credit under this Subsection (5) may be claimed for production occurring
604     during a period of 48 months beginning with the month in which the commercial energy
605     system is placed in commercial service.
606          [(II) The tax credit allowed by this Subsection (2)(c) for each year]
607          (iii) A tax credit under this Subsection (5) may not be carried forward or carried back.
608          [(C) The tax credit under this Subsection (2)(c) is allowed for any commercial energy
609     system completed and placed in service on or after January 1, 2007.]
610          [(iii) A business entity that leases]
611          (c) A taxpayer that is a lessee of a commercial energy system installed on a commercial
612     unit [is eligible for the] may claim a tax credit under this Subsection [(2)(c)] (5) if the [lessee
613     can confirm] taxpayer confirms that the lessor irrevocably elects not to claim the tax credit.
614          [(d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year
615     in which the energy system is completed and placed in service.]
616          [(ii) Additional energy systems or parts of energy systems may be claimed for
617     subsequent years.]
618          [(iii) If the amount of a tax credit under Subsection (2)(a) exceeds a business entity's
619     tax liability under this chapter for a taxable year, the amount of the tax credit exceeding the
620     liability may be carried forward for a period that does not exceed the next four taxable years.]
621          [(3) (a) A business entity that owns a commercial energy system located in the state
622     that uses solar equipment capable of producing a total of 660 or more kilowatts of electricity]
623          (6) (a) Subject to the other provisions of this Subsection (6), a taxpayer may claim a
624     refundable tax credit as provided in this Subsection [(3)] (6) if:
625          (i) the taxpayer owns a commercial energy system that uses solar equipment capable of
626     producing a total of 660 or more kilowatts of electricity;
627          [(i)] (ii) (A) the commercial energy system supplies all or part of the energy required
628     by commercial units owned or used by the [business entity] taxpayer; or
629          (B) the [business entity] taxpayer sells all or part of the energy produced by the
630     commercial energy system as a commercial enterprise; [and]
631          [(ii)] (iii) the [business entity] taxpayer does not claim a tax credit under Subsection
632     [(2)(b).] (4);
633          (iv) the commercial energy system is completed and placed in service on or after
634     January 1, 2015; and
635          (v) the taxpayer obtains a written certification from the office in accordance with
636     Subsection (7).
637          (b) [A business entity may claim] (i) Subject to Subsections (6)(b)(ii) and (iii), a tax
638     credit under this [section] Subsection (6) is equal to the product of:
639          [(i)] (A) 0.35 cents; and
640          [(ii)] (B) the kilowatt hours of electricity produced and [either] used or sold during the
641     taxable year.
642          [(c) The] (ii) A tax credit under this Subsection [(3)] (6) may be claimed for
643     production occurring during a period of 48 months beginning with the month in which the
644     commercial energy system is placed in commercial service.
645          [(d) The] (iii) A tax credit under this Subsection [(3)] (6) may not be carried forward
646     or carried back.
647          [(e) The tax credit under this Subsection (3) is allowed for a commercial energy system
648     completed and placed in service on or after January 1, 2015.]
649          [(f)] (c) A [business entity that leases] taxpayer that is a lessee of a commercial energy
650     system installed on a commercial unit may claim a tax credit under this Subsection [(3)] (6) if
651     the [business entity that is the lessee can confirm] taxpayer confirms that the lessor irrevocably
652     elects not to claim the tax credit.
653          [(4) (a) Except as provided in Subsection (4)(b), the tax credits provided for under
654     Subsection (2) or (3) are]
655          (7) (a) Before a taxpayer may claim a tax credit under this section, the taxpayer shall
656     obtain a written certification from the office.
657          (b) The office shall issue a taxpayer a written certification if the office determines that:
658          (i) the taxpayer meets the requirements of this section to receive a tax credit; and
659          (ii) the residential energy system or commercial energy system with respect to which
660     the taxpayer seeks to claim a tax credit:
661          (A) has been completely installed;
662          (B) is a viable system for saving or producing energy from renewable resources; and
663          (C) is safe, reliable, efficient, and technically feasible to ensure that the residential
664     energy system or commercial energy system uses the state's renewable and nonrenewable
665     energy resources in an appropriate and economic manner.
666          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
667     office may make rules:
668          (i) for determining whether a residential energy system or commercial energy system
669     meets the requirements of Subsection (7)(b)(ii); and
670          (ii) for purposes of a tax credit under Subsection (3) or (4), establishing the reasonable
671     costs of a residential energy system or a commercial energy system, as an amount per unit of
672     energy production.
673          (d) A taxpayer that obtains a written certification from the office shall retain the
674     certification for the same time period a person is required to keep books and records under
675     Section 59-1-1406.
676          (8) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
677     commission may make rules to address the certification of a tax credit under this section.
678          (9) A tax credit under this section is in addition to any tax credits provided under the
679     laws or rules and regulations of the United States.
680          [(b)] (10) A purchaser of one or more solar units that claims a tax credit under Section
681     59-7-614.3 for the purchase of the one or more solar units may not claim a tax credit under this
682     section for that purchase.
683          [(c) (i) The office may set standards for residential and commercial energy systems
684     claiming a tax credit under Subsections (2)(a) and (b) that cover the safety, reliability,
685     efficiency, leasing, and technical feasibility of the systems to ensure that the systems eligible
686     for the tax credit use the state's renewable and nonrenewable energy resources in an appropriate
687     and economic manner.]
688          [(ii) The office may set standards for residential and commercial energy systems that
689     establish the reasonable costs of an energy system, as used in Subsections (2)(a)(ii)(A) and
690     (2)(b)(ii)(A), as an amount per unit of energy production.]
691          [(iii) A tax credit may not be taken under Subsection (2) or (3) until the office has
692     certified that the energy system has been completely installed and is a viable system for saving
693     or production of energy from renewable resources.]
694          [(d) The office and the commission may make rules in accordance with Title 63G,
695     Chapter 3, Utah Administrative Rulemaking Act, that are necessary to implement this section.]
696          [(5)] (11) (a) On or before October 1, [2012] 2017, and every five years [thereafter]
697     after 2017, the Revenue and Taxation Interim Committee shall review each tax credit provided
698     by this section and report its recommendations to the Legislative Management Committee
699     concerning whether the tax credit should be continued, modified, or repealed.
700          (b) The Revenue and Taxation Interim Committee's report under Subsection [(5)]
701     (11)(a) shall include information concerning the cost of the tax credit, the purpose and
702     effectiveness of the tax credit, and the state's benefit from the tax credit.
703          Section 3. Section 59-10-1014 is amended to read:
704          59-10-1014. Nonrefundable renewable energy systems tax credits -- Definitions --
705     Certification -- Rulemaking authority -- Revenue and Taxation Interim Committee study.
706          (1) As used in this [part] section:
707          (a) (i) "Active solar system"[: (i)] means a system of equipment that is capable of:
708          (A) collecting and converting incident solar radiation into thermal, mechanical, or
709     electrical energy[,]; and
710          (B) transferring [these forms] a form of energy described in Subsection (1)(a)(i)(A) by
711     a separate apparatus to storage or to the point of use[; and].
712          (ii) "Active solar system" includes water heating, space heating or cooling, and
713     electrical or mechanical energy generation.
714          (b) "Biomass system" means [any] a system of apparatus and equipment for use in:
715          (i) converting material into biomass energy, as defined in Section 59-12-102[,]; and
716          (ii) transporting [that] the biomass energy by separate apparatus to the point of use or
717     storage.
718          [(c) "Business entity" means any entity under which business is conducted or
719     transacted.]
720          [(d)] (c) "Direct use geothermal system" means a system of apparatus and equipment
721     [enabling] that enables the direct use of [thermal] geothermal energy[, generally between 100
722     and 300 degrees Fahrenheit, that is contained in the earth] to meet energy needs, including
723     heating a building, an industrial process, and aquaculture.
724          [(e)] (d) "Geothermal electricity" means energy that is:
725          (i) contained in heat that continuously flows outward from the earth [that is]; and
726          (ii) used as a sole source of energy to produce electricity.
727          (e) "Geothermal energy" means energy generated by heat that is contained in the earth.
728          (f) "Geothermal heat pump system" means a system of apparatus and equipment
729     [enabling] that:
730          (i) enables the use of thermal properties contained in the earth at temperatures well
731     below 100 degrees Fahrenheit [to help]; and
732          (ii) helps meet heating and cooling needs of a structure.
733          (g) "Hydroenergy system" means a system of apparatus and equipment that is capable
734     of:
735          (i) intercepting and converting kinetic water energy into electrical or mechanical
736     energy; and
737          (ii) transferring this form of energy by separate apparatus to the point of use or storage.
738          (h) "Office" means the Office of Energy Development created in Section 63M-4-401.
739          (i) (i) "Passive solar system"[:(i)] means a direct thermal system that utilizes the
740     structure of a building and its operable components to provide for collection, storage, and
741     distribution of heating or cooling during the appropriate times of the year by utilizing the
742     climate resources available at the site[; and].
743          (ii) "Passive solar system" includes those portions and components of a building that
744     are expressly designed and required for the collection, storage, and distribution of solar energy.
745          (j) (i) "Principal recovery portion" means the portion of a lease payment that
746     constitutes the cost a person incurs in acquiring a residential energy system.
747          (ii) "Principal recovery portion" does not include:
748          (A) an interest charge; or
749          (B) a maintenance expense.
750          [(j)] (k) "Residential energy system" means [any active solar, passive solar, biomass,
751     direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system] the
752     following used to supply energy to or for [any] a residential unit[.]:
753          (i) an active solar system;
754          (ii) a biomass system;
755          (iii) a direct use geothermal system;
756          (iv) a geothermal heat pump system;
757          (v) a hydroenergy system;
758          (vi) a passive solar system; or
759          (vii) a wind system.
760          [(k)] (l) (i) "Residential unit" means [any] a house, condominium, apartment, or similar
761     dwelling unit that:
762          (A) is located in the state; and
763          (B) serves as a dwelling for a person, group of persons, or a family [but].
764          (ii) "Residential unit" does not include property subject to a fee under:
765          [(i)] (A) Section 59-2-404;
766          [(ii)] (B) Section 59-2-405;
767          [(iii)] (C) Section 59-2-405.1;
768          [(iv)] (D) Section 59-2-405.2; or
769          [(v)] (E) Section 59-2-405.3.
770          [(l)] (m) "Wind system" means a system of apparatus and equipment that is capable of:
771          (i) intercepting and converting wind energy into mechanical or electrical energy; and
772          (ii) transferring these forms of energy by a separate apparatus to the point of use or
773     storage.
774          [(2) For taxable years beginning on or after January 1, 2007, a claimant, estate, or trust
775     may claim a nonrefundable tax credit as provided in this section if:]
776          [(a) a claimant, estate, or trust that is not a business entity purchases and completes or
777     participates in the financing of a residential energy system to supply all or part of the energy for
778     the claimant's, estate's, or trust's residential unit in the state; or]
779          [(b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to
780     another claimant, estate, or trust that is not a business entity before making a claim for a tax
781     credit under Subsection (6) or Section 59-7-614; and]
782          [(ii) the claimant, estate, or trust that is a business entity assigns its right to the tax
783     credit to the claimant, estate, or trust that is not a business entity as provided in Subsection
784     (6)(c) or Subsection 59-7-614(2)(a)(iii).]
785          (2) A claimant, estate, or trust may claim an energy system tax credit as provided in
786     this section against a tax due under this chapter for a taxable year.
787          (3) (a) Subject to the other provisions of this Subsection (3), a claimant, estate, or trust
788     may claim a nonrefundable tax credit under this Subsection (3) with respect to a residential unit
789     the claimant, estate, or trust owns or uses if:
790          (i) the claimant, estate, or trust:
791          (A) purchases and completes a residential energy system to supply all or part of the
792     energy required for the residential unit; or
793          (B) participates in the financing of a residential energy system to supply all or part of
794     the energy required for the residential unit;
795          (ii) the residential energy system is completed and placed in service on or after January
796     1, 2007; and
797          (iii) the claimant, estate, or trust obtains a written certification from the office in
798     accordance with Subsection (4).
799          [(3) (a) The] (b) (i) Subject to Subsections (3)(b)(ii) through (vi), the tax credit
800     [described in Subsection (2)] is equal to 25% of the reasonable costs of each residential energy
801     system[, including installation costs, against any income tax liability of the claimant, estate, or
802     trust under this chapter for the taxable year in which the residential energy system is completed
803     and placed in service] installed with respect to each residential unit the claimant, estate, or trust
804     owns or uses.
805          [(b) The total amount of each tax credit under this section may not exceed $2,000 per
806     residential unit.]
807          [(c) The tax credit under this section is allowed for any residential energy system
808     completed and placed in service on or after January 1, 2007.]
809          [(4) (a) The tax credit provided for in this section shall be claimed in the return for the
810     taxable year in which the residential energy system is completed and placed in service.]
811          (ii) A tax credit under this Subsection (3) may include installation costs.
812          (iii) A claimant, estate, or trust may claim a tax credit under this Subsection (3) for the
813     taxable year in which the residential energy system is completed and placed in service.
814          (iv) If the amount of a tax credit under this Subsection (3) exceeds a claimant's,
815     estate's, or trust's tax liability under this chapter for a taxable year, the amount of the tax credit
816     exceeding the liability may be carried forward for a period that does not exceed the next four
817     taxable years.
818          (v) The total amount of tax credit a claimant, estate, or trust may claim under this
819     Subsection (3) may not exceed $2,000 per residential unit.
820          [(b) Additional] (vi) A claimant, estate, or trust may claim a tax credit with respect to
821     additional residential energy systems or parts of residential energy systems [may be similarly
822     claimed in returns] for a subsequent taxable [years as long as] year if the total amount
823     [claimed] of tax credit the claimant, estate, or trust claims does not exceed $2,000 per
824     residential unit.
825          [(c) If the amount of the tax credit under this section exceeds the income tax liability of
826     the claimant, estate, or trust claiming the tax credit under this section for that taxable year, then
827     the amount not used may be carried over for a period that does not exceed the next four taxable
828     years.]
829          [(5) (a) A] (c) (i) Subject to Subsections (3)(c)(ii) and (iii), a claimant, estate, or trust
830     [that is not a business entity] that leases a residential energy system installed on a residential
831     unit [is eligible for the residential energy] may claim a tax credit under this Subsection (3) if
832     [that] the claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the
833     tax credit.
834          [(b) Only] (ii) A claimant, estate, or trust described in Subsection (3)(c)(i) that leases a
835     residential energy system may claim as a tax credit under this Subsection (3) only the principal
836     recovery portion of the lease payments[, which is the cost incurred by the claimant, estate, or
837     trust in acquiring the residential energy system excluding interest charges and maintenance
838     expenses, is eligible for the tax credits].
839          [(c)] (iii) A claimant, estate, or trust described in [this] Subsection [(5)] (3)(c)(i) that
840     leases a residential energy system may [use the tax credits] claim a tax credit under this
841     Subsection (3) for a period that does not exceed seven taxable years [from the initiation of the
842     lease.] after the date the lease begins, as stated in the lease agreement.
843          (d) If a claimant, estate, or trust sells a residential unit to another person before the
844     claimant, estate, or trust claims the tax credit under this Subsection (3):
845          (i) the claimant, estate, or trust may assign the tax credit to the other person; and
846          (ii) (A) if the other person files a return under Chapter 7, Corporate Franchise and
847     Income Taxes, the other person may claim the tax credit as if the other person had met the
848     requirements of Section 59-7-614 to claim the tax credit; or
849          (B) if the other person files a return under this chapter, the other person may claim the
850     tax credit under this section as if the other person had met the requirements of this section to
851     claim the tax credit.
852          [(6) (a) A claimant, estate, or trust that is a business entity that purchases and
853     completes or participates in the financing of a residential energy system to supply all or part of
854     the energy required for a residential unit owned or used by the claimant, estate, or trust that is a
855     business entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
856     Subsection (6).]
857          [(b) (i) For taxable years beginning on or after January 1, 2007, a claimant, estate, or
858     trust that is a business entity is entitled to a nonrefundable tax credit equal to 25% of the
859     reasonable costs of a residential energy system installed with respect to each residential unit it
860     owns or uses, including installation costs, against any tax due under this chapter for the taxable
861     year in which the energy system is completed and placed in service.]
862          [(ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000
863     per residential unit.]
864          [(iii) The tax credit under this Subsection (6) is allowed for any residential energy
865     system completed and placed in service on or after January 1, 2007.]
866          [(c) If a claimant, estate, or trust that is a business entity sells a residential unit to a
867     claimant, estate, or trust that is not a business entity before making a claim for the tax credit
868     under this Subsection (6), the claimant, estate, or trust that is a business entity may:]
869          [(i) assign its right to this tax credit to the claimant, estate, or trust that is not a business
870     entity; and]
871          [(ii) if the claimant, estate, or trust that is a business entity assigns its right to the tax
872     credit to a claimant, estate, or trust that is not a business entity under Subsection (6)(c)(i), the
873     claimant, estate, or trust that is not a business entity may claim the tax credit as if that claimant,
874     estate, or trust that is not a business entity had completed or participated in the costs of the
875     residential energy system under this section.]
876          [(7) (a) A tax credit under this section may be claimed for the taxable year in which the
877     residential energy system is completed and placed in service.]
878          [(b) Additional residential energy systems or parts of residential energy systems may be
879     claimed for subsequent years.]
880          [(c) If the amount of a tax credit under this section exceeds the tax liability of the
881     claimant, estate, or trust claiming the tax credit under this section for a taxable year, the amount
882     of the tax credit exceeding the tax liability may be carried over for a period which does not
883     exceed the next four taxable years.]
884          [(8) (a) Except as provided in Subsection (8)(b), tax credits provided for under this
885     section are]
886          (4) (a) Before a claimant, estate, or trust may claim a tax credit under this section, the
887     claimant, estate, or trust shall obtain a written certification from the office.
888          (b) The office shall issue a claimant, estate, or trust a written certification if the office
889     determines that:
890          (i) the claimant, estate, or trust meets the requirements of this section to receive a tax
891     credit; and
892          (ii) the office determines that the residential energy system with respect to which the
893     claimant, estate, or trust seeks to claim a tax credit:
894          (A) has been completely installed;
895          (B) is a viable system for saving or producing energy from renewable resources; and
896          (C) is safe, reliable, efficient, and technically feasible to ensure that the residential
897     energy system uses the state's renewable and nonrenewable energy resources in an appropriate
898     and economic manner.
899          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
900     office may make rules:
901          (i) for determining whether a residential energy system meets the requirements of
902     Subsection (4)(b)(ii); and
903          (ii) for purposes of a tax credit under Subsection (3), establishing the reasonable costs
904     of a residential energy system, as an amount per unit of energy production.
905          (d) A claimant, estate, or trust that obtains a written certification from the office shall
906     retain the certification for the same time period a person is required to keep books and records
907     under Section 59-1-1406.
908          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
909     commission may make rules to address the certification of a tax credit under this section.
910          (6) A tax credit under this section is in addition to any tax credits provided under the
911     laws or rules and regulations of the United States.
912          [(b)] (7) A purchaser of one or more solar units that claims a tax credit under Section
913     59-10-1024 for the purchase of the one or more solar units may not claim a tax credit under this
914     section for that purchase.
915          [(9) (a) The office may set standards for residential energy systems that cover the
916     safety, reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the
917     systems eligible for the tax credit use the state's renewable and nonrenewable energy resources
918     in an appropriate and economic manner.]
919          [(b) The office may set standards for residential and commercial energy systems that
920     establish the reasonable costs of an energy system, as used in Subsections (3)(a) and (6)(b)(i),
921     as an amount per unit of energy production.]
922          [(c) A tax credit may not be taken under this section until the office has certified that
923     the energy system has been completely installed and is a viable system for saving or production
924     of energy from renewable resources.]
925          [(10) The office and the commission may make rules in accordance with Title 63G,
926     Chapter 3, Utah Administrative Rulemaking Act, that are necessary to implement this section.]
927          [(11)] (8) (a) On or before October 1, [2012] 2017, and every five years [thereafter]
928     after 2017, the Revenue and Taxation Interim Committee shall review each tax credit provided
929     by this section and report its recommendations to the Legislative Management Committee
930     concerning whether the tax credit should be continued, modified, or repealed.
931          (b) The Revenue and Taxation Interim Committee's report under Subsection [(11)]
932     (8)(a) shall include information concerning the cost of the tax credit, the purpose and
933     effectiveness of the tax credit, and the state's benefit from the tax credit.
934          Section 4. Section 59-10-1106 is amended to read:
935          59-10-1106. Refundable renewable energy systems tax credits -- Definitions --
936     Certification -- Rulemaking authority -- Revenue and Taxation Interim Committee study.
937          (1) As used in this section:
938          (a) "Active solar system" [is] has the same meaning as defined in Section 59-10-1014.
939          (b) "Biomass system" [is] has the same meaning as defined in Section 59-10-1014.
940          [(c) "Business entity" is as defined in Section 59-10-1014.]
941          [(d)] (c) "Commercial energy system" [means any active solar, passive solar,
942     geothermal electricity, direct-use geothermal, geothermal heat-pump system, wind,
943     hydroenergy, or biomass system used to supply energy to a commercial unit or as a commercial
944     enterprise] has the same meaning as defined in Section 59-7-614.
945          [(e)] (d) "Commercial enterprise" [means a business entity that:] has the same meaning
946     as defined in Section 59-7-614.
947          [(i) is a claimant, estate, or trust; and]
948          [(ii) has the purpose of producing electrical, mechanical, or thermal energy for sale
949     from a commercial energy system.]
950          [(f)] (e) (i) "Commercial unit" [means any building or structure that a business entity
951     that is a claimant, estate, or trust uses to transact its business] has the same meaning as defined
952     in Section 59-7-614.
953          (ii) Notwithstanding Subsection (1)[(f)](e)(i):
954          (A) [in the case of] with respect to an active solar system used for agricultural water
955     pumping or a wind system, each individual energy generating device [shall] is considered to be
956     a commercial unit; [and] or
957          (B) if an energy system is the building or structure that [a business entity that is] a
958     claimant, estate, or trust uses to transact [its] business, a commercial unit is the complete
959     energy system itself.
960          [(g)] (f) "Direct use geothermal system" [is] has the same meaning as defined in
961     Section 59-10-1014.
962          [(h)] (g) "Geothermal electricity" [is] has the same meaning as defined in Section
963     59-10-1014.
964          (h) "Geothermal energy" has the same meaning as defined in Section 59-10-1014.
965          (i) "Geothermal heat pump system" [is] has the same meaning as defined in Section
966     59-10-1014.
967          (j) "Hydroenergy system" [is] has the same meaning as defined in Section 59-10-1014.
968          (k) "Office" means the Office of Energy Development created in Section 63M-4-401.
969          (l) "Passive solar system" [is] has the same meaning as defined in Section 59-10-1014.
970          (m) "Principal recovery portion" has the same meaning as defined in Section
971     59-10-1014.
972          [(m)] (n) "Wind system" [is] has the same meaning as defined in Section 59-10-1014.
973          [(2) (a) (i) A business entity that is a claimant, estate, or trust that purchases or
974     participates in the financing of a commercial energy system situated in Utah is entitled to a
975     refundable tax credit as provided in this Subsection (2)(a) if the commercial energy system
976     does not use wind, geothermal electricity, or biomass equipment capable of producing a total of
977     660 or more kilowatts of electricity and:]
978          (2) A claimant, estate, or trust may claim an energy system tax credit as provided in
979     this section against a tax due under this chapter for a taxable year.
980          (3) (a) Subject to the other provisions of this Subsection (3), a claimant, estate, or trust
981     may claim a refundable tax credit under this Subsection (3) with respect to a commercial
982     energy system if:
983          (i) the commercial energy system does not use:
984          (A) wind, geothermal electricity, solar, or biomass equipment capable of producing a
985     total of 660 or more kilowatts of electricity; or
986          (B) solar equipment capable of producing 2,000 or more kilowatts of electricity;
987          (ii) the claimant, estate, or trust purchases or participates in the financing of the
988     commercial energy system;
989          (iii) (A) the commercial energy system supplies all or part of the energy required by
990     commercial units owned or used by the [business entity that is a] claimant, estate, or trust; or
991          (B) the [business entity that is a] claimant, estate, or trust sells all or part of the energy
992     produced by the commercial energy system as a commercial enterprise[.];
993          (iv) the commercial energy system is completed and placed in service on or after
994     January 1, 2007; and
995          (v) the claimant, estate, or trust obtains a written certification from the office in
996     accordance with Subsection (6).
997          [(ii) (A) A business entity that is a claimant, estate, or trust is entitled to a] (b) (i)
998     Subject to Subsections (3)(b)(ii) through (v), the tax credit [of up] is equal to 10% of the
999     reasonable costs of [any] the commercial energy system [installed, including].
1000          (ii) A tax credit under this Subsection (3) may include installation costs[, against any
1001     tax due under this chapter].
1002          (iii) A claimant, estate, or trust may claim a tax credit under this Subsection (3) for the
1003     taxable year in which the commercial energy system is completed and placed in service.
1004          (iv) A tax credit under this Subsection (3) may not be carried forward or carried back.
1005          [(B) Notwithstanding Subsection (2)(a)(ii)(A), the]
1006          (v) The total amount of [the] tax credit a claimant, estate, or trust may claim under this
1007     Subsection [(2)(a)] (3) may not exceed $50,000 per commercial unit.
1008          [(C) The credit under this Subsection (2)(a) is allowed for any commercial energy
1009     system completed and placed in service on or after January 1, 2007.]
1010          [(iii)] (c) (i) [A business entity that is a claimant, estate, or trust that leases] Subject to
1011     Subsections (3)(c)(ii) and (iii), a claimant, estate, or trust that is a lessee of a commercial
1012     energy system installed on a commercial unit [is eligible for the] may claim a tax credit under
1013     this Subsection [(2)(a)] (3) if the [lessee can confirm] claimant, estate, or trust confirms that the
1014     lessor irrevocably elects not to claim the tax credit.
1015          [(iv) Only] (ii) A claimant, estate, or trust described in Subsection (3)(c)(i) may claim
1016     as a tax credit under this Subsection (3) only the principal recovery portion of the lease
1017     payments[, which is the cost incurred by a business entity that is a claimant, estate, or trust in
1018     acquiring a commercial energy system, excluding interest charges and maintenance expenses,
1019     is eligible for the tax credit under this Subsection (2)(a)].
1020          [(v) A business entity that is a claimant, estate, or trust that leases a commercial energy
1021     system is eligible to use the]
1022          (iii) A claimant, estate, or trust described in Subsection (3)(c)(i) may claim a tax credit
1023     under this Subsection [(2)(a)] (3) for a period [no greater than] that does not exceed seven
1024     taxable years [from the initiation of the lease] after the date the lease begins, as stated in the
1025     lease agreement.
1026          [(b) (i) A business entity that is a claimant, estate, or trust that owns a commercial
1027     energy system situated in Utah using wind, geothermal electricity, or biomass equipment
1028     capable of producing a total of 660 or more kilowatts of electricity is entitled to a refundable
1029     tax credit as provided in this section if:]
1030          (4) (a) Subject to the other provisions of this Subsection (4), a claimant, estate, or trust
1031     may claim a refundable tax credit under this Subsection (4) with respect to a commercial
1032     energy system if:
1033          (i) the commercial energy system uses wind, geothermal electricity, or biomass
1034     equipment capable of producing a total of 660 or more kilowatts of electricity;
1035          (ii) (A) the commercial energy system supplies all or part of the energy required by
1036     commercial units owned or used by the [business entity that is a] claimant, estate, or trust; or
1037          (B) the [business entity that is a] claimant, estate, or trust sells all or part of the energy
1038     produced by the commercial energy system as a commercial enterprise[.];
1039          (iii) the commercial energy system is completed and placed in service on or after
1040     January 1, 2007; and
1041          (iv) the claimant, estate, or trust obtains a written certification from the office in
1042     accordance with Subsection (6).
1043          [(ii) A business entity that is a claimant, estate, or trust is entitled to]
1044          (b) (i) Subject to Subsections (4)(b)(ii) and (iii), a tax credit under this Subsection
1045     [(2)(b)] (4) is equal to the product of:
1046          (A) 0.35 cents; and
1047          (B) the kilowatt hours of electricity produced and [either] used or sold during the
1048     taxable year.
1049          [(iii) The credit allowed by this Subsection (2)(b):]
1050          [(A)] (ii) A tax credit under this Subsection (4) may be claimed for production
1051     occurring during a period of 48 months beginning with the month in which the commercial
1052     energy system is placed in commercial service[; and].
1053          [(B)] (iii) A tax credit under this Subsection (4) may not be carried forward or back.
1054          [(iv) A business entity that is a claimant, estate, or trust that leases]
1055          (c) A claimant, estate, or trust that is a lessee of a commercial energy system installed
1056     on a commercial unit [is eligible for the] may claim a tax credit under this [section] Subsection
1057     (4) if the [lessee can confirm] claimant, estate, or trust confirms that the lessor irrevocably
1058     elects not to claim the tax credit.
1059          [(3) The tax credits provided for under this section are]
1060          (5) (a) Subject to the other provisions of this Subsection (5), a claimant, estate, or trust
1061     may claim a refundable tax credit as provided in this Subsection (5) if:
1062          (i) the claimant, estate, or trust owns a commercial energy system that uses solar
1063     equipment capable of producing a total of 660 or more kilowatts of electricity;
1064          (ii) (A) the commercial energy system supplies all or part of the energy required by
1065     commercial units owned or used by the claimant, estate, or trust; or
1066          (B) the claimant, estate, or trust sells all or part of the energy produced by the
1067     commercial energy system as a commercial enterprise;
1068          (iii) the claimant, estate, or trust does not claim a tax credit under Subsection (3);
1069          (iv) the commercial energy system is completed and placed in service on or after
1070     January 1, 2015; and
1071          (v) the claimant, estate, or trust obtains a written certification from the office in
1072     accordance with Subsection (6).
1073          (b) (i) Subject to Subsections (5)(b)(ii) and (iii), a tax credit under this Subsection (5)
1074     is equal to the product of:
1075          (A) 0.35 cents; and
1076          (B) the kilowatt hours of electricity produced and used or sold during the taxable year.
1077          (ii) A tax credit under this Subsection (5) may be claimed for production occurring
1078     during a period of 48 months beginning with the month in which the commercial energy
1079     system is placed in commercial service.
1080          (iii) A tax credit under this Subsection (5) may not be carried forward or carried back.
1081          (c) A claimant, estate, or trust that is a lessee of a commercial energy system installed
1082     on a commercial unit may claim a tax credit under this Subsection (5) if the claimant, estate, or
1083     trust confirms that the lessor irrevocably elects not to claim the tax credit.
1084          (6) (a) Before a claimant, estate, or trust may claim a tax credit under this section, the
1085     claimant, estate, or trust shall obtain a written certification from the office.
1086          (b) The office shall issue a claimant, estate, or trust a written certification if the office
1087     determines that:
1088          (i) the claimant, estate, or trust meets the requirements of this section to receive a tax
1089     credit; and
1090          (ii) the office determines that the commercial energy system with respect to which the
1091     claimant, estate, or trust seeks to claim a tax credit:
1092          (A) has been completely installed;
1093          (B) is a viable system for saving or producing energy from renewable resources; and
1094          (C) is safe, reliable, efficient, and technically feasible to ensure that the commercial
1095     energy system uses the state's renewable and nonrenewable resources in an appropriate and
1096     economic manner.
1097          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
1098     office may make rules:
1099          (i) for determining whether a commercial energy system meets the requirements of
1100     Subsection (6)(b)(ii); and
1101          (ii) for purposes of a tax credit under Subsection (3), establishing the reasonable costs
1102     of a commercial energy system, as an amount per unit of energy production.
1103          (d) A claimant, estate, or trust that obtains a written certification from the office shall
1104     retain the certification for the same time period a person is required to keep books and records
1105     under Section 59-1-1406.
1106          (7) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
1107     commission may make rules to address the certification of a tax credit under this section.
1108          (8) A tax credit under this section is in addition to any tax credits provided under the
1109     laws or rules and regulations of the United States.
1110          [(4) (a) The office may set standards for commercial energy systems claiming a tax
1111     credit under Subsection (2)(a) that cover the safety, reliability, efficiency, leasing, and technical
1112     feasibility of the systems to ensure that the systems eligible for the tax credit use the state's
1113     renewable and nonrenewable energy resources in an appropriate and economic manner.]
1114          [(b) A tax credit may not be taken under this section until the office has certified that
1115     the commercial energy system has been completely installed and is a viable system for saving
1116     or production of energy from renewable resources.]
1117          [(5) The office and the commission may make rules in accordance with Title 63G,
1118     Chapter 3, Utah Administrative Rulemaking Act, that are necessary to implement this section.]
1119          (9) A purchaser of one or more solar units that claims a tax credit under Section
1120     59-10-1024 for the purchase of the one or more solar units may not claim a tax credit under this
1121     section for that purchase.
1122          [(6)] (10) (a) On or before October 1, [2012] 2017, and every five years [thereafter]
1123     after 2017, the Revenue and Taxation Interim Committee shall review each tax credit provided
1124     by this section and report its recommendations to the Legislative Management Committee
1125     concerning whether the credit should be continued, modified, or repealed.
1126          (b) The Revenue and Taxation Interim Committee's report under Subsection [(6)]
1127     (10)(a) shall include information concerning the cost of the credit, the purpose and
1128     effectiveness of the credit, and the state's benefit from the credit.
1129          Section 5. Effective date -- Retrospective operation.
1130          (1) This bill takes effect on May 12, 2015.
1131          (2) The actions affecting the following sections have retrospective operation for a
1132     taxable year beginning on or after January 1, 2015:
1133          (a) Section 59-7-614;
1134          (b) Section 59-10-1014; and
1135          (c) Section 59-10-1106.
1136          Section 6. Coordinating S.B. 14 with S.B. 13 -- Substantive and technical
1137     amendments.
1138          If this S.B. 14 and S.B. 13, Income Tax Amendments, both pass and become law, it is
1139     the intent of the Legislature that the Office of Legislative Research and General Counsel
1140     prepare the Utah Code database for publication as follows:
1141          (1) Section 59-7-614 in this bill supersedes Section 59-7-614 in S.B. 13;
1142          (2) delete all of Subsection 59-7-614(10) in this bill; and
1143          (3) renumber Subsection 59-7-614(11) in this bill, including the references to
1144     Subsection 59-7-614(11) in this bill, to Subsection (10).