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

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




Legislative Review Note
     as of 11-20-14 2:17 PM

Office of Legislative Research and General Counsel