7 LONG TITLE
8 General Description:
9 This bill modifies tax credit provisions related to enterprise zones.
10 Highlighted Provisions:
11 This bill:
12 ▸ modifies the targeted business income tax credit program;
13 ▸ modifies the application requirements for businesses to apply for a targeted business
14 income tax credit;
15 ▸ modifies the Governor's Office of Economic Development (GOED) oversight and
16 reporting responsibilities in administering the targeted business income tax credit
18 ▸ limits the amount of tax credits that may be awarded each year;
19 ▸ defines terms; and
20 ▸ makes technical changes.
21 Money Appropriated in this Bill:
23 Other Special Clauses:
24 This bill provides retrospective operation.
25 Utah Code Sections Affected:
27 63N-2-302, as renumbered and amended by Laws of Utah 2015, Chapter 283
28 63N-2-303, as renumbered and amended by Laws of Utah 2015, Chapter 283
29 63N-2-304, as renumbered and amended by Laws of Utah 2015, Chapter 283
30 63N-2-305, as last amended by Laws of Utah 2016, Third Special Session, Chapter 1
32 Be it enacted by the Legislature of the state of Utah:
33 Section 1. Section 63N-2-302 is amended to read:
34 63N-2-302. Definitions.
35 As used in this part:
41 (a) is a[
42 (b) meets the criteria established in Section 63N-2-304.
44 person or a nonresident person.
45 (b) "Claimant" does not include an estate or trust.
47 the following criteria in addition to the normal operations of the business applicant:
48 (a) [
49 (b) significant new capital development[
55 designated as an enterprise zone by the office under Part 2, Enterprise Zone Act.
57 nonresident estate.
63 estate, or trust may claim:
64 (a) as provided by statute; and
65 (b) regardless of whether, for the taxable year for which the claimant, estate, or trust
66 claims the tax credit, the claimant, estate, or trust has a tax liability under:
67 (i) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
68 (ii) Title 59, Chapter 10, Individual Income Tax Act.
70 available under [
72 document [
74 before the applicant may claim a targeted business income tax credit under this part.
76 Section 2. Section 63N-2-303 is amended to read:
77 63N-2-303. Powers of the office.
78 The office shall:
79 (1) monitor the implementation and operation of this part and conduct a continuing
80 evaluation of the effectiveness of the targeted business income tax credit in bringing significant
81 new employment and significant new capital development to rural communities;
82 (2) determine a business entity's eligibility for a targeted business income tax credit
84 (3) ensure that tax credits are only awarded under this part to a business applicant that
85 has satisfied performance benchmarks as determined by the office;
86 (4) ensure that the amount of targeted business income tax credit awarded to a business
87 applicant through a targeted business income tax credit eligibility certificate is no more than
88 $100,000 for the business applicant's taxable year;
89 (5) ensure that the aggregate amount of targeted business income tax credits awarded to
90 business applicants through targeted business income tax credit eligibility certificates is no
91 more than $300,000 for each fiscal year;
92 (6) as part of the annual written report described in Section 63N-1-301, prepare an
93 annual evaluation that provides:
94 (a) the identity of each business applicant that was provided a targeted business income
95 tax credit eligibility certificate by the office during the year of the annual report; and
96 (b) the total amount awarded in targeted business income tax credit for each
97 development zone; and
98 (7) [
99 and [
100 make rules regarding:
106 (b) the form and content of an application for a targeted business income tax credit
107 eligibility certificate under this part;
108 (c) documentation or other requirements for a business applicant to receive a targeted
109 business income tax credit eligibility certificate under this part; and
110 (d) administration of targeted business income tax credit awards and the issuing of
111 targeted business income tax credit eligibility certificates, including relevant timelines and
113 Section 3. Section 63N-2-304 is amended to read:
114 63N-2-304. Application for targeted business income tax credit.
115 (1) (a) For [
116 a business applicant may [
118 certificate under this part if the business applicant:
119 (i) is located in:
120 (A) an enterprise zone; and
121 (B) a county with[
124 (ii) meets the requirements of Section 63N-2-212;
125 (iii) provides[
128 (iv) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, is
129 not engaged in the following, as defined by the State Tax Commission by rule:
130 (A) construction;
131 (B) retail trade; or
132 (C) public utility activities.
133 (b) For a taxable year for which a business applicant claims a targeted business income
134 tax credit available under this part, the business applicant may not claim or carry forward a tax
135 credit available under Section 59-7-607, 59-7-610, 59-10-1007, 59-10-1010, or 63N-2-213.
136 (2) (a) A business applicant seeking to claim a targeted business income tax credit
137 under this part shall [
139 business applicant is seeking to claim [
140 (b) The application described in Subsection (2)(a) shall include:
141 (i) any documentation required by the [
142 that the business applicant meets the requirements of Subsection (1);
143 (ii) a plan developed by the business applicant that [
144 (A) if the community investment project includes [
145 employment, the projected number and anticipated wage level of the jobs that the business
146 applicant plans to create as the basis for qualifying for a targeted business income tax credit;
147 (B) if the community investment project includes significant new capital development,
149 qualifying for a targeted business income tax credit; [
150 (C) [
151 of the enterprise zone in which the business applicant is providing a community investment
152 project; [
154 development goals of the county or municipality in which the business applicant is providing a
155 community investment project; [
156 (E) any matching funds that will be used for the community investment project;
157 (F) how any targeted business income tax credit incentives that were awarded in a
158 previous year have been used for the community investment project by the business applicant;
160 (G) the requested amount of the targeted business income tax credit; and
161 (iii) any additional information required by the [
162 (3) (a) The [
163 (i) evaluate an application filed under Subsection (2); [
164 (ii) determine whether the business applicant is potentially eligible for a targeted
165 business income tax credit[
166 (iii) if the business applicant is potentially eligible for a targeted business income tax
167 credit, determine performance benchmarks and the deadline for meeting those benchmarks that
168 the business applicant must achieve before the office awards a targeted business income tax
169 credit to the business applicant.
170 (b) If the [
171 potentially eligible for a targeted business income tax credit, the [
172 office shall:
173 (i) [
174 for [
175 benchmarks by the deadline as determined by the office as described in Subsection (3)(a)(iii);
178 (ii) notify the business applicant of the potential amount of the targeted business
179 income tax credit that may be awarded to the business applicant, which amount may be no
180 more than $100,000 for the business applicant in a taxable year; and
181 (iii) monitor a business applicant to ensure compliance with this section[
182 measure the business applicant's progress in meeting performance benchmarks.
183 (c) If the business applicant provides evidence to the office, in a form prescribed by the
184 office, that the business applicant has achieved the performance benchmarks by the deadline as
185 determined by the office as described in Subsection (3)(a)(iii), the office shall:
186 (i) certify that the business applicant is eligible for a targeted business income tax
188 (ii) issue a targeted business income tax credit eligibility certificate to the business
189 applicant in accordance with Section 63N-2-305; and
190 (iii) provide a duplicate copy of the targeted business income tax credit eligibility
191 certificate to the State Tax Commission.
209 Section 4. Section 63N-2-305 is amended to read:
210 63N-2-305. Targeted business income tax credit structure -- Revenue and
211 Taxation Interim Committee study.
212 (1) A business applicant that is certified and issued a targeted business income tax
213 credit eligibility certificate by the office under Subsection 63N-2-304(3) [
215 tax credit in the amount specified on the targeted business income tax credit eligibility
217 (a) against the business applicant's tax liability under:
218 (i) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
219 (ii) Title 59, Chapter 10, Individual Income Tax Act; and
220 (b) subject to requirements and limitations provided by this part.
221 (2) The total amount of the targeted business income tax credits allowed under this part
222 for all business applicants may not exceed $300,000 in any fiscal year.
223 (3) [
224 community investment project provided by a business applicant may not[
266 (a) eligibility for a targeted business income tax credit; [
267 (b) compliance with this part, including Subsection (3) or Section 63N-2-304.
280 eligibility [
281 (b) The State Tax Commission may audit a business applicant to ensure:
282 (i) eligibility for a targeted business income tax credit; [
283 (ii) compliance with this part, including Subsection (3) [
285 Revenue and Taxation Interim Committee shall review the tax credit provided by this section
286 and make recommendations concerning whether the tax credit should be continued, modified,
287 or repealed.
288 (b) In conducting the review required by Subsection [
289 Taxation Interim Committee shall:
290 (i) schedule time on at least one committee agenda to conduct the review;
291 (ii) invite state agencies, individuals, and organizations concerned with the credit under
292 review to provide testimony;
293 (iii) ensure that the recommendations described in this section include an evaluation of:
294 (A) the cost of the tax credit to the state;
295 (B) the purpose and effectiveness of the tax credit; and
296 (C) the extent to which the state benefits from the tax credit; and
297 (iv) undertake other review efforts as determined by the chairs of the Revenue and
298 Taxation Interim Committee.
299 Section 5. Retrospective operation.
300 This bill has retrospective operation for a taxable year beginning on or after January 1,
Legislative Review Note
Office of Legislative Research and General Counsel