1     
ENTERPRISE ZONE TAX CREDIT AMENDMENTS

2     
2019 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Douglas V. Sagers

5     
Senate Sponsor: David P. Hinkins

6     

7     LONG TITLE
8     General Description:
9          This bill amends the enterprise zone income tax credits.
10     Highlighted Provisions:
11          This bill:
12          ▸     authorizes enterprise zone income tax credits for:
13               •     the creation of certain full-time jobs in a business that produces, processes,
14     distributes, or dispenses hydrogen fuel; and
15               •     certain investments in plant, equipment, or other depreciable property used to
16     produce, process, distribute, or dispense hydrogen fuel; and
17          ▸     makes technical changes.
18     Money Appropriated in this Bill:
19          None
20     Other Special Clauses:
21          This bill provides a special effective date.
22     Utah Code Sections Affected:
23     AMENDS:
24          63N-2-213, as last amended by Laws of Utah 2016, Third Special Session, Chapter 1
25     

26     Be it enacted by the Legislature of the state of Utah:
27          Section 1. Section 63N-2-213 is amended to read:
28          63N-2-213. State tax credits.
29          (1) The office shall certify a business entity's eligibility for a tax credit described in this
30     section.
31          (2) A business entity seeking to receive a tax credit as provided in this section shall
32     provide the office with:
33          (a) an application for a tax credit certificate in a form approved by the office, including
34     a certification, by an officer of the business entity, of a signature on the application; and
35          (b) documentation that demonstrates the business entity has met the requirements to
36     receive the tax credit.
37          (3) If, after review of an application and documentation provided by a business entity
38     as described in Subsection (2), the office determines that the application and documentation are
39     inadequate to provide a reasonable justification for authorizing the tax credit, the office shall:
40          (a) deny the tax credit; or
41          (b) inform the business entity that the application or documentation was inadequate
42     and ask the business entity to submit additional documentation.
43          (4) If, after review of an application and documentation provided by a business entity
44     as described in Subsection (2), the office determines that the application and documentation
45     provide reasonable justification for authorizing a tax credit, the office shall:
46          (a) determine the amount of the tax credit to be granted to the business entity;
47          (b) issue a tax credit certificate to the business entity; and
48          (c) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
49          (5) A business entity may not claim a tax credit under this section unless the business
50     entity has a tax credit certificate issued by the office.
51          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
52     office shall make rules describing:
53          (a) the form and content of an application for a tax credit under this section;
54          (b) the documentation requirements for a business entity to receive a tax credit
55     certificate under this section; and
56          (c) administration of the program, including relevant timelines and deadlines.
57          (7) Subject to the limitations of Subsections (8) through (10), and if the requirements
58     of this part are met, the following nonrefundable tax credits against a tax under Title 59,
59     Chapter 7, Corporate Franchise and Income Taxes, or Title 59, Chapter 10, Individual Income
60     Tax Act, are applicable in an enterprise zone:
61          (a) a tax credit of $750 may be claimed by a business entity for each new full-time
62     employee position created within the enterprise zone;
63          (b) an additional $500 tax credit may be claimed if the new full-time employee position
64     created within the enterprise zone pays at least 125% of:
65          (i) the county average monthly nonagricultural payroll wage for the respective industry
66     as determined by the Department of Workforce Services; or
67          (ii) if the county average monthly nonagricultural payroll wage is not available for the
68     respective industry, the total average monthly nonagricultural payroll wage in the respective
69     county where the enterprise zone is located;
70          (c) an additional tax credit of $750 may be claimed if the new full-time employee
71     position created within the enterprise zone is in a business entity that adds value to agricultural
72     commodities through manufacturing or processing;
73          (d) an additional tax credit of $200 may be claimed for two consecutive years for each
74     new full-time employee position created within the enterprise zone that is filled by an
75     employee who is insured under an employer-sponsored health insurance program if the
76     employer pays at least 50% of the premium cost for the year for which the credit is claimed;
77          (e) an additional tax credit of $750 may be claimed if the new full-time employee
78     position created within the enterprise zone is in a business entity that produces or processes
79     hydrogen for use as a fuel;
80          (f) an additional tax credit of $750 may be claimed if the new full-time employee
81     position created within the enterprise zone is in a business entity that distributes or dispenses
82     hydrogen fuel;
83          [(e)] (g) a tax credit of 25% of the first $200,000 spent on rehabilitating a building in
84     the enterprise zone that has been vacant for two years or more; [and]
85          [(f)] (h) an annual investment tax credit of 10% of the first $250,000 in investment,
86     and 5% of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable
87     property[.]; and
88          (i) an additional annual investment tax credit of 10% of the first $250,000 investment,
89     5% of the next $1,000,000 investment, and 2.5% of the next $2,000,000 investment in plant,
90     equipment, or other depreciable property used primarily:
91          (i) to produce or process hydrogen for use as a fuel; or
92          (ii) to distribute or dispense hydrogen fuel.
93          (8) (a) Subject to the limitations of Subsection (8)(b), a business entity claiming a tax
94     credit under Subsections (7)(a) through [(d)] (f) may claim the tax credit for no more than 30
95     full-time employee positions in a taxable year.
96          (b) A business entity that received a tax credit for one or more new full-time employee
97     positions under Subsections (7)(a) through [(d)] (f) in a prior taxable year may claim a tax
98     credit for a new full-time employee position in a subsequent taxable year under Subsections
99     (7)(a) through [(d)] (f) if:
100          (i) the business entity has created a new full-time position within the enterprise zone;
101     and
102          (ii) the total number of full-time employee positions at the business entity at any point
103     during the tax year for which the tax credit is being claimed is greater than the highest number
104     of full-time employee positions that existed at the business entity in the previous three taxable
105     years.
106          (c) Construction jobs are not eligible for the tax credits under Subsections (7)(a)
107     through [(d)] (f).
108          (9) If the amount of a tax credit under this section exceeds a business entity's tax
109     liability under this chapter for a taxable year, the business entity may carry forward the amount
110     of the tax credit exceeding the liability for a period that does not exceed the next three taxable
111     years.
112          (10) Tax credits under [Subsections (7)(a) through (f)] Subsection (7) may not be
113     claimed by a business entity primarily engaged in retail trade or by a public utilities business.
114          (11) A business entity that has no employees:
115          (a) may not claim tax credits under Subsections (7)(a) through [(d)] (f); and
116          (b) may claim tax credits under Subsections [(7)(e)] (7)(g) through [(f)] (i).
117          (12) A business entity may not claim or carry forward a tax credit available under this
118     part for a taxable year during which the business entity has claimed the targeted business
119     income tax credit available under Section 63N-2-305.
120          (13) (a) On or before November 30, 2018, and every three years after 2018, the
121     Revenue and Taxation Interim Committee shall review the tax credits provided by this section
122     and make recommendations concerning whether the tax credits should be continued, modified,
123     or repealed.
124          (b) In conducting the review required by Subsection (13)(a), the Revenue and Taxation
125     Interim Committee shall:
126          (i) schedule time on at least one committee agenda to conduct the review;
127          (ii) invite state agencies, individuals, and organizations concerned with the credits
128     under review to provide testimony;
129          (iii) ensure that the recommendations described in this section include an evaluation of:
130          (A) the cost of the tax credits to the state;
131          (B) the purpose and effectiveness of the tax credits; and
132          (C) the extent to which the state benefits from the tax credits; and
133          (iv) undertake other review efforts as determined by the chairs of the Revenue and
134     Taxation Interim Committee.
135          Section 2. Effective date.
136          This bill takes effect for a taxable year beginning on or after January 1, 2020.