This document includes House Floor Amendments incorporated into the bill on Tue, Mar 3, 2020 at 11:55 AM by naomigarrow.
Representative Douglas V. Sagers proposes the following substitute bill:


1     
ENTERPRISE ZONE TAX CREDIT AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Douglas V. Sagers

5     
Senate Sponsor: Ralph Okerlund

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 for a specified time, an enterprise zone tax credit for certain investments
13     in a plant, equipment, or other depreciable property used to:
14               •     produce or process from a renewable energy source, hydrogen for use as fuel; or
15               •     distribute or dispense hydrogen fuel produced from a renewable energy source;
16          ▸     allows a taxpayer to claim enterprise zone income tax credits against taxes owed
17     under the Gross Receipts Tax on Certain Corporations Not Required to Pay
18     Corporate Franchise or Income Tax Act; and
19          ▸     makes technical changes.
20     Money Appropriated in this Bill:
21          None
22     Other Special Clauses:
23          This bill provides a special effective date.
24     Utah Code Sections Affected:
25     AMENDS:
26          59-7-614.10, as last amended by Laws of Utah 2019, Chapter 247
27          59-10-1037, as last amended by Laws of Utah 2019, Chapter 247
28          63I-2-263, as last amended by Laws of Utah 2019, Chapters 182, 240, 246, 325, 370,
29     and 483
30          63N-2-213, as last amended by Laws of Utah 2019, Chapter 247
31     ENACTS:
32          59-8-301, Utah Code Annotated 1953
33     

34     Be it enacted by the Legislature of the state of Utah:
35          Section 1. Section 59-7-614.10 is amended to read:
36          59-7-614.10. Nonrefundable enterprise zone tax credit.
37          (1) As used in this section:
38          (a) "Business entity" means a corporation that meets the definition of "business entity"
39     as that term is defined in Section 63N-2-202.
40          (b) "Office" means the Governor's Office of Economic Development created in Section
41     63N-1-201.
42          (2) Subject to the provisions of this section, a business entity may claim a
43     nonrefundable enterprise zone tax credit as described in Section 63N-2-213.
44          (3) The enterprise zone tax credit under this section is the amount listed as the tax
45     credit amount on the tax credit certificate that the office issues to the business entity for the
46     taxable year.
47          (4) A business entity may carry forward a tax credit under this section for a period that
48     does not exceed the next three taxable years, if the amount of the tax credit exceeds the
49     business entity's tax liability under this chapter for that taxable year.
50          (5) A business entity may not claim or carry forward a tax credit [available] under this
51     [part] section for a taxable year during which the business entity has claimed the targeted
52     business income tax credit [available] under Section 59-7-624.
53          (6) (a) In accordance with Section 59-7-159, the Revenue and Taxation Interim
54     Committee shall study the tax credit allowed by this section and make recommendations
55     concerning whether the tax credit should be continued, modified, or repealed.
56          (b) (i) Except as provided in Subsection (6)(b)(ii), for purposes of the study required by
57     this Subsection (6), the office shall provide by electronic means the following information for
58     each calendar year to the Office of the Legislative Fiscal Analyst:
59          (A) the amount of tax credits provided in each development zone;
60          (B) the number of new full-time employee positions reported to obtain tax credits in
61     each development zone;
62          (C) the amount of tax credits awarded for rehabilitating a building in each development
63     zone;
64          (D) the amount of tax credits awarded for investing in a plant, equipment, or other
65     depreciable property in each development zone;
66          (E) the information related to the tax credit contained in the office's latest report under
67     Section 63N-1-301; and
68          (F) any other information that the Office of the Legislative Fiscal Analyst requests.
69          (ii) (A) In providing the information described in Subsection (6)(b)(i), the office shall
70     redact information that identifies a recipient of a tax credit under this section.
71          (B) If, notwithstanding the redactions made under Subsection (6)(b)(ii)(A), reporting
72     the information described in Subsection (6)(b)(i) might disclose the identity of a recipient of a
73     tax credit, the office may file a request with the Revenue and Taxation Interim Committee to
74     provide the information described in Subsection (6)(b)(i) in the aggregate for all development
75     zones that receive the tax credit under this section.
76          (c) As part of the study required by this Subsection (6), the Office of the Legislative
77     Fiscal Analyst shall report to the Revenue and Taxation Interim Committee a summary and
78     analysis of the information provided to the Office of the Legislative Fiscal Analyst by the
79     office under Subsection (6)(b).
80          (d) The Revenue and Taxation Interim Committee shall ensure that the
81     recommendations described in Subsection (6)(a) include an evaluation of:
82          (i) the cost of the tax credit to the state;
83          (ii) the purpose and effectiveness of the tax credit; and
84          (iii) the extent to which the state benefits from the tax credit.
85          Section 2. Section 59-8-301 is enacted to read:
86     
Part 3. Tax Credits

87          59-8-301. Nonrefundable enterprise zone tax credit.
88          (1) As used in this section:
89          (a) "Business entity" means an organization subject to the tax imposed by this part that
90     is a business entity as defined in Section 63N-2-202.
91          (b) "Office" means the Governor's Office of Economic Development created in Section
92     63N-1-201.
93          (2) Subject to the provisions of this section, a business entity may claim a
94     nonrefundable enterprise zone tax credit as described in Section 63N-2-213.
95          (3) The enterprise zone tax credit under this section is the amount listed as the tax
96     credit amount on the tax credit certificate that the office issues to the business entity for the
97     taxable year.
98          (4) A business entity may carry forward a tax credit under this section for a period that
99     does not exceed the next three taxable years, if the amount of the tax credit exceeds the
100     business entity's tax liability under this chapter for that taxable year.
101          (5) (a) The Revenue and Taxation Interim Committee shall Ĥ→ :
101a          (i) ←Ĥ study the tax credit allowed
102     by this section Ĥ→ [:
103          (i)] ←Ĥ as part of the Revenue and Taxation Interim Committee's study under Subsection
104     59-7-164.10(6); and
105          (ii) make recommendations concerning whether the tax credit should be continued,
106     modified, or repealed.
107          (b) Except as provided in Subsection (5)(c), for purposes of the study required by this
108     Subsection (5), the office shall provide by electronic means the following information for each
109     calendar year to the Office of the Legislative Fiscal Analyst:
110          (i) the amount of tax credits provided in each development zone;
111          (ii) the number of new full-time employee positions reported to obtain tax credits in
112     each development zone;
113          (iii) the amount of tax credits awarded for rehabilitating a building in each
114     development zone;
115          (iv) the amount of tax credits awarded for investing in a plant, equipment, or other
116     depreciable property in each development zone;
117          (v) the information related to the tax credit contained in the office's latest report under
118     Section 63N-1-301; and
119          (vi) any other information that the Office of the Legislative Fiscal Analyst requests.
120          (c) (i) In providing the information described in Subsection (5) Ĥ→ [(a)] (b) ←Ĥ , the office
120a     shall
121     redact information that identifies a recipient of a tax credit under this section.
122          (ii) If, notwithstanding the redactions made under Subsection (5) Ĥ→ [(b)] (c) ←Ĥ (i),
122a     reporting the
123     information described in Subsection (5)(b)(i) might disclose the identity of a recipient of a tax
124     credit, the office may file a request with the Revenue and Taxation Interim Committee to
125     provide the information described in Subsection (5)(b)(i) in the aggregate for all development
126     zones that receive the tax credit under this section.
127          (d) As part of the study required by this Subsection (5), the Office of the Legislative
128     Fiscal Analyst shall report to the Revenue and Taxation Interim Committee a summary and
129     analysis of the information provided to the Office of the Legislative Fiscal Analyst by the
130     office under Subsection (5)(b).
131          (e) The Revenue and Taxation Interim Committee shall ensure that the
132     recommendations described in Subsection (5)(a) include an evaluation of:
133          (i) the cost of the tax credit to the state;
134          (ii) the purpose and effectiveness of the tax credit; and
135          (iii) the extent to which the state benefits from the tax credit.
136          Section 3. Section 59-10-1037 is amended to read:
137          59-10-1037. Nonrefundable enterprise zone tax credit.
138          (1) As used in this section:
139          (a) "Business entity" means a claimant, estate, or trust that meets the definition of
140     "business entity" as that term is defined in Section 63N-2-202.
141          (b) "Office" means the Governor's Office of Economic Development created in Section
142     63N-1-201.
143          (2) Subject to the provisions of this section, a business entity may claim a
144     nonrefundable enterprise zone tax credit as described in Section 63N-2-213.
145          (3) The enterprise zone tax credit under this section is the amount listed as the tax
146     credit amount on the tax credit certificate that the office issues to the business entity for the
147     taxable year.
148          (4) A business entity may carry forward a tax credit under this section for a period that
149     does not exceed the next three taxable years, if the amount of the tax credit exceeds the
150     business entity's tax liability under this chapter for that taxable year.
151          (5) A business entity may not claim or carry forward a tax credit [available] under this
152     [part] section for a taxable year during which the business entity has claimed the targeted
153     business income tax credit [available] under Section 59-10-1112.
154          (6) (a) In accordance with Section 59-10-137, the Revenue and Taxation Interim
155     Committee shall study the tax credit allowed by this section and make recommendations
156     concerning whether the tax credit should be continued, modified, or repealed.
157          (b) (i) Except as provided in Subsection (6)(b)(ii), for purposes of the study required by
158     this Subsection (6), the office shall provide by electronic means the following information, if
159     available to the office, for each calendar year to the Office of the Legislative Fiscal Analyst:
160          (A) the amount of tax credits provided in each development zone;
161          (B) the number of new full-time employee positions reported to obtain tax credits in
162     each development zone;
163          (C) the amount of tax credits awarded for rehabilitating a building in each development
164     zone;
165          (D) the amount of tax credits awarded for investing in a plant, equipment, or other
166     depreciable property in each development zone;
167          (E) the information related to the tax credit contained in the office's latest report under
168     Section 63N-1-301; and
169          (F) other information that the Office of the Legislative Fiscal Analyst requests.
170          (ii) (A) In providing the information described in Subsection (6)(b)(i), the office shall
171     redact information that identifies a recipient of a tax credit under this section.
172          (B) If, notwithstanding the redactions made under Subsection (6)(b)(ii)(A), reporting
173     the information described in Subsection (6)(b)(i) might disclose the identity of a recipient of a
174     tax credit, the office may file a request with the Revenue and Taxation Interim Committee to
175     provide the information described in Subsection (6)(b)(i) in the aggregate for all development
176     zones that receive the tax credit under this section.
177          (c) As part of the study required by this Subsection (6), the Office of the Legislative
178     Fiscal Analyst shall report to the Revenue and Taxation Interim Committee a summary and
179     analysis of the information provided to the Office of the Legislative Fiscal Analyst by the
180     office under Subsection (6)(b).
181          (d) The Revenue and Taxation Interim Committee shall ensure that the
182     recommendations described in Subsection (6)(a) include an evaluation of:
183          (i) the cost of the tax credit to the state;
184          (ii) the purpose and effectiveness of the tax credit; and
185          (iii) the extent to which the state benefits from the tax credit.
186          Section 4. Section 63I-2-263 is amended to read:
187          63I-2-263. Repeal dates, Title 63A to Title 63N.
188          (1) On July 1, 2020:
189          (a) Subsection 63A-1-203(5)(a)(i) is repealed; and
190          (b) in Subsection 63A-1-203(5)(a)(ii), the language that states "appointed on or after
191     May 8, 2018," is repealed.
192          (2) Sections 63C-4a-307 and 63C-4a-309 are repealed January 1, 2020.
193          (3) Title 63C, Chapter 19, Higher Education Strategic Planning Commission is
194     repealed July 1, 2020.
195          (4) The following sections regarding the World War II Memorial Commission are
196     repealed on July 1, 2020:
197          (a) Section 63G-1-801;
198          (b) Section 63G-1-802;
199          (c) Section 63G-1-803; and
200          (d) Section 63G-1-804.
201          (5) In relation to the State Fair Park Committee, on January 1, 2021:
202          (a) Section 63H-6-104.5 is repealed; and
203          (b) Subsections 63H-6-104(8) and (9) are repealed.
204          (6) Section 63H-7a-303 is repealed on July 1, 2022.
205          (7) In relation to the Employability to Careers Program Board, on July 1, 2022:
206          (a) Subsection 63J-1-602.1(52) is repealed;
207          (b) Subsection 63J-4-301(1)(h), related to the review of data and metrics, is repealed;
208     and
209          (c) Title 63J, Chapter 4, Part 7, Employability to Careers Program, is repealed.
210          (8) Section 63J-4-708 is repealed January 1, 2023.
211          (9) Subsection 63N-2-213(7)(g), which provides a tax credit related to property used
212     primarily to produce or process hydrogen for fuel or to distribute or dispense hydrogen fuel, is
213     repealed January 1, 2027.
214          Section 5. Section 63N-2-213 is amended to read:
215          63N-2-213. State tax credits.
216          (1) The office shall certify a business entity's eligibility for a tax credit described in this
217     section.
218          (2) A business entity seeking to receive a tax credit as provided in this section shall
219     provide the office with:
220          (a) an application for a tax credit certificate in a form approved by the office, including
221     a certification, by an officer of the business entity, of a signature on the application; and
222          (b) documentation that demonstrates the business entity has met the requirements to
223     receive the tax credit.
224          (3) If, after review of an application and documentation provided by a business entity
225     as described in Subsection (2), the office determines that the application and documentation are
226     inadequate to provide a reasonable justification for authorizing the tax credit, the office shall:
227          (a) deny the tax credit; or
228          (b) inform the business entity that the application or documentation was inadequate
229     and ask the business entity to submit additional documentation.
230          (4) If, after review of an application and documentation provided by a business entity
231     as described in Subsection (2), the office determines that the application and documentation
232     provide reasonable justification for authorizing a tax credit, the office shall:
233          (a) determine the amount of the tax credit to be granted to the business entity;
234          (b) issue a tax credit certificate to the business entity; and
235          (c) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
236          (5) A business entity may not claim a tax credit under this section unless the business
237     entity has a tax credit certificate issued by the office.
238          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
239     office shall make rules describing:
240          (a) the form and content of an application for a tax credit under this section;
241          (b) the documentation requirements for a business entity to receive a tax credit
242     certificate under this section; and
243          (c) administration of the program, including relevant timelines and deadlines.
244          (7) Subject to the limitations of Subsections (8) through (10), and if the requirements
245     of this part are met, the following nonrefundable tax credits against a tax under Title 59,
246     Chapter 7, Corporate Franchise and Income Taxes, Title 59, Chapter 8, Gross Receipts Tax on
247     Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, or Title 59,
248     Chapter 10, Individual Income Tax Act, are applicable in an enterprise zone:
249          (a) a tax credit of $750 may be claimed by a business entity for each new full-time
250     employee position created within the enterprise zone;
251          (b) an additional $500 tax credit may be claimed if the new full-time employee position
252     created within the enterprise zone pays at least 125% of:
253          (i) the county average monthly nonagricultural payroll wage for the respective industry
254     as determined by the Department of Workforce Services; or
255          (ii) if the county average monthly nonagricultural payroll wage is not available for the
256     respective industry, the total average monthly nonagricultural payroll wage in the respective
257     county where the enterprise zone is located;
258          (c) an additional tax credit of $750 may be claimed if the new full-time employee
259     position created within the enterprise zone is in a business entity that adds value to agricultural
260     commodities through manufacturing or processing;
261          (d) an additional tax credit of $200 may be claimed for two consecutive years for each
262     new full-time employee position created within the enterprise zone that is filled by an
263     employee who is insured under an employer-sponsored health insurance program if the
264     employer pays at least 50% of the premium cost for the year for which the credit is claimed;
265          (e) a tax credit of 25% of the first $200,000 spent on rehabilitating a building in the
266     enterprise zone that has been vacant for two years or more; [and]
267          (f) an annual investment tax credit of 10% of the first $250,000 in investment, and 5%
268     of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable
269     property[.]; and
270          (g) for a taxable year beginning on or after January 1, 2021, and before January 1, 2026,
271     an additional annual investment tax credit of 10% of the first $250,000 investment, 5% of the
272     next $1,000,000 investment, and 2.5% of the next $2,000,000 investment, in a plant,
273     equipment, or other depreciable property used primarily:
274          (i) to produce or process, from a renewable energy source, as defined in Section
275     54-17-601, hydrogen for use as a fuel; or
276          (ii) to distribute or dispense hydrogen fuel produced from a renewable energy source,
277     as defined in Section 54-17-601.
278          (8) (a) Subject to the limitations of Subsection (8)(b), a business entity claiming a tax
279     credit under Subsections (7)(a) through (d) may claim the tax credit for no more than 30
280     full-time employee positions in a taxable year.
281          (b) A business entity that received a tax credit for one or more new full-time employee
282     positions under Subsections (7)(a) through (d) in a prior taxable year may claim a tax credit for
283     a new full-time employee position in a subsequent taxable year under Subsections (7)(a)
284     through (d) if:
285          (i) the business entity has created a new full-time position within the enterprise zone;
286     and
287          (ii) the total number of full-time employee positions at the business entity at any point
288     during the tax year for which the tax credit is being claimed is greater than the highest number
289     of full-time employee positions that existed at the business entity in the previous three taxable
290     years.
291          (c) Construction jobs are not eligible for the tax credits under Subsections (7)(a)
292     through [(d)] (f).
293          (9) If the amount of a tax credit under this section exceeds a business entity's tax
294     liability under this chapter for a taxable year, the business entity may carry forward the amount
295     of the tax credit exceeding the liability for a period that does not exceed the next three taxable
296     years.
297          (10) Tax credits under [Subsections (7)(a) through (f)] Subsection (7) may not be
298     claimed by a business entity primarily engaged in retail trade or by a public utilities business.
299          (11) A business entity that has no employees:
300          (a) may not claim tax credits under Subsections (7)(a) through (d); and
301          (b) may claim tax credits under Subsections (7)(e) through [(f)] (g).
302          (12) (a) A business entity may not claim or carry forward a tax credit available under
303     this part for a taxable year during which the business entity has claimed the targeted business
304     income tax credit available under Section 63N-2-304.
305          (b) A business entity may not claim or carry forward a tax credit available under this
306     section for a taxable year during which the business entity claims or carries forward a tax credit
307     available under Section 59-7-610 or 59-10-1007.
308          (13) (a) On or before November 30, 2018, and every three years after 2018, the
309     Revenue and Taxation Interim Committee shall review the tax credits provided by this section
310     and make recommendations concerning whether the tax credits should be continued, modified,
311     or repealed.
312          (b) In conducting the review required by Subsection (13)(a), the Revenue and Taxation
313     Interim Committee shall:
314          (i) schedule time on at least one committee agenda to conduct the review;
315          (ii) invite state agencies, individuals, and organizations concerned with the credits
316     under review to provide testimony;
317          (iii) ensure that the recommendations described in this section include an evaluation of:
318          (A) the cost of the tax credits to the state;
319          (B) the purpose and effectiveness of the tax credits; and
320          (C) the extent to which the state benefits from the tax credits; and
321          (iv) undertake other review efforts as determined by the chairs of the Revenue and
322     Taxation Interim Committee.
323          Section 6. Effective date.
324          This bill takes effect for a taxable year beginning on or after January 1, 2021.