1     
ENTERPRISE ZONE TAX CREDIT AMENDMENTS

2     
2021 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 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 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 2020, Chapter 354
27          59-10-1037, as last amended by Laws of Utah 2020, Chapter 354

28          63I-2-263, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 12
29          63N-2-213, as last amended by Laws of Utah 2020, Chapter 360
30     ENACTS:
31          59-8-201, Utah Code Annotated 1953
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 59-7-614.10 is amended to read:
35          59-7-614.10. Nonrefundable enterprise zone tax credit.
36          (1) As used in this section:
37          (a) "Business entity" means a corporation that meets the definition of "business entity"
38     as that term is defined in Section 63N-2-202.
39          (b) "Office" means the Governor's Office of Economic Development created in Section
40     63N-1-201.
41          (2) Subject to the provisions of this section, a business entity may claim a
42     nonrefundable enterprise zone tax credit as described in Section 63N-2-213.
43          (3) The enterprise zone tax credit under this section is the amount listed as the tax
44     credit amount on the tax credit certificate that the office issues to the business entity for the
45     taxable year.
46          (4) A business entity may carry forward a tax credit under this section for a period that
47     does not exceed the next three taxable years, if the amount of the tax credit exceeds the
48     business entity's tax liability under this chapter for that taxable year.
49          (5) A business entity may not claim or carry forward a tax credit under this [part]
50     section for a taxable year during which the business entity has claimed the targeted business
51     income tax credit under Section 59-7-624.
52          (6) (a) In accordance with Section 59-7-159, the Revenue and Taxation Interim
53     Committee shall study the tax credit allowed by this section and make recommendations
54     concerning whether the tax credit should be continued, modified, or repealed.
55          (b) (i) Except as provided in Subsection (6)(b)(ii), for purposes of the study required by
56     this Subsection (6), the office shall provide by electronic means the following information for
57     each calendar year to the Office of the Legislative Fiscal Analyst:
58          (A) the amount of tax credits provided in each development zone;

59          (B) the number of new full-time employee positions reported to obtain tax credits in
60     each development zone;
61          (C) the amount of tax credits awarded for rehabilitating a building in each development
62     zone;
63          (D) the amount of tax credits awarded for investing in a plant, equipment, or other
64     depreciable property in each development zone;
65          (E) the information related to the tax credit contained in the office's latest report under
66     Section 63N-1-301; and
67          (F) any other information that the Office of the Legislative Fiscal Analyst requests.
68          (ii) (A) In providing the information described in Subsection (6)(b)(i), the office shall
69     redact information that identifies a recipient of a tax credit under this section.
70          (B) If, notwithstanding the redactions made under Subsection (6)(b)(ii)(A), reporting
71     the information described in Subsection (6)(b)(i) might disclose the identity of a recipient of a
72     tax credit, the office may file a request with the Revenue and Taxation Interim Committee to
73     provide the information described in Subsection (6)(b)(i) in the aggregate for all development
74     zones that receive the tax credit under this section.
75          (c) As part of the study required by this Subsection (6), the Office of the Legislative
76     Fiscal Analyst shall report to the Revenue and Taxation Interim Committee a summary and
77     analysis of the information provided to the Office of the Legislative Fiscal Analyst by the
78     office under Subsection (6)(b).
79          (d) The Revenue and Taxation Interim Committee shall ensure that the
80     recommendations described in Subsection (6)(a) include an evaluation of:
81          (i) the cost of the tax credit to the state;
82          (ii) the purpose and effectiveness of the tax credit; and
83          (iii) the extent to which the state benefits from the tax credit.
84          Section 2. Section 59-8-201 is enacted to read:
85     
Part 2. Tax Credits

86          59-8-201. Nonrefundable enterprise zone tax credit.
87          (1) As used in this section:
88          (a) "Business entity" means an organization subject to the tax imposed by this part that
89     is a business entity as defined in Section 63N-2-202.

90          (b) "Office" means the Governor's Office of Economic Development created in Section
91     63N-1-201.
92          (2) Subject to the provisions of this section, a business entity may claim a
93     nonrefundable enterprise zone tax credit as described in Section 63N-2-213.
94          (3) The enterprise zone tax credit under this section is the amount listed as the tax
95     credit amount on the tax credit certificate that the office issues to the business entity for the
96     taxable year.
97          (4) A business entity may carry forward a tax credit under this section for a period that
98     does not exceed the next three taxable years, if the amount of the tax credit exceeds the
99     business entity's tax liability under this chapter for that taxable year.
100          (5) (a) The Revenue and Taxation Interim Committee shall:
101          (i) study the tax credit allowed by this section as part of the Revenue and Taxation
102     Interim Committee's study under Subsection 59-7-164.10(6); and
103          (ii) make recommendations concerning whether the tax credit should be continued,
104     modified, or repealed.
105          (b) Except as provided in Subsection (5)(c), for purposes of the study required by this
106     Subsection (5), the office shall provide by electronic means the following information for each
107     calendar year to the Office of the Legislative Fiscal Analyst:
108          (i) the amount of tax credits provided in each development zone;
109          (ii) the number of new full-time employee positions reported to obtain tax credits in
110     each development zone;
111          (iii) the amount of tax credits awarded for rehabilitating a building in each
112     development zone;
113          (iv) the amount of tax credits awarded for investing in a plant, equipment, or other
114     depreciable property in each development zone;
115          (v) the information related to the tax credit contained in the office's latest report under
116     Section 63N-1-301; and
117          (vi) any other information that the Office of the Legislative Fiscal Analyst requests.
118          (c) (i) In providing the information described in Subsection (5)(b), the office shall
119     redact information that identifies a recipient of a tax credit under this section.
120          (ii) If, notwithstanding the redactions made under Subsection (5)(c)(i), reporting the

121     information described in Subsection (5)(b)(i) might disclose the identity of a recipient of a tax
122     credit, the office may file a request with the Revenue and Taxation Interim Committee to
123     provide the information described in Subsection (5)(b)(i) in the aggregate for all development
124     zones that receive the tax credit under this section.
125          (d) As part of the study required by this Subsection (5), the Office of the Legislative
126     Fiscal Analyst shall report to the Revenue and Taxation Interim Committee a summary and
127     analysis of the information provided to the Office of the Legislative Fiscal Analyst by the
128     office under Subsection (5)(b).
129          (e) The Revenue and Taxation Interim Committee shall ensure that the
130     recommendations described in Subsection (5)(a) include an evaluation of:
131          (i) the cost of the tax credit to the state;
132          (ii) the purpose and effectiveness of the tax credit; and
133          (iii) the extent to which the state benefits from the tax credit.
134          Section 3. Section 59-10-1037 is amended to read:
135          59-10-1037. Nonrefundable enterprise zone tax credit.
136          (1) As used in this section:
137          (a) "Business entity" means a claimant, estate, or trust that meets the definition of
138     "business entity" as that term is defined in Section 63N-2-202.
139          (b) "Office" means the Governor's Office of Economic Development created in Section
140     63N-1-201.
141          (2) Subject to the provisions of this section, a business entity may claim a
142     nonrefundable enterprise zone tax credit as described in Section 63N-2-213.
143          (3) The enterprise zone tax credit under this section is the amount listed as the tax
144     credit amount on the tax credit certificate that the office issues to the business entity for the
145     taxable year.
146          (4) A business entity may carry forward a tax credit under this section for a period that
147     does not exceed the next three taxable years, if the amount of the tax credit exceeds the
148     business entity's tax liability under this chapter for that taxable year.
149          (5) A business entity may not claim or carry forward a tax credit under this [part]
150     section for a taxable year during which the business entity has claimed the targeted business
151     income tax credit under Section 59-10-1112.

152          (6) (a) In accordance with Section 59-10-137, the Revenue and Taxation Interim
153     Committee shall study the tax credit allowed by this section and make recommendations
154     concerning whether the tax credit should be continued, modified, or repealed.
155          (b) (i) Except as provided in Subsection (6)(b)(ii), for purposes of the study required by
156     this Subsection (6), the office shall provide by electronic means the following information, if
157     available to the office, for each calendar year to the Office of the Legislative Fiscal Analyst:
158          (A) the amount of tax credits provided in each development zone;
159          (B) the number of new full-time employee positions reported to obtain tax credits in
160     each development zone;
161          (C) the amount of tax credits awarded for rehabilitating a building in each development
162     zone;
163          (D) the amount of tax credits awarded for investing in a plant, equipment, or other
164     depreciable property in each development zone;
165          (E) the information related to the tax credit contained in the office's latest report under
166     Section 63N-1-301; and
167          (F) other information that the Office of the Legislative Fiscal Analyst requests.
168          (ii) (A) In providing the information described in Subsection (6)(b)(i), the office shall
169     redact information that identifies a recipient of a tax credit under this section.
170          (B) If, notwithstanding the redactions made under Subsection (6)(b)(ii)(A), reporting
171     the information described in Subsection (6)(b)(i) might disclose the identity of a recipient of a
172     tax credit, the office may file a request with the Revenue and Taxation Interim Committee to
173     provide the information described in Subsection (6)(b)(i) in the aggregate for all development
174     zones that receive the tax credit under this section.
175          (c) As part of the study required by this Subsection (6), the Office of the Legislative
176     Fiscal Analyst shall report to the Revenue and Taxation Interim Committee a summary and
177     analysis of the information provided to the Office of the Legislative Fiscal Analyst by the
178     office under Subsection (6)(b).
179          (d) The Revenue and Taxation Interim Committee shall ensure that the
180     recommendations described in Subsection (6)(a) include an evaluation of:
181          (i) the cost of the tax credit to the state;
182          (ii) the purpose and effectiveness of the tax credit; and

183          (iii) the extent to which the state benefits from the tax credit.
184          Section 4. Section 63I-2-263 is amended to read:
185          63I-2-263. Repeal dates, Title 63A to Title 63N.
186          (1) On July 1, 2020:
187          (a) Subsection 63A-1-203(5)(a)(i) is repealed; and
188          (b) in Subsection 63A-1-203(5)(a)(ii), the language that states "appointed on or after
189     May 8, 2018," is repealed.
190          (2) Section 63A-3-111 is repealed June 30, 2021.
191          (3) Title 63C, Chapter 19, Higher Education Strategic Planning Commission is
192     repealed July 1, 2021.
193          (4) Title 63C, Chapter 22, Digital Wellness, Citizenship, and Safe Technology
194     Commission is repealed July 1, 2023.
195          (5) The following sections regarding the World War II Memorial Commission are
196     repealed on July 1, 2022:
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          (6) Subsections 63G-6a-802(1)(d) and 63G-6a-802(3)(b)(iii), regarding a procurement
202     relating to a vice presidential debate, are repealed January 1, 2021.
203          (7) In relation to the State Fair Park Committee, on January 1, 2021:
204          (a) Section 63H-6-104.5 is repealed; and
205          (b) Subsections 63H-6-104(8) and (9) are repealed.
206          (8) Section 63H-7a-303 is repealed July 1, 2024.
207          (9) Subsection 63J-1-206(3)(c), relating to coronavirus, is repealed July 1, 2021.
208          (10) In relation to the Employability to Careers Program Board, on July 1, 2022:
209          (a) Subsection 63J-1-602.1(57) is repealed;
210          (b) Subsection 63J-4-301(1)(h), related to the review of data and metrics, is repealed;
211     and
212          (c) Title 63J, Chapter 4, Part 7, Employability to Careers Program, is repealed.
213          (11) Title 63M, Chapter 4, Part 8, Voluntary Home Energy Information Pilot Program

214     Act, is repealed January 1, 2022.
215          (12) Sections 63M-7-213 and 63M-7-213.5 are repealed on January 1, 2023.
216          (13) Subsection 63N-2-213(7)(g), which provides a tax credit related to property
217     primarily used to produce or process hydrogen for fuel or to distribute or dispense hydrogen
218     fuel, is repealed January 1, 2028.
219          [(13)] (14) Subsection 63N-12-508(3) is repealed December 31, 2021.
220          [(14)] (15) Title 63N, Chapter 13, Part 3, Facilitating Public-Private Partnerships Act,
221     is repealed January 1, 2024.
222          [(15)] (16) Title 63N, Chapter 15, COVID-19 Economic Recovery Programs, is
223     repealed December 31, 2021.
224          Section 5. Section 63N-2-213 is amended to read:
225          63N-2-213. State tax credits.
226          (1) The office shall certify a business entity's eligibility for a tax credit described in this
227     section.
228          (2) A business entity seeking to receive a tax credit as provided in this section shall
229     provide the office with:
230          (a) an application for a tax credit certificate in a form approved by the office, including
231     a certification, by an officer of the business entity, of a signature on the application; and
232          (b) documentation that demonstrates the business entity has met the requirements to
233     receive the tax credit.
234          (3) If, after review of an application and documentation provided by a business entity
235     as described in Subsection (2), the office determines that the application and documentation are
236     inadequate to provide a reasonable justification for authorizing the tax credit, the office shall:
237          (a) deny the tax credit; or
238          (b) inform the business entity that the application or documentation was inadequate
239     and ask the business entity to submit additional documentation.
240          (4) If, after review of an application and documentation provided by a business entity
241     as described in Subsection (2), the office determines that the application and documentation
242     provide reasonable justification for authorizing a tax credit, the office shall:
243          (a) determine the amount of the tax credit to be granted to the business entity;
244          (b) issue a tax credit certificate to the business entity; and

245          (c) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
246          (5) A business entity may not claim a tax credit under this section unless the business
247     entity has a tax credit certificate issued by the office.
248          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
249     office shall make rules describing:
250          (a) the form and content of an application for a tax credit under this section;
251          (b) the documentation requirements for a business entity to receive a tax credit
252     certificate under this section; and
253          (c) administration of the program, including relevant timelines and deadlines.
254          (7) Subject to the limitations of Subsections (8) through (10), and if the requirements
255     of this part are met, the following nonrefundable tax credits against a tax under Title 59,
256     Chapter 7, Corporate Franchise and Income Taxes, Title 59, Chapter 8, Gross Receipts Tax on
257     Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, or Title 59,
258     Chapter 10, Individual Income Tax Act, are applicable in an enterprise zone:
259          (a) a tax credit of $750 may be claimed by a business entity for each new full-time
260     employee position created within the enterprise zone;
261          (b) an additional $500 tax credit may be claimed if the new full-time employee position
262     created within the enterprise zone pays at least 125% of:
263          (i) the county average monthly nonagricultural payroll wage for the respective industry
264     as determined by the Department of Workforce Services; or
265          (ii) if the county average monthly nonagricultural payroll wage is not available for the
266     respective industry, the total average monthly nonagricultural payroll wage in the respective
267     county where the enterprise zone is located;
268          (c) an additional tax credit of $750 may be claimed if the new full-time employee
269     position created within the enterprise zone is in a business entity that adds value to agricultural
270     commodities through manufacturing or processing;
271          (d) an additional tax credit of $200 may be claimed for each new full-time employee
272     position created within the enterprise zone that is filled by an employee who is insured under
273     an employer-sponsored health insurance program if the employer pays at least 50% of the
274     premium cost for the year for which the credit is claimed;
275          (e) a tax credit of 25% of the first $200,000 spent on rehabilitating a building in the

276     enterprise zone that has been vacant for two years or more, including that the building has had
277     or contained no occupants, tenants, furniture, or personal property for two years or more, in the
278     time period immediately before the rehabilitation; [and]
279          (f) an annual investment tax credit may be claimed in an amount equal to 5% of the first
280     $750,000 qualifying investment in plant, equipment, or other depreciable property[.]; and
281          (g) for a taxable year beginning on or after January 1, 2022, and before January 1,
282     2026, an additional annual investment tax credit of 10% of the first $250,000 investment, 5%
283     of the next $1,000,000 investment, and 2.5% of the next $2,000,000 investment, in a plant,
284     equipment, or other depreciable property primarily used:
285          (i) to produce or process, from a renewable energy source, as defined in Section
286     54-17-601, hydrogen for use as a fuel; or
287          (ii) to distribute or dispense hydrogen fuel produced from a renewable energy source,
288     as defined in Section 54-17-601.
289          (8) (a) Subject to the limitations of Subsection (8)(b), a business entity claiming a tax
290     credit under Subsections (7)(a) through (d) may claim the tax credit for no more than 30
291     full-time employee positions in a taxable year.
292          (b) A business entity that received a tax credit for one or more new full-time employee
293     positions under Subsections (7)(a) through (d) in a prior taxable year may claim a tax credit for
294     a new full-time employee position in a subsequent taxable year under Subsections (7)(a)
295     through (d) if:
296          (i) the business entity has created a new full-time position within the enterprise zone;
297     and
298          (ii) the total number of employee positions at the business entity at any point during the
299     tax year for which the tax credit is being claimed is greater than the highest number of
300     employee positions that existed at the business entity in the previous taxable year.
301          (c) Construction jobs are not eligible for the tax credits under Subsections (7)(a)
302     through (d).
303          (9) If the amount of a tax credit under this section exceeds a business entity's tax
304     liability under this chapter for a taxable year, the business entity may carry forward the amount
305     of the tax credit exceeding the liability for a period that does not exceed the next three taxable
306     years.

307          (10) Tax credits under [Subsections (7)(a) through (f)] Subsection (7) may not be
308     claimed by a business entity primarily engaged in retail trade or by a public utilities business.
309          (11) A business entity that has no employees:
310          (a) may not claim tax credits under Subsections (7)(a) through (d); and
311          (b) may claim tax credits under Subsections (7)(e) through [(f)] (g).
312          (12) (a) A business entity may not claim or carry forward a tax credit available under
313     this part for a taxable year during which the business entity has claimed the targeted business
314     income tax credit available under Section 63N-2-304.
315          (b) A business entity may not claim or carry forward a tax credit available under this
316     section for a taxable year during which the business entity claims or carries forward a tax credit
317     available under Section 59-7-610 or 59-10-1007.
318          (13) (a) On or before November 30, 2018, and every three years after 2018, the
319     Revenue and Taxation Interim Committee shall review the tax credits provided by this section
320     and make recommendations concerning whether the tax credits should be continued, modified,
321     or repealed.
322          (b) In conducting the review required by Subsection (13)(a), the Revenue and Taxation
323     Interim Committee shall:
324          (i) schedule time on at least one committee agenda to conduct the review;
325          (ii) invite state agencies, individuals, and organizations concerned with the credits
326     under review to provide testimony;
327          (iii) ensure that the recommendations described in this section include an evaluation of:
328          (A) the cost of the tax credits to the state;
329          (B) the purpose and effectiveness of the tax credits; and
330          (C) the extent to which the state benefits from the tax credits; and
331          (iv) undertake other review efforts as determined by the chairs of the Revenue and
332     Taxation Interim Committee.
333          Section 6. Effective date.
334          This bill takes effect for a taxable year beginning on or after January 1, 2022.