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H.B. 171

             1               h [ REAUTHORIZATION OF THE ] h RECYCLING
             2     

MARKET DEVELOPMENT ZONE ACT h AND RELATED TAX CREDITS h

             3     
2000 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Ben C. Ferry

             6      AN ACT RELATING TO STATE AFFAIRS h [ ; ] AND REVENUE AND TAXATION; MODIFYING TAX
             6a      CREDIT PROVISIONS; h EXTENDING THE SUNSET DATE OF THE
             7      RECYCLING MARKET DEVELOPMENT ZONE ACT AND ACCOMPANYING SECTIONS;
             8      CLARIFYING WHEN CERTAIN TAX CREDITS CAN BE CLAIMED OR CARRIED
             9      FORWARD; AND MAKING TECHNICAL CHANGES.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             11a           h 59-7-610, as enacted by Chapter 236, Laws of Utah 1996
             11b          59-10-108.7, as enacted by Chapter 236, Laws of Utah 1996 h
             12          63-55-209, as last amended by Chapters 21, 76 and 156, Laws of Utah 1999
             13      Be it enacted by the Legislature of the state of Utah:
             13a           h Section 1. Section 59-7-610, is amended to read:
             13b          59-7-610.   Credit -- Recycling market development zone.
             13c          (1) For tax years beginning on or after January 1, 1996, the following state tax credits are
             13d      applicable to businesses operating in a recycling market development zone as defined in Section
             13e      9-2-1602:
             13f          (a) (i) There shall be allowed a nonrefundable tax credit of 5% of the purchase price paid
             13g      [during the taxable year] for machinery and equipment used directly in:
             13h          (A) commercial composting; or
             13i          (B) manufacturing facilities or plant units that:
             13j          (I) manufacture, process, compound, or produce recycled items of tangible personal property
             13k      for sale; or
             13l          (II) reduce or reuse postconsumer waste material.
             13m          (ii) The Department of Community and Economic Development shall certify that the machinery
             13n      and equipment are integral to the composting or recycling process on a form provided by the tax h

             13o      h commission before the taxpayer is entitled to the tax credit under this section.
             13p          (iii) The taxpayer shall enclose with its tax return the certification received under Subsection
             13q      (1)(a)(ii).
             13r          (b) There shall be allowed a nonrefundable tax credit equal to 20% of net expenditures up to
             13s      $10,000 to third parties for rent, wages, supplies, tools, test inventory, and utilities made by the
             13t      taxpayer for establishing and operating recycling or composting technology in Utah, with an annual
             13u      maximum credit of $2,000.
             13v          (2) The total nonrefundable credit allowed under this section may not exceed 40% of the Utah
             13w      income tax liability of the taxpayer prior to any credits in the taxable year of purchase prior to claiming
             13x      the credit authorized by this section.
             13y          (3) (a) Any tax credit not used for the taxable year in which the purchase price on composting
             13z      or recycling machinery and equipment was paid may be carried over for credit against the business's
             13aa      income taxes in the three succeeding taxable years until the total credit amount is used.
             13ab          (b) Tax credits not claimed by a business on its state income tax return within three years are
             13ac      forfeited.
             13ad          (4) The tax commission shall make rules governing what information shall be filed with the tax
             13ae      commission to verify the entitlement to and amount of a tax credit.
             13af           (5) (a) NOTWITHSTANDING SUBSECTION (1)(a), S FOR TAXABLE YEARS BEGINNING ON
             13afa      OR AFTER JANUARY 1, 2001, s A TAXPAYER MAY NOT CLAIM OR CARRY
             13ag      FORWARD A TAX CREDIT DESCRIBED IN SUBSECTION (1)(a) IN A TAXABLE YEAR DURING WHICH
             13ah      THE TAXPAYER CLAIMS OR CARRIES FORWARD A TAX CREDIT UNDER SECTION 9-2-413.
             13ai          (b) FOR A TAXABLE YEAR OTHER THAN A TAXABLE YEAR DURING WHICH THE TAXPAYER
             13aj      MAY NOT CLAIM OR CARRY FORWARD A TAX CREDIT IN ACCORDANCE WITH SUBSECTION (5)(a),
             13ak      A TAXPAYER MAY CLAIM OR CARRY FORWARD A TAX CREDIT DESCRIBED IN SUBSECTION (1)(a):
             13al          (i) IF THE TAXPAYER MAY CLAIM OR CARRY FORWARD THE CREDIT IN ACCORDANCE
             13am      WITH SUBSECTIONS (1) AND (2); AND
             13an          (ii) SUBJECT TO SUBSECTIONS (3) AND (4).
             13ao          (6) NOTWITHSTANDING SUBSECTION (1)(b), S FOR TAXABLE YEARS BEGINNING ON OR
             13aoa      AFTER JANUARY 1, 2001, s A TAXPAYER MAY NOT CLAIM A TAX CREDIT
             13ap      DESCRIBED IN SUBSECTION (1)(b) IN A TAXABLE YEAR DURING WHICH THE TAXPAYER CLAIMS
             13aq      OR CARRIES FORWARD A TAX CREDIT UNDER SECTION 9-2-413.
             13ar          Section 2. Section 59-10-108.7, is amended to read:
             13as          59-10-108.7.   Recycling market development zones credit.
             13at          (1) For tax years beginning on or after January 1, 1996, the following state tax credits are
             13au      applicable to an individual in a recycling market development zone as defined in Section 9-2-1602:
             13av          (a) (i) There shall be allowed a nonrefundable tax credit of 5% of the purchase price paid
             13aw      [during the taxable year] for machinery and equipment used directly in:
             13ax          (A) commercial composting; or
             13ay          (B) manufacturing facilities or plant units that:
             13az          (I) manufacture, process, compound, or produce recycled items of tangible personal property
             13ba      for sale; or
             13bb          (II) reduce or reuse postconsumer waste material. h

             13bc           h (ii) The Department of Community and Economic Development shall certify that the
             13bd      machinery and equipment are integral to the composting or recycling process on a form provided by
             13be      the tax commission before the taxpayer is entitled to the tax credit under this section.
             13bf          (iii) The taxpayer shall enclose with its tax return the certification received under Subsection
             13bg      (1)(a)(ii).
             13bh          (b) There shall be allowed a nonrefundable tax credit equal to 20% of net expenditures up to
             13bi      $10,000 to third parties for rent, wages, supplies, tools, test inventory, and utilities made by the
             13bj      taxpayer for establishing and operating recycling or composting technology in Utah, with an annual
             13bk      maximum credit of $2,000.
             13bl          (2) The total credit allowed under this section may not exceed 40% of the Utah income tax
             13bm      liability of the taxpayer prior to any credits in the taxable year of purchase prior to claiming the credit
             13bn      authorized by this section.
             13bo          (3) (a) Any tax credit not used for the taxable year in which the purchase price on composting
             13bp      or recycling machinery and equipment was paid may be carried over for credit against the individual's
             13bq      income taxes in the three succeeding taxable years until the total credit amount is used.
             13br          (b) Tax credits not claimed by an individual on the individual's state income tax return within
             13bs      three years are forfeited.
             13bt          (4) The tax commission shall make rules governing what information shall be filed with the tax
             13bu      commission to verify the entitlement to and amount of a tax credit.
             13bv          (5) (a) NOTWITHSTANDING SUBSECTION (1)(a), S FOR TAXABLE YEARS BEGINNING ON
             13bva      OR AFTER JANUARY 1, 2001, s A TAXPAYER MAY NOT CLAIM OR CARRY
             13bw      FORWARD A TAX CREDIT DESCRIBED IN SUBSECTION (1)(a) IN A TAXABLE YEAR DURING WHICH
             13bx      THE TAXPAYER CLAIMS OR CARRIES FORWARD A TAX CREDIT UNDER SECTION 9-2-413.
             13by          (b) FOR A TAXABLE YEAR OTHER THAN A TAXABLE YEAR DURING WHICH THE TAXPAYER
             13bz      MAY NOT CLAIM OR CARRY FORWARD A TAX CREDIT IN ACCORDANCE WITH SUBSECTION (5)(a),
             13ca      A TAXPAYER MAY CLAIM OR CARRY FORWARD A TAX CREDIT DESCRIBED IN SUBSECTION (1)(a):
             13cb          (i) IF THE TAXPAYER MAY CLAIM OR CARRY FORWARD THE CREDIT IN ACCORDANCE
             13cc      WITH SUBSECTIONS (1) AND (2); AND
             13cd          (ii) SUBJECT TO SUBSECTIONS (3) AND (4).
             13ce          (6) NOTWITHSTANDING SUBSECTION (1)(b), S FOR TAXABLE YEARS BEGINNING ON OR
             13cea      AFTER JANUARY 1, 2001, s A TAXPAYER MAY NOT CLAIM A TAX CREDIT
             13cf      DESCRIBED IN SUBSECTION (1)(b) IN A TAXABLE YEAR DURING WHICH THE TAXPAYER
             13cg      CLAIMS OR CARRIES FORWARD A TAX CREDIT UNDER SECTION 9-2-413. h
             14          Section h [ 1. ] 3. h Section 63-55-209 is amended to read:
             15           63-55-209. Repeal dates, Title 9.
             16          (1) Title 9, Chapter 1, Part 8, Commission on National and Community Service Act, is
             17      repealed July 1, 2004.
             18          [(2) Title 9, Chapter 2, Part 3, Small Business Advisory Council, is repealed July 1, 1999.]
             19          [(3)] (2) Title 9, Chapter 2, Part 4, Enterprise Zone Act, is repealed July 1, 2008.
             20          [(5)] (3) Section 9-2-1208 regarding waste tire recycling loans is repealed July 1, 2000.

             21          [(6)](4) (a) Title 9, Chapter 2, Part 16, Recycling Market Development Zone Act, is
             22      repealed July 1, [2000,] S [ 2004 ] 2010 s .
             23          (b) Sections 59-7-610 and 59-10-108.7 , regarding tax credits for certain persons in
             24      recycling market development zones, are repealed for tax years beginning on or after January 1,
             25      [2001] S [ 2005 ] 2011 s .
             26          (c) Notwithstanding Subsection (4)(b), a person may not claim a tax credit under Section
             27      59-7-610 or 59-10-108.7 :

             28          (i) for the purchase price of machinery or equipment described in Section 59-7-610 or
             29      59-10-108.7 if the machinery or equipment is purchased on or after July 1, S [ 2004 ] 2010 s ; or
             30          (ii) for an expenditure described in Subsection 59-7-610 (1)(b) or 59-10-108.7 (1)(b), if the
             31      expenditure is made on or after July 1, S [ 2004 ] 2010 s .
             32          (d) Notwithstanding Subsections (4)(b) and (c), a person may carry forward a tax credit
             33      in accordance with Section 59-7-610 or 59-10-108.7 if:
             34          (i) the person is entitled to a tax credit under Section 59-7-610 or 59-10-108.7 ; and
             35          (ii) (A) for the purchase price of machinery or equipment described in Section 59-7-610
             36      or 59-10-108.7 , the machinery or equipment is purchased on or before June 30, S [ 2004 ] 2010 s ; or
             37          (B) for an expenditure described in Subsection 59-7-610 (1)(b) or 59-10-108.7 (1)(b), the
             38      expenditure is made on or before June 30, S [ 2004 ] 2010 s .
             39          [(7)] (5) Title 9, Chapter 3, Part 3, Heber Valley Historic Railroad Authority, is repealed
             40      July 1, 2009.
             41          [(8) Title 9, Chapter 4, Part 4, Disaster Relief, is repealed July 1, 1999.]
             42          [(9)] (6) Title 9, Chapter 4, Part 9, Utah Housing Finance Agency Act, is repealed July 1,
             43      2006.
             44          [(4)] (7) Title 9, Chapter 13, Utah Technology and Small Business Finance Act, is repealed
             45      July 1, 2002.




Legislative Review Note
    as of 11-18-99 2:35 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


Committee Note

The Business, Labor, and Economic Development Interim Committee recommended this bill.

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