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First Substitute S.B. 13
Senator Howard A. Stephenson proposes the following substitute bill:
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TAX CREDITS FOR ALTERNATE POWER
2
GENERATION
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2007 GENERAL SESSION
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STATE OF UTAH
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Chief Sponsor: Howard A. Stephenson
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House Sponsor:
Michael E. Noel
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LONG TITLE
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General Description:
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This bill amends and extends the renewable energy tax credit.
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Highlighted Provisions:
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This bill:
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. defines terms;
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. extends the availability of the renewable energy tax credit;
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. provides for the Tax Review Commission to review the renewable energy tax credit;
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. expands the renewable energy tax credit to include some geothermal sources;
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. makes the renewable energy tax credit on some commercial energy systems a
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refundable credit;
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. changes the calculation of the tax credit for commercial energy systems;
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. removes language reimbursing the Uniform School Fund for renewable energy tax
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credits taken; and
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. makes technical changes.
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Monies Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill provides retrospective operation.
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Utah Code Sections Affected:
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AMENDS:
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59-10-1014, as renumbered and amended by Chapter 223, Laws of Utah 2006
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ENACTS:
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59-10-1106, Utah Code Annotated 1953
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REPEALS AND REENACTS:
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59-7-614, as last amended by Chapter 223, Laws of Utah 2006
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
59-7-614
is repealed and reenacted to read:
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59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
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State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
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authority.
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(1) As used in this section:
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(a) "Active solar system":
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(i) means a system of equipment capable of collecting and converting incident solar
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radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
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by a separate apparatus to storage or to the point of use; and
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(ii) includes water heating, space heating or cooling, and electrical or mechanical
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energy generation.
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(b) "Biomass system" means any system of apparatus and equipment for use in
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converting material into biomass energy, as defined in Section
59-12-102
, and transporting that
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energy by separate apparatus to the point of use or storage.
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(c) "Business entity" means any sole proprietorship, estate, trust, partnership,
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association, corporation, cooperative, or other entity under which business is conducted or
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transacted.
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(d) "Commercial energy system" means any active solar, passive solar, geothermal
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electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
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biomass system used to supply energy to a commercial unit or as a commercial enterprise.
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(e) "Commercial enterprise" means a business entity whose purpose is to produce
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electrical, mechanical, or thermal energy for sale from a commercial energy system.
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(f) (i) "Commercial unit" means any building or structure that a business entity uses to
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transact its business except as provided in Subsection (1)(f)(ii); and
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(ii) (A) in the case of an active solar system used for agricultural water pumping or a
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wind system, each individual energy generating device shall be a commercial unit; and
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(B) if an energy system is the building or structure that a business entity uses to
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transact its business, a commercial unit is the complete energy system itself.
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(g) "Direct-use geothermal system" means a system of apparatus and equipment
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enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
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that is contained in the earth to meet energy needs, including heating a building, an industrial
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process, and aquaculture.
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(h) "Geothermal electricity" means energy contained in heat that continuously flows
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outward from the earth that is used as a sole source of energy to produce electricity.
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(i) "Geothermal heat-pump system" means a system of apparatus and equipment
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enabling the use of thermal properties contained in the earth at temperatures well below 100
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degrees Fahrenheit to help meet heating and cooling needs of a structure.
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(j) "Hydroenergy system" means a system of apparatus and equipment capable of
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intercepting and converting kinetic water energy into electrical or mechanical energy and
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transferring this form of energy by separate apparatus to the point of use or storage.
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(k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
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59-10-103
and an individual as defined in Section
59-10-103
.
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(l) "Passive solar system":
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(i) means a direct thermal system that utilizes the structure of a building and its
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operable components to provide for collection, storage, and distribution of heating or cooling
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during the appropriate times of the year by utilizing the climate resources available at the site;
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and
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(ii) includes those portions and components of a building that are expressly designed
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and required for the collection, storage, and distribution of solar energy.
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(m) "Residential energy system" means any active solar, passive solar, biomass,
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direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
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supply energy to or for any residential unit.
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(n) "Residential unit" means any house, condominium, apartment, or similar dwelling
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unit that serves as a dwelling for a person, group of persons, or a family but does not include
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property subject to a fee under:
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(i) Section
59-2-404
;
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(ii) Section
59-2-405
;
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(iii) Section
59-2-405.1
;
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(iv) Section
59-2-405.2
; or
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(v) Section
59-2-405.3
.
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(o) "Utah Geological Survey" means the Utah Geological Survey established in Section
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63-73-5
.
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(p) "Wind system" means a system of apparatus and equipment capable of intercepting
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and converting wind energy into mechanical or electrical energy and transferring these forms of
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energy by a separate apparatus to the point of use, sale, or storage.
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(2) (a) (i) For taxable years beginning on or after January 1, 2007, a business entity that
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purchases and completes or participates in the financing of a residential energy system to
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supply all or part of the energy required for a residential unit owned or used by the business
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entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
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Subsection (2)(a).
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(ii) (A) A business entity is entitled to a tax credit equal to 25% of the reasonable costs
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of each residential energy system installed with respect to each residential unit it owns or uses,
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including installation costs, against any tax due under this chapter for the taxable year in which
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the energy system is completed and placed in service.
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(B) The total amount of each credit under this Subsection (2)(a) may not exceed $2,000
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per residential unit, except that the credit may not exceed $1,000 per residential unit for a
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geothermal heat-pump system.
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(C) The credit under this Subsection (2)(a) is allowed for any residential energy system
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completed and placed in service on or after January 1, 2007.
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(iii) If a business entity sells a residential unit to an individual taxpayer before making
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a claim for the tax credit under this Subsection (2)(a), the business entity may:
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(A) assign its right to this tax credit to the individual taxpayer; and
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(B) if the business entity assigns its right to the tax credit to an individual taxpayer
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under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
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individual taxpayer had completed or participated in the costs of the residential energy system
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under Section
59-10-1014
.
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(b) (i) For taxable years beginning on or after January 1, 2007, a business entity that
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purchases or participates in the financing of a commercial energy system situated in Utah is
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entitled to a refundable tax credit as provided in this Subsection (2)(b) if the commercial
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energy system does not use wind, geothermal electricity, or biomass equipment capable of
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producing a total of 660 or more kilowatts of electricity and:
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(A) the commercial energy system supplies all or part of the energy required by
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commercial units owned or used by the business entity; or
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(B) the business entity sells all or part of the energy produced by the commercial
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energy system as a commercial enterprise.
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(ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs
132
of any commercial energy system installed, including installation costs, against any tax due
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under this chapter for the taxable year in which the commercial energy system is completed and
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placed in service.
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(B) Notwithstanding Subsection (2)(b)(ii)(A), the total amount of the credit under this
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Subsection (2)(b) may not exceed $50,000 per commercial unit.
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(C) The credit under this Subsection (2)(b) is allowed for any commercial energy
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system completed and placed in service on or after January 1, 2007.
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(iii) A business entity that leases a commercial energy system installed on a
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commercial unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can
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confirm that the lessor irrevocably elects not to claim the credit.
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(iv) Only the principal recovery portion of the lease payments, which is the cost
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incurred by a business entity in acquiring a commercial energy system, excluding interest
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charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
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(v) A business entity that leases a commercial energy system is eligible to use the tax
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credit under this Subsection (2)(b) for a period no greater than seven years from the initiation
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of the lease.
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(c) (i) For taxable years beginning on or after January 1, 2007, a business entity that
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owns a commercial energy system situated in Utah using wind, geothermal electricity, or
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biomass equipment capable of producing a total of 660 or more kilowatts of electricity is
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entitled to a refundable tax credit as provided in this Subsection (2)(c) if:
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(A) the commercial energy system supplies all or part of the energy required by
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commercial units owned or used by the business entity; or
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(B) the business entity sells all or part of the energy produced by the commercial
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energy system as a commercial enterprise.
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(ii) (A) A business entity is entitled to a tax credit under this section equal to the
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product of:
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(I) 0.35 cents; and
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(II) the kilowatt hours of electricity produced and either used or sold during the taxable
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year.
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(B) (I) The credit calculated under Subsection (2)(c)(ii)(A) may be claimed for
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production occurring during a period of 48 months beginning with the month in which the
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commercial energy system is placed in commercial service.
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(II) The credit allowed by this Subsection (2)(c) for each year may not be carried
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forward or carried back.
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(C) The credit under this Subsection (2)(c) is allowed for any commercial energy
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system completed and placed in service on or after January 1, 2007.
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(iii) A business entity that leases a commercial energy system installed on a
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commercial unit is eligible for the tax credit under this Subsection (2)(c) if the lessee can
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confirm that the lessor irrevocably elects not to claim the credit.
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(d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year
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in which the energy system is completed and placed in service.
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(ii) Additional energy systems or parts of energy systems may be claimed for
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subsequent years.
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(iii) If the amount of a tax credit under Subsection (2)(a) or (b) exceeds a business
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entity's tax liability under this chapter for a taxable year, the amount of the credit exceeding the
177
liability may be carried over for a period which does not exceed the next four taxable years.
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(3) (a) The tax credits provided for under Subsection (2) are in addition to any tax
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credits provided under the laws or rules and regulations of the United States.
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(b) (i) The Utah Geological Survey may set standards for residential and commercial
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energy systems claiming a credit under Subsections (2)(a) and (b) that cover the safety,
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reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the systems
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eligible for the tax credit use the state's renewable and nonrenewable energy resources in an
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appropriate and economic manner.
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(ii) The Utah Geological Survey may set standards for residential and commercial
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energy systems that establish the reasonable costs of an energy system, as used in Subsections
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(2)(a)(ii)(A) and (2)(b)(ii)(A), as an amount per unit of energy production.
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(iii) A tax credit may not be taken under Subsection (2) until the Utah Geological
189
Survey has certified that the energy system has been completely installed and is a viable system
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for saving or production of energy from renewable resources.
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(c) The Utah Geological Survey and the commission may make rules in accordance
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with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, that are necessary to
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implement this section.
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(4) (a) On or before October 1, 2012, and every five years thereafter, the Tax Review
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Commission shall review the tax credits provided by this section and make recommendations
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to the Revenue and Taxation Interim Committee concerning whether the credit should be
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continued, modified, or repealed.
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(b) The Tax Review Commission's report under Subsection (4)(a) shall include
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information concerning the cost of the credit, the purpose and effectiveness of the credit, and
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the state's benefit from the credit.
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Section 2.
Section
59-10-1014
is amended to read:
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59-10-1014. Renewable energy systems tax credit -- Definitions -- Limitations --
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State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
204
authority.
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(1) As used in this part:
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(a) "Active solar system":
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(i) means a system of equipment capable of collecting and converting incident solar
208
radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
209
by a separate apparatus to storage or to the point of use; and
210
(ii) includes water heating, space heating or cooling, and electrical or mechanical
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energy generation.
212
(b) "Biomass system" means any system of apparatus and equipment [capable of
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converting organic plant, wood, or waste products into electrical and thermal energy and
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transferring these forms of energy by a separate apparatus to the point of use or storage] for use
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in converting material into biomass energy, as defined in Section
59-12-102
, and transporting
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that energy by separate apparatus to the point of use or storage.
217
(c) "Business entity" means any entity under which business is conducted or transacted.
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[(d) "Commercial energy system" means any active solar, passive solar, wind,
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hydroenergy, or biomass system used to supply energy to a commercial unit or as a commercial
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enterprise.]
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[(e) "Commercial enterprise" means a business entity whose purpose is to produce
222
electrical, mechanical, or thermal energy for sale from a commercial energy system.]
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[(f) (i) "Commercial unit" means any building or structure which that a business entity
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uses to transact its business, except as provided in Subsection (1)(f)(ii); and]
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[(ii) (A) in the case of an active solar system used for agricultural water pumping or a
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wind system, each individual energy generating device shall be a commercial unit; and]
227
[(B) if an energy system is the building or structure which a business entity uses to
228
transact its business, a commercial unit is the complete energy system itself.]
229
(d) "Direct-use geothermal system" means a system of apparatus and equipment
230
enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
231
that is contained in the earth to meet energy needs, including heating a building, an industrial
232
process, and aquaculture.
233
(e) "Geothermal electricity" means energy contained in heat that continuously flows
234
outward from the earth that is used as a sole source of energy to produce electricity.
235
(f) "Geothermal heat-pump system" means a system of apparatus and equipment
236
enabling the use of thermal properties contained in the earth at temperatures well below 100
237
degrees Fahrenheit to help meet heating and cooling needs of a structure.
238
(g) "Hydroenergy system" means a system of apparatus and equipment capable of
239
intercepting and converting kinetic water energy into electrical or mechanical energy and
240
transferring this form of energy by separate apparatus to the point of use or storage.
241
(h) "Passive solar system":
242
(i) means a direct thermal system [which] that utilizes the structure of a building and its
243
operable components to provide for collection, storage, and distribution of heating or cooling
244
during the appropriate times of the year by utilizing the climate resources available at the site;
245
and
246
(ii) includes those portions and components of a building that are expressly designed
247
and required for the collection, storage, and distribution of solar energy.
248
(i) "Residential energy system" means any active solar, passive solar, biomass,
249
direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
250
supply energy to or for any residential unit.
251
(j) "Residential unit" means any house, condominium, apartment, or similar dwelling
252
unit [which] that serves as a dwelling for a person, group of persons, or a family but does not
253
include property subject to a fee under:
254
(i) Section
59-2-404
;
255
(ii) Section
59-2-405
;
256
(iii) Section
59-2-405.1
;
257
(iv) Section
59-2-405.2
; or
258
(v) Section
59-2-405.3
.
259
(k) "Utah Geological Survey" means the Utah Geological Survey established in Section
260
63-73-5
.
261
(l) "Wind system" means a system of apparatus and equipment capable of intercepting
262
and converting wind energy into mechanical or electrical energy and transferring these forms of
263
energy by a separate apparatus to the point of use or storage.
264
(2) For taxable years beginning on or after January 1, [2001] 2007, [but beginning on
265
or before December 31, 2006,] a claimant, estate, or trust may claim a nonrefundable tax credit
266
as provided in this section if:
267
(a) a claimant, estate, or trust that is not a business entity purchases and completes or
268
participates in the financing of a residential energy system to supply all or part of the energy for
269
the claimant's, estate's, or trust's residential unit in the state; or
270
(b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to
271
another claimant, estate, or trust that is not a business entity [prior to] before making a claim
272
for a tax credit under Subsection (6) or Section
59-7-614
; and
273
(ii) the claimant, estate, or trust that is a business entity assigns its right to the tax credit
274
to the claimant, estate, or trust that is not a business entity as provided in Subsection (6)(c) or
275
Subsection
59-7-614
(2)(a)(iii).
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(3) (a) The tax credit described in Subsection (2) is equal to 25% of the reasonable
277
costs of [the] each residential energy system, including installation costs, against any income
278
tax liability of the claimant, estate, or trust under this chapter for the taxable year in which the
279
residential energy system is completed and placed in service.
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(b) The total amount of [the] each tax credit under this section may not exceed $2,000
281
per residential unit, except that the credit may not exceed $1,000 per residential unit for a
282
geothermal heat-pump system.
283
(c) The tax credit under this section is allowed for any residential energy system
284
completed and placed in service on or after January 1, [2001] 2007[, but on or before
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December 31, 2006].
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(4) (a) The tax credit provided for in this section shall be claimed in the return for the
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taxable year in which the residential energy system is completed and placed in service.
288
(b) Additional residential energy systems or parts of residential energy systems may be
289
similarly claimed in returns for subsequent taxable years as long as the total amount claimed
290
does not exceed $2,000 per residential unit.
291
(c) If the amount of the tax credit under this section exceeds the income tax liability of
292
the claimant, estate, or trust claiming the tax credit under this section for that taxable year, then
293
the amount not used may be carried over for a period [which] that does not exceed the next
294
four taxable years.
295
(5) (a) A claimant, estate, or trust that is not a business entity that leases a residential
296
energy system installed on a residential unit is eligible for the residential energy tax [credits]
297
credit if that claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the
298
tax credit.
299
(b) Only the principal recovery portion of the lease payments, which is the cost
300
incurred by the claimant, estate, or trust in acquiring the residential energy system excluding
301
interest charges and maintenance expenses, is eligible for the tax credits.
302
(c) A claimant, estate, or trust described in this Subsection (5) may use the tax credits
303
for a period that does not exceed seven years from the initiation of the lease.
304
(6) (a) A claimant, estate, or trust that is a business entity that purchases and completes
305
or participates in the financing of a residential energy system to supply all or part of the energy
306
required for a residential unit owned or used by the claimant, estate, or trust that is a business
307
entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
308
Subsection (6).
309
(b) (i) For taxable years beginning on or after January 1, [2001] 2007, [but beginning
310
on or before December 31, 2006,] a claimant, estate, or trust that is a business entity is entitled
311
to a nonrefundable tax credit equal to 25% of the reasonable costs of a residential energy
312
system installed with respect to each residential unit it owns or uses, including installation
313
costs, against any tax due under this chapter for the taxable year in which the energy system is
314
completed and placed in service.
315
(ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000
316
per residential unit.
317
(iii) The tax credit under this Subsection (6) is allowed for any residential energy
318
system completed and placed in service on or after January 1, [2001] 2007[, but on or before
319
December 31, 2006].
320
(c) If a claimant, estate, or trust that is a business entity sells a residential unit to a
321
claimant, estate, or trust that is not a business entity [prior to] before making a claim for the tax
322
credit under this Subsection (6), the claimant, estate, or trust that is a business entity may:
323
(i) assign its right to this tax credit to the claimant, estate, or trust that is not a business
324
entity; and
325
(ii) if the claimant, estate, or trust that is a business entity assigns its right to the tax
326
credit to a claimant, estate, or trust that is not a business entity under Subsection (6)(c)(i), the
327
claimant, estate, or trust that is not a business entity may claim the tax credit as if that claimant,
328
estate, or trust that is not a business entity had completed or participated in the costs of the
329
residential energy system under this section.
330
[(7) (a) A claimant, estate, or trust that is a business entity that purchases or
331
participates in the financing of a commercial energy system is entitled to a nonrefundable tax
332
credit as provided in this Subsection (7) if:]
333
[(i) the commercial energy system supplies all or part of the energy required by
334
commercial units owned or used by the claimant, estate, or trust that is a business entity; or]
335
[(ii) the claimant, estate, or trust that is a business entity sells all or part of the energy
336
produced by the commercial energy system as a commercial enterprise.]
337
[(b) (i) A claimant, estate, or trust that is a business entity is entitled to a tax credit
338
equal to 10% of the costs of any commercial energy system installed, including installation
339
costs, against any tax due under this chapter for the taxable year in which the commercial
340
energy system is completed and placed in service.]
341
[(ii) The total amount of the tax credit under this Subsection (7) may not exceed
342
$50,000 per commercial unit.]
343
[(iii) The tax credit under this Subsection (7) is allowed for any commercial energy
344
system completed and placed in service on or after January 1, 2001 , but on or before
345
December 31, 2006 .]
346
[(c) A claimant, estate, or trust that is a business entity that leases a commercial energy
347
system installed on a commercial unit is eligible for the tax credit under this Subsection (7) if
348
the claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax
349
credit.]
350
[(d) Only the principal recovery portion of the lease payments, which is the cost
351
incurred by a claimant, estate, or trust that is not a business entity in acquiring a commercial
352
energy system, excluding interest charges and maintenance expenses, is eligible for the tax
353
credit under this Subsection (7).]
354
[(e) A claimant, estate, or trust that is a business entity that leases a commercial energy
355
system is eligible to use the tax credit under this Subsection (7) for a period that does not
356
exceed seven years from the initiation of the lease.]
357
[(8)] (7) (a) A tax credit under this section may be claimed for the taxable year in
358
which the residential energy system is completed and placed in service.
359
(b) Additional residential energy systems or parts of residential energy systems may be
360
claimed for subsequent years.
361
(c) If the amount of a tax credit under this section exceeds the tax liability of the
362
claimant, estate, or trust claiming the tax credit under this section for a taxable year, the amount
363
of the tax credit exceeding the tax liability may be carried over for a period which does not
364
exceed the next four taxable years.
365
[(9)] (8) The tax credits provided for under this section are in addition to any tax
366
credits provided under the laws or rules and regulations of the United States.
367
[(10)] (9) (a) The Utah Geological Survey may set standards for residential [and
368
commercial] energy systems that cover the safety, reliability, efficiency, leasing, and technical
369
feasibility of the systems to ensure that the systems eligible for the tax credit use the state's
370
renewable and nonrenewable energy resources in an appropriate and economic manner.
371
(b) The Utah Geological Survey may set standards for residential and commercial
372
energy systems that establish the reasonable costs of an energy system, as used in Subsections
373
(3)(a) and (6)(b)(i), as an amount per unit of energy production.
374
[(b)] (c) A tax credit may not be taken under this section until the Utah Geological
375
Survey has certified that the energy system has been completely installed and is a viable system
376
for saving or production of energy from renewable resources.
377
[(11)] (10) The Utah Geological Survey and the commission [are authorized to
378
promulgate] may make rules in accordance with Title 63, Chapter 46a, Utah Administrative
379
Rulemaking Act, [which] that are necessary to implement this section.
380
[(12) The Uniform School Fund shall be reimbursed by transfers from the General
381
Fund for any tax credits taken under this section.]
382
(11) (a) On or before October 1, 2012, and every five years thereafter, the Tax Review
383
Commission shall review the tax credits provided by this section and make recommendations
384
to the Revenue and Taxation Interim Committee concerning whether the credit should be
385
continued, modified, or repealed.
386
(b) The Tax Review Commission's report under Subsection (11)(a) shall include
387
information concerning the cost of the credit, the purpose and effectiveness of the credit, and
388
the state's benefit from the credit.
389
Section 3.
Section
59-10-1106
is enacted to read:
390
59-10-1106. Renewable energy tax credit.
391
(1) As used in this section:
392
(a) "Active solar system" is as defined in Section
59-10-1014
.
393
(b) "Biomass system" is as defined in Section
59-10-1014
.
394
(c) "Business entity" is as defined in Section
59-10-1014
.
395
(d) "Commercial energy system" means any active solar, passive solar, geothermal
396
electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
397
biomass system used to supply energy to a commercial unit or as a commercial enterprise.
398
(e) "Commercial enterprise" means a business entity whose purpose is to produce
399
electrical, mechanical, or thermal energy for sale from a commercial energy system.
400
(f) (i) "Commercial unit" means any building or structure that a business entity uses to
401
transact its business except as provided in Subsection (1)(f)(ii); and
402
(ii) (A) in the case of an active solar system used for agricultural water pumping or a
403
wind system, each individual energy generating device shall be a commercial unit; and
404
(B) if an energy system is the building or structure that a business entity uses to
405
transact its business, a commercial unit is the complete energy system itself.
406
(g) "Direct-use geothermal system" is as defined in Section
59-10-1014
.
407
(h) "Geothermal electricity" is as defined in Section
59-10-1014
.
408
(i) "Geothermal heat-pump system" is as defined in Section
59-10-1014
.
409
(j) "Hydroenergy system" is as defined in Section
59-10-1014
.
410
(k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
411
59-10-103
and an individual as defined in Section
59-10-103
.
412
(l) "Passive solar system" is as defined in Section
59-10-1014
.
413
(m) "Utah Geological Survey" means the Utah Geological Survey established in
414
Section
63-73-5
.
415
(n) "Wind system" is as defined in Section
59-10-1014
.
416
(2) (a) (i) For taxable years beginning on or after January 1, 2007, a business entity that
417
purchases or participates in the financing of a commercial energy system situated in Utah is
418
entitled to a tax credit as provided in this Subsection (2)(a) if the commercial energy system
419
does not use wind, geothermal electricity, or biomass equipment capable of producing a total of
420
660 or more kilowatts of electricity and:
421
(A) the commercial energy system supplies all or part of the energy required by
422
commercial units owned or used by the business entity; or
423
(B) the business entity sells all or part of the energy produced by the commercial
424
energy system as a commercial enterprise.
425
(ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs
426
of any commercial energy system installed, including installation costs, against any tax due
427
under this chapter for the taxable year in which the commercial energy system is completed and
428
placed in service.
429
(B) Notwithstanding Subsection (2)(a)(ii)(A), the total amount of the credit under this
430
Subsection (2)(a) may not exceed $50,000 per commercial unit.
431
(C) The credit under this Subsection (2)(a) is allowed for any commercial energy
432
system completed and placed in service on or after January 1, 2007.
433
(iii) A business entity that leases a commercial energy system installed on a
434
commercial unit is eligible for the tax credit under this Subsection (2)(a) if the lessee can
435
confirm that the lessor irrevocably elects not to claim the credit.
436
(iv) Only the principal recovery portion of the lease payments, which is the cost
437
incurred by a business entity in acquiring a commercial energy system, excluding interest
438
charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(a).
439
(v) A business entity that leases a commercial energy system is eligible to use the tax
440
credit under this Subsection (2)(a) for a period no greater than seven years from the initiation of
441
the lease.
442
(b) (i) For taxable years beginning on or after January 1, 2007, but beginning on or
443
before December 31, 2012, a business entity that owns a commercial energy system situated in
444
Utah using wind, geothermal electricity, or biomass equipment capable of producing a total of
445
660 or more kilowatts of electricity is entitled to a refundable tax credit as provided in this
446
section if:
447
(A) the commercial energy system supplies all or part of the energy required by
448
commercial units owned or used by the business entity; or
449
(B) the business entity sells all or part of the energy produced by the commercial
450
energy system as a commercial enterprise.
451
(ii) A business entity is entitled to a tax credit under Subsection (2)(b) equal to the
452
product of:
453
(A) 0.35 cents; and
454
(B) the kilowatt hours of electricity produced and either used or sold during the taxable
455
year.
456
(iii) The credit allowed by this Subsection (2)(b):
457
(A) may be claimed for production occurring during a period of 48 months beginning
458
with the month in which the commercial energy system is placed in service; and
459
(B) may not be carried forward or back.
460
(iv) A business entity that leases a commercial energy system installed on a
461
commercial unit is eligible for the tax credit under this section if the lessee can confirm that the
462
lessor irrevocably elects not to claim the credit.
463
(3) The tax credits provided for under this section are in addition to any tax credits
464
provided under the laws or rules and regulations of the United States.
465
(4) (a) The Utah Geological Survey may set standards for commercial energy systems
466
claiming a tax credit under Subsection (2)(a) that cover the safety, reliability, efficiency,
467
leasing, and technical feasibility of the systems to ensure that the systems eligible for the tax
468
credit use the state's renewable and nonrenewable energy resources in an appropriate and
469
economic manner.
470
(b) A tax credit may not be taken under this section until the Utah Geological Survey
471
has certified that the commercial energy system has been completely installed and is a viable
472
system for saving or production of energy from renewable resources.
473
(5) The Utah Geological Survey and the commission may make rules in accordance
474
with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, that are necessary to
475
implement this section.
476
(6) (a) On or before October 1, 2012, and every five years thereafter, the Tax Review
477
Commission shall review the tax credits provided by this section and make recommendations
478
to the Revenue and Taxation Interim Committee concerning whether the credit should be
479
continued, modified, or repealed.
480
(b) The Tax Review Commission's report under Subsection (6)(a) shall include
481
information concerning the cost of the credit, the purpose and effectiveness of the credit, and
482
the state's benefit from the credit.
483
Section 4. Retrospective operation.
484
This bill has retrospective operation for taxable years beginning on or after January 1,
485
2007.
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