Recycling Market Development Zone Tax Credit Amendments

H.B. 179 LEGISLATIVE GENERAL COUNSEL 6 Approved for Filing: A.V. Arthur 6 6 01-23-20 6:27 PM 6 H.B. 179 1 RECYCLING MARKET DEVELOPMENT ZONE TAX CREDIT 2 AMENDMENTS 3 2020 GENERAL SESSION 4 STATE OF UTAH 5 Chief Sponsor: Kay J. Christofferson 6 Senate Sponsor: ____________ 7 8 LONG TITLE 9 General Description: 10 This bill modifies the carry forward provisions of the recycling market development 11 zone income tax credits. 12 Highlighted Provisions: 13 This bill: 14 < modifies the carry forward provisions of the recycling market development zone 15 income tax credits by: 16 C allowing a carry forward for the amount of the credit that the claimant did not 17 use during the taxable year; and 18 C limiting the carry forward to the credit allowed for purchases of mac1h9inery and 20 equipment; and 21 < makes technical and conforming changes. 22 Money Appropriated in this Bill: 23 None 24 Other Special Clauses: 25 This bill provides retrospective operation. 26 Utah Code Sections Affected: 27 AMENDS: 28 59-7-610, as last amended by Laws of Utah 2019, Chapter 247 *HB0179* H.B. 179 01-23-20 6:27 PM - 2 - 29 59-10-1002, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2 30 59-10-1007, as last amended by Laws of Utah 2019, Chapter 247 31 63I-1-263, as last amended by Laws of Utah 2019, Chapters 89, 246, 311, 414, 468, 32 469, 482 and last amended by Coordination Clause, Laws of Utah 2019, Chapter 33 246 34 35 Be it enacted by the Legislature of the state of Utah: 36 Section 1. Section 59-7-610 is amended to read: 37 59-7-610. Recycling market development zones tax credits. 38 (1) Subject to other provisions of this section, a taxpayer that is a business operating in 39 a recycling market development zone as defined in Section 63N-2-402 may claim the following 40 nonrefundable tax credits: 41 (a) a tax credit of 5% of the purchase price paid for machinery and equipment used 42 directly in: 43 (i) commercial composting; or 44 (ii) manufacturing facilities or plant units that: 45 (A) manufacture, process, compound, or produce recycled items of tangible personal 46 property for sale; or 47 (B) reduce or reuse postconsumer waste material; and 48 (b) a tax credit equal to the lesser of: 49 (i) 20% of net expenditures to third parties for rent, wages, supplies, tools, test 50 inventory, and utilities made by the taxpayer for establishing and operating recycling or 51 composting technology in Utah; and 52 (ii) $2,000. 53 (2) (a) To claim a tax credit described in Subsection (1), the taxpayer shall receive 54 from the Governor's Office of Economic Development a written certification, on a form 55 approved by the commission, that includes: 56 (i) a statement that the taxpayer is operating a business within the boundaries of a 57 recycling market development zone; 58 (ii) for claims of the tax credit described in Subsection (1)(a): 59 (A) the type of the machinery and equipment that the taxpayer purchased; 01-23-20 6:27 PM H.B. 179 - 3 - 60 (B) the date that the taxpayer purchased the machinery and equipment; 61 (C) the purchase price for the machinery and equipment; 62 (D) the total purchase price for all machinery and equipment for which the taxpayer is 63 claiming a tax credit; 64 (E) a statement that the machinery and equipment are integral to the composting or 65 recycling process; and 66 (F) the amount of the taxpayer's tax credit; and 67 (iii) for claims of the tax credit described in Subsection (1)(b): 68 (A) the type of net expenditure that the taxpayer made to a third party; 69 (B) the date that the taxpayer made the payment to a third party; 70 (C) the amount that the taxpayer paid to each third party; 71 (D) the total amount that the taxpayer paid to all third parties; 72 (E) a statement that the net expenditures support the establishment and operation of 73 recycling or composting technology in Utah; and 74 (F) the amount of the taxpayer's tax credit. 75 (b) (i) The Governor's Office of Economic Development shall provide a taxpayer 76 seeking to claim a tax credit under Subsection (1) with a copy of the written certification. 77 (ii) The taxpayer shall retain a copy of the written certification for the same period of 78 time that a person is required to keep books and records under Section 59-1-1406. 79 (c) The Governor's Office of Economic Development shall submit to the commission 80 an electronic list that includes: 81 (i) the name and identifying information of each taxpayer to which the office issues a 82 written certification; and 83 (ii) for each taxpayer, the amount of each tax credit listed on the written certification. 84 (3) A taxpayer may not claim a tax credit under Subsection (1)(a), Subsection (1)(b), or 85 both that exceeds 40% of the taxpayer's state income tax liability as the tax liability is 86 calculated: 87 (a) for the taxable year in which the taxpayer made the purchases or payments; 88 (b) before any other tax credits the taxpayer may claim for the taxable year; and 89 (c) before the taxpayer claiming a tax credit authorized by this section. 90 (4) The commission shall make rules governing what information a taxpayer shall file H.B. 179 01-23-20 6:27 PM - 4 - 91 with the commission to verify the entitlement to and amount of a tax credit. 92 (5) Except as provided in Subsections (6) through (8), a taxpayer may carry forward, to 93 the next three taxable years, the amount of [the tax credit that exceeds the taxpayer's income 94 tax liability] a tax credit described in Subsection (1)(a) that the taxpayer does not use for the 95 taxable year. 96 (6) A taxpayer may not claim or carry forward a tax credit described in Subsection 97 (1)(a) in a taxable year during which the taxpayer claims or carries forward a tax credit under 98 Section 63N-2-213. 99 (7) A taxpayer may not claim [or carry forward] a tax credit described in Subsection 100 (1)(b) in a taxable year during which the taxpayer claims or carries forward a tax credit under 101 Section 63N-2-213. 102 (8) A taxpayer may not claim or carry forward a tax credit under this section for a 103 taxable year during which the taxpayer claims the targeted business income tax credit under 104 Section 59-7-624. 105 Section 2. Section 59-10-1002 is amended to read: 106 59-10-1002. Definitions. 107 As used in this part: 108 (1) (a) Except as provided in Subsection (1)(b) or Subsection 59-10-1003(2), 109 "claimant" means a resident or nonresident person that has state taxable income. 110 (b) "Claimant" does not include an estate or trust. 111 (2) Except as provided in Subsection 59-10-1003(2), "estate" means a nonresident 112 estate or a resident estate that has state taxable income. 113 (3) "Nonrefundable tax credit" or "tax credit" means a tax credit that a claimant, estate, 114 or trust may: 115 (a) claim: 116 (i) as provided by statute; and 117 (ii) in an amount that does not exceed the claimant's, estate's, or trust's tax liability 118 under this chapter for a taxable year; and 119 (b) carry forward or carry back: 120 (i) if allowed by statute; and 121 (ii) unless otherwise provided in statute, to the extent that the amount of the tax credit 01-23-20 6:27 PM H.B. 179 - 5 - 122 exceeds the claimant's, estate's, or trust's tax liability under this chapter for a taxable year. 123 (4) Except as provided in Subsection 59-10-1003(2), "trust" means a nonresident trust 124 or a resident trust that has state taxable income. 125 Section 3. Section 59-10-1007 is amended to read: 126 59-10-1007. Recycling market development zones tax credits. 127 (1) Subject to other provisions of this section, a claimant, estate, or trust in a recycling 128 market development zone as defined in Section 63N-2-402 may claim the following 129 nonrefundable tax credits: 130 (a) a tax credit of 5% of the purchase price paid for machinery and equipment used 131 directly in: 132 (i) commercial composting; or 133 (ii) manufacturing facilities or plant units that: 134 (A) manufacture, process, compound, or produce recycled items of tangible personal 135 property for sale; or 136 (B) reduce or reuse postconsumer waste material; and 137 (b) a tax credit equal to the lesser of: 138 (i) 20% of net expenditures to third parties for rent, wages, supplies, tools, test 139 inventory, and utilities made by the claimant, estate, or trust for establishing and operating 140 recycling or composting technology in Utah; and 141 (ii) $2,000. 142 (2) (a) To claim a tax credit described in Subsection (1), the claimant, estate, or trust 143 shall receive from the Governor's Office of Economic Development a written certification, on a 144 form approved by the commission, that includes: 145 (i) a statement that the claimant, estate, or trust is operating within the boundaries of a 146 recycling market development zone; 147 (ii) for claims of the tax credit described in Subsection (1)(a): 148 (A) the type of the machinery and equipment that the claimant, estate, or trust 149 purchased; 150 (B) the date that the claimant, estate, or trust purchased the machinery and equipment; 151 (C) the purchase price for the machinery and equipment; 152 (D) the total purchase price for all machinery and equipment for which the claimant, H.B. 179 01-23-20 6:27 PM - 6 - 153 estate, or trust is claiming a tax credit; 154 (E) the amount of the claimant's, estate's, or trust's tax credit; and 155 (F) a statement that the machinery and equipment are integral to the composting or 156 recycling process; and 157 (iii) for claims of the tax credit described in Subsection (1)(b): 158 (A) the type of net expenditure that the claimant, estate, or trust made to a third party; 159 (B) the date that the claimant, estate, or trust made the payment to a third party; 160 (C) the amount that the claimant, estate, or trust paid to each third party; 161 (D) the total amount that the claimant, estate, or trust paid to all third parties; 162 (E) a statement that the net expenditures support the establishment and operation of 163 recycling or composting technology in Utah; and 164 (F) the amount of the claimant's, estate's, or trust's tax credit. 165 (b) (i) The Governor's Office of Economic Development shall provide a claimant, 166 estate, or trust seeking to claim a tax credit under Subsection (1) with a copy of the written 167 certification. 168 (ii) The claimant, estate, or trust shall retain a copy of the written certification for the 169 same period of time that a person is required to keep books and records under Section 170 59-1-1406. 171 (c) The Governor's Office of Economic Development shall submit to the commission 172 an electronic list that includes: 173 (i) the name and identifying information of each claimant, estate, or trust to which the 174 office issues a written certification; and 175 (ii) for each claimant, estate, or trust, the amount of each tax credit listed on the written 176 certification. 177 (3) A claimant, estate, or trust may not claim a tax credit under Subsection (1)(a), 178 Subsection (1)(b), or both that exceeds 40% of the claimant's, estate's, or trust's state income 179 tax liability as the tax liability is calculated: 180 (a) for the taxable year in which the claimant, estate, or trust made the purchases or 181 payments; 182 (b) before any other tax credits the claimant, estate, or trust may claim for the taxable 183 year; and 01-23-20 6:27 PM H.B. 179 - 7 - 184 (c) before the claimant, estate, or trust claiming a tax credit authorized by this section. 185 (4) The commission shall make rules governing what information a claimant, estate, or 186 trust shall file with the commission to verify the entitlement to and amount of a tax credit. 187 (5) Except as provided in Subsections (6) through (8), a claimant, estate, or trust may 188 carry forward, to the next three taxable years, the amount of [the tax credit that exceeds the 189 taxpayer's income tax liability] a tax credit described in Subsection (1)(a) that the claimant, 190 estate, or trust does not use for the taxable year. 191 (6) A claimant, estate, or trust may not claim or carry forward a tax credit described in 192 Subsection (1)(a) in a taxable year during which the claimant, estate, or trust claims or carries 193 forward a tax credit under Section 63N-2-213. 194 (7) A claimant, estate, or trust may not claim a tax credit described in Subsection (1)(b) 195 in a taxable year during which the claimant, estate, or trust claims or carries forward a tax 196 credit under Section 63N-2-213. 197 (8) A claimant, estate, or trust may not claim or carry forward a tax credit available 198 under this section for a taxable year during which the claimant, estate, or trust claims the 199 targeted business income tax credit under Section 59-10-1112. 200 Section 4. Section 63I-1-263 is amended to read: 201 63I-1-263. Repeal dates, Titles 63A to 63N. 202 (1) In relation to the Utah Transparency Advisory Board, on January 1, 2025: 203 (a) Subsection 63A-1-201(1) is repealed; 204 (b) Subsection 63A-1-202(2)(c), the language that states "using criteria established by 205 the board" is repealed; 206 (c) Section 63A-1-203 is repealed; 207 (d) Subsections 63A-1-204(1) and (2), the language that states "After consultation with 208 the board, and" is repealed; and 209 (e) Subsection 63A-1-204(1)(b), the language that states "using the standards provided 210 in Subsection 63A-1-203(3)(c)" is repealed. 211 (2) Subsection 63A-5-228(2)(h), relating to prioritizing and allocating capital 212 improvement funding, is repealed [on] July 1, 2024. 213 (3) Section 63A-5-603, State Facility Energy Efficiency Fund, is repealed July 1, 2023. 214 (4) Title 63C, Chapter 4a, Constitutional and Federalism Defense Act, is repealed July H.B. 179 01-23-20 6:27 PM - 8 - 215 1, 2028. 216 (5) Title 63C, Chapter 6, Utah Seismic Safety Commission, is repealed January 1, 217 2025. 218 (6) Title 63C, Chapter 16, Prison Development Commission Act, is repealed July 1, 219 2020. 220 (7) Title 63C, Chapter 17, Point of the Mountain Development Commission Act, is 221 repealed July 1, 2021. 222 (8) Title 63C, Chapter 18, Mental Health Crisis Line Commission, is repealed July 1, 223 2023. 224 (9) Title 63G, Chapter 21, Agreements to Provide State Services, is repealed July 1, 225 2025. 226 (10) Title 63H, Chapter 4, Heber Valley Historic Railroad Authority, is repealed July 1, 227 2020. 228 (11) In relation to the State Fair Corporation Board of Directors, on January 1, 2025: 229 (a) Subsection 63H-6-104(2)(c), related to a Senate appointment, is repealed; 230 (b) Subsection 63H-6-104(2)(d), related to a House appointment, is repealed; 231 (c) in Subsection 63H-6-104(2)(e), the language that states ", of whom only one may 232 be a legislator, in accordance with Subsection (3)(e)," is repealed; 233 (d) Subsection 63H-6-104(3)(a)(i) is amended to read: 234 "(3)(a)(i) Except as provided in Subsection (3)(a)(ii), a board member appointed under 235 Subsection (2)(e) or (f) shall serve a term that expires on the December 1 four years after the 236 year that the board member was appointed."; 237 (e) in Subsections 63H-6-104(3)(a)(ii), (c)(ii), and (d), the language that states "the 238 president of the Senate, the speaker of the House, the governor," is repealed and replaced with 239 "the governor"; and 240 (f) Subsection 63H-6-104(3)(e), related to limits on the number of legislators, is 241 repealed. 242 (12) Title 63H, Chapter 8, Utah Housing Corporation Act, is repealed July 1, 2026. 243 (13) Section 63M-7-212 is repealed [on] December 31, 2019. 244 (14) On July 1, 2025: 245 (a) in Subsection 17-27a-404(3)(c)(ii), the language that states "the Resource 01-23-20 6:27 PM H.B. 179 - 9 - 246 Development Coordinating Committee," is repealed; 247 (b) Subsection 23-14-21(2)(c) is amended to read "(c) provide notification of proposed 248 sites for the transplant of species to local government officials having jurisdiction over areas 249 that may be affected by a transplant."; 250 (c) in Subsection 23-14-21(3), the language that states "and the Resource Development 251 Coordinating Committee" is repealed; 252 (d) in Subsection 23-21-2.3(1), the language that states "the Resource Development 253 Coordinating Committee created in Section 63J-4-501 and" is repealed; 254 (e) in Subsection 23-21-2.3(2), the language that states "the Resource Development 255 Coordinating Committee and" is repealed; 256 (f) Subsection 63J-4-102(1) is repealed and the remaining subsections are renumbered 257 accordingly; 258 (g) Subsections 63J-4-401(5)(a) and (c) are repealed; 259 (h) Subsection 63J-4-401(5)(b) is renumbered to Subsection 63J-4-401(5)(a) and the 260 word "and" is inserted immediately after the semicolon; 261 (i) Subsection 63J-4-401(5)(d) is renumbered to Subsection 63J-4-401(5)(b); 262 (j) Sections 63J-4-501, 63J-4-502, 63J-4-503, 63J-4-504, and 63J-4-505 are repealed; 263 and 264 (k) Subsection 63J-4-603(1)(e)(iv) is repealed and the remaining subsections are 265 renumbered accordingly. 266 (15) Subsection 63J-1-602.1(13), Nurse Home Visiting Restricted Account is repealed 267 July 1, 2026. 268 (16) Subsection 63J-1-602.2(4), referring to dedicated credits to the Utah Marriage 269 Commission, is repealed July 1, 2023. 270 (17) Subsection 63J-1-602.2(5), referring to the Trip Reduction Program, is repealed 271 July 1, 2022. 272 (18) (a) Subsection 63J-1-602.1[(53)](55), relating to the Utah Statewide Radio System 273 Restricted Account, is repealed July 1, 2022. 274 (b) When repealing Subsection 63J-1-602.1[(53)](55), the Office of Legislative 275 Research and General Counsel shall, in addition to the office's authority under Subsection 276 36-12-12(3), make necessary changes to subsection numbering and cross references. H.B. 179 01-23-20 6:27 PM - 10 - 277 (19) Subsection 63J-1-602.2[(23)](24), related to the Utah Seismic Safety 278 Commission, is repealed January 1, 2025. 279 (20) Subsection 63J-4-708(1), in relation to the Talent Ready Utah Board, on January 280 1, 2023, is amended to read: 281 "(1) On or before October 1, the board shall provide an annual written report to the 282 Social Services Appropriations Subcommittee and the Economic Development and Workforce 283 Services Interim Committee.". 284 (21) In relation to the Utah Substance Use and Mental Health Advisory Council, on 285 January 1, 2023: 286 (a) Sections 63M-7-301, 63M-7-302, 63M-7-303, 63M-7-304, and 63M-7-306 are 287 repealed; 288 (b) Section 63M-7-305, the language that states "council" is replaced with 289 "commission"; 290 (c) Subsection 63M-7-305(1) is repealed and replaced with: 291 "(1) "Commission" means the Commission on Criminal and Juvenile Justice."; and 292 (d) Subsection 63M-7-305(2) is repealed and replaced with: 293 "(2) The commission shall: 294 (a) provide ongoing oversight of the implementation, functions, and evaluation of the 295 Drug-Related Offenses Reform Act; and 296 (b) coordinate the implementation of Section 77-18-1.1 and related provisions in 297 Subsections 77-18-1(5)(b)(iii) and (iv).". 298 (22) The Crime Victim Reparations and Assistance Board, created in Section 299 63M-7-504, is repealed July 1, 2027. 300 (23) Title 63M, Chapter 11, Utah Commission on Aging, is repealed July 1, 2021. 301 (24) Subsection 63N-1-301(4)(c), related to the Talent Ready Utah Board, is repealed 302 [on] January 1, 2023. 303 (25) Title 63N, Chapter 2, Part 2, Enterprise Zone Act, is repealed July 1, 2028. 304 (26) (a) Title 63N, Chapter 2, Part 4, Recycling Market Development Zone Act, is 305 repealed January 1, 2021. 306 (b) Subject to [Subsection] Subsections (26)(c) and (d), Sections 59-7-610 and 307 59-10-1007 regarding tax credits for certain persons in recycling market development zones, 01-23-20 6:27 PM H.B. 179 - 11 - 308 are repealed for taxable years beginning on or after January 1, 2021. 309 (c) A person may not claim a tax credit under Section 59-7-610 or 59-10-1007: 310 (i) for the purchase price of machinery or equipment described in Section 59-7-610 or 311 59-10-1007, if the machinery or equipment is purchased on or after January 1, 2021; or 312 (ii) for an expenditure described in Subsection 59-7-610(1)(b) or 59-10-1007(1)(b), if 313 the expenditure is made on or after January 1, 2021. 314 (d)[ Notwithstanding Subsections (26)(b) and (c), a] A person may carry forward a tax 315 credit in accordance with Section 59-7-610 or 59-10-1007 if: 316 (i) the person is entitled to a tax credit under [Section] Subsection 59-7-610(1)(a) or 317 59-10-1007(1)(a); and 318 (ii) [(A) for the purchase price of machinery or equipment described in Section 319 59-7-610 or 59-10-1007,] the machinery or equipment is purchased on or before December 31, 320 2020[; or]. 321 [(B) for an expenditure described in Subsection 59-7-610(1)(b) or 59-10-1007(1)(b), 322 the expenditure is made on or before December 31, 2020.] 323 (27) Section 63N-2-512 is repealed [on] July 1, 2021. 324 (28) (a) Title 63N, Chapter 2, Part 6, Utah Small Business Jobs Act, is repealed 325 January 1, 2021. 326 (b) Section 59-9-107 regarding tax credits against premium taxes is repealed for 327 calendar years beginning on or after January 1, 2021. 328 (c) Notwithstanding Subsection (28)(b), an entity may carry forward a tax credit in 329 accordance with Section 59-9-107 if: 330 (i) the person is entitled to a tax credit under Section 59-9-107 on or before December 331 31, 2020; and 332 (ii) the qualified equity investment that is the basis of the tax credit is certified under 333 Section 63N-2-603 on or before December 31, 2023. 334 (29) Subsections 63N-3-109(2)(e) and 63N-3-109(2)(f)(i) are repealed July 1, 2023. 335 (30) Title 63N, Chapter 4, Part 4, Rural Employment Expansion Program, is repealed 336 July 1, 2023. 337 (31) Title 63N, Chapter 9, Part 2, Outdoor Recreational Infrastructure Grant Program, 338 is repealed January 1, 2023. H.B. 179 01-23-20 6:27 PM - 12 - 339 (32) In relation to the Pete Suazo Utah Athletic Commission, on January 1, 2021: 340 (a) Subsection 63N-10-201(2)(a) is amended to read: 341 "(2) (a) The governor shall appoint five commission members with the advice and 342 consent of the Senate."; 343 (b) Subsection 63N-10-201(2)(b), related to legislative appointments, is repealed; 344 (c) in Subsection 63N-10-201(3)(a), the language that states ", president, or speaker, 345 respectively," is repealed; and 346 (d) Subsection 63N-10-201(3)(d) is amended to read: 347 "(d) The governor may remove a commission member for any reason and replace the 348 commission member in accordance with this section.". 349 (33) In relation to the Talent Ready Utah Board, on January 1, 2023: 350 (a) Subsection 9-22-102(16) is repealed; 351 (b) in Subsection 9-22-114(2), the language that states "Talent Ready Utah," is 352 repealed; and 353 (c) in Subsection 9-22-114(5), the language that states "representatives of Talent Ready 354 Utah," is repealed. 355 (34) Title 63N, Chapter 12, Part 5, Talent Ready Utah Center, is repealed January 1, 356 2023. 357 Section 5. Retrospective operation. 358 This bill has retrospective operation for a taxable year beginning on or after January 1, 359 2019.