R357-15. Enterprise Zone Tax Credit, R357. Governor, Economic Development, Utah Administrative Code

Utah Administrative Code (Current through November 1, 2019)

R357-15-1. Authority

Latest version.

(1) Subsection 63N-2-213(6) requires the office to make rules establishing the form and content of an application for an Enterprise Zone tax credit, the documentation required to receive an Enterprise Zone tax credit, and the administration of the program, including relevant timelines and deadlines.

R357-15-2. Definitions

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The definitions below are in addition to or serve to clarify the definitions found in Section 63N-2-202, Section 59-7-614.10, and Section 59-10-1037.

(1) "Annual investment", "Investment" or "Qualifying investment" means the purchase of most types of tangible property (except land) such as buildings, machinery, vehicles, furniture, and equipment that:

(a) qualifies for depreciation under the Internal Revenue Service's Form 4562; and

(b) is put into service at an operating address, of the business entity, that is within an enterprise zone designated by the office for the applicable tax year.

(2) "Baseline" means the highest count of employment positions that existed within the business entity during the previous three taxable years.

(3) "Qualified business use vehicle" means an automobile, light truck, heavy truck, van, utility vehicle, or motorcycle.

(4) "New full-time employee position" means a position that has been newly created in addition to the baseline filled by an employee working at least 30 hours per week:

(a) for a period of at least six consecutive months; and

(b) where the period ends in the tax year for which the credit is claimed.

(5) "Payment documentation" means a;

(a) bank statement;

(b) cleared check;

(d) signed statement from the seller confirming the payer, payee, date paid, and amount paid for cash payments.

(6) "Purchase documentation" means a bill of sale, contract of sale, receipt, invoice, or other documentation which identifies the buyer, seller, purchase price, item(s) purchased, and the date of purchase.

(7) "Value-added business entity" means a company that creates a change in the physical state or form of a product in a manner that enhances its value, thus expanding the customer base of the product. Examples include milling wheat into flour or making strawberries into jam.

R357-15-3. Application Form and Content

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(1) An application form will be provided by the Office and will contain the following content:

(a) General submission instructions;

(b) Types of tax credits available to be claimed;

(d) Any required deadlines and relevant timelines; and

(e) All required documents and information necessary for verification and approval of the application.

(2) The application shall be created in an electronic format available to the public at business.utah.gov

(3) The application shall also be available in paper format for any person or entity that requests a paper copy via mail or telephone.

R357-15-4. Required Documentation and Verification Information

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(1) To claim any of the tax credits available under 63N-2-201 et. seq. the following basic information must be provided to the Office:

(a) business entity's name that is claiming a tax credit on a Utah Tax filing submission;

(b) contact name, email, phone number, mailing address and relevant title(s);

(c) the physical operating address where the business entity is located including a screenshot of the address pinpoint within the Enterprise Zone as found on locate.utah.gov.

(d) the business entity's tax identification number whether a federally provided Employer Identification Number (EIN) or a Social Security Number (SSN); and

(e) information as required under Section R357-15-3.

(2) To qualify for any of the Employment tax credits pursuant to Subsections 63N-2-213(7)(a) through (d) the following documentation and information is required:

(a) current total of all employees including the total of employees as reported to the Department of Workforce Services for the last three years;

(b) the number of new full-time employee positions created above the baseline.

(i) For each new full-time employee position above the baseline the applicant must provide:

(A) Employee Name;

(B) Employee wages paid;

(D) Employee Hire date and termination date id applicable;

(E) If applicable, proof of employer-sponsored health insurance program if the employer pays at least 50% of the premium cost;

(F) If applicable, evidence that the business entity adds value to agricultural commodities through manufacturing or processing, including a list of sample products or processes.

(3) To qualify for the private capital investment tax credit under Subsections 63N-2-213(7)(e) and (f) the following documentation and information is required:

(a) If the private capital investment is for the rehabilitation of a building in an Enterprise Zone the applicant must provide:

(i) The rehabilitated building's physical address

(ii) Documents showing the current owner such as the deed or mortgage documents;

(iii) The date the building was last occupied;

(iv) A current occupancy permit or certificate;

(v) Purchase documentation of all rehabilitation expenses totaling the amount the tax credit is calculated from;

(vi) One or more forms of payment documentation validating any rehabilitation expense with an amount claimed equal to or greater than the amount established by the office is paid in entirety; and

vii. Any other documentation requested by the Office including a sworn affidavit confirming the rehabilitation costs from the owner of the building if applicant is not the owner of the building.

(b) If the private capital investment is a qualifying investment in plant, equipment, or other depreciable property in an Enterprise Zone the applicant must provide:

(i) an itemized list of qualified investments being claimed for the credit on a template provided by the office;

(ii) purchase documentation for all investment claimed; and;

(iii) one or more forms of payment documentation validating an investment with an amount claimed that is equal to or greater than an amount established by the office is paid in entirety;

(iv) property and real estate investments also require;

(A) a settlement statement; and

(B) property tax notice with building and land values separated from total property value.

(V) qualified business use vehicle and other motor vehicle investments also require business use percentage.

R357-15-5. Application Review and Authorization Process for an Enterprise Zone Tax Credit

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(1) The Office shall review all submitted applications within a reasonable amount of time and approve or deny the application

(a) The Office shall review all tax credits claimed and documentation provided.

(b) The Office may request additional documentation or information if the Office determines that further verification is required.

i. Failure to comply with a request for additional documentation may result in a denial of the application.

(2) The Office will issue tax credit certificates for all tax credits for which an applicant has applied, qualified and been approved by the Office.

(a) This Office may issue a partial approval if only parts of the application are determined to qualify.

(3) The Office must provide written notice that includes its reasoning when denying any or a portion of a tax credit application.

(4) If approved in whole or in part, the Office shall provide any necessary documents and instructions, approved by the Utah Tax Commission, for claiming the tax credit.

(5)(a) When a business entity is seeking to receive a tax credit for the purchase of a qualified business use vehicle, in conformity with Subsection 63N-2-213(7)(f), the office shall not grant a tax credit for the trade-in value of a qualified business use vehicle that the business entity traded into the purchase of the vehicle for which the tax credit is being sought.

(b) The amount claimed towards investment in a qualified business use vehicle or a motor vehicle described in subsection R357-15-4(3)(b)(v)is determined as acquisition cost, less any trade in value in accordance with subsection R357-15-5(5), multiplied by the business use percentage.

(6) The trade in value in a purchase may be claimed towards a state tax credit for private capital investment that is qualifying investment in plant, equipment, or other depreciable property when, in the purchase that qualifies as investment by the business entity, there was traded in:

(a) plant, equipment, or other depreciable property that qualifies for depreciation on IRS Form 4562 and is not a qualified business use vehicle;

(b) a qualified business use vehicle that was traded in by an individual who is an owner or officer of the applying business entity; or

(6) The Office may deny claims of investment for software purchases that are cloud services or software as a service.

(7) The Office may deny claims for investment purchased prior to the three previous taxable years.

(8) The Office may deny claims for Investments purchased from another entity with the same ownership.

(9) The Office may deny claims if the only connection to an enterprise zone for a business entity is a P.O. Box.

(10) The Office may deny claims for investment that was transferred from personal use to business use unless the original investment and personal use occurred within the same taxable year the asset was placed into service by the applying business entity.

(11) The Office may deny claims for state tax credits under Subsections 63N-2-213(7)(a)-(f) if 51% of a business entity's employees that are employed at facilities, that are within a designated enterprise zone, of a business entity do not reside within the county in which the enterprise zone is located or an enterprise zone that is immediately adjacent or contiguous to the county in which the enterprise zone is located as per section 63N-2-212.

R357-15-6. Appeal of Application Denial

Latest version.

(1) A hearing contesting the denial of an application in whole or in part of an Enterprise Zone Tax Credit is designated as informal hearings.