1 | 1 | | H.B. 424 |
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2 | 2 | | LEGISLATIVE GENERAL COUNSEL |
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3 | 3 | | 6 Approved for Filing: S. Elder 6 |
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4 | 4 | | 6 02-08-23 3:52 PM 6 |
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5 | 5 | | H.B. 424 |
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6 | 6 | | 1 HISTORIC REHABILITATION TAX CREDIT AMENDMENTS |
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7 | 7 | | 2 2023 GENERAL SESSION |
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8 | 8 | | 3 STATE OF UTAH |
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9 | 9 | | 4 Chief Sponsor: Carl R. Albrecht |
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10 | 10 | | 5 Senate Sponsor: ____________ |
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11 | 11 | | 6 |
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12 | 12 | | 7LONG TITLE |
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13 | 13 | | 8General Description: |
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14 | 14 | | 9 This bill modifies the tax credit related to expenditures for rehabilitating a historic |
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15 | 15 | | 10building. |
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16 | 16 | | 11Highlighted Provisions: |
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17 | 17 | | 12 This bill: |
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18 | 18 | | 13 <defines terms; |
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19 | 19 | | 14 <expands eligibility for the tax credit to include rehabilitation expenditures made for |
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20 | 20 | | 15certain historic commercial buildings; |
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21 | 21 | | 16 <provides that a person may assign all or a portion of a historic rehabilitation tax |
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22 | 22 | | 17credit; and |
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23 | 23 | | 18 <makes technical and conforming changes. |
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24 | 24 | | 19Money Appropriated in this Bill: |
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25 | 25 | | 20 None |
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26 | 26 | | 21Other Special Clauses: |
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27 | 27 | | 22 This bill provides a special effective date. |
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28 | 28 | | 23Utah Code Sections Affected: |
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29 | 29 | | 24AMENDS: |
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30 | 30 | | 25 59-7-609, as enacted by Laws of Utah 1995, Chapter 42 |
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31 | 31 | | 26 59-10-1006, as renumbered and amended by Laws of Utah 2006, Chapter 223 |
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32 | 32 | | 27 |
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33 | 33 | | *HB0424* H.B. 424 02-08-23 3:52 PM |
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34 | 34 | | - 2 - |
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35 | 35 | | 28Be it enacted by the Legislature of the state of Utah: |
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36 | 36 | | 29 Section 1. Section 59-7-609 is amended to read: |
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37 | 37 | | 30 59-7-609. Historic preservation credit. |
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38 | 38 | | 31 (1) As used in this section: |
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39 | 39 | | 32 (a) "Certified historic building" means a building that: |
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40 | 40 | | 33 (i) is listed on the National Register of Historic Places within three years of taking the |
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41 | 41 | | 34credit under this section; or |
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42 | 42 | | 35 (ii) (A) is located in a National Register Historic District; and |
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43 | 43 | | 36 (B) has been designated by the State Historic Preservation Office as being of |
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44 | 44 | | 37significance to the district. |
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45 | 45 | | 38 (b) "Commercial" means a building used to conduct business. |
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46 | 46 | | 39 (c) "Historic preservation credit" means the tax credit described in Subsection (2). |
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47 | 47 | | 40 (d) "Qualified claimant" means: |
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48 | 48 | | 41 (i) (A) a taxpayer that qualifies for a historic preservation credit; or |
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49 | 49 | | 42 (B) a person that is assigned a historic preservation credit; and |
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50 | 50 | | 43 (ii) has a written certification as provided in Subsection (3) or (4). |
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51 | 51 | | 44 (e) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to |
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52 | 52 | | 45the rehabilitation and restoration of the physical elements of the building. |
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53 | 53 | | 46 (ii) "Qualified rehabilitation expenditures" includes the historic decorative elements, |
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54 | 54 | | 47and the upgrading of the structural, mechanical, electrical, and plumbing systems. |
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55 | 55 | | 48 (iii) "Qualified rehabilitation expenditures" does not include expenditures related to: |
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56 | 56 | | 49 (A) the taxpayer's personal labor; |
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57 | 57 | | 50 (B) cost of acquisition of the property; |
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58 | 58 | | 51 (C) any expenditure attributable to the enlargement of an existing building; |
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59 | 59 | | 52 (D) rehabilitation of a certified historic building without the approval required in |
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60 | 60 | | 53Subsection (3); or |
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61 | 61 | | 54 (E) any expenditure attributable to landscaping and other site features, outbuildings, |
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62 | 62 | | 55garages, and related features. |
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63 | 63 | | 56 (f) "Residential" means a building used for residential use, either owner occupied or |
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64 | 64 | | 57income producing. |
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65 | 65 | | 58 [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed 02-08-23 3:52 PM H.B. 424 |
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66 | 66 | | - 3 - |
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67 | 67 | | 59to a taxpayer subject to Section 59-7-104, as a credit against the tax due,] A taxpayer may |
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68 | 68 | | 60claim a nonrefundable tax credit in an amount equal to 20% of qualified rehabilitation |
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69 | 69 | | 61expenditures, [costing] if the qualified rehabilitation expenditures: |
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70 | 70 | | 62 (i) cost more than $10,000[,]; and |
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71 | 71 | | 63 (ii) are incurred in connection with any residential or commercial certified historic |
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72 | 72 | | 64building. [When qualifying expenditures of more than $10,000 are incurred, the credit allowed |
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73 | 73 | | 65by this section shall apply to the full amount of expenditures.] |
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74 | 74 | | 66 [(b) All rehabilitation work to which the credit may be applied shall be approved by the |
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75 | 75 | | 67State Historic Preservation Office prior to completion of the rehabilitation project as meeting |
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76 | 76 | | 68the Secretary of the Interior's Standards for Rehabilitation so that the office can provide |
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77 | 77 | | 69corrective comments to the taxpayer in order to preserve the historical qualities of the |
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78 | 78 | | 70building.] |
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79 | 79 | | 71 (b) (i) A qualified claimant may assign all or a portion of a historic preservation credit |
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80 | 80 | | 72to which the qualified claimant is entitled. |
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81 | 81 | | 73 (ii) There is no limit on the number of transactions for the assignment of all or a |
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82 | 82 | | 74portion of a historic preservation credit. |
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83 | 83 | | 75 (3) (a) The office shall issue a historic preservation credit certificate to a taxpayer if the |
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84 | 84 | | 76office: |
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85 | 85 | | 77 (i) approves all rehabilitation work for which a taxpayer may claim a tax credit as |
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86 | 86 | | 78meeting the Secretary of the Interior's Standards for Rehabilitation before completion of the |
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87 | 87 | | 79rehabilitation project so that the office can provide corrective comments to the taxpayer to |
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88 | 88 | | 80preserve the historic qualities of the building; |
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89 | 89 | | 81 (ii) determines that the rehabilitation project conforms with the approved rehabilitation |
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90 | 90 | | 82work; and |
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91 | 91 | | 83 (iii) verifies the property is a residential or commercial certified historic building and |
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92 | 92 | | 84the amount of the taxpayer's qualified rehabilitation expenditures. |
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93 | 93 | | 85 (b) The tax credit certificate shall list the amount of the historic preservation credit that |
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94 | 94 | | 86the taxpayer is eligible to claim. |
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95 | 95 | | 87 (4) (a) To assign a historic preservation credit to another person, a qualified claimant |
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96 | 96 | | 88shall provide a written notice to the State Historic Preservation Office, in a form established by |
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97 | 97 | | 89the State Historic Preservation Office, that includes: H.B. 424 02-08-23 3:52 PM |
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98 | 98 | | - 4 - |
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99 | 99 | | 90 (i) the qualified claimant's written certificate and other proof that the qualified claimant |
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100 | 100 | | 91is assigning all or a portion of the historic preservation credit to which the qualified claimant is |
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101 | 101 | | 92entitled; |
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102 | 102 | | 93 (ii) the amount of the historic preservation credit that the qualified claimant is |
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103 | 103 | | 94assigning; and |
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104 | 104 | | 95 (iii) contact information for the person to whom the qualified claimant is assigning all |
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105 | 105 | | 96or a portion of the historic preservation tax credit. |
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106 | 106 | | 97 (b) If the qualified claimant meets the requirements of Subsection (4)(a), the State |
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107 | 107 | | 98Historic Preservation Office shall issue an assigned historic preservation credit certificate to the |
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108 | 108 | | 99person identified by the qualified claimant for the amount specified in the qualified claimant's |
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109 | 109 | | 100written notice described in Subsection (4)(a). |
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110 | 110 | | 101 (5) A person who is issued a historic preservation credit certificate in accordance with |
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111 | 111 | | 102Subsection (4) may claim the historic preservation credit as if: |
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112 | 112 | | 103 (a) the person had met the requirements of this section to claim the historic |
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113 | 113 | | 104preservation credit, if the person files a return under this chapter; or |
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114 | 114 | | 105 (b) the person had met the requirements of Section 59-10-1006 to claim the historic |
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115 | 115 | | 106preservation credit under Section 59-10-1006, if the person files a return under Chapter 10, |
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116 | 116 | | 107Individual Income Tax Act. |
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117 | 117 | | 108 (6) (a) The office shall issue a historic preservation credit certificate to a qualified |
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118 | 118 | | 109claimant that assigns a historic preservation credit for any remaining amount of the historic |
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119 | 119 | | 110preservation credit that was not assigned; or |
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120 | 120 | | 111 (b) if there is no credit remaining, the office shall remove the qualified claimant from |
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121 | 121 | | 112the list of qualified claimants sent to the commission according to Subsection (8). |
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122 | 122 | | 113 [(c)] (7) [Any amount of credit remaining may be carried forward to each of the five |
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123 | 123 | | 114taxable years following the qualified expenditures.] A qualified claimant may carry forward the |
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124 | 124 | | 115amount of the historic preservation credit that exceeds the qualified claimant's liability for five |
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125 | 125 | | 116taxable years after the year in which the qualified claimant claims a tax credit under this |
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126 | 126 | | 117section. |
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127 | 127 | | 118 (8) The office shall provide the with commission an electronic report that includes for |
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128 | 128 | | 119each qualified claimant to which the office issued a historic preservation credit certificate under |
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129 | 129 | | 120this section for a taxable year: 02-08-23 3:52 PM H.B. 424 |
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130 | 130 | | - 5 - |
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131 | 131 | | 121 (a) the name of the qualified claimant; |
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132 | 132 | | 122 (b) the identifying information of the qualified claimant; and |
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133 | 133 | | 123 (c) the amount of the historic preservation credit that the qualified claimant is eligible |
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134 | 134 | | 124to claim. |
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135 | 135 | | 125 (9) A qualified claimant shall retain a certificate issued under this section as described |
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136 | 136 | | 126in Section 59-1-1406. |
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137 | 137 | | 127 [(d)] (10) The commission, in consultation with the [Division of State History] State |
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138 | 138 | | 128Historic Preservation Office, shall [promulgate rules] make rules to implement this section. |
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139 | 139 | | 129 [(2) As used in this section:] |
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140 | 140 | | 130 [(a) "Certified historic building" means a building that is listed on the National |
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141 | 141 | | 131Register of Historic Places within three years of taking the credit under this section or that is |
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142 | 142 | | 132located in a National Register Historic District and the building has been designated by the |
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143 | 143 | | 133Division of State History as being of significance to the district.] |
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144 | 144 | | 134 [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable |
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145 | 145 | | 135to the rehabilitation and restoration of the physical elements of the building, including the |
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146 | 146 | | 136historic decorative elements, and the upgrading of the structural, mechanical, electrical, and |
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147 | 147 | | 137plumbing systems to applicable codes.] |
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148 | 148 | | 138 [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:] |
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149 | 149 | | 139 [(A) the taxpayer's personal labor;] |
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150 | 150 | | 140 [(B) cost of acquisition of the property;] |
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151 | 151 | | 141 [(C) any expenditure attributable to the enlargement of an existing building;] |
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152 | 152 | | 142 [(D) rehabilitation of a certified historic building without the approval required in |
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153 | 153 | | 143Subsection (1)(b); or] |
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154 | 154 | | 144 [(E) any expenditure attributable to landscaping and other site features, outbuildings, |
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155 | 155 | | 145garages, and related features.] |
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156 | 156 | | 146 [(c) "Residential" means a building used for residential use, either owner occupied or |
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157 | 157 | | 147income producing.] |
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158 | 158 | | 148 Section 2. Section 59-10-1006 is amended to read: |
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159 | 159 | | 149 59-10-1006. Historic preservation tax credit. |
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160 | 160 | | 150 (1) As used in this section: |
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161 | 161 | | 151 (a) "Certified historic building" means a building that: H.B. 424 02-08-23 3:52 PM |
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162 | 162 | | - 6 - |
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163 | 163 | | 152 (i) is listed on the National Register of Historic Places within three years of taking the |
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164 | 164 | | 153credit under this section; or |
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165 | 165 | | 154 (ii) (A) is located in a National Register Historic District; and |
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166 | 166 | | 155 (B) has been designated by the State Historic Preservation Office as being of |
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167 | 167 | | 156significance to the district. |
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168 | 168 | | 157 (b) "Commercial" means a building used to conduct business. |
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169 | 169 | | 158 (c) "Historic preservation credit" means the tax credit described in Subsection (2). |
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170 | 170 | | 159 (d) "Qualified claimant" means: |
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171 | 171 | | 160 (i) (A) a claimant, estate, or trust that qualifies for a historic preservation credit; or |
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172 | 172 | | 161 (B) a person that is assigned a historic preservation credit; and |
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173 | 173 | | 162 (ii) has a written certification as provided in Subsection (3) or (4). |
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174 | 174 | | 163 (e) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to |
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175 | 175 | | 164the rehabilitation and restoration of the physical elements of the building, including the historic |
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176 | 176 | | 165decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing |
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177 | 177 | | 166systems to applicable codes. |
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178 | 178 | | 167 (ii) "Qualified rehabilitation expenditures" does not include expenditures related to: |
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179 | 179 | | 168 (A) the taxpayer's personal labor; |
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180 | 180 | | 169 (B) cost of acquisition of the property; |
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181 | 181 | | 170 (C) any expenditure attributable to the enlargement of an existing building; |
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182 | 182 | | 171 (D) rehabilitation of a certified historic building without the approval required in |
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183 | 183 | | 172Subsection (3); or |
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184 | 184 | | 173 (E) any expenditure attributable to landscaping and other site features, outbuildings, |
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185 | 185 | | 174garages, and related features. |
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186 | 186 | | 175 (f) "Residential" means a building used for residential use, either owner occupied or |
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187 | 187 | | 176income producing. |
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188 | 188 | | 177 [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed |
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189 | 189 | | 178to a claimant, estate, or trust,] A claimant, estate, or trust may claim as a nonrefundable tax |
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190 | 190 | | 179credit [against the income tax due,] in an amount equal to 20% of qualified rehabilitation |
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191 | 191 | | 180expenditures, [costing] if the qualified rehabilitation expenditures: |
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192 | 192 | | 181 (i) cost more than $10,000[,]; and |
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193 | 193 | | 182 (ii) are incurred in connection with any residential or commercial certified historic 02-08-23 3:52 PM H.B. 424 |
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194 | 194 | | - 7 - |
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195 | 195 | | 183building. [When qualifying expenditures of more than $10,000 are incurred, the tax credit |
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196 | 196 | | 184allowed by this section shall apply to the full amount of expenditures.] |
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197 | 197 | | 185 [(b) All rehabilitation work to which the tax credit may be applied shall be approved |
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198 | 198 | | 186by the State Historic Preservation Office prior to completion of the rehabilitation project as |
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199 | 199 | | 187meeting the Secretary of the Interior's Standards for Rehabilitation so that the office can |
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200 | 200 | | 188provide corrective comments to the claimant, estate, or trust in order to preserve the historical |
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201 | 201 | | 189qualities of the building.] |
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202 | 202 | | 190 (b) (i) A qualified claimant may assign all or a portion of a historic preservation credit |
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203 | 203 | | 191to which the qualified claimant is entitled. |
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204 | 204 | | 192 (ii) There is no limit on the number of transactions for the sale or assignment of all or a |
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205 | 205 | | 193portion of a historic preservation credit under this section. |
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206 | 206 | | 194 (3) (a) The office shall issue a historic preservation credit certificate to a claimant, |
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207 | 207 | | 195estate, or trust if the office: |
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208 | 208 | | 196 (i) approves all rehabilitation work for which a claimant, estate, or trust may claim a |
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209 | 209 | | 197tax credit as meeting the Secretary of the Interior's Standards for Rehabilitation before |
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210 | 210 | | 198completion of the rehabilitation project so that the office can provide corrective comments to |
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211 | 211 | | 199the taxpayer to preserve the historic qualities of the building; |
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212 | 212 | | 200 (ii) determines that the rehabilitation project conforms with the approved rehabilitation |
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213 | 213 | | 201work; and |
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214 | 214 | | 202 (iii) verifies the property is a residential or commercial certified historic building and |
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215 | 215 | | 203the amount of the taxpayer's qualified rehabilitation expenditures. |
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216 | 216 | | 204 (4) (a) To assign a historic preservation credit to another person, a qualified claimant |
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217 | 217 | | 205shall provide written notice to the State Historic Preservation Office, in a form established by |
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218 | 218 | | 206the State Historic Preservation Office, that includes: |
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219 | 219 | | 207 (i) the qualified claimant's written certificate and other proof that the qualified claimant |
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220 | 220 | | 208is assigning all or a portion of the historic preservation credit to which the qualified claimant is |
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221 | 221 | | 209entitled; |
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222 | 222 | | 210 (ii) the amount of the historic preservation credit that the qualified claimant is |
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223 | 223 | | 211assigning; and |
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224 | 224 | | 212 (iii) contact information for the person to whom the qualified claimant is assigning all |
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225 | 225 | | 213or a portion of the historic preservation credit. H.B. 424 02-08-23 3:52 PM |
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226 | 226 | | - 8 - |
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227 | 227 | | 214 (b) If the qualified claimant meets the requirements of Subsection (4)(a), the State |
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228 | 228 | | 215Historic Preservation Office shall issue an assigned historic preservation credit certificate to the |
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229 | 229 | | 216person identified by the qualified claimant for the amount specified in the written notice |
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230 | 230 | | 217described in Subsection (4)(a). |
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231 | 231 | | 218 (5) A person who is issued a historic preservation credit certificate in accordance with |
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232 | 232 | | 219Subsection (4)(b) may claim the historic preservation credit as if: |
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233 | 233 | | 220 (a) the person had met the requirements of this section to claim the historic |
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234 | 234 | | 221preservation credit, if the person files a return under this chapter; or |
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235 | 235 | | 222 (b) the person had met the requirements of Section 59-7-609 to claim the historic |
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236 | 236 | | 223preservation credit under Section 59-7-609, if the person files a return under Chapter 7, |
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237 | 237 | | 224Corporate Franchise and Income Taxes, Chapter 8, Gross Receipts Tax on Certain |
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238 | 238 | | 225Corporations Not Required to Pay Corporate Franchise or Income Tax Act, or Chapter 9, |
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239 | 239 | | 226Taxation of Admitted Insurers. |
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240 | 240 | | 227 [(c) Any amount of tax credit remaining may be carried forward to each of the five |
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241 | 241 | | 228taxable years following the qualified expenditures.] |
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242 | 242 | | 229 (6) (a) The office shall issue a historic preservation credit certificate to a qualified |
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243 | 243 | | 230claimant that assigns a historic preservation credit for any remaining amount of the historic |
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244 | 244 | | 231preservation credit that was not assigned; or |
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245 | 245 | | 232 (b) if there is no credit remaining, the office shall remove the qualified claimant from |
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246 | 246 | | 233the list of qualified claimants sent to the commission according to Subsection (8). |
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247 | 247 | | 234 (7) A qualified claimant may carry forward the amount of the historic preservation |
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248 | 248 | | 235credit that exceeds the qualified claimant's liability for five taxable years after the year in which |
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249 | 249 | | 236the qualified claimant claims a tax credit under this section. |
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250 | 250 | | 237 (8) The office shall provide the commission with an electronic report that includes for |
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251 | 251 | | 238each qualified claimant to which the office issued a historic preservation credit certificate under |
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252 | 252 | | 239this section for a taxable year: |
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253 | 253 | | 240 (a) the name of the qualified claimant; |
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254 | 254 | | 241 (b) the identifying information of the qualified claimant; and |
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255 | 255 | | 242 (c) the amount of the historic preservation credit that the qualified claimant is eligible |
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256 | 256 | | 243to claim. |
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257 | 257 | | 244 [(d)] (9) The commission, in consultation with the Division of State History, shall 02-08-23 3:52 PM H.B. 424 |
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258 | 258 | | - 9 - |
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259 | 259 | | 245promulgate rules to implement this section. |
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260 | 260 | | 246 [(2) As used in this section:] |
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261 | 261 | | 247 [(a) "Certified historic building" means a building that is listed on the National |
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262 | 262 | | 248Register of Historic Places within three years of taking the credit under this section or that is |
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263 | 263 | | 249located in a National Register Historic District and the building has been designated by the |
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264 | 264 | | 250Division of State History as being of significance to the district.] |
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265 | 265 | | 251 [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable |
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266 | 266 | | 252to the rehabilitation and restoration of the physical elements of the building, including the |
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267 | 267 | | 253historic decorative elements, and the upgrading of the structural, mechanical, electrical, and |
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268 | 268 | | 254plumbing systems to applicable codes.] |
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269 | 269 | | 255 [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:] |
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270 | 270 | | 256 [(A) a claimant's, estate's, or trust's personal labor;] |
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271 | 271 | | 257 [(B) cost of acquisition of the property;] |
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272 | 272 | | 258 [(C) any expenditure attributable to the enlargement of an existing building;] |
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273 | 273 | | 259 [(D) rehabilitation of a certified historic building without the approval required in |
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274 | 274 | | 260Subsection (1)(b); or] |
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275 | 275 | | 261 [(E) any expenditure attributable to landscaping and other site features, outbuildings, |
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276 | 276 | | 262garages, and related features.] |
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277 | 277 | | 263 [(c) "Residential" means a building used for residential use, either owner occupied or |
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278 | 278 | | 264income producing.] |
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279 | 279 | | 265 Section 3. Effective date. |
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280 | 280 | | 266 This bill takes effect for a taxable year beginning on or after January 1, 2024. |
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