59-7-614 - Renewable energy systems tax credit -- Definitions -- Limitations -- Certification -- Rulemaking authority.
59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --Certification -- Rulemaking authority.
(1) As used in this section:
(a) "Active solar system":
(i) means a system of equipment capable of collecting and converting incident solarradiation into thermal, mechanical, or electrical energy, and transferring these forms of energy bya separate apparatus to storage or to the point of use; and
(ii) includes water heating, space heating or cooling, and electrical or mechanical energygeneration.
(b) "Biomass system" means any system of apparatus and equipment for use inconverting material into biomass energy, as defined in Section 59-12-102, and transporting thatenergy by separate apparatus to the point of use or storage.
(c) "Business entity" means any sole proprietorship, estate, trust, partnership, association,corporation, cooperative, or other entity under which business is conducted or transacted.
(d) "Commercial energy system" means any active solar, passive solar, geothermalelectricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or biomasssystem used to supply energy to a commercial unit or as a commercial enterprise.
(e) "Commercial enterprise" means a business entity whose purpose is to produceelectrical, mechanical, or thermal energy for sale from a commercial energy system.
(f) (i) "Commercial unit" means any building or structure that a business entity uses totransact its business.
(ii) Notwithstanding Subsection (1)(f)(i):
(A) in the case of an active solar system used for agricultural water pumping or a windsystem, each individual energy generating device shall be a commercial unit; and
(B) if an energy system is the building or structure that a business entity uses to transactits business, a commercial unit is the complete energy system itself.
(g) "Direct-use geothermal system" means a system of apparatus and equipment enablingthe direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit, that iscontained in the earth to meet energy needs, including heating a building, an industrial process,and aquaculture.
(h) "Geothermal electricity" means energy contained in heat that continuously flowsoutward from the earth that is used as a sole source of energy to produce electricity.
(i) "Geothermal heat-pump system" means a system of apparatus and equipment enablingthe use of thermal properties contained in the earth at temperatures well below 100 degreesFahrenheit to help meet heating and cooling needs of a structure.
(j) "Hydroenergy system" means a system of apparatus and equipment capable ofintercepting and converting kinetic water energy into electrical or mechanical energy andtransferring this form of energy by separate apparatus to the point of use or storage.
(k) "Individual taxpayer" means any person who is a taxpayer as defined in Section59-10-103 and an individual as defined in Section 59-10-103.
(l) "Passive solar system":
(i) means a direct thermal system that utilizes the structure of a building and its operablecomponents to provide for collection, storage, and distribution of heating or cooling during theappropriate times of the year by utilizing the climate resources available at the site; and
(ii) includes those portions and components of a building that are expressly designed and
required for the collection, storage, and distribution of solar energy.
(m) "Residential energy system" means any active solar, passive solar, biomass,direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used tosupply energy to or for any residential unit.
(n) "Residential unit" means any house, condominium, apartment, or similar dwellingunit that serves as a dwelling for a person, group of persons, or a family but does not includeproperty subject to a fee under:
(i) Section 59-2-404;
(ii) Section 59-2-405;
(iii) Section 59-2-405.1;
(iv) Section 59-2-405.2; or
(v) Section 59-2-405.3.
(o) "Utah Geological Survey" means the Utah Geological Survey established in Section79-3-201.
(p) "Wind system" means a system of apparatus and equipment capable of interceptingand converting wind energy into mechanical or electrical energy and transferring these forms ofenergy by a separate apparatus to the point of use, sale, or storage.
(2) (a) (i) For taxable years beginning on or after January 1, 2007, a business entity thatpurchases and completes or participates in the financing of a residential energy system to supplyall or part of the energy required for a residential unit owned or used by the business entity andsituated in Utah is entitled to a nonrefundable tax credit as provided in this Subsection (2)(a).
(ii) (A) A business entity is entitled to a tax credit equal to 25% of the reasonable costsof each residential energy system installed with respect to each residential unit it owns or uses,including installation costs, against any tax due under this chapter for the taxable year in whichthe energy system is completed and placed in service.
(B) The total amount of each credit under this Subsection (2)(a) may not exceed $2,000per residential unit.
(C) The credit under this Subsection (2)(a) is allowed for any residential energy systemcompleted and placed in service on or after January 1, 2007.
(iii) If a business entity sells a residential unit to an individual taxpayer before making aclaim for the tax credit under this Subsection (2)(a), the business entity may:
(A) assign its right to this tax credit to the individual taxpayer; and
(B) if the business entity assigns its right to the tax credit to an individual taxpayer underSubsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the individualtaxpayer had completed or participated in the costs of the residential energy system under Section59-10-1014.
(b) (i) For taxable years beginning on or after January 1, 2007, a business entity thatpurchases or participates in the financing of a commercial energy system situated in Utah isentitled to a refundable tax credit as provided in this Subsection (2)(b) if the commercial energysystem does not use wind, geothermal electricity, or biomass equipment capable of producing atotal of 660 or more kilowatts of electricity, and:
(A) the commercial energy system supplies all or part of the energy required bycommercial units owned or used by the business entity; or
(B) the business entity sells all or part of the energy produced by the commercial energysystem as a commercial enterprise.
(ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs ofany commercial energy system installed, including installation costs, against any tax due underthis chapter for the taxable year in which the commercial energy system is completed and placedin service.
(B) Notwithstanding Subsection (2)(b)(ii)(A), the total amount of the credit under thisSubsection (2)(b) may not exceed $50,000 per commercial unit.
(C) The credit under this Subsection (2)(b) is allowed for any commercial energy systemcompleted and placed in service on or after January 1, 2007.
(iii) A business entity that leases a commercial energy system installed on a commercialunit is eligible for the tax credit under this Subsection (2)(b) if the lessee can confirm that thelessor irrevocably elects not to claim the credit.
(iv) Only the principal recovery portion of the lease payments, which is the cost incurredby a business entity in acquiring a commercial energy system, excluding interest charges andmaintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
(v) A business entity that leases a commercial energy system is eligible to use the taxcredit under this Subsection (2)(b) for a period no greater than seven years from the initiation ofthe lease.
(vi) A tax credit allowed by this Subsection (2)(b) may not be carried forward or carriedback.
(c) (i) For taxable years beginning on or after January 1, 2007, a business entity thatowns a commercial energy system situated in Utah using wind, geothermal electricity, or biomassequipment capable of producing a total of 660 or more kilowatts of electricity is entitled to arefundable tax credit as provided in this Subsection (2)(c) if:
(A) the commercial energy system supplies all or part of the energy required bycommercial units owned or used by the business entity; or
(B) the business entity sells all or part of the energy produced by the commercial energysystem as a commercial enterprise.
(ii) (A) A business entity is entitled to a tax credit under this section equal to the productof:
(I) 0.35 cents; and
(II) the kilowatt hours of electricity produced and either used or sold during the taxableyear.
(B) (I) The credit calculated under Subsection (2)(c)(ii)(A) may be claimed forproduction occurring during a period of 48 months beginning with the month in which thecommercial energy system is placed in commercial service.
(II) The credit allowed by this Subsection (2)(c) for each year may not be carried forwardor carried back.
(C) The credit under this Subsection (2)(c) is allowed for any commercial energy systemcompleted and placed in service on or after January 1, 2007.
(iii) A business entity that leases a commercial energy system installed on a commercialunit is eligible for the tax credit under this Subsection (2)(c) if the lessee can confirm that thelessor irrevocably elects not to claim the credit.
(d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year inwhich the energy system is completed and placed in service.
(ii) Additional energy systems or parts of energy systems may be claimed for subsequent
years.
(iii) If the amount of a tax credit under Subsection (2)(a) exceeds a business entity's taxliability under this chapter for a taxable year, the amount of the credit exceeding the liability maybe carried forward for a period which does not exceed the next four taxable years.
(3) (a) Except as provided in Subsection (3)(b), the tax credits provided for underSubsection (2) are in addition to any tax credits provided under the laws or rules and regulationsof the United States.
(b) A purchaser of one or more solar units that claims a tax credit under Section59-7-614.3 for the purchase of the one or more solar units may not claim a tax credit under thissection for that purchase.
(c) (i) The Utah Geological Survey may set standards for residential and commercialenergy systems claiming a credit under Subsections (2)(a) and (b) that cover the safety,reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the systemseligible for the tax credit use the state's renewable and nonrenewable energy resources in anappropriate and economic manner.
(ii) The Utah Geological Survey may set standards for residential and commercial energysystems that establish the reasonable costs of an energy system, as used in Subsections(2)(a)(ii)(A) and (2)(b)(ii)(A), as an amount per unit of energy production.
(iii) A tax credit may not be taken under Subsection (2) until the Utah Geological Surveyhas certified that the energy system has been completely installed and is a viable system forsaving or production of energy from renewable resources.
(d) The Utah Geological Survey and the commission may make rules in accordance withTitle 63G, Chapter 3, Utah Administrative Rulemaking Act, that are necessary to implement thissection.
(4) (a) On or before October 1, 2012, and every five years thereafter, the Utah TaxReview Commission shall review each tax credit provided by this section and makerecommendations to the Revenue and Taxation Interim Committee concerning whether the creditshould be continued, modified, or repealed.
(b) The Utah Tax Review Commission's report under Subsection (4)(a) shall includeinformation concerning the cost of the credit, the purpose and effectiveness of the credit, and thestate's benefit from the credit.
Amended by Chapter 344, 2009 General Session