59-10-1014 - Renewable energy systems tax credit -- Definitions -- Limitations -- Certification -- Rulemaking authority.
59-10-1014. Renewable energy systems tax credit -- Definitions -- Limitations --Certification -- Rulemaking authority.
(1) As used in this part:
(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 entity under which business is conducted or transacted.
(d) "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.
(e) "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.
(f) "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.
(g) "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.
(h) "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 andrequired for the collection, storage, and distribution of solar energy.
(i) "Residential energy system" means any active solar, passive solar, biomass, direct-usegeothermal, geothermal heat-pump system, wind, or hydroenergy system used to supply energy toor for any residential unit.
(j) "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.
(k) "Utah Geological Survey" means the Utah Geological Survey established in Section79-3-201.
(l) "Wind system" means a system of apparatus and equipment capable of intercepting
and converting wind energy into mechanical or electrical energy and transferring these forms ofenergy by a separate apparatus to the point of use or storage.
(2) For taxable years beginning on or after January 1, 2007, a claimant, estate, or trustmay claim a nonrefundable tax credit as provided in this section if:
(a) a claimant, estate, or trust that is not a business entity purchases and completes orparticipates in the financing of a residential energy system to supply all or part of the energy forthe claimant's, estate's, or trust's residential unit in the state; or
(b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to anotherclaimant, estate, or trust that is not a business entity before making a claim for a tax credit underSubsection (6) or Section 59-7-614; and
(ii) the claimant, estate, or trust that is a business entity assigns its right to the tax creditto the claimant, estate, or trust that is not a business entity as provided in Subsection (6)(c) orSubsection 59-7-614(2)(a)(iii).
(3) (a) The tax credit described in Subsection (2) is equal to 25% of the reasonable costsof each residential energy system, including installation costs, against any income tax liability ofthe claimant, estate, or trust under this chapter for the taxable year in which the residential energysystem is completed and placed in service.
(b) The total amount of each tax credit under this section may not exceed $2,000 perresidential unit.
(c) The tax credit under this section is allowed for any residential energy systemcompleted and placed in service on or after January 1, 2007.
(4) (a) The tax credit provided for in this section shall be claimed in the return for thetaxable year in which the residential energy system is completed and placed in service.
(b) Additional residential energy systems or parts of residential energy systems may besimilarly claimed in returns for subsequent taxable years as long as the total amount claimed doesnot exceed $2,000 per residential unit.
(c) If the amount of the tax credit under this section exceeds the income tax liability ofthe claimant, estate, or trust claiming the tax credit under this section for that taxable year, thenthe amount not used may be carried over for a period that does not exceed the next four taxableyears.
(5) (a) A claimant, estate, or trust that is not a business entity that leases a residentialenergy system installed on a residential unit is eligible for the residential energy tax credit if thatclaimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax credit.
(b) Only the principal recovery portion of the lease payments, which is the cost incurredby the claimant, estate, or trust in acquiring the residential energy system excluding interestcharges and maintenance expenses, is eligible for the tax credits.
(c) A claimant, estate, or trust described in this Subsection (5) may use the tax credits fora period that does not exceed seven years from the initiation of the lease.
(6) (a) A claimant, estate, or trust that is a business entity that purchases and completesor participates in the financing of a residential energy system to supply all or part of the energyrequired for a residential unit owned or used by the claimant, estate, or trust that is a businessentity and situated in Utah is entitled to a nonrefundable tax credit as provided in this Subsection(6).
(b) (i) For taxable years beginning on or after January 1, 2007, a claimant, estate, or trustthat is a business entity is entitled to a nonrefundable tax credit equal to 25% of the reasonable
costs of a 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.
(ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000per residential unit.
(iii) The tax credit under this Subsection (6) is allowed for any residential energy systemcompleted and placed in service on or after January 1, 2007.
(c) If a claimant, estate, or trust that is a business entity sells a residential unit to aclaimant, estate, or trust that is not a business entity before making a claim for the tax creditunder this Subsection (6), the claimant, estate, or trust that is a business entity may:
(i) assign its right to this tax credit to the claimant, estate, or trust that is not a businessentity; and
(ii) if the claimant, estate, or trust that is a business entity assigns its right to the taxcredit to a claimant, estate, or trust that is not a business entity under Subsection (6)(c)(i), theclaimant, estate, or trust that is not a business entity may claim the tax credit as if that claimant,estate, or trust that is not a business entity had completed or participated in the costs of theresidential energy system under this section.
(7) (a) A tax credit under this section may be claimed for the taxable year in which theresidential energy system is completed and placed in service.
(b) Additional residential energy systems or parts of residential energy systems may beclaimed for subsequent years.
(c) If the amount of a tax credit under this section exceeds the tax liability of theclaimant, estate, or trust claiming the tax credit under this section for a taxable year, the amountof the tax credit exceeding the tax liability may be carried over for a period which does notexceed the next four taxable years.
(8) (a) Except as provided in Subsection (8)(b), tax credits provided for under thissection are in addition to any tax credits provided under the laws or rules and regulations of theUnited States.
(b) A purchaser of one or more solar units that claims a tax credit under Section59-10-1024 for the purchase of the one or more solar units may not claim a tax credit under thissection for that purchase.
(9) (a) The Utah Geological Survey may set standards for residential energy systems thatcover the safety, reliability, efficiency, leasing, and technical feasibility of the systems to ensurethat the systems eligible for the tax credit use the state's renewable and nonrenewable energyresources in an appropriate and economic manner.
(b) 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 (3)(a) and(6)(b)(i), as an amount per unit of energy production.
(c) A tax credit may not be taken under this section until the Utah Geological Survey hascertified that the energy system has been completely installed and is a viable system for saving orproduction of energy from renewable resources.
(10) The Utah Geological Survey and the commission may make rules in accordancewith Title 63G, Chapter 3, Utah Administrative Rulemaking Act, that are necessary to implementthis section.
(11) (a) On or before October 1, 2012, and every five years thereafter, the Utah Tax
Review 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 (11)(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