Utah Life Science &Technology Tax Credit

Effective retroactively for tax years beginning on or after 01/01/2012 , SB 23 makes various changes to the life science and technology credits. The legislation repeals the nonrefundable individual income tax credit for capital gain transactions related to a life science establishment, previously available for transactions occurring on or after January 1, 2011 that resulted in short or long-term capital gains. Regarding the nonrefundable tax credit against the individual income tax for investment in certain life science establishments, the legislation provides that if an eligible claimant is a pass-through entity taxpayer that files a corporate franchise and income tax return, the eligible claimant can claim the tax credit on the corporate franchise and income tax return. Regarding the refundable technology and life science credit for business entities that increase state tax revenues allowed against individual and corporate income tax, the legislation provides that the tax credit for an eligible business entity (EBE) that enters into a qualifying agreement may not exceed: (1) for the tax year in which the EBE business first generates eligible new state tax revenues and the two following years, the amount of eligible new state tax revenues generated by the EBE; (2) for the seven tax years following the last of the three tax years, 75% of the amount of eligible new state tax revenues generated by the EBE. Also, the Office of Economic Development (Office) can only issue a tax credit certificate to an applicant if the agreement with the Office includes a provision that the applicant will make new capital expenditures of at least $1 million in Utah and the applicant makes such expenditures in accordance with the agreement. With regards to the application process for the life science and technology credits, the Office can only issue tax credits certificates to the extent that the legislature expressly authorizes it by statute to issue certificates for a fiscal year. The Office must determine quarterly the tax credit applicants to which a tax credit may be provided and the amount of the credit. If the total amount of tax credit certificates the Office issues in a quarter of a fiscal year is less than the amount of tax credits the Office may issue in that quarter, the Office may issue the remaining amount of the certificates in a following quarter. For fiscal year 2011-12 only, if the total amount of tax credit certificates the Office issues in fiscal year 2011-12 is less than the amount of tax credit certificates the Office may issue for the fiscal year, the Office can issue the remaining amount of the certificates in a later fiscal year. A tax credit applicant can apply to the Office to receive a tax credit certificate by filing an application with the Office on or before the quarterly deadline established by the Office by rule. The Office can issue tax credit certificates for the first tax year in which the applicant enters into an agreement with the office and the nine immediately following tax years (previously two following tax years).