Section R357-3-106 - Economic Development Tax Credit Process(1) Annual tax credits shall be based on incremental taxes paid by the business entity or withheld on behalf of employees of a new commercial project.(2)(a) GO Utah shall propose a tax credit structure based on the factors set forth in this rule in a combination GO Utah deems the most effective and beneficial in weighing the benefits of the state, local community, and company.(b) GO Utah shall propose the tax credit terms and structure to the Board before making a final offer to the business entity.(3) If the Executive Director approves an Economic Development Tax Credit, GO Utah shall provide a tax credit offer letter to a business entity that includes:(a) the proposed terms of the Economic Development Tax Credit, including the maximum amount of aggregate annual tax credits and the time period over which the tax credits may be claimed;(b) a statement that the company must demonstrate sufficient growth and supply; and(c) documentation that will be required each incentive year to claim a tax credit for the following tax year.(4) If the applicant intends to accept the incentive offer, it shall counter-execute the tax credit offer letter.(5) If the Executive Director denies an application for an Economic Development Tax Credit, GO Utah shall provide a letter to the business entity that includes: (a) notice of the application denial;(b) reason for denial; and(c) notice that if the business entity makes changes to the proposed new commercial project, they may reapply for a tax credit.(6) GO Utah shall establish a baseline with the company that consists of the count of full-time employees and state revenue reflective of presence in the state before the Board approval date. A baseline must be established before awarding a tax credit.(7) A company with an active contract, who desires a tax credit, must provide an annual report for the incentive year in the format and method as directed by GO Utah, with a level of accuracy comparable with information GO Utah obtains from the Department of Workforce Services and the Tax Commission, that at a minimum must contain: (a) a list of individuals in Utah that received compensation at the company or project with their position, start date, termination date, hours paid, wages paid, benefits paid and employer withholding taxes paid or an aggregate list that provides qualification and legislative reporting required for Section 63N-2-106, as determined GO Utah;(b) the requested amount of tax revenue to be rebated from withholding, sales and use, vendor paid sales tax and income tax verified as paid, remitted and receipted to the state; and(c) a current authorization to disclose from the Utah State Tax Commission from the baseline period to three years after the end date of the contract.(8) The office may cause an apportionment for the following reasons: (a) a business entity's project scope is to create or develop a new good or service that is co-located within a current location that is not transparent with other operations, employees and revenue, which would not be included in the calculation of new state revenue;(b) a business entity has a material amount of employees operating the company's retail business; or(c) a company adjusts operations that create operations outside the scope of the agreement or boundaries of the economic development zone.(9) The office may consider sales and use tax paid for capital asset purchases of a business entity within the scope of the agreement up to 50% of the total amount of state tax.(10) A company who hires employees for the new commercial project through a professional employment organization shall require the professional employment organization to provide the office an employee report under attestation.(11) The projected employment and salary growth from the latest annual report period may be carried forward to additional periods when the Fiscal Impact Questionnaire omits this information.(12) A company who does not attain the 20 service hours per high paying job per year may be awarded a tax credit if other statutory or contracted terms are met to the satisfaction of the office.Utah Admin. Code R357-3-106
Adopted by Utah State Bulletin Number 2019-2, effective 12/24/2018Amended by Utah State Bulletin Number 2021-14, effective 7/12/2021Amended by Utah State Bulletin Number 2022-08, effective 4/8/2022Amended by Utah State Bulletin Number 2022-22, effective 10/27/2022Amended by Utah State Bulletin Number 2024-03, effective 1/25/2024