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James Dixon
Rural Economic Development Outreach Specialist
801.538.8687

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Utah Governor's Office of Economic Development GOED
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Enterprise Zone Tax Credits

The following tax credits may be claimed by eligible businesses locating or expanding in enterprise zones on Utah state income tax forms:

JOB CREATION TAX CREDITS (maximum 30 full time positions per tax year):

  1. A $750 tax credit for each new full time position filled for at least six months during the tax year.
  2. An additional $500 tax credit if the new position pays at least 125% of the county average monthly wage for the respective industry (determined by the Utah Dept. of Employment Security). In the event this information is not available for the respective industry, the position must pay at least 125% of the total average monthly wage in the county.
  3. An additional $750 tax credit if the new position is in a business which adds value to agricultural commodities through manufacturing or processing.
  4. An additional $200 tax credit, for two consecutive years, for each new position insured under an employer sponsored health insurance program if the employer pays at least 50% of the premium.

OTHER TAX CREDITS:

  1. A tax credit (not to exceed $100,000) of 50% of the value of a cash contribution to a 501(c)(3) private nonprofit corporation engaged primarily in community and economic development, and is accredited by the Utah Rural Development Council.
  2. A tax credit of 25% of the first $200,000 spent on rehabilitating a building which has been vacant for at least two years, and which is located within an enterprise zone.
  3. An annual investment tax credit of 10% of the first $250,000 in investment, and 5% of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable property.

Non refundable tax credits are available to eligible businesses in designated enterprise zones from the start of the tax year in which the designation is made. Unused credits may be carried over for three years. Businesses closing operations in one rural area to locate in another rural area may not claim tax credits under this program. Construction jobs are not eligible for tax credits. Retail businesses and public utilities are not eligible to claim tax credits.

To apply for the Enterprise Zone Tax Credits use our online application:

Frequently Asked Questions (FAQ)

Answers to Frequently Asked Questions are in general and may change depending upon the circumstances of the situation. Neither the Utah State Tax Commission nor the Governor’s Office of Economic Development prepare returns for taxpayers and cannot advise taxpayers to the extent we are not their accountants or legal representatives.

1 Regarding prior year Enterprise Zone tax credit carryforwards, do entities need to reapply for these or track them on their own? Per the Utah State Tax Commission, the statute in 2015 §63M-1-413 (3) is the same as 2016 §63N-2-213(9) which states that if the nonrefundable credit exceeds the tax liability then it can be carried forward for the next three taxable years. It does not state that carryforwards from 2015 or prior years need to be certified in the new statute. The Tax Commission will be reviewing and auditing credits claimed in 2015 and prior years so if there are any carryforwards from credits earned in 2015 or prior the Auditing Division will make adjustments to the carryforwards if applicable subject to the statute of limitations, etc.

The Utah Tax Commission form TC-40a has a box to enter prior year carryforward amounts with the respective code already identified.

2 How can I identify if an area has been designated as an Enterprise Zone? The web-site Locate.utah.gov has an area to enter a physical address on the left side. After entering that data click the grey ‘Get Summary’ button in the upper left-hand corner, which will generate a report. Scroll down and expand the red section entitled Workforce to identify approved Enterprise Zone, the expiration year, the Point of Contact name, telephone, and email address.
3 What is the deadline for filing an application for the Enterprise Zone tax credit? Applications must be received 4 weeks prior to the anticipated filing date. Submitted applications will be processed on a first come/first serve basis and no application will be processed until all requested supporting documentation has been provided. All submitted data must be supported by documentation.
4 The online application notes that applications are due 4 weeks prior to the anticipated tax filing date. Does this mean the filing deadline, or just 4 weeks before filing? We anticipate it taking 4 weeks to process an application for this tax credit. If you have the data available earlier, you do not have to wait until 4 weeks before the tax filing deadline to submit the application. Submitted applications will be processed on a first come/first serve basis and no application will be processed until all requested supporting documentation has been provided. All submitted data must be supported by documentation.
5 If I am amending a tax return next year, can I claim the Enterprise Zone tax credit as long as I submit it 4 weeks before I anticipate filing the tax return? We anticipate it taking 4 weeks to process an application for this tax credit. If you have the data available earlier, you do not have to wait until 4 weeks before the tax filing deadline to submit the application. Submitted applications will be processed on a first come/first serve basis and no application will be processed until all requested supporting documentation has been provided. All submitted data must be supported by documentation. Once you have the certificate you can claim the Enterprise Zone tax credit.
6 Construction jobs are not allowed for the job creation tax credits, but can construction companies continue to claim investment credits? As provided in Statute 63N-2, there is no exclusion for construction companies claiming the investment tax credits.
7 Is it correct that retail companies may not claim either the job creation or investment tax credits? As provided in Statute 63N-2, business entities primarily engaged in retail trade do not qualify for either the job creation or investment tax credits.
8 Can the Enterprise Zone tax credits flow down to shareholders/partners? Pass-through entities cannot claim nonrefundable tax credits, which the job creation and investment tax credits available under the Enterprise Zone tax credit are identified as nonrefundable tax credits. The credit would be passed through to the pass-through entity taxpayer (shareholders).
11 Past information about these credits said the credits could be carried back three years. Is that still available (in addition to carrying the credits forward three years)? As provided in Statute 63N-2, if the amount of a tax credit under this section exceeds a business entity’s tax liability under this chapter for a taxable year, the business entity may carry forward the amount of the tax credit exceeding the liability for a period that does not exceed the next three taxable years.
12 Where can we find out information on 125% of the county wage? The Office of Rural Development has provided an updated schedule which is now available as a link in the online application.
13 If I need to amend a 2014 return to claim the credit, do I use the online application process or do I just do as was previously done (i.e., determine the credits and claim them and keep the information if requested)? To amend a 2014 tax return to claim this credit do not complete the online application. Instead please contact the Utah State Tax Commission as the Governor’s Office of Economic Development is responsible for certifying business entity’s eligibility beginning with the 2016 tax year.
15 What supporting documentation is needed to support a qualifying investment in plant, equipment, or other depreciable property? As provided in Statute 63N-2, documentation must include invoices, receipts, bill of sale, etc. showing the entire purchase price and documentation to show amount paid by applicant such as loan documentation or check detail and bank statement detail.

In addition, if any of the items qualify as listed property per the Internal Revenue Service, please provide the combined business/investment use percentage that the entity will be claiming on the Internal Revenue Service Form 4562 for the same listed property item being claimed a tax credit. If any changes are made to the combined business/investment use percentage on the 2016 Internal Revenue Service Form 4562, those changes must be communicated to the Governor’s Office of Economic Development within 7 business days or as soon as the discrepancy is identified.

To calculate the adjusted cost eligible for the tax credit, the office will take the purchase price of the listed property and multiply that by the combined business/investment use percentage. (If applicable, please also provide the sum of any section 179 expense deduction, any special depreciation allowance, any credit for employer-provided childcare facilities and services, and for automobiles and other listed property placed in service after 1985 (i.e. transition property), reduce the depreciable basis by the entire investment credit).

Listed property is defined by the Internal Revenue Service as any of the following:
1. Any passenger automobile
2. Any other property used for transportation
3. Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment),
4. Any computer and related peripheral equipment, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment.

For further definitions on and clarifications of listed property, please contact the Internal Revenue Service (a helpful link is here https://www.irs.gov/publications/p534/ch03.html)

16 What supporting documentation is needed to support a private capital investment for the rehabilitation of a building in an Enterprise Zone? As provided in Statute 63N-2, the rehabilitated building’s physical address; documents showing the current owner such as the deed or mortgage documents; the date the building was last occupied; a notarized vacancy letter; a current occupancy permit or certificate; receipts and paid invoices of all rehabilitation expenses totaling the amount the tax credit is calculated from; check detail and bank statement detail to validate the entire amount paid; and the Office may request further documentation to verify receipts and paid invoices.
17 My company purchased a delivery route – can this be claimed for the EZ tax credit? As provided per Statute 63N-2 and per Utah Administrative Rules R357-15-2 a “qualifying investment in plant, equipment, or other depreciable property” means an investment in most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment that qualifies for depreciation under the Internal Revenue Service’s Form 4562.

The purchase of the delivery route cannot be claimed for the Enterprise Zone tax credit. The policy decision, made by the Office of Rural Development, limits this tax credit, as it applies to qualifying investments in plant, equipment, or other depreciable property, to tangible assets only.

18 Did the tax credits get discontinued for 2016? The Enterprise Zone tax credits did not get discontinued for 2016, but it does involve a new process. Per the Enterprise Zone statute 63N-2 and Enterprise Zone rules R357-15, the Governor’s Office of Economic Development will be certifying a business entity’s eligibility for this tax credit beginning in tax year 2016. Please go to this web-site to find the application: http://business.utah.gov/programs/incentives/enterprise-zones/
19 Please clarify the process for applying for this credit retroactively. Are we still able to get credits for 2015? Please contact the Utah State Tax Commission as the Governor’s Office of Economic Development is responsible for certifying business entity’s eligibility beginning with the 2016 tax year.
20 Is this tax credit available to tax payers from the start date of the first tax year in which the business was located in a designated Enterprise Zone? This tax credit is available to tax payers as provided by statute 63N-2 and available to entity’s located within the respective Enterprise Zone and meeting certain criteria beginning the first year an Enterprise Zone designation is made.
21 If an investment in qualified property was made in a prior year is the tax payer eligible to claim this credit as long as they were already located within the zone? As provided in Statute 63N-2, once an entity has met qualifying criteria, the tax payer is eligible to claim a qualifying investment in plant, equipment, or other depreciable property that qualifies for depreciation under the Internal Revenue Service’s Form 4562 the year in which the investment occurred as long as during that same year the location of the qualified property was within an approved Enterprise Zone and the necessary supporting documentation is provided. If the investment occurred prior to 2016, please contact the Utah State Tax Commission as the Governor’s Office of Economic Development is responsible for certifying business entity’s eligibility beginning with the 2016 tax year.
22 Does the minimum investment of $1.25M within one year still have to be met? The $1,250,000 corresponds to the annual investment tax credit of 10% of the first $250,000 in investment, and 5% of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable property as per Statute 63N-2. The $1,250,000 is a maximum figure, not a minimum investment.
23 Is the Utah statute of limitations 3 years from the original filing due date plus the extension period, or 2 years from the date the tax was paid, whichever is later? Per the Utah State Tax Commission, the Auditing Division answers questions regarding how statutes are interpreted and applied and sometimes how returns are prepared. It should be noted that the Legislature determines statute and the Auditing Division is tasked with fair and equitable administration of the statutes with no opinions regarding them. The Auditing Division does not prepare returns for taxpayers nor can we advise them to the extent we are not their accountants or legal representatives.

The statute of limitations for filing a return is generally 3 years after the return is filed per UCA §59-1-1410(1)(a).

Claims for refunds must be within 3 years from the due date of the original return including extension or 2 years from the date the tax was paid per UCA §59-1-1410(8)(a).

59-1-1410 Action for collection of tax, fee, or charge — Action for refund or credit of tax, fee, or charge — Denial of refund claim under appeal — Appeal of denied refund claim.
(1)(a) Except as provided in Subsections (3) through (7) and Sections 59-5-114, 59-7-519, 59-10-536, and 59-11-113, the commission shall assess a tax, fee, or charge within three years after the day on which a person files a return.

(8)(a) Except as provided in Subsection (8)(b) or Section 19-12-203, 59-7-522, 59-10-529, or 59-12-110, the commission may not make a credit or refund unless a person files a claim with the commission within the later of:
(i) three years from the due date of the return, including the period of any extension of time provided in statute for filing the return; or
(ii) two years from the date the tax was paid.

The Tax Commission’s website at http://tax.utah.gov/ contains helpful information for taxpayers including forms and publications and the general contact phone number of 801-297-2200 for further questions.

28 Is there a paper application, or is it all required to be submitted online? If it is all required to be online, is there at least a way we can print blank screens of all of the information required? The application is required to be submitted online at this time. A pdf file can be provided upon request.
29 What documentation is needed to support application submissions? As provided in Statute 63N-2, documentation need to support application submissions includes, but is not limited to, claiming entity data (e.g. name, address, physical address, tax identification number), responses to qualification questions, and a certification letter signed by an officer of the applying entity. If the employment-related tax credit is being claimed, documentation includes, but is not limited to:
§ a current total of all full time employees including the total of employees as reported to the Department of Workforce Services for the last three years,
§ the number of new incremental employee positions created above the baseline,
§ for each new incremental employee position above the baseline provide:
– employee name,
– employee hourly wage and/or annual salary,
– employee average hours worked per week,
– employee hire date,
– if applicable, proof of employer-sponsored health insurance program if the employer pays at least 50% of the premium cost,
– if applicable, evidence that the business entity adds value to agricultural commodities through manufacturing or processing, list of sample products or processes, and
– other documentation as requested by the office.

If the investment-related tax credit for rehabilitating a building is being claimed, documentation includes, but is not limited to:
§ the rehabilitated building’s physical address,
§ documents showing the current owner such as the deed or mortgage documents,
§ the date the building was last occupied,
§ a notarized vacancy letter,
§ a current occupancy permit or certificate,
§ receipts and paid invoices of all rehabilitation expenses totaling the amount the tax credit is calculated from,
§ loan documentation, check copies, and bank statements showing the entire amount paid by the applicant
§ the office may request further documentation.

If the investment-related tax credit for qualifying investment in plant, equipment, or other depreciable property is being claimed, documentation includes, but is not limited to:
§ receipts and paid invoices of all rehabilitation expenses totaling the amount the tax credit is calculated from,
§ loan documentation, check copies, and bank statements showing the entire amount paid by the applicant
§ the office may request further documentation.

Please refer to the Enterprise Zone statute 63N-2 and Enterprise Zone rules R357-15.

30 Can a third party submit the application for a client? If so, how? The third party can complete the online application for the claiming entity. As part of the application there is a certification letter that a business officer of the applying entity must sign.
31 If there is no paper application how does the client sign? As part of the application there is a certification letter that a business officer of the applying entity must sign. The signed certification letter needs to be uploaded as part of the application.
32 Can a third party sign for the client? As provided in by statute 63N-2, the application must include a certification letter signed by an officer of the business entity applying for the tax credit.
33 What is the current definition of “primarily engaged in retail trade?” Retail store locations are not eligible for this tax credit.
34 Where can we go to find current rules for the Enterprise Zone Tax credit? Please refer to the Enterprise Zone Utah Statute 63N-2 and Utah Administrative Code R357-15.
36 We have a client who has a 1065 business located within an Enterprise Zone. 1065 entities are flow through and do not pay tax at that level. Does our client need to fill out the new form for the 1065 business and then again for their TC 40? The Auditing Division answers questions regarding how statutes are interpreted and applied and sometimes how returns are prepared. It should be noted that the Legislature determines statute and the Auditing Division is tasked with fair and equitable administration of the statutes with no opinions regarding them. The Auditing Division does not prepare returns for taxpayers nor can we advise them to the extent we are not their accountants or legal representatives.

If the partnership is the entity receiving the credit it needs to file if the shareholders are interested in claiming the credit that would flow through to them. The TC-65 partnership form and instructions are located on the Tax Commission’s website at http://tax.utah.gov/.

40 My company is located within an approved Enterprise Zone and has a 6/30/2016 year end. Can I claim the credit for new equipment purchased between 01/01/2016 and 6/30/16 and new employees hired during the same time frame? Or do they not qualify until their tax year beginning 7/1/2016? Your website says “Nonrefundable tax credits are available to eligible businesses in designated enterprise zones from the start of the tax year in which the designation is made.” As provided in Statute 63N-2, once a claiming entity qualifies for eligibility, credits can be claimed, once stated criteria has been met during tax year 2016. Stated criteria that may affect if a tax credit can be claimed includes, but is not limited to, the point in time when the claiming entity achieves a new full-time employee position created within the enterprise zone. A New full-time employee position means a position that has been newly created in addition to the highest baseline count of employment positions that existed within the business entity during the previous three taxable years and is filled by an employee working at least 30 hours per week, for a period of at least six consecutive months, and where the period ends in the tax year for which the credit is claimed. Please refer to the Enterprise Zone Utah Statute 63N-2 and Utah Administrative Code R357-15 for additional criteria.
42 I am a CPA who helps individuals file for this tax credit. How do I supply the required data to GOED if I do not receive this data until after the 4 weeks period before we plan to file the return? The Governor’s Office of Economic Development needs 4 weeks to process the application, so all data will need to be submitted at least 4 weeks before the tax credit certificate is needed back. Submitted applications will be processed on a first come/first serve basis and no application will be processed until all requested supporting documentation has been provided. All submitted data must be supported by documentation.
43 What deadline is applicable to taxpayers who have not filed for a few years? That tax payer would not be barred from the credit just because he didn’t send it to GOED prior to the final extension deadline period. That tax payer would be entitled to the tax credit, regardless of when the tax return is filed. The Governor’s Office of Economic Development needs 4 weeks to process the application, so all data will need to be submitted at least 4 weeks before the tax credit certificate is needed back. Submitted applications will be processed on a first come/first serve basis and no application will be processed until all requested supporting documentation has been provided. All submitted data must be supported by documentation.

With regard to tax payers who have not filed for a few years, it depends on the tax year the credit is being claimed, for credits in 2015 and previous years please contact the Utah State Tax Commission as the Governor’s Office of Economic Development is responsible for certifying business entity’s eligibility beginning with the 2016 tax year.

45 Our business is in an Enterprise Zone designated since 2015. We opened in the summer of 2015 so a number of our positions were either not created yet or the employee didn’t work for 6 months because we weren’t open long enough for the 2015 tax year. Can I just file for all our employees in the 2016 tax year or should I include the date they started in 2015 and fill out everything through the 2016 tax season? As provided by statute 63N-2, a tax credit may be claimed by a business entity for each new full-time employee position created within the enterprise zone. A New full-time employee position means a position that has been newly created in addition to the highest baseline count of employment positions that existed within the business entity during the previous three taxable years and is filled by an employee working at least 30 hours per week, for a period of at least six consecutive months, and where the period ends in the tax year for which the credit is claimed. Part of the documentation required includes a current total of all full time employees including the total of employees as reported to the Department of Workforce Services for the last three years.

In addition, the employment-related tax credits are available only to a business entity for which at least 51% of the employees employed at the facilities of the business entity located in the Enterprise Zone are individuals who, at the time of employment, reside in (a) the county in which the Enterprise Zone is located, or (b) an Enterprise Zone that is immediately adjacent and contiguous to the county in which the Enterprise Zone is located.

46 We are a restaurant in a tourist driven economy many of our front-of-the-house employees work full time for most of the year (over six months) but then work significantly less during the slow season. They still make a good salary for the area (30k-ish). Can I include those positions if they create full time work for most of the year? We don’t completely close down during the slow months because we want them to make something. As provided by statute 63N-2, a tax credit may be claimed by a business entity for each new full-time employee position created within the enterprise zone. A new full-time employee position means a position that has been newly created in addition to the highest baseline count of employment positions that existed within the business entity during the previous three taxable years and is filled by an employee working at least 30 hours per week, for a period of at least six consecutive months, and where the period ends in the tax year for which the credit is claimed. Part of the documentation required includes a current total of all full time employees including the total of employees as reported to the Department of Workforce Services for the last three years.

In addition, the employment-related tax credits are available only to a business entity for which at least 51% of the employees employed at the facilities of the business entity located in the Enterprise Zone are individuals who, at the time of employment, reside in (a) the county in which the Enterprise Zone is located, or (b) an Enterprise Zone that is immediately adjacent and contiguous to the county in which the Enterprise Zone is located.

Related Links

Enterprise Zones Tax Credits

Utah Enterprise Zones Map

ENTERPRISE-ZONE-EXPIRATION-AND-CONTACT-LIST-UPDATED-July 2016

For more information about tax credits, please contact:
Utah Tax Commission
Technical Research Unit
Taxpayer Services Division
210 North 1950 West
Salt Lake City, Utah 84134
Telephone: (801) 297-2200
Fax: (801) 297-7574
taxmaster@utah.gov