Utah Admin. Code R357-10-11 - Recapture

(1) If the office determines recapture is necessary pursuant to Utah Code Section 63M-1-3504, the office shall issue a Provisional Notice of Agency Action for Recapture to both the qualified community development entity and the taxpayer that claimed the tax credit allowed under Utah Code Section 59-9-107. Such notice shall be delivered to the qualified community development entity by (i) electronic mail and (ii) certified mail, and shall state under which provision of Utah Code Section 63M-1-3504 the recapture is sought.

(2) The six-month cure period provided for in Utah Code Section 63M-1-3505 begins on the day following receipt of the Provisional Notice of Agency Action for Recapture. If the action or omission upon which the recapture is based is cured during the six month cure period, the office shall issue a notice of cure to the qualified community development entity. If the action or omission upon which the recapture is based is not cured within the six-month cure period, the office shall issue a final Notice of Agency Action for Recapture to the qualified community development entity, the taxpayer that claimed the tax credit, and the Utah Tax Commission.

(3) For the purposes of Recapture, the Office interprets the requirement to invest 85% of the purchase price of the qualified equity investment as follows:

(a) If the qualified community development entity does not transfer or assign any of its certification, then the qualified community development entity must invest and maintain invested an amount equal to 85% or more of the original amount of the qualified equity investment certified by the Office and for which cash was received within 45 days.

(b) If the qualified community development entity transfers all or a portion of its certified qualified equity investment authority to a controlling entity or subsidiary, then:

(i) The qualified community development entity (the transferor) must invest and maintain invested an amount equal to or greater than 85% of the portion of the certified qualified equity investment authority it retained, and for which it received cash investment within 45 days, AND

(ii) The controlling entity or subsidiary (the transferee) must invest and maintain invested and amount equal to or greater than 85% of the portion of the certified qualified equity investment authority it received, and for which it received cash investment within 45 days.

(c) The 85% investment requirement shall be defined in a manner consistent with the "Substantially-All" standard set forth in IRC Section 45D and the rules and regulations promulgated thereunder. The Department shall be notified of any ransaction fees paid by the qualified active low-income community business that are in excess of a total of $50,000 for the entire time period of the investment, up to seven years.

(i) Notice of transaction fees that are in excess of $50,000 to be paid by the qualified active low-income community business must be requested in writing within 15 days of closing the investment with the qualified active low-income community business and must include an explanation for the necessity of the excess fees including highlighting the impact to the state and how the fees and impact for the particular deal compares to the customary industry practice across both the Federal New Market Tax Credit program and other States' New Market Tax Credit programs.

(4) If after the six month cure period, the action or omission upon which the recapture is based is not cured, the Office shall issue a final notice of Agency Action for Recapture.

(a) The Final Notice of Agency Action for Recapture shall also be sent to the Utah Tax Commission.

Notes

Utah Admin. Code R357-10-11

Adopted by Utah State Bulletin Number 2015-15, effective 7/8/2015