(1) Except as provided in Subsection (2), the office shall revoke a tax credit certificate issued under Section 63N-4-304 if the rural investment company in which the credit-eligible capital contribution was made does any of the following before the rural investment company exits the program in accordance with Section 63N-4-309:

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Terms Used In Utah Code 63N-4-305

  • Affiliate: means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another person. See Utah Code 63N-4-302
  • Closing date: means the date on which a rural investment company collects:
         (3)(a) all of the investments described in Subsection 63N-4-303(7) related to phase one investment authority; or
         (3)(b) all of the investments described in Subsection 63N-4-303(7) related to phase two investment authority. See Utah Code 63N-4-302
  • Eligible small business: means a business that at the time of an initial growth investment in the business by a rural investment company:
         (5)(a) has fewer than 150 employees;
         (5)(b) has less than $10,000,000 in net income for the preceding taxable year;
         (5)(c) maintains the business's principal business operations in the state; and
         (5)(d) is engaged in an industry related to:
              (5)(d)(i) aerospace;
              (5)(d)(ii) defense;
              (5)(d)(iii) energy and natural resources;
              (5)(d)(iv) financial services;
              (5)(d)(v) life sciences;
              (5)(d)(vi) outdoor products;
              (5)(d)(vii) software development;
              (5)(d)(viii) information technology;
              (5)(d)(ix) manufacturing; or
              (5)(d)(x) agribusiness. See Utah Code 63N-4-302
  • Equal: means , with respect to biological sex, of the same value. See Utah Code 68-3-12.5
  • Growth investment: means any capital or equity investment in an eligible small business or any loan made from the investment authority to an eligible small business with a stated maturity at least one year after the date of issuance. See Utah Code 63N-4-302
  • Investment authority: means the minimum amount of investment a rural investment company must make in eligible small businesses in order for credit-eligible contributions to the rural investment company to qualify for a rural job creation tax credit under Section 59-7-621 or 59-10-1038. See Utah Code 63N-4-302
  • Phase one investment authority: means investment authority the office grants a rural investment company based on an application submitted under Subsection 63N-4-303(1)(b)(i). See Utah Code 63N-4-302
  • Phase two investment authority: means investment authority the office grants a rural investment company based on an application submitted under Subsection 63N-4-303(1)(b)(ii). See Utah Code 63N-4-302
  • Principal business operations: means the location where at least 60% of a business's employees work or where employees that are paid at least 60% of a business's payroll work. See Utah Code 63N-4-302
  • Program: means the provisions of this part applicable to a rural investment company. See Utah Code 63N-4-302
  • Rural county: means :
         (18)(a) with respect to phase one investment authority, any county in this state except Salt Lake, Utah, Davis, Weber, Washington, Cache, Tooele, and Summit counties; or
         (18)(b) with respect to phase two investment authority, any county in this state except Salt Lake, Utah, Davis, and Weber counties. See Utah Code 63N-4-302
  • Rural investment company: means a person approved by the office under Section 63N-4-303. See Utah Code 63N-4-302
  • State: when applied to the different parts of the United States, includes a state, district, or territory of the United States. See Utah Code 68-3-12.5
  • Tax credit: means a rural job creation tax credit created by Section 59-7-621 or 59-10-1038. See Utah Code 63N-4-302
  • Tax credit certificate: means a certificate issued by the office that:
         (22)(a) lists the name of the person to which the office authorizes a tax credit;
         (22)(b) lists the person's taxpayer identification number;
         (22)(c) lists the amount of tax credit that the office authorizes the person to claim for the taxable year; and
         (22)(d) may include other information as determined by the office. See Utah Code 63N-4-302
     (1)(a) fails to invest 100% of the rural investment company’s investment authority in growth investments in this state within three years of the closing date;
     (1)(b) fails to maintain growth investments in this state equal to 100% of the rural investment company’s investment authority until the seventh anniversary of the closing date in accordance with this section;
     (1)(c) makes a distribution or payment that results in the rural investment company having less than 100% of the rural investment company’s investment authority invested in growth investments in this state or available for investment in growth investments and held in cash and other marketable securities;
     (1)(d)

          (1)(d)(i) with respect to phase one investment authority, fails to maintain growth investments equal to 70% of the rural investment company’s investment authority in eligible small businesses that maintain their principal business operations in a rural county; or
          (1)(d)(ii) with respect to phase two investment authority, fails to maintain growth investments equal to 100% of the rural investment company’s investment authority in eligible small businesses that maintain their principal business operations in a rural county;
     (1)(e) invests more than $5,000,000 from the investment authority in the same eligible small business, including amounts invested in affiliates of the eligible small business, exclusive of growth investments made with repaid or redeemed growth investments or interest or profits realized on the repaid or redeemed growth investments;
     (1)(f) makes a growth investment in an eligible small business that directly, or indirectly through an affiliate:

          (1)(f)(i) owns or has the right to acquire an ownership interest in the rural investment company, an affiliate of the rural investment company, or an investor in the rural investment company; or
          (1)(f)(ii) makes a loan to or an investment in the rural investment company, an affiliate of the rural investment company, or an investor in the rural investment company; or
     (1)(g) fails to timely provide a document described in Subsection 63N-4-307(1)(d).
(2)

     (2)(a)

          (2)(a)(i) For the purposes of Subsection (1), an investment is maintained even if the investment is sold or repaid if the rural investment company reinvests an amount equal to the capital returned or recovered by the fund from the original investment, exclusive of any profits realized, in other growth investments in this state within 12 months of the receipt of such capital.
          (2)(a)(ii) Amounts received periodically by a rural investment company are treated as continually invested in growth investments if the amounts are reinvested in one or more growth investments by the end of the following calendar year.
          (2)(a)(iii) A rural investment company is not required to reinvest capital returned from growth investments after the sixth anniversary of the closing date and such growth investments are considered as being held continuously by the rural investment company through the seventh anniversary of the closing date.
     (2)(b)

          (2)(b)(i) Subsection (1)(g) does not apply to investments in publicly traded securities by an eligible small business or an owner or affiliate of an eligible small business.
          (2)(b)(ii) Under Subsection (1)(g), a rural investment company is not considered an affiliate of a business concern solely as a result of the rural investment company’s growth investment.
     (2)(c) A growth investment in an eligible small business that is not located in a rural county may count toward the requirements of Subsection (1)(d) if the office determines that the eligible small business is located in an economically disadvantaged rural area as defined by rules made by the office in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
(3)

     (3)(a) Before revoking one or more tax credit certificates under this section, the office shall notify the rural investment company of the reasons for the pending revocation.
     (3)(b) If the rural investment company corrects any violation outlined in the notice to the satisfaction of the office within 90 days after the day on which the notice was sent, the office may not revoke the tax credit certificate.
     (3)(c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the office may make rules that establish criteria to determine what constitutes a correction under Subsection (3)(b).
(4) If tax credit certificates are revoked under this section:

     (4)(a)

          (4)(a)(i) the rural investment company shall make a cash distribution to the office in an amount equal to the sum of all tax credits awarded to persons that have made credit-eligible contributions to the rural investment company; and
          (4)(a)(ii) if the rural investment company is able to provide documentation to the office that proves that a tax credit described in Subsection (4)(a)(i) has not been claimed, the amount owed under Subsection (4)(a)(i) shall be reduced by the amount of the unclaimed tax credit;
     (4)(b) the rural investment company’s investment authority and credit-eligible capital contributions will not count toward the limits on the program size described in Subsection 63N-4-303(6);
     (4)(c) if the office awards lapsed investment authority to a rural investment company, the office shall first award lapsed investment authority pro rata to each rural investment company that was awarded less than the requested investment authority under Subsection 63N-4-303(6)(d), which a rural investment company may allocate to the rural investment company’s investors at the rural investment company’s discretion; and
     (4)(d) the office may award any remaining investment authority to new applicants.
(5) The office may not revoke a tax credit certificate after a rural investment company has exited the program in accordance with Section 63N-4-309.

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