(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.
