Severance Amendments

Replaced the previous 'certificate-only' process with a new requirement for taxpayers to enter into a formal agreement with the Division of Oil, Gas, and Mining before beginning eligible exploration activities.

Added a new requirement for taxpayers to file an annual report with the Division verifying that severance tax liability was incurred as a direct result of the eligible exploration activity.

Refined the definition of 'claimant' and 'eligible claimant' to explicitly include persons to whom tax credits are assigned, and clarified exclusions for Great Salt Lake mining operations.

Simplified the definition of 'exploration activity' by removing specific mine status conditions (like 'closed mine' or 'construction commencement date') and replacing them with a broader list of activities associated with producing or expanding mineral production.

Authorized taxpayers to claim the high-cost infrastructure tax credit against severance tax liability instead of only against income tax liability, and allowed this claim for costs incurred in 2024.

Adjusted the retrospective effective date for the mining exploration tax credit section (59-5-304) to apply to taxable years beginning on or after January 1, 2022, rather than January 1, 2025.

Mining exploration tax credits now require taxpayers to enter into an agreement with the division and receive a tax credit certificate before claiming the credit, replacing the previous direct claim process.

Taxpayers can now claim high cost infrastructure tax credits against severance tax liability instead of only against income tax liability, providing more flexibility in tax planning.

New Part 5 (Sections 59-5-301 through 59-5-305) establishes definitions and procedures for severance tax credits, including recompletion/workover credits and hydrogen fuel conversion credits.

The mining exploration tax credit repeal is now scheduled for July 1, 2035, with legislative review required before repeal, extending the current credit period.

The division of oil, gas, and mining now has specific duties to verify natural gas to hydrogen conversion plants and issue tax credit certificates under the new agreement process.

New Section 63L-2-202 requires federal agencies to consult with the state before implementing federal designations that could impact critical mineral deposits in Utah.

Several sections were renumbered and technical corrections were made to cross-references between tax code sections.

Changed the mining exploration tax credit process from a direct claim to requiring an agreement with the division and issuance of a tax credit certificate after eligible exploration activities are completed.

Added new requirement for taxpayers to obtain a tax credit certificate after becoming an eligible claimant before claiming the mining exploration tax credit.

Modified eligibility for high cost infrastructure tax credits to allow them to be claimed against severance tax liability instead of only income tax liability.

Created new definitions for 'eligible claimant', 'assigned tax credit certificate', and 'certified expenditure' in the mining exploration tax credit section.

Updated definitions in the severance tax section to clarify terms like 'condensate', 'crude oil', 'natural gas', and 'natural gas liquids'.

Extended the carryforward period for mining exploration tax credits from 3 years to 15 years.

Added requirement for taxpayers to provide written notice of intent to assign tax credits to the division before assignment.