CORPORATE TAX CREDITS
These tables report tax credits. The first table indicates the raw data reported on the return, and the second table for each year corrects some amounts that are reported, but not used because the tax liability was not large enough to allow the full credit. Several of the credits have been combined in an "other credits" (see table footnotes) category to prevent disclosure problems since so few taxpayers use them. The category may have different members from year to year. (Some of them are very new, however.)
Readers may note that the return numbers do not add up. This is because a return may include several credits; in fact, most do because of the prepayment credit.
Prepayments of corporate taxes and the withholding of taxes on mineral production royalties are claimed on the Utah form as refundable credits. To the purist, it may even seem strange to call these credits against the tax since they are actually payments of the tax. It appears the prepayment requirements are working well to collect taxes, and that firms, in aggregate, are cautious in meeting prepayment requirements, overpaying taxes. This can of course create problems when there is a downturn and large amounts of prepayments must be returned with interest.
Refundable credits - those which will be returned to the taxpayer if they exceed the tax liability - include the "Off-Highway Agricultural Gas Tax Credit" and the "Targeted Business Credit" in addition to the above prepayments.
Nonrefundable credits are designed to induce corporations to engage in a socially or economically desired behavior, such as investing in underdeveloped areas or research, or at least to reward them for doing so. Since they are nonrefundable, the full value of the credit may often not be used. The nonrefundable total, on the accompanying allowed table, reports on those credits that can actually be used to reduce taxes, and the balance is reported on the line "excess credit”. There may also be a larger amount of unused credits available since some forms only report credits that are usable.
The reseach credit was the most expensive in 2004, as in 2003. Combined with the research equipment credit, well over $15 million was claimed, but only about $4 million was usable in 2004.