(1) Subject to other provisions of this section, a taxpayer that is a business operating in a recycling market development zone as defined in Section 63N-2-402 may claim the following nonrefundable tax credits:

1. (a) a tax credit of 5% of the purchase price paid for machinery and equipment used directly in:

   1. (i) commercial composting; or

   2. (ii) manufacturing facilities or plant units that:

      1. (A) manufacture, process, compound, or produce recycled items of tangible personal property for sale; or
      2. (B) reduce or reuse postconsumer waste material; and

2. (b) a tax credit equal to the lesser of:

   1. (i) 20% of net expenditures to third parties for rent, wages, supplies, tools, test inventory, and utilities made by the taxpayer for establishing and operating recycling or composting technology in the state; and
   2. (ii) $2,000.

(2)

1. (a) To claim a tax credit described in Subsection (1), the taxpayer shall receive from the Governor's Office of Economic Development a written certification, on a form approved by the commission, that includes:

   1. (i) a statement that the taxpayer is operating a business within the boundaries of a recycling market development zone;

   2. (ii) for a claim of the tax credit described in Subsection (1)(a):

      1. (A) the type of the machinery and equipment that the taxpayer purchased;
      2. (B) the date that the taxpayer purchased the machinery and equipment;
      3. (C) the purchase price for the machinery and equipment;
      4. (D) the total purchase price for all machinery and equipment for which the taxpayer is claiming a tax credit;
      5. (E) a statement that the machinery and equipment are integral to the composting or recycling process; and
      6. (F) the amount of the taxpayer's tax credit; and

   3. (iii) for a claim of the tax credit described in Subsection (1)(b):

      1. (A) the type of net expenditure that the taxpayer made to a third party;
      2. (B) the date that the taxpayer made the payment to a third party;
      3. (C) the amount that the taxpayer paid to each third party;
      4. (D) the total amount that the taxpayer paid to all third parties;
      5. (E) a statement that the net expenditures support the establishment and operation of recycling or composting technology in the state; and
      6. (F) the amount of the taxpayer's tax credit.

2. (b)

   1. (i) The Governor's Office of Economic Development shall provide a taxpayer seeking to claim a tax credit under Subsection (1) with a copy of the written certification.
   2. (ii) The taxpayer shall retain a copy of the written certification for the same period of time that a person is required to keep books and records under Section 59-1-1406.

3. (c) The Governor's Office of Economic Development shall submit to the commission an electronic list that includes:

   1. (i) the name and identifying information of each taxpayer to which the Governor's Office of Economic Development issues a written certification; and
   2. (ii) for each taxpayer, the amount of each tax credit listed on the written certification.

(3) A taxpayer may not claim a tax credit under Subsection (1)(a), Subsection (1)(b), or both that exceeds 40% of the taxpayer's state income tax liability as the tax liability is calculated:

1. (a) for the taxable year in which the taxpayer made the purchases or payments;
2. (b) before any other tax credits the taxpayer may claim for the taxable year; and
3. (c) before the taxpayer claims a tax credit authorized by this section.