Should the Tax Commission's Auditing Division simply accept a Utah State Historic Preservation Office (SHPO) certification (Form TC-40H) as sufficient proof that a residential rehabilitation project qualifies for the historic preservation income tax credit, rather than independently second-guessing whether the work really counts as qualifying rehabilitation, and what does the credit require to begin with?

Plain-English summary

This ruling actually answers two related questions from the same correspondent about Utah's historic preservation income tax credit.

Question 1 — how much proof does the Auditing Division need? An auditor asked whether the Division should simply defer to a Utah State Historic Preservation Office (SHPO) certification as adequate proof that a project qualifies for the credit, rather than independently evaluating whether the construction work really counts as historic rehabilitation. The Commission said yes: under Utah Code Ann. § 59-10-108.5, the Legislature directed the Tax Commission to work with the Division of State History to develop a verification process, and Rule R865-19-41 implements that by having SHPO certify qualifying projects directly — assigning a unique project number and completing Form TC-40H. SHPO confirmed to the Commission that it doesn't issue certification numbers for projects that don't qualify, and the Commission noted a practical safeguard: the form must carry both an authorized SHPO employee's signature and a UT-SHPO logo stamp, since blank TC-40H forms are publicly available in libraries and could otherwise be filled out by anyone. The Commission's view: SHPO, not the Tax Commission, is the better-equipped body to judge whether construction work qualifies as historic rehabilitation.

Question 2 — does a specific back-porch project qualify? A taxpayer separately asked about a specific residential rehabilitation project. The Commission laid out the credit's substantive requirements: 20% of qualified expenditures are creditable against income tax, the building must be listed on the National Register of Historic Places (or designated historically significant to its district by the Division of State History), the qualifying expenditures must exceed $10,000, the work must rehabilitate/restore the building's existing physical elements (not simply add square footage), and the state Historic Preservation Officer must approve the work and assign it a certification number. Based on the facts presented, the taxpayer's back-porch construction qualified for a credit equal to 20% of the stated dollar amount.

What this means for you

Homeowners considering a historic-residence rehabilitation project

Before you spend money expecting a 20% state income tax credit, get SHPO to review and certify your project (and assign it a certification number on Form TC-40H) — this ruling confirms the Tax Commission will rely on that certification rather than making its own independent judgment call. Keep in mind the credit requires more than $10,000 in qualifying expenditures and covers restoring/rehabilitating existing physical elements, not simply enlarging the building.

Accountants and tax preparers claiming the historic preservation credit for clients

Confirm the client actually has a signed TC-40H with the UT-SHPO logo stamp on the signature line before claiming the credit — per this ruling, a blank or unsigned form (even one obtained from a library) isn't valid certification. If a client's project seems borderline (rehabilitation vs. enlargement, for example), that's a question for SHPO to resolve through its certification process, not something the Tax Commission will independently second-guess.

Auditors and tax professionals evaluating whether to challenge a claimed credit

This ruling establishes that a valid SHPO certification (unique project number, signed TC-40H, UT-SHPO stamp) should be treated as sufficient proof of qualification — the Commission explicitly declined to have its Auditing Division re-litigate whether specific construction work counts as qualifying rehabilitation once SHPO has certified it.

Common questions

Q: Does the Tax Commission independently verify that our rehabilitation work qualifies as "historic preservation," or do we just need SHPO's approval?
A: Per this ruling, SHPO's certification is sufficient — the Commission accepts a signed, project-numbered Form TC-40H as adequate evidence and does not independently re-evaluate whether the work qualifies.

Q: What has to be true about the building and the work for the credit to apply?
A: The building must be on the National Register of Historic Places or designated historically significant to its district by the Division of State History; qualifying expenditures must exceed $10,000; the work must rehabilitate/restore the building's physical elements rather than simply enlarge it; and the state Historic Preservation Officer must approve the work with a unique certification number.

Q: Can someone fill out a blank TC-40H form themselves to claim the credit?
A: No — this ruling notes that although blank TC-40H forms are available in libraries, the form is only valid when signed by an authorized Historic Preservation Office employee, with a UT-SHPO logo stamped on the signature line.

Citations and references

Statutes (Utah Code Ann., as in effect at the time of this 1996 ruling):

• § 59-10-108.5 — directed the Tax Commission to work with the Division of State History to develop a verification process for construction projects qualifying for the historic preservation tax credit

Rules:

• Utah Administrative Rule R865-19-41 — implements § 59-10-108.5 by delegating project certification to the Historic Preservation Office, which certifies qualifying projects by issuing a unique project number and completing Form TC-40H

Forms:

• Form TC-40H — Historic Preservation Credit certification form; must be signed by an authorized Historic Preservation Office employee with a UT-SHPO logo stamp on the signature line

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/96-022.htm

Original ruling text

96-022

Response
January 26, 1996

Request

Re: Historic Preservation Tax Credit.

Dear XXXXX,

We have prepared a response to the attached letter from XXXXX, but you asked a different question that has not been answered in this response. Therefore, we are addressing your question separately.

You asked if the Auditing should always accept certification by the State Historic Preservation Office as ample evidence that a project qualifies for the Historic Preservation Credit. Our response is "yes." Section 59-10-108.5 of the Utah Code, directed the Tax Commission to work with the Division of state History to develop processes for verifying which construction projects qualify for the tax credit. Administrative Rule R865-I9-41 outlines our agreement that the Historic Preservation Office will certify projects for the tax credit. The Historic Preservation Office certifies the project by issuing it a unique project number and completing the Historic Preservation Credit form (TC-40H). XXXXX of the Historic Preservation Office assures us that certification numbers are not issued for nonqualifying projects.

XXXXX mentioned that blank TC-40H are available in libraries, so it is worth mentioning that the form must be signed by an authorized Historic Preservation Office employee. The signature on the form should be followed by a UT-SHPO logo which is stamped on the signature line. (Refer to XXXXX form to see the logo stamp).

We understand your concern that a taxpayer's construction project may not qualify as rehabilitation or preservation, but we feel that the Historic Preservation Office is better equipped to make that determination than the Tax Commission.

For the Commission,

Alice Shearer,

Commissioner

XXXXX

RE: Advisory Opinion Historic Preservation Tax Credit

Dear XXXXX,

We have received your request for an advisory opinion regarding the historic preservation tax credit. We find as follows:

Utah law allows as a credit against income tax 20% of qualified expenditures to rehabilitate certified historic residential buildings. To qualify, the building must be listed on the National Register of Historic Places or designated by the Division of state History as historically significant to the district. The expenditures must amount to more than $10,000 and they must have been used to rehabilitate or restore the physical elements of the building, but not merely to enlarge the existing building. Finally, the rehabilitation must be approved by the state Historic Preservation Officer who will assign the work a unique certification number.

From the facts presented in your letter, the construction on your back porch qualifies for a tax credit of 20% of $$$$$.

For the Commission,

Alice Shearer

Commissioner