H.B. 136 Enrolled

REVENUE AND TAXATION CRIMINAL OFFENSES AND PENALTIES
2001 GENERAL SESSION
STATE OF UTAH
Sponsor: Bryan D. Holladay
This act modifies the Revenue and Taxation Code and the Utah Criminal Code to clarify
revenue and taxation penalties and offenses. The act provides for the offense of intentionally
attempting to evade or defeat a tax or the payment of a tax, modifies the statute of limitations
for prosecuting certain offenses, and makes technical changes. This act takes effect on July
1, 2001.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
59-1-401 (Effective 07/01/01), as last amended by Chapter 253, Laws of Utah 2000
76-8-1101, as enacted by Chapter 3, Laws of Utah 1987
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 59-1-401 (Effective 07/01/01) is amended to read:
59-1-401 (Effective 07/01/01). Offenses and penalties -- Statute of limitations --
Commission authority to waive, reduce, or compromise penalty or interest.
(1) (a) The penalty for failure to file a tax return within the time prescribed by law
including extensions is the greater of $20 or 10% of the unpaid tax due on the return.
(b) Subsection (1) does not apply to amended returns.
(2) The penalty for failure to pay tax due shall be the greater of $20 or 10% of the unpaid
tax for:
(a) failure to pay any tax, as reported on a timely filed return;
(b) failure to pay any tax within 90 days of the due date of the return, if there was a late
filed return subject to the penalty provided under Subsection (1)(a);
(c) failure to pay any tax within 30 days of the date of mailing any notice of deficiency of
tax unless a petition for redetermination or a request for agency action is filed within 30 days of
the date of mailing the notice of deficiency;
(d) failure to pay any tax within 30 days after the date the commission's order constituting

final agency action resulting from a timely filed petition for redetermination or request for agency
action is issued or is considered to have been [issued] denied under Subsection 63-46b-13 (3)(b); and
(e) failure to pay any tax within 30 days after the date of a final judicial decision resulting
from a timely filed petition for judicial review.
(3) (a) Beginning January 1, 1995, in the case of any underpayment of estimated tax or
quarterly installments required by Sections 59-5-107 , 59-5-207 , 59-7-504 , and 59-9-104 , there shall
be added a penalty in an amount determined by applying the interest rate provided under Section
59-1-402 plus four percentage points to the amount of the underpayment for the period of the
underpayment.
(b) (i) For purposes of Subsection (3)(a), the amount of the underpayment shall be the excess
of the required installment over the amount, if any, of the installment paid on or before the due date
for the installment.
(ii) The period of the underpayment shall run from the due date for the installment to
whichever of the following dates is the earlier:
(A) the original due date of the tax return, without extensions, for the taxable year; or
(B) with respect to any portion of the underpayment, the date on which that portion is paid.
(iii) For purposes of this Subsection (3), a payment of estimated tax shall be credited against
unpaid required installments in the order in which the installments are required to be paid.
(4) (a) In case of an extension of time to file an individual income tax or corporate franchise
tax return, if the lesser of 90% of the total tax reported on the tax return or 100% of the prior year's
tax is not paid by the due date of the return, not including extensions, a 2% per month penalty shall
apply on the unpaid tax during the period of extension.
(b) If a return is not filed within the extension time period as provided in Section 59-7-505
or 59-10-516 , penalties as provided in Subsection (1) and Subsection (2)(b) shall be added in lieu
of the penalty assessed under this Subsection (4) as if no extension of time for filing a return had
been granted.
(5) (a) Additional penalties for underpayments of tax are as provided in Subsections (5)(a)(i)
through (iv).

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(i) Except as provided in Subsection (5)(c), if any underpayment of tax is due to negligence,
the penalty is 10% of the underpayment.
(ii) Except as provided in Subsection (5)(d), if any underpayment of tax is due to intentional
disregard of law or rule, the penalty is 15% of the underpayment.
(iii) For intent to evade the tax, the penalty is the greater of $500 per period or 50% of the
tax due.
(iv) If the underpayment is due to fraud with intent to evade the tax, the penalty is the greater
of $500 per period or 100% of the underpayment.
(b) If the commission determines that a person is liable for a penalty imposed under
Subsection (5)(a)(ii), (iii), or (iv), the commission shall notify the taxpayer of the proposed penalty.
(i) The notice of proposed penalty shall:
(A) set forth the basis of the assessment; and
(B) be mailed by registered mail, postage prepaid, to the person's last-known address.
(ii) Upon receipt of the notice of proposed penalty, the person against whom the penalty is
proposed may:
(A) pay the amount of the proposed penalty at the place and time stated in the notice; or
(B) proceed in accordance with the review procedures of Subsection (5)(b)(iii).
(iii) Any person against whom a penalty has been proposed in accordance with this
Subsection (5) may contest the proposed penalty by filing a petition for an adjudicative proceeding
with the commission.
(iv) If the commission determines that a person is liable for a penalty under this Subsection
(5), the commission shall assess the penalty and give notice and demand for payment. The notice
and demand for payment shall be mailed by registered mail, postage prepaid, to the person's
last-known address.
(c) Notwithstanding Subsection (5)(a)(i), a vendor that collects a tax under Subsection
59-12-107 (1)(b) is not subject to the penalty under Subsection (5)(a)(i) if on or after July 1, 2001:
(i) a court of competent jurisdiction issues a final unappealable judgment or order
determining that:

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(A) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
and
(B) the commission or a county, city, or town may require the vendor to collect a tax under
Subsection 59-12-103 (2)(a) or (b); or
(ii) the commission issues a final unappealable administrative order determining that:
(A) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
and
(B) the commission or a county, city, or town may require the vendor to collect a tax under
Subsection 59-12-103 (2)(a) or (b).
(d) Notwithstanding Subsection (5)(a)(ii), a vendor that collects a tax under Subsection
59-12-107 (1)(b) is not subject to the penalty under Subsection (5)(a)(ii) if:
(i) (A) a court of competent jurisdiction issues a final unappealable judgment or order
determining that:
(I) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a); and
(II) the commission or a county, city, or town may require the vendor to collect a tax under
Subsection 59-12-103 (2)(a) or (b); or
(B) the commission issues a final unappealable administrative order determining that:
(I) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a); and
(II) the commission or a county, city, or town may require the vendor to collect a tax under
Subsection 59-12-103 (2)(a) or (b); and
(ii) the vendor's intentional disregard of law or rule is warranted by existing law or by a
nonfrivolous argument for the extension, modification, or reversal of existing law or the
establishment of new law.
(6) The penalty for failure to file an information return or a complete supporting schedule
is $50 for each return or schedule up to a maximum of $1,000.
(7) If any taxpayer, in furtherance of a frivolous position, has a prima facie intent to delay
or impede administration of the tax law and files a purported return that fails to contain information
from which the correctness of reported tax liability can be determined or that clearly indicates that

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the tax liability shown must be substantially incorrect, the penalty is $500.
(8) For monthly payment of sales and use taxes under Section 59-12-108 , in addition to any
other penalties for late payment, a vendor may not retain a percentage of sales and use taxes collected
as otherwise allowable under Section 59-12-108 .
(9) (a) As provided in Section 76-8-1101 , [the following are] criminal offenses and
penalties[:] are as provided in Subsections (9)(b) through (d).
[(a)] (b) (i) Any person who is required by this title or any laws the commission administers
or regulates to register with or obtain a license or permit from the commission, [or] who operates
without having registered or secured a license or permit, or who operates when the registration,
license, or permit is expired or not current, is guilty of a class B misdemeanor[, except that,
notwithstanding].
(ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (9)(b)(i), the fine [is] may
not:
(A) be less than $500 [nor more than]; or
(B) exceed $1,000.
[(b)] (c) (i) Any person who, with intent to evade any tax or requirement of this title or any
lawful requirement of the commission, fails to make, render, sign, or verify any return or to supply
any information within the time required [under this title] by law, or who makes, renders, signs, or
verifies any false or fraudulent return or statement, or who supplies any false or fraudulent
information, is guilty of a third degree felony[, except that, notwithstanding].
(ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (9)(c)(i), the fine [is] may
not:
(A) be less than $1,000 [nor more than]; or
(B) exceed $5,000.
[(c)] (d) (i) Any person who intentionally or willfully attempts to evade or defeat any tax or
the payment [thereof] of a tax is, in addition to other penalties provided by law, guilty of a second
degree felony[, except that, notwithstanding].
(ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (9)(d)(i), the fine [is] may

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not:
(A) be less than $1,500 [nor more than]; or
(B) exceed $25,000.
[(d)] (e) The statute of limitations for prosecution for a violation of this [section] Subsection
(9) is the later of six years:
(i) from the date the tax should have been remitted; or
(ii) after the day on which the person commits the criminal offense.
(10) Upon making a record of its actions, and upon reasonable cause shown, the commission
may waive, reduce, or compromise any of the penalties or interest imposed under this part.
Section 2. Section 76-8-1101 is amended to read:
76-8-1101. Criminal offenses and penalties relating to revenue and taxation -- Statute
of limitations.
(1) (a) As provided in Section 59-1-401 [:], criminal offenses and penalties are as provided
in Subsections (1)(b) through (d).
[(a)] (b) (i) Any person who is required by Title 59 or any laws the State Tax Commission
administers or regulates to register with or obtain a license or permit from the State Tax
Commission, [or] who operates without having registered or secured a license or permit, or who
operates when the registration, license, or permit is expired or not current, is guilty of a class B
misdemeanor[, except that, notwithstanding].
(ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (1)(b)(i), the fine [is]
may not:
(A) be less than $500 [nor more than]; or
(B) exceed $1,000.
[(b)] (c) (i) Any person who, with intent to evade any tax or requirement of Title 59 or any
lawful requirement of the State Tax Commission, fails to make, render, sign, or verify any return or
to supply any information within the time required [under this title] by law, or who makes, renders,
signs, or verifies any false or fraudulent return or statement, or who supplies any false or fraudulent
information, is guilty of a third degree felony[, except that, notwithstanding].

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(ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (1)(c)(i), the fine [is] may
not:
(A) be less than $1,000 [nor more than]; or
(B) exceed $5,000.
[(c)] (d) (i) Any person who intentionally or willfully attempts to evade or defeat any tax or
the payment [thereof] of a tax is, in addition to other penalties provided by law, guilty of a second
degree felony[, except that, notwithstanding].
(ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (1)(d)(i), the fine [is] may
not:
(A) be less than $1,500 [nor more than]; or
(B) exceed $25,000.
(2) The statute of limitations for prosecution for a violation of this section is the later of six
years:
(a) from the date the tax should have been remitted; or
(b) after the day on which the person commits the criminal offense.
Section 3. Effective date.
This act takes effect on July 1, 2001.

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