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H.B. 136
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6 This act modifies the Revenue and Taxation Code and the Utah Criminal Code to clarify
7 revenue and taxation penalties and offenses. The act provides for the offense of intentionally
8 attempting to evade or defeat a tax or the payment of a tax, modifies statute of limitations
9 for prosecuting certain offenses, and makes technical changes. This act takes effect on July
10 1, 2001.
11 This act affects sections of Utah Code Annotated 1953 as follows:
12 AMENDS:
13 59-1-401 (Effective 07/01/01), as last amended by Chapter 253, Laws of Utah 2000
14 76-8-1101, as enacted by Chapter 3, Laws of Utah 1987
15 Be it enacted by the Legislature of the state of Utah:
16 Section 1. Section 59-1-401 (Effective 07/01/01) is amended to read:
17 59-1-401 (Effective 07/01/01). Offenses and penalties.
18 (1) (a) The penalty for failure to file a tax return within the time prescribed by law
19 including extensions is the greater of $20 or 10% of the unpaid tax due on the return.
20 (b) Subsection (1) does not apply to amended returns.
21 (2) The penalty for failure to pay tax due shall be the greater of $20 or 10% of the unpaid
22 tax for:
23 (a) failure to pay any tax, as reported on a timely filed return;
24 (b) failure to pay any tax within 90 days of the due date of the return, if there was a late
25 filed return subject to the penalty provided under Subsection (1)(a);
26 (c) failure to pay any tax within 30 days of the date of mailing any notice of deficiency of
27 tax unless a petition for redetermination or a request for agency action is filed within 30 days of
28 the date of mailing the notice of deficiency;
29 (d) failure to pay any tax within 30 days after the date the commission's order constituting
30 final agency action resulting from a timely filed petition for redetermination or request for agency
31 action is issued or is considered to have been [
32 and
33 (e) failure to pay any tax within 30 days after the date of a final judicial decision resulting
34 from a timely filed petition for judicial review.
35 (3) (a) Beginning January 1, 1995, in the case of any underpayment of estimated tax or
36 quarterly installments required by Sections 59-5-107 , 59-5-207 , 59-7-504 , and 59-9-104 , there
37 shall be added a penalty in an amount determined by applying the interest rate provided under
38 Section 59-1-402 plus four percentage points to the amount of the underpayment for the period of
39 the underpayment.
40 (b) (i) For purposes of Subsection (3)(a), the amount of the underpayment shall be the
41 excess of the required installment over the amount, if any, of the installment paid on or before the
42 due date for the installment.
43 (ii) The period of the underpayment shall run from the due date for the installment to
44 whichever of the following dates is the earlier:
45 (A) the original due date of the tax return, without extensions, for the taxable year; or
46 (B) with respect to any portion of the underpayment, the date on which that portion is paid.
47 (iii) For purposes of this Subsection (3), a payment of estimated tax shall be credited
48 against unpaid required installments in the order in which the installments are required to be paid.
49 (4) (a) In case of an extension of time to file an individual income tax or corporate
50 franchise tax return, if the lesser of 90% of the total tax reported on the tax return or 100% of the
51 prior year's tax is not paid by the due date of the return, not including extensions, a 2% per month
52 penalty shall apply on the unpaid tax during the period of extension.
53 (b) If a return is not filed within the extension time period as provided in Section 59-7-505
54 or 59-10-516 , penalties as provided in Subsection (1) and Subsection (2)(b) shall be added in lieu
55 of the penalty assessed under this Subsection (4) as if no extension of time for filing a return had
56 been granted.
57 (5) (a) Additional penalties for underpayments of tax are as provided in Subsections
58 (5)(a)(i) through (iv).
59 (i) Except as provided in Subsection (5)(c), if any underpayment of tax is due to
60 negligence, the penalty is 10% of the underpayment.
61 (ii) Except as provided in Subsection (5)(d), if any underpayment of tax is due to
62 intentional disregard of law or rule, the penalty is 15% of the underpayment.
63 (iii) For intent to evade the tax, the penalty is the greater of $500 per period or 50% of the
64 tax due.
65 (iv) If the underpayment is due to fraud with intent to evade the tax, the penalty is the
66 greater of $500 per period or 100% of the underpayment.
67 (b) If the commission determines that a person is liable for a penalty imposed under
68 Subsection (5)(a)(ii), (iii), or (iv), the commission shall notify the taxpayer of the proposed penalty.
69 (i) The notice of proposed penalty shall:
70 (A) set forth the basis of the assessment; and
71 (B) be mailed by registered mail, postage prepaid, to the person's last-known address.
72 (ii) Upon receipt of the notice of proposed penalty, the person against whom the penalty
73 is proposed may:
74 (A) pay the amount of the proposed penalty at the place and time stated in the notice; or
75 (B) proceed in accordance with the review procedures of Subsection (5)(b)(iii).
76 (iii) Any person against whom a penalty has been proposed in accordance with this
77 Subsection (5) may contest the proposed penalty by filing a petition for an adjudicative proceeding
78 with the commission.
79 (iv) If the commission determines that a person is liable for a penalty under this Subsection
80 (5), the commission shall assess the penalty and give notice and demand for payment. The notice
81 and demand for payment shall be mailed by registered mail, postage prepaid, to the person's
82 last-known address.
83 (c) Notwithstanding Subsection (5)(a)(i), a vendor that collects a tax under Subsection
84 59-12-107 (1)(b) is not subject to the penalty under Subsection (5)(a)(i) if on or after July 1, 2001:
85 (i) a court of competent jurisdiction issues a final unappealable judgment or order
86 determining that:
87 (A) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
88 and
89 (B) the commission or a county, city, or town may require the vendor to collect a tax under
90 Subsection 59-12-103 (2)(a) or (b); or
91 (ii) the commission issues a final unappealable administrative order determining that:
92 (A) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
93 and
94 (B) the commission or a county, city, or town may require the vendor to collect a tax under
95 Subsection 59-12-103 (2)(a) or (b).
96 (d) Notwithstanding Subsection (5)(a)(ii), a vendor that collects a tax under Subsection
97 59-12-107 (1)(b) is not subject to the penalty under Subsection (5)(a)(ii) if:
98 (i) (A) a court of competent jurisdiction issues a final unappealable judgment or order
99 determining that:
100 (I) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
101 and
102 (II) the commission or a county, city, or town may require the vendor to collect a tax under
103 Subsection 59-12-103 (2)(a) or (b); or
104 (B) the commission issues a final unappealable administrative order determining that:
105 (I) the vendor meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
106 and
107 (II) the commission or a county, city, or town may require the vendor to collect a tax under
108 Subsection 59-12-103 (2)(a) or (b); and
109 (ii) the vendor's intentional disregard of law or rule is warranted by existing law or by a
110 nonfrivolous argument for the extension, modification, or reversal of existing law or the
111 establishment of new law.
112 (6) The penalty for failure to file an information return or a complete supporting schedule
113 is $50 for each return or schedule up to a maximum of $1,000.
114 (7) If any taxpayer, in furtherance of a frivolous position, has a prima facie intent to delay
115 or impede administration of the tax law and files a purported return that fails to contain
116 information from which the correctness of reported tax liability can be determined or that clearly
117 indicates that the tax liability shown must be substantially incorrect, the penalty is $500.
118 (8) For monthly payment of sales and use taxes under Section 59-12-108 , in addition to
119 any other penalties for late payment, a vendor may not retain a percentage of sales and use taxes
120 collected as otherwise allowable under Section 59-12-108 .
121 (9) (a) As provided in Section 76-8-1101 , [
122 penalties[
123 [
124 administers or regulates to register with or obtain a license or permit from the commission, [
125 who operates without having registered or secured a license or permit, or who operates when the
126 registration, license, or permit is expired or not current, is guilty of a class B misdemeanor[
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128 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (9)(b)(i), the fine [
129 may not:
130 (A) be less than $500 [
131 (B) exceed $1,000.
132 [
133 lawful requirement of the commission, fails to make, render, sign, or verify any return or to supply
134 any information within the time required [
135 or verifies any false or fraudulent return or statement, or who supplies any false or fraudulent
136 information, is guilty of a third degree felony[
137 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (9)(c)(i), the fine [
138 may not:
139 (A) be less than $1,000 [
140 (B) exceed $5,000.
141 [
142 or the payment [
143 second degree felony[
144 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (9)(d)(i), the fine [
145 may not:
146 (A) be less than $1,500 [
147 (B) exceed $25,000.
148 [
149 Subsection (9) is the later of six years:
150 (i) from the date the tax should have been remitted; or
151 (ii) after the day on which the person commits the criminal offense.
152 (10) Upon making a record of its actions, and upon reasonable cause shown, the
153 commission may waive, reduce, or compromise any of the penalties or interest imposed under this
154 part.
155 Section 2. Section 76-8-1101 is amended to read:
156 76-8-1101. Criminal offenses and penalties relating to revenue and taxation -- Statute
157 of limitations.
158 (1) (a) As provided in Section 59-1-401 [
159 in Subsections (1)(b) through (d).
160 [
161 administers or regulates to register with or obtain a license or permit from the State Tax
162 Commission, [
163 operates when the registration, license, or permit is expired or not current, is guilty of a class B
164 misdemeanor[
165 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (1)(b)(i), the fine [
166 may not:
167 (A) be less than $500 [
168 (B) exceed $1,000.
169 [
170 lawful requirement of the State Tax Commission, fails to make, render, sign, or verify any return
171 or to supply any information within the time required [
172 renders, signs, or verifies any false or fraudulent return or statement, or who supplies any false or
173 fraudulent information, is guilty of a third degree felony[
174 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (1)(c)(i), the fine [
175 may not:
176 (A) be less than $1,000 [
177 (B) exceed $5,000.
178 [
179 or the payment [
180 second degree felony[
181 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (1)(d)(i), the fine [
182 may not:
183 (A) be less than $1,500 [
184 (B) exceed $25,000.
185 (2) The statute of limitations for prosecution for a violation of this section is the later of
186 six years:
187 (a) from the date the tax should have been remitted; or
188 (b) after the day on which the person commits the criminal offense.
189 Section 3. Effective date.
190 This act takes effect on July 1, 2001.
Legislative Review Note
as of 1-26-01 12:29 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.