H.B. 436

1

MUNICIPAL ENERGY SALES AND USE TAX
2 REVISIONS
3 2007 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Gregory H. Hughes
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill modifies a provision relating to the municipal energy sales and use tax.
11 Highlighted Provisions:
12 This bill:
13 . requires a reduction in the amount of the natural gas portion of the municipal energy
14 sales and use tax in December 2008 after adjusting for growth;
15 . provides definitions; and
16 . makes technical changes.
17 Monies Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 None
21 Utah Code Sections Affected:
22 AMENDS:
23 10-1-307, as last amended by Chapters 253 and 352, Laws of Utah 2006
24
25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 10-1-307 is amended to read:
27 10-1-307. Collection of taxes by commission -- Distribution of revenues -- Charge

28 for services -- Collection of taxes by municipality.
29 (1) Except for the direct payment provisions provided in Subsection (3), the
30 commission shall collect, enforce, and administer the municipal energy sales and use tax from
31 energy suppliers according to the procedures established in Title 59, Chapter 12, Part 1, Tax
32 Collection, except for Section 59-12-107.1 .
33 (2) (a) Except as provided in Subsections 10-1-203 (3)(d), 10-1-305 (5), and
34 10-1-310 (2) and subject to Subsection (6), the commission shall pay a municipality the
35 difference between:
36 (i) the entire amount collected by the commission from the municipal energy sales and
37 use tax authorized by this part based on:
38 (A) the point of sale of the taxable energy if a taxable sale occurs in a municipality that
39 imposes a municipal energy sales and use tax as provided in this part; or
40 (B) the point of use of the taxable energy if the use occurs in a municipality that
41 imposes a municipal energy sales and use tax as provided in this part; and
42 (ii) the administration fee charged in accordance with Subsection (2)(c).
43 (b) In accordance with Subsection (2)(a), the commission shall transfer to the
44 municipality monthly by electronic transfer the revenues generated by the municipal energy
45 sales and use tax levied by the municipality and collected by the commission.
46 (c) (i) The commission shall charge a municipality imposing a municipal energy sales
47 and use tax a fee for administering the tax at the percentage provided in Section 59-12-206 ,
48 except that the commission may not charge a fee for taxes collected by a municipality under
49 Subsection (3).
50 (ii) The fee charged under Subsection (2)(c)(i) shall be:
51 (A) deposited in the Sales and Use Tax Administrative Fees Account; and
52 (B) used for sales tax administration as provided in Subsection 59-12-206 (2).
53 (3) An energy supplier shall pay the municipal energy sales and use tax revenues it
54 collects from its customers under this part directly to each municipality in which the energy
55 supplier has sales of taxable energy if:
56 (a) the municipality is the energy supplier; or
57 (b) (i) the energy supplier estimates that the municipal energy sales and use tax
58 collected annually by the energy supplier from its Utah customers equals $1,000,000 or more;

59 and
60 (ii) the energy supplier collects the tax imposed by this part.
61 (4) An energy supplier paying a tax under this part directly to a municipality may retain
62 the percentage of the tax authorized under Subsection 59-12-108 (2) for the energy supplier's
63 costs of collecting and remitting the tax.
64 (5) An energy supplier paying the tax under this part directly to a municipality shall file
65 an information return with the commission, at least annually, on a form prescribed by the
66 commission.
67 (6) (a) As used in this Subsection (6):
68 (i) "2005 base amount" means, for a municipality that imposes a municipal energy
69 sales and use tax, the natural gas portion of municipal energy sales and use tax proceeds paid to
70 the municipality for fiscal year 2005.
71 (ii) "2006 base amount" means, for a municipality that imposes a municipal energy
72 sales and use tax, the natural gas portion of municipal energy sales and use tax proceeds paid to
73 the municipality for fiscal year 2006, reduced by the 2006 rebate amount.
74 (iii) "2006 growth estimate" means the three-year average of the United States Census
75 Bureau's population estimate for a municipality for calendar years 2004, 2005, and 2006.
76 (iv) "2006 growth percentage" means:
77 (A) 14%, for a municipality whose 2006 growth estimate is equal to or greater than
78 10%;
79 (B) 12%, for a municipality whose 2006 growth estimate is 5% or greater but less than
80 10%; and
81 (C) 10%, for a municipality whose 2006 growth estimate is less than 5%.
82 [(iii)] (v) "2006 rebate amount" means, for a municipality that imposes a municipal
83 energy sales and use tax, the difference between:
84 (A) the natural gas portion of municipal energy sales and use tax proceeds paid to the
85 municipality for fiscal year 2006; and
86 (B) the 2005 base amount, plus:
87 (I) 10% of the 2005 base amount; and
88 (II) the natural gas portion of municipal energy sales and use tax proceeds paid to the
89 municipality for fiscal year 2006 attributable to an increase in the rate of the municipal energy

90 sales and use tax implemented by the municipality during fiscal year 2006.
91 (vi) "2007 base amount" means, for a municipality that imposes a municipal energy
92 sales and use tax, the natural gas portion of municipal energy sales and use tax proceeds paid to
93 the municipality for fiscal year 2007, reduced by the 2007 rebate amount.
94 [(iv)] (vii) "2007 rebate amount" means, for a municipality that imposes a municipal
95 energy sales and use tax, the difference between:
96 (A) the natural gas portion of municipal energy sales and use tax proceeds paid to the
97 municipality for fiscal year 2007; and
98 (B) the 2006 base amount, plus:
99 (I) 10% of the 2006 base amount; and
100 (II) the natural gas portion of municipal energy sales and use tax proceeds paid to the
101 municipality for fiscal year 2007 attributable to an increase in the rate of the municipal energy
102 sales and use tax implemented by the municipality during fiscal year 2007.
103 (viii) "2008 rebate amount" means, for a municipality that imposes a municipal energy
104 sales and use tax, the difference between:
105 (A) the natural gas portion of municipal energy sales and use tax proceeds paid to the
106 municipality for fiscal year 2008; and
107 (B) the 2007 base amount, plus:
108 (I) a percentage of the 2007 base amount equal to the 2006 growth percentage; and
109 (II) the natural gas portion of municipal energy sales and use tax proceeds paid to the
110 municipality for fiscal year 2008 attributable to an increase in the rate of the municipal energy
111 sales and use tax implemented by the municipality during fiscal year 2008.
112 [(v)] (ix) "Fiscal year 2005" means the period beginning July 1, 2004 and ending June
113 30, 2005.
114 [(vi)] (x) "Fiscal year 2006" means the period beginning July 1, 2005 and ending June
115 30, 2006.
116 [(vii)] (xi) "Fiscal year 2007" means the period beginning July 1, 2006 and ending June
117 30, 2007.
118 [(viii)] (xii) "Gas supplier" means an energy supplier that supplies natural gas.
119 [(ix)] (xiii) "Natural gas portion" means the amount of municipal energy sales and use
120 tax proceeds attributable to sales and uses of natural gas.

121 (b) (i) In December 2006, each gas supplier shall reduce the natural gas portion of
122 municipal energy sales and use gas proceeds to be paid to a municipality by the 2006 rebate
123 amount.
124 (ii) If the 2006 rebate amount exceeds the amount of the natural gas portion of
125 municipal energy sales and use tax proceeds for December 2006, the gas supplier shall reduce
126 the natural gas portion of municipal energy sales and use tax proceeds to be paid to a
127 municipality each month thereafter until the 2006 rebate amount is exhausted.
128 (iii) For December 2006 and for each month thereafter that the gas supplier is required
129 under Subsection (6)(b)(ii) to reduce the natural gas portion of municipal energy sales and use
130 tax proceeds to be paid to a municipality:
131 (A) each municipality imposing a municipal energy sales and use tax shall provide the
132 gas supplier with the amount by which its municipal energy sales and use tax rate applicable to
133 the sales and uses of natural gas would need to be reduced in order to reduce the natural gas
134 portion of municipal energy sales and use tax proceeds by the same amount as the reduction to
135 the municipality; and
136 (B) each gas supplier shall reduce the municipal energy sales and use tax rate
137 applicable to sales and uses of natural gas by the amount of the tax rate reduction provided by
138 the municipality.
139 (c) (i) In December 2007, each gas supplier shall reduce the natural gas portion of
140 municipal energy sales and use tax proceeds to be paid to a municipality by the 2007 rebate
141 amount.
142 (ii) If the 2007 rebate amount exceeds the amount of the natural gas portion of
143 municipal energy sales and use tax proceeds for December 2007, the gas supplier shall reduce
144 the natural gas portion of municipal energy sales and use tax proceeds to be paid to a
145 municipality each month thereafter until the 2007 rebate amount is exhausted.
146 (iii) For December 2007 and for each month thereafter that the gas supplier is required
147 under Subsection (6)(c)(ii) to reduce the natural gas portion of municipal energy sales and use
148 tax proceeds to be paid to a municipality:
149 (A) each municipality imposing a municipal energy sales and use tax shall provide the
150 gas supplier with the amount by which its municipal energy sales and use tax rate applicable to
151 the sales and uses of natural gas would need to be reduced in order to reduce the natural gas

152 portion of municipal energy sales and use tax proceeds by the same amount as the reduction to
153 the municipality; and
154 (B) each gas supplier shall reduce the municipal energy sales and use tax rate
155 applicable to sales and uses of natural gas by the amount of the tax rate reduction provided by
156 the municipality.
157 (d) (i) In December 2008, each gas supplier shall reduce the natural gas portion of
158 municipal energy sales and use tax proceeds to be paid to a municipality by the 2008 rebate
159 amount.
160 (ii) If the 2008 rebate amount exceeds the amount of the natural gas portion of
161 municipal energy sales and use tax proceeds for December 2008, the gas supplier shall reduce
162 the natural gas portion of municipal energy sales and use tax proceeds to be paid to a
163 municipality each month thereafter until the 2008 rebate amount is exhausted.
164 (iii) For December 2008 and for each month thereafter that the gas supplier is required
165 under Subsection (6)(d)(ii) to reduce the natural gas portion of municipal energy sales and use
166 tax proceeds to be paid to a municipality:
167 (A) each municipality imposing a municipal energy sales and use tax shall provide the
168 gas supplier with the amount by which its municipal energy sales and use tax rate applicable to
169 the sales and uses of natural gas would need to be reduced in order to reduce the natural gas
170 portion of municipal energy sales and use tax proceeds by the same amount as the reduction to
171 the municipality; and
172 (B) each gas supplier shall reduce the municipal energy sales and use tax rate
173 applicable to sales and uses of natural gas by the amount of the tax rate reduction provided by
174 the municipality.
175 [(d)] (e) Nothing in this Subsection (6) may be construed to require a reduction under
176 Subsection (6)(b) [or], (c), or (d) if the rebate amount is zero or negative.




Legislative Review Note
as of 2-15-07 11:29 AM

Office of Legislative Research and General Counsel