S.B. 40

1

EARNED INCOME TAX CREDIT
2 2007 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Darin G. Peterson
5 House Sponsor: Patrick Painter
6
7 LONG TITLE
8 General Description:
9 This bill amends the Individual Income Tax Act to enact an earned income tax credit.
10 Highlighted Provisions:
11 This bill:
12 . defines terms;
13 . enacts a refundable earned income tax credit, including addressing the amount of
14 tax credit that may be claimed by:
15 . a claimant that is a resident of this state for the entire taxable year for which the
16 tax credit is claimed;
17 . a nonresident claimant; or
18 . a part-year resident claimant; and
19 . grants rulemaking authority to the State Tax Commission.
20 Monies Appropriated in this Bill:
21 None
22 Other Special Clauses:
23 This bill takes effect for taxable years beginning on or after January 1, 2008.
24 Utah Code Sections Affected:
25 ENACTS:
26 59-10-1106, Utah Code Annotated 1953
27

28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 59-10-1106 is enacted to read:
30 59-10-1106. Definitions -- Earned income tax credit-- Commission rulemaking
31 authority.
32 (1) As used in this section:
33 (a) "Federal earned income tax credit" means the amount of the federal earned income
34 tax credit a claimant is allowed for the taxable year in accordance with Section 32, Internal
35 Revenue Code.
36 (b) "Military service" is as defined in Section 59-10-116 .
37 (c) "Nonresident claimant" means a claimant that, for the taxable year for which a tax
38 credit is claimed under this section:
39 (i) is not a resident of this state; and
40 (ii) has federal adjusted gross income derived from Utah sources as calculated under
41 Section 59-10-117 .
42 (d) "Part-year resident claimant" means a claimant that, during the taxable year for
43 which a tax credit is claimed under this section, changes residency status during a taxable year
44 from:
45 (i) resident to nonresident; or
46 (ii) nonresident to resident.
47 (e) "Servicemember" is as defined in Section 59-10-116 .
48 (f) "State income tax percentage for a nonresident claimant" means, for a taxable year,
49 a percentage equal to a nonresident claimant's adjusted gross income for the taxable year
50 received from Utah sources, as determined under Section 59-10-117 , divided by the difference
51 between:
52 (i) the nonresident individual's total adjusted gross income for that taxable year; and
53 (ii) if the nonresident individual described in Subsection (1)(f)(i) is a servicemember,
54 the compensation the servicemember receives for military service if the servicemember is
55 serving in compliance with military orders.
56 (g) "State income tax percentage for a part-year resident claimant" means, for a taxable
57 year, a fraction:
58 (i) the numerator of which is the sum of:

59 (A) for the time period during the taxable year that the part-year resident claimant is a
60 resident, the part-year resident claimant's total adjusted gross income for that time period; and
61 (B) for the time period during the taxable year that the part-year resident claimant is a
62 nonresident, the part-year resident claimant's adjusted gross income for that time period
63 received from Utah sources, as determined under Section 59-10-117 ; and
64 (ii) the denominator of which is the difference between:
65 (A) the part-year resident claimant's total adjusted gross income for that taxable year;
66 and
67 (B) if the part-year resident claimant is a servicemember, any compensation the
68 servicemember receives for military service during the portion of the taxable year that the
69 servicemember is a nonresident if the servicemember is serving in compliance with military
70 orders.
71 (2) Subject to Subsections (3) and (4), for taxable years beginning on or after January
72 1, 2008, a claimant may claim a refundable earned income tax credit.
73 (3) (a) For a claimant that is a resident of this state for the entire taxable year for which
74 a tax credit is claimed under this section, the tax credit is an amount equal to 10% of the
75 federal earned income tax credit.
76 (b) For a claimant that is a nonresident claimant, the tax credit is equal to the product
77 of:
78 (i) an amount equal to 10% of the federal earned income tax credit; and
79 (ii) the state income tax percentage for the nonresident claimant.
80 (c) For a claimant that is a part-year resident claimant, the tax credit is equal to the
81 product of:
82 (i) an amount equal to 10% of the federal earned income tax credit; and
83 (ii) the state income tax percentage for the part-year resident individual.
84 (4) A claimant may not carry forward or carry back a tax credit provided for under this
85 section.
86 (5) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
87 commission may by rule define what constitutes compensation.
88 Section 2. Effective date.
89 This bill takes effect for taxable years beginning on or after January 1, 2008.

Legislative Review Note
as of 12-13-06 9:30 AM

Office of Legislative Research and General Counsel