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Third Substitute H.B. 359

Senator Wayne L. Niederhauser proposes the following substitute bill:


             1     
TAX CHANGES

             2     
2008 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: John Dougall

             5     
Senate Sponsor: Wayne L. Niederhauser

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends the Corporate Franchise and Income Taxes chapter, the Individual
             10      Income Tax Act, the Sales and Use Tax Act, the Transportation Code, and related
             11      provisions to address the income taxation of individuals, estates, and trusts, including
             12      real estate investment trusts, a change in a state sales and use tax rate, a sales tax refund
             13      for qualified emergency food agencies, a sales and use tax exemption, and the
             14      expenditure of certain state sales and use tax revenues.
             15      Highlighted Provisions:
             16          This bill:
             17          .    defines terms;
             18          .    addresses the income taxation of a real estate investment trust or income from a real
             19      estate investment trust;
             20          .    repeals provisions imposing an individual income tax on the basis of graduated
             21      brackets and rates;
             22          .    provides that an individual income tax is imposed on the basis of a single tax rate,
             23      including:
             24              .    modifying and repealing definitions;
             25              .    modifying additions to and subtractions from adjusted gross income;


             26              .    addressing the taxation of a nonresident individual or part-year resident
             27      individual; and
             28              .    addressing provisions relating to the determination and reporting of income tax
             29      liability and information;
             30          .    addresses the apportionment of business income for purposes of the individual
             31      income tax;
             32          .    modifies the income taxation of estates and trusts, including:
             33              .    providing definitions;
             34              .    providing that the tax is calculated on the basis of unadjusted income;        
             35              .    modifying additions to and subtractions from unadjusted income; and
             36              .    addressing provisions relating to the determination and reporting of income tax
             37      liability and information;
             38          .    addresses the taxation of pass-through entities, including:
             39              .    providing definitions;    and
             40              .    renumbering and amending provisions relating to pass-through entities;
             41          .    renumbers and amends provisions relating to tax credits, including tax credits for:
             42              .    a taxpayer;
             43              .    an investment in the Utah Educational Savings Plan Trust; or
             44              .    retirement income;
             45          .    provides nonrefundable tax credits for:
             46              .    a trust or estate;
             47              .    a contribution to a medical care savings account;
             48              .    capital gain transactions;
             49              .    certain amounts paid for insurance under a health benefit plan; or
             50              .    certain solar projects;
             51          .    requires the Utah Tax Review Commission to study the solar projects tax credits;
             52          .    provides that a person may not claim a nonrefundable renewable energy systems tax
             53      credit for certain purchases for which the person claims a tax credit for certain solar
             54      projects;
             55          .    modifies the refundable renewable energy tax credit to clarify that an estate or trust
             56      may claim the tax credit;    


             57          .    addresses the apportionment of tax credits;    
             58          .    addresses the following relating to a medical care savings account:
             59              .    taxation;
             60              .    penalties; and
             61              .    interest;
             62          .    amends provisions relating to the taxation of an investment in the Utah Educational
             63      Savings Plan Trust;
             64          .    renumbers and amends the individual income tax contribution provisions;
             65          .    addresses the administration of income tax contributions;
             66          .    grants rulemaking authority to:
             67              .    the State Tax Commission; and
             68              .    the Insurance Department;
             69          .    increases a state sales and use tax rate from 4.65% to 4.70%;
             70          .    provides that a .025% tax rate on certain sales and use transactions shall be
             71      deposited into the Critical Highway Needs Fund and the Transportation Investment
             72      Fund of 2005;
             73          .    provides that a .025% tax rate on certain sales and use transactions shall be
             74      deposited into the Transportation Fund to be expended to address chokepoints in
             75      construction management;
             76          .    extends the expiration date for certain sales and use tax exemptions;
             77          .    provides a sales and use tax exemption for sales of fuel to a common carrier that is a
             78      railroad for use in a locomotive engine;
             79          .    provides that state sales and use tax revenues deposited into the Transportation
             80      Fund are not appropriated into the class B and class C roads account;
             81          .    modifies the statutes creating the Transportation Investment Fund of 2005 and the
             82      Critical Highway Needs Fund to address the sources of revenue that may be
             83      deposited into the funds; and
             84          .    makes technical changes.
             85      Monies Appropriated in this Bill:
             86          None
             87      Other Special Clauses:


             88          This bill provides effective dates.
             89          This bill coordinates with the following to provide for apportionment of tax credits:
             90          (1) H.B. 158, Tax Credit for Military Retired Pay;
             91          (2) H.B. 199, Tax Credits for Energy Efficient Residences;
             92          (3) H.B. 279, Tax Incentives for Military Members;
             93          (4) H.B. 351, Individual Income Tax - Health Insurance; and
             94          (5) H.B. 360, Individual Income Tax - Long-Term Care Insurance Premiums.
             95      Utah Code Sections Affected:
             96      AMENDS:
             97          9-4-802, as last amended by Laws of Utah 2003, Chapter 132
             98          9-4-803, as last amended by Laws of Utah 2003, Chapter 132
             99          23-14-13, as last amended by Laws of Utah 1995, Chapter 211
             100          23-14-14.1, as enacted by Laws of Utah 2003, Chapter 162
             101          26-18a-3, as last amended by Laws of Utah 1997, Chapter 1
             102          26-18a-4, as last amended by Laws of Utah 1997, Chapter 1
             103          26-48-102, as enacted by Laws of Utah 2006, Chapter 280
             104          31A-32a-101, as enacted by Laws of Utah 1999, Chapter 131
             105          31A-32a-103, as enacted by Laws of Utah 1999, Chapter 131
             106          31A-32a-104, as enacted by Laws of Utah 1999, Chapter 131
             107          31A-32a-105, as enacted by Laws of Utah 1999, Chapter 131
             108          31A-32a-106, as last amended by Laws of Utah 2001, Chapter 53
             109          31A-32a-107, as enacted by Laws of Utah 1999, Chapter 131
             110          48-2c-117, as enacted by Laws of Utah 2001, Chapter 260
             111          53B-8a-106, as last amended by Laws of Utah 2007, Chapter 100
             112          59-7-101, as last amended by Laws of Utah 2004, Chapter 54
             113          59-7-105, as last amended by Laws of Utah 2007, Chapter 100
             114          59-7-106, as last amended by Laws of Utah 2007, Chapter 100
             115          59-7-116.5, as enacted by Laws of Utah 1995, Chapter 311
             116          59-7-402, as last amended by Laws of Utah 2004, Chapter 54
             117          59-7-614, as repealed and reenacted by Laws of Utah 2007, Chapter 288
             118          59-10-103, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2


             119          59-10-104, as last amended by Laws of Utah 2007, Chapter 288
             120          59-10-104.1, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
             121          59-10-110, as renumbered and amended by Laws of Utah 1987, Chapter 2
             122          59-10-114, as last amended by Laws of Utah 2007, Chapter 100
             123          59-10-115, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
             124          59-10-116, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
             125          59-10-117, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
             126          59-10-118, as last amended by Laws of Utah 1995, Chapter 311
             127          59-10-119, as renumbered and amended by Laws of Utah 1987, Chapter 2
             128          59-10-120, as renumbered and amended by Laws of Utah 1987, Chapter 2
             129          59-10-121, as renumbered and amended by Laws of Utah 1987, Chapter 2
             130          59-10-122, as renumbered and amended by Laws of Utah 1987, Chapter 2
             131          59-10-123, as renumbered and amended by Laws of Utah 1987, Chapter 2
             132          59-10-124, as renumbered and amended by Laws of Utah 1987, Chapter 2
             133          59-10-125, as renumbered and amended by Laws of Utah 1987, Chapter 2
             134          59-10-126, as last amended by Laws of Utah 1995, Chapter 311
             135          59-10-201, as last amended by Laws of Utah 2007, Chapter 100
             136          59-10-201.1, as last amended by Laws of Utah 2006, Chapter 223
             137          59-10-202, as last amended by Laws of Utah 2007, Chapter 100
             138          59-10-204, as last amended by Laws of Utah 2006, Chapter 223
             139          59-10-205, as last amended by Laws of Utah 2006, Chapter 223
             140          59-10-207, as last amended by Laws of Utah 2006, Chapter 223
             141          59-10-209.1, as enacted by Laws of Utah 2006, Chapter 223
             142          59-10-210, as last amended by Laws of Utah 2006, Chapter 223
             143          59-10-507, as last amended by Laws of Utah 2003, Chapter 198
             144          59-10-1014, as last amended by Laws of Utah 2007, Chapters 122 and 288
             145          59-10-1106, as enacted by Laws of Utah 2007, Chapter 288
             146          59-12-103, as last amended by Laws of Utah 2007, Chapters 9, 101, 126, 206, and 288
             147          59-12-104, as last amended by Laws of Utah 2007, Chapters 76, 195, 214, 224, 288,
             148      295, and 329
             149          72-2-107, as last amended by Laws of Utah 2007, Chapter 126


             150          72-2-124, as last amended by Laws of Utah 2006, Chapters 11 and 135
             151          72-2-125, as enacted by Laws of Utah 2007, Chapter 206
             152      ENACTS:
             153          59-7-614.2, Utah Code Annotated 1953
             154          59-10-1020, Utah Code Annotated 1953
             155          59-10-1021, Utah Code Annotated 1953
             156          59-10-1022, Utah Code Annotated 1953
             157          59-10-1023, Utah Code Annotated 1953
             158          59-10-1024, Utah Code Annotated 1953
             159          59-10-1301, Utah Code Annotated 1953
             160          59-10-1302, Utah Code Annotated 1953
             161          59-10-1303, Utah Code Annotated 1953
             162          59-10-1401, Utah Code Annotated 1953
             163          59-10-1402, Utah Code Annotated 1953
             164      RENUMBERS AND AMENDS:
             165          59-10-1002.1, (Renumbered from 59-10-1016, as renumbered and amended by Laws of
             166      Utah 2006, Chapter 223)
             167          59-10-1002.2, (Renumbered from 59-10-1206.9, as enacted by Laws of Utah 2007,
             168      Chapter 288)
             169          59-10-1017, (Renumbered from 59-10-1206.1, as enacted by Laws of Utah 2007,
             170      Chapter 100)
             171          59-10-1018, (Renumbered from 59-10-1206.2, as enacted by Laws of Utah 2007,
             172      Chapter 288)
             173          59-10-1019, (Renumbered from 59-10-1206.3, as enacted by Laws of Utah 2007,
             174      Chapter 288)
             175          59-10-1304, (Renumbered from 59-10-551, as last amended by Laws of Utah 2006,
             176      Chapter 280)
             177          59-10-1305, (Renumbered from 59-10-530, as last amended by Laws of Utah 1997,
             178      Chapter 12)
             179          59-10-1306, (Renumbered from 59-10-530.5, as last amended by Laws of Utah 2003,
             180      Chapter 132)


             181          59-10-1307, (Renumbered from 59-10-549, as last amended by Laws of Utah 2005,
             182      Chapter 208)
             183          59-10-1308, (Renumbered from 59-10-550, as last amended by Laws of Utah 1997,
             184      Chapters 1 and 12)
             185          59-10-1309, (Renumbered from 59-10-550.1, as enacted by Laws of Utah 2003,
             186      Chapter 162)
             187          59-10-1310, (Renumbered from 59-10-550.2, as enacted by Laws of Utah 2006,
             188      Chapter 280)
             189          59-10-1311, (Renumbered from 59-10-547, as last amended by Laws of Utah 1998,
             190      Chapter 269)
             191          59-10-1312, (Renumbered from 59-10-548, as last amended by Laws of Utah 2002,
             192      Chapters 107 and 256)
             193          59-10-1403, (Renumbered from 59-10-301, as renumbered and amended by Laws of
             194      Utah 1987, Chapter 2)
             195          59-10-1404, (Renumbered from 59-10-302, as renumbered and amended by Laws of
             196      Utah 1987, Chapter 2)
             197          59-10-1405, (Renumbered from 59-10-303, as last amended by Laws of Utah 2006,
             198      Fourth Special Session, Chapter 2)
             199      REPEALS:
             200          59-10-206, as last amended by Laws of Utah 1995, Chapter 345
             201          59-10-801, as last amended by Laws of Utah 1997, Chapter 159
             202          59-10-1201, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
             203          59-10-1202, as last amended by Laws of Utah 2007, Chapters 100 and 288
             204          59-10-1203, as last amended by Laws of Utah 2007, Chapters 100 and 288
             205          59-10-1204, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
             206          59-10-1205, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
             207          59-10-1206, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
             208          59-10-1207, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
             209     
             210      Be it enacted by the Legislature of the state of Utah:
             211          Section 1. Section 9-4-802 is amended to read:


             212           9-4-802. Purposes of Homeless Coordinating Committee -- Uses of Pamela
             213      Atkinson Homeless Trust Account.
             214          (1) (a) The Homeless Coordinating Committee shall work to ensure that services
             215      provided to the homeless by state agencies, local governments, and private organizations are
             216      provided in a cost-effective manner.
             217          (b) Programs funded by the committee shall emphasize emergency housing and
             218      self-sufficiency, including placement in meaningful employment or occupational training
             219      activities and, where needed, special services to meet the unique needs of the homeless who
             220      have families with children, or who are mentally ill, disabled, or suffer from other serious
             221      challenges to employment and self-sufficiency.
             222          (c) The committee may also fund treatment programs to ameliorate the effects of
             223      substance abuse or a disability.
             224          (2) The committee members designated in Subsection 9-4-801 (2) shall:
             225          (a) award contracts funded by the Pamela Atkinson Homeless Trust Account with the
             226      advice and input of those designated in Subsection 9-4-801 (3);
             227          (b) consider need, diversity of geographic location, coordination with or enhancement
             228      of existing services, and the extensive use of volunteers; and
             229          (c) give priority for funding to programs that serve the homeless who are mentally ill
             230      and who are in families with children.
             231          (3) (a) In any fiscal year, no more than 80% of the funds in the Pamela Atkinson
             232      Homeless Trust Account may be allocated to organizations that provide services only in Salt
             233      Lake, Davis, Weber, and Utah Counties.
             234          (b) The committee may:
             235          (i) expend up to 3% of its annual appropriation for administrative costs associated with
             236      the allocation of funds from the Pamela Atkinson Homeless Trust Account, and up to 2% of its
             237      annual appropriation for marketing the account and soliciting donations to the account; and
             238          (ii) pay for the initial costs of the State Tax Commission in implementing Section
             239      [ 59-10-530.5 ] 59-10-1306 from the account.
             240          (4) (a) The committee may not expend, except as provided in Subsection (4)(b), an
             241      amount equal to the greater of $50,000 or 20% of the amount donated to the Pamela Atkinson
             242      Homeless Trust Account during fiscal year 1988-89.


             243          (b) If there are decreases in contributions to the account, the committee may expend
             244      funds held in reserve to provide program stability, but the committee shall reimburse the
             245      amounts of those expenditures to the reserve fund.
             246          (5) The committee shall make an annual report to the Economic Development and
             247      Human Resources Appropriations Subcommittee regarding the programs and services funded
             248      by contributions to the Pamela Atkinson Homeless Trust Account.
             249          (6) The moneys in the Pamela Atkinson Homeless Trust Account shall be invested by
             250      the state treasurer according to the procedures and requirements of Title 51, Chapter 7, State
             251      Money Management Act, except that all interest or other earnings derived from the fund
             252      moneys shall be deposited in the fund.
             253          Section 2. Section 9-4-803 is amended to read:
             254           9-4-803. Creation of Pamela Atkinson Homeless Trust Account.
             255          (1) There is created a restricted account within the General Fund to be known as the
             256      Pamela Atkinson Homeless Trust Account.
             257          (2) Private contributions received under this section and Section [ 59-10-530.5 ]
             258      59-10-1306 shall be deposited into the account to be used only for programs described in
             259      Section 9-4-802 .
             260          (3) Money shall be appropriated from the account to the State Homeless Coordinating
             261      Committee in accordance with the Utah Budgetary Procedures Act.
             262          (4) The State Homeless Coordinating Committee may accept transfers, grants, gifts,
             263      bequests, or any money made available from any source to implement this part.
             264          Section 3. Section 23-14-13 is amended to read:
             265           23-14-13. Wildlife Resources Account.
             266          (1) The Wildlife Resources Account [within the General Fund] is established within
             267      the General Fund.
             268          (2) The following monies shall be deposited into the Wildlife Resources Account:
             269          (a) revenue from the sale of licenses, permits, tags, and certificates of registration
             270      issued under this title or a rule or proclamation of the Wildlife Board, except as otherwise
             271      provided by this title;
             272          (b) revenue from the sale, lease, rental, or other granting of rights of real or personal
             273      property acquired with revenue specified in Subsection (2)(a);


             274          (c) revenue from fines and forfeitures for violations of this title or any rule,
             275      proclamation, or order of the Wildlife Board, minus court costs not to exceed the schedule
             276      adopted by the Judicial Council;
             277          (d) funds appropriated from the General Fund by the Legislature pursuant to Section
             278      23-19-39 ;
             279          (e) other monies received by the division under any provision of this title, except as
             280      otherwise provided by this title; [and]
             281          (f) contributions made in accordance with Section 59-10-1305 ; and
             282          [(f)] (g) interest, dividends, or other income earned on account monies.
             283          (3) Monies in the Wildlife Resources Account shall be used for the administration of
             284      this title.
             285          Section 4. Section 23-14-14.1 is amended to read:
             286           23-14-14.1. Wolf Depredation and Management Restricted Account -- Interest --
             287      Use of contributions and interest.
             288          (1) There is created within the General Fund the Wolf Depredation and Management
             289      Restricted Account.
             290          (2) The account shall be funded by contributions deposited into the Wolf Depredation
             291      and Management Restricted Account in accordance with Section [ 59-10-550.1 ] 59-10-1309 .
             292          (3) (a) The Wolf Depredation and Management Restricted Account shall earn interest.
             293          (b) Interest earned on the Wolf Depredation and Management Restricted Account shall
             294      be deposited into the Wolf Depredation and Management Restricted Account.
             295          (4) (a) Subject to Subsection (4)(b), contributions and interest deposited into the Wolf
             296      Depredation and Management Restricted Account shall be used by the Division of Wildlife
             297      Resources for:
             298          (i) payments for livestock depredation by wolves; or
             299          (ii) wolf management.
             300          (b) Contributions and interest deposited into the Wolf Depredation and Management
             301      Restricted Account may be used for the purposes described in Subsection (4)(a) only to the
             302      extent permitted by federal law.
             303          Section 5. Section 26-18a-3 is amended to read:
             304           26-18a-3. Purpose of committee.


             305          (1) The committee shall work to:
             306          (a) provide financial assistance for initial medical expenses of children who need organ
             307      transplants;
             308          (b) obtain the assistance of volunteer and public service organizations; and
             309          (c) fund activities as the committee designates for the purpose of educating the public
             310      about the need for organ donors.
             311          (2) (a) The committee is responsible for awarding financial assistance funded by the
             312      trust account.
             313          (b) The financial assistance awarded by the committee under Subsection (1)(a) shall be
             314      in the form of interest free loans. The committee may establish terms for repayment of the
             315      loans, including a waiver of the requirement to repay any awards if, in the committee's
             316      judgment, repayment of the loan would impose an undue financial burden on the recipient.
             317          (c) In making financial awards under Subsection (1)(a), the committee shall consider:
             318          (i) need;
             319          (ii) coordination with or enhancement of existing services or financial assistance,
             320      including availability of insurance or other state aid;
             321          (iii) the success rate of the particular organ transplant procedure needed by the child;
             322      and
             323          (iv) the extent of the threat to the child's life without the organ transplant.
             324          (3) The committee may only provide the assistance described in this section to children
             325      who have resided in Utah, or whose legal guardians have resided in Utah for at least six months
             326      prior to the date of assistance under this section.
             327          (4) (a) The committee may expend up to 5% of its annual appropriation for
             328      administrative costs associated with the allocation of funds from the trust account.
             329          (b) The administrative costs shall be used for the costs associated with staffing the
             330      committee and for State Tax Commission costs in implementing Section [ 59-10-550 ]
             331      59-10-1308 .
             332          (5) The committee shall make an annual report to the Health and Human Services
             333      Appropriations Subcommittee regarding the programs and services funded by contributions to
             334      the trust account.
             335          Section 6. Section 26-18a-4 is amended to read:


             336           26-18a-4. Creation of Kurt Oscarson Children's Organ Transplant Trust
             337      Account.
             338          (1) There is created a restricted account within the General Fund pursuant to Section
             339      51-5-4 known as the Kurt Oscarson Children's Organ Transplant Trust Account. Private
             340      contributions received under this section and Section [ 59-10-550 ] 59-10-1308 shall be
             341      deposited into the trust account to be used only for the programs and purposes described in
             342      Section 26-18a-3 .
             343          (2) Money shall be appropriated from the trust account to the committee in accordance
             344      with Title 63, Chapter 38, Budgetary Procedures Act.
             345          (3) In addition to funds received under Section [ 59-10-550 ] 59-10-1308 , the committee
             346      may accept transfers, grants, gifts, bequests, or any money made available from any source to
             347      implement this chapter.
             348          Section 7. Section 26-48-102 is amended to read:
             349           26-48-102. Cat and Dog Community Spay and Neuter Program Restricted
             350      Account -- Interest -- Use of contributions and interest.
             351          (1) There is created within the General Fund the Cat and Dog Community Spay and
             352      Neuter Program Restricted Account.
             353          (2) The account shall be funded by contributions deposited into the Cat and Dog
             354      Community Spay and Neuter Program Restricted Account in accordance with Section
             355      [ 59-10-550.2 ] 59-10-1310 .
             356          (3) (a) The Cat and Dog Community Spay and Neuter Program Restricted Account
             357      shall earn interest.
             358          (b) Interest earned on the Cat and Dog Community Spay and Neuter Program
             359      Restricted Account shall be deposited into the Cat and Dog Community Spay and Neuter
             360      Program Restricted Account.
             361          (4) The department shall distribute contributions and interest deposited into the Cat and
             362      Dog Community Spay and Neuter Program Restricted Account to one or more organizations
             363      that:
             364          (a) are exempt from federal income taxation under Section 501(c)(3), Internal Revenue
             365      Code;
             366          (b) operate a mobile spay and neuter clinic for cats and dogs;


             367          (c) provide annual spay and neuter services at the mobile spay and neuter clinic
             368      described in Subsection (4)(b):
             369          (i) to one or more communities in at least 20 counties in the state; and
             370          (ii) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
             371      and
             372          (d) (i) spay and neuter cats and dogs owned by persons having low incomes; and
             373          (ii) have established written guidelines for determining what constitutes a person
             374      having a low income in accordance with any rules made by the department as authorized by
             375      Subsection (5)(c).
             376          (5) (a) An organization described in Subsection (4) may apply to the department to
             377      receive a distribution in accordance with Subsection (4).
             378          (b) An organization that receives a distribution from the department in accordance with
             379      Subsection (4):
             380          (i) shall expend the distribution only to spay or neuter dogs and cats:
             381          (A) owned by persons having low incomes;
             382          (B) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
             383          (C) through a statewide voucher program; and