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