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S.B. 31
1
INCOME TAX AMENDMENTS
2
2008 GENERAL SESSION
3
STATE OF UTAH
4
Chief Sponsor: Wayne L. Niederhauser
5
House Sponsor:
John Dougall
6
7
LONG TITLE
8
Committee Note:
9
The Revenue and Taxation Interim Committee recommended this bill.
10
The Utah Tax Review Commission recommended this bill.
11
Membership: 6 legislators 10 non-legislators
12
Legislative Vote: 5 voting for 0 voting against 1 absent
13
General Description:
14
This bill amends the Individual Income Tax Act and related provisions to address the
15
income taxation of individuals, estates, and trusts.
16
Highlighted Provisions:
17
This bill:
18
. repeals provisions imposing an individual income tax on the basis of graduated
19
brackets and rates;
20
. provides that an individual income tax is imposed on the basis of a single tax rate,
21
including:
22
. modifying and repealing definitions;
23
. modifying additions to and subtractions from adjusted gross income;
24
. addressing the taxation of a nonresident individual or part-year resident
25
individual; and
26
. addressing provisions relating to the determination and reporting of income tax
27
liability and information;
28
. modifies the income taxation of estates and trusts, including:
29
. providing definitions;
30
. providing that the tax is calculated on the basis of unadjusted income;
31
. modifying additions to and subtractions from unadjusted income; and
32
. addressing provisions relating to the determination and reporting of income tax
33
liability and information;
34
. addresses the taxation of pass-through entities, including:
35
. providing definitions; and
36
. renumbering and amending provisions relating to pass-through entities;
37
. renumbers and amends provisions relating to tax credits, including tax credits for:
38
. a taxpayer;
39
. an investment in the Utah Educational Savings Plan Trust; or
40
. retirement income;
41
. provides nonrefundable tax credits for:
42
. a trust or estate; or
43
. a contribution to a medical care savings account;
44
. modifies the refundable renewable energy tax credit to clarify that an estate or trust
45
may claim the tax credit;
46
. addresses the apportionment of tax credits;
47
. addresses the following relating to a medical care savings account:
48
. taxation;
49
. penalties; and
50
. interest;
51
. amends provisions relating to the taxation of an investment in the Utah Educational
52
Savings Plan Trust;
53
. renumbers and amends the individual income tax contribution provisions;
54
. addresses the administration of income tax contributions; and
55
. makes technical changes.
56
Monies Appropriated in this Bill:
57
None
58
Other Special Clauses:
59
This bill has retrospective operation for taxable years beginning on or after January 1,
60
2008.
61
Utah Code Sections Affected:
62
AMENDS:
63
9-4-802, as last amended by Laws of Utah 2003, Chapter 132
64
9-4-803, as last amended by Laws of Utah 2003, Chapter 132
65
23-14-13, as last amended by Laws of Utah 1995, Chapter 211
66
23-14-14.1, as enacted by Laws of Utah 2003, Chapter 162
67
26-18a-3, as last amended by Laws of Utah 1997, Chapter 1
68
26-18a-4, as last amended by Laws of Utah 1997, Chapter 1
69
26-48-102, as enacted by Laws of Utah 2006, Chapter 280
70
31A-32a-101, as enacted by Laws of Utah 1999, Chapter 131
71
31A-32a-103, as enacted by Laws of Utah 1999, Chapter 131
72
31A-32a-104, as enacted by Laws of Utah 1999, Chapter 131
73
31A-32a-105, as enacted by Laws of Utah 1999, Chapter 131
74
31A-32a-106, as last amended by Laws of Utah 2001, Chapter 53
75
31A-32a-107, as enacted by Laws of Utah 1999, Chapter 131
76
48-2c-117, as enacted by Laws of Utah 2001, Chapter 260
77
53B-8a-106, as last amended by Laws of Utah 2007, Chapter 100
78
59-10-103, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
79
59-10-104, as last amended by Laws of Utah 2007, Chapter 288
80
59-10-104.1, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
81
59-10-110, as renumbered and amended by Laws of Utah 1987, Chapter 2
82
59-10-114, as last amended by Laws of Utah 2007, Chapter 100
83
59-10-115, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
84
59-10-116, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
85
59-10-117, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
86
59-10-118, as last amended by Laws of Utah 1995, Chapter 311
87
59-10-119, as renumbered and amended by Laws of Utah 1987, Chapter 2
88
59-10-120, as renumbered and amended by Laws of Utah 1987, Chapter 2
89
59-10-121, as renumbered and amended by Laws of Utah 1987, Chapter 2
90
59-10-122, as renumbered and amended by Laws of Utah 1987, Chapter 2
91
59-10-123, as renumbered and amended by Laws of Utah 1987, Chapter 2
92
59-10-124, as renumbered and amended by Laws of Utah 1987, Chapter 2
93
59-10-125, as renumbered and amended by Laws of Utah 1987, Chapter 2
94
59-10-126, as last amended by Laws of Utah 1995, Chapter 311
95
59-10-201, as last amended by Laws of Utah 2007, Chapter 100
96
59-10-201.1, as last amended by Laws of Utah 2006, Chapter 223
97
59-10-202, as last amended by Laws of Utah 2007, Chapter 100
98
59-10-204, as last amended by Laws of Utah 2006, Chapter 223
99
59-10-205, as last amended by Laws of Utah 2006, Chapter 223
100
59-10-207, as last amended by Laws of Utah 2006, Chapter 223
101
59-10-209.1, as enacted by Laws of Utah 2006, Chapter 223
102
59-10-210, as last amended by Laws of Utah 2006, Chapter 223
103
59-10-507, as last amended by Laws of Utah 2003, Chapter 198
104
59-10-1106, as enacted by Laws of Utah 2007, Chapter 288
105
ENACTS:
106
59-10-1020, Utah Code Annotated 1953
107
59-10-1021, Utah Code Annotated 1953
108
59-10-1301, Utah Code Annotated 1953
109
59-10-1302, Utah Code Annotated 1953
110
59-10-1303, Utah Code Annotated 1953
111
59-10-1401, Utah Code Annotated 1953
112
59-10-1402, Utah Code Annotated 1953
113
RENUMBERS AND AMENDS:
114
59-10-1002.1, (Renumbered from 59-10-1016, as renumbered and amended by Laws of
115
Utah 2006, Chapter 223)
116
59-10-1002.2, (Renumbered from 59-10-1206.9, as enacted by Laws of Utah 2007,
117
Chapter 288)
118
59-10-1017, (Renumbered from 59-10-1206.1, as enacted by Laws of Utah 2007,
119
Chapter 100)
120
59-10-1018, (Renumbered from 59-10-1206.2, as enacted by Laws of Utah 2007,
121
Chapter 288)
122
59-10-1019, (Renumbered from 59-10-1206.3, as enacted by Laws of Utah 2007,
123
Chapter 288)
124
59-10-1304, (Renumbered from 59-10-551, as last amended by Laws of Utah 2006,
125
Chapter 280)
126
59-10-1305, (Renumbered from 59-10-530, as last amended by Laws of Utah 1997,
127
Chapter 12)
128
59-10-1306, (Renumbered from 59-10-530.5, as last amended by Laws of Utah 2003,
129
Chapter 132)
130
59-10-1307, (Renumbered from 59-10-549, as last amended by Laws of Utah 2005,
131
Chapter 208)
132
59-10-1308, (Renumbered from 59-10-550, as last amended by Laws of Utah 1997,
133
Chapters 1, and 12)
134
59-10-1309, (Renumbered from 59-10-550.1, as enacted by Laws of Utah 2003,
135
Chapter 162)
136
59-10-1310, (Renumbered from 59-10-550.2, as enacted by Laws of Utah 2006,
137
Chapter 280)
138
59-10-1311, (Renumbered from 59-10-547, as last amended by Laws of Utah 1998,
139
Chapter 269)
140
59-10-1312, (Renumbered from 59-10-548, as last amended by Laws of Utah 2002,
141
Chapters 107, and 256)
142
59-10-1403, (Renumbered from 59-10-301, as renumbered and amended by Laws of
143
Utah 1987, Chapter 2)
144
59-10-1404, (Renumbered from 59-10-302, as renumbered and amended by Laws of
145
Utah 1987, Chapter 2)
146
59-10-1405, (Renumbered from 59-10-303, as last amended by Laws of Utah 2006,
147
Fourth Special Session, Chapter 2)
148
REPEALS:
149
59-10-206, as last amended by Laws of Utah 1995, Chapter 345
150
59-10-801, as last amended by Laws of Utah 1997, Chapter 159
151
59-10-1201, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
152
59-10-1202, as last amended by Laws of Utah 2007, Chapters 100, and 288
153
59-10-1203, as last amended by Laws of Utah 2007, Chapters 100, and 288
154
59-10-1204, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
155
59-10-1205, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
156
59-10-1206, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
157
59-10-1207, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
158
159
Be it enacted by the Legislature of the state of Utah:
160
Section 1.
Section
9-4-802
is amended to read:
161
9-4-802. Purposes of Homeless Coordinating Committee -- Uses of Pamela
162
Atkinson Homeless Trust Account.
163
(1) (a) The Homeless Coordinating Committee shall work to ensure that services
164
provided to the homeless by state agencies, local governments, and private organizations are
165
provided in a cost-effective manner.
166
(b) Programs funded by the committee shall emphasize emergency housing and
167
self-sufficiency, including placement in meaningful employment or occupational training
168
activities and, where needed, special services to meet the unique needs of the homeless who
169
have families with children, or who are mentally ill, disabled, or suffer from other serious
170
challenges to employment and self-sufficiency.
171
(c) The committee may also fund treatment programs to ameliorate the effects of
172
substance abuse or a disability.
173
(2) The committee members designated in Subsection
9-4-801
(2) shall:
174
(a) award contracts funded by the Pamela Atkinson Homeless Trust Account with the
175
advice and input of those designated in Subsection
9-4-801
(3);
176
(b) consider need, diversity of geographic location, coordination with or enhancement
177
of existing services, and the extensive use of volunteers; and
178
(c) give priority for funding to programs that serve the homeless who are mentally ill
179
and who are in families with children.
180
(3) (a) In any fiscal year, no more than 80% of the funds in the Pamela Atkinson
181
Homeless Trust Account may be allocated to organizations that provide services only in Salt
182
Lake, Davis, Weber, and Utah Counties.
183
(b) The committee may:
184
(i) expend up to 3% of its annual appropriation for administrative costs associated with
185
the allocation of funds from the Pamela Atkinson Homeless Trust Account, and up to 2% of its
186
annual appropriation for marketing the account and soliciting donations to the account; and
187
(ii) pay for the initial costs of the State Tax Commission in implementing Section
188
[
59-10-530.5
]
59-10-1306
from the account.
189
(4) (a) The committee may not expend, except as provided in Subsection (4)(b), an
190
amount equal to the greater of $50,000 or 20% of the amount donated to the Pamela Atkinson
191
Homeless Trust Account during fiscal year 1988-89.
192
(b) If there are decreases in contributions to the account, the committee may expend
193
funds held in reserve to provide program stability, but the committee shall reimburse the
194
amounts of those expenditures to the reserve fund.
195
(5) The committee shall make an annual report to the Economic Development and
196
Human Resources Appropriations Subcommittee regarding the programs and services funded
197
by contributions to the Pamela Atkinson Homeless Trust Account.
198
(6) The moneys in the Pamela Atkinson Homeless Trust Account shall be invested by
199
the state treasurer according to the procedures and requirements of Title 51, Chapter 7, State
200
Money Management Act, except that all interest or other earnings derived from the fund
201
moneys shall be deposited in the fund.
202
Section 2.
Section
9-4-803
is amended to read:
203
9-4-803. Creation of Pamela Atkinson Homeless Trust Account.
204
(1) There is created a restricted account within the General Fund to be known as the
205
Pamela Atkinson Homeless Trust Account.
206
(2) Private contributions received under this section and Section [
59-10-530.5
]
207
59-10-1306
shall be deposited into the account to be used only for programs described in
208
Section
9-4-802
.
209
(3) Money shall be appropriated from the account to the State Homeless Coordinating
210
Committee in accordance with the Utah Budgetary Procedures Act.
211
(4) The State Homeless Coordinating Committee may accept transfers, grants, gifts,
212
bequests, or any money made available from any source to implement this part.
213
Section 3.
Section
23-14-13
is amended to read:
214
23-14-13. Wildlife Resources Account.
215
(1) The Wildlife Resources Account [within the General Fund] is established within
216
the General Fund.
217
(2) The following monies shall be deposited into the Wildlife Resources Account:
218
(a) revenue from the sale of licenses, permits, tags, and certificates of registration
219
issued under this title or a rule or proclamation of the Wildlife Board, except as otherwise
220
provided by this title;
221
(b) revenue from the sale, lease, rental, or other granting of rights of real or personal
222
property acquired with revenue specified in Subsection (a);
223
(c) revenue from fines and forfeitures for violations of this title or any rule,
224
proclamation, or order of the Wildlife Board, minus court costs not to exceed the schedule
225
adopted by the Judicial Council;
226
(d) funds appropriated from the General Fund by the Legislature pursuant to Section
227
23-19-39
;
228
(e) other monies received by the division under any provision of this title, except as
229
otherwise provided by this title; [and]
230
(f) contributions made in accordance with Section
59-10-1305
; and
231
[(f)] (g) interest, dividends, or other income earned on account monies.
232
(3) Monies in the Wildlife Resources Account shall be used for the administration of
233
this title.
234
Section 4.
Section
23-14-14.1
is amended to read:
235
23-14-14.1. Wolf Depredation and Management Restricted Account -- Interest --
236
Use of contributions and interest.
237
(1) There is created within the General Fund the Wolf Depredation and Management
238
Restricted Account.
239
(2) The account shall be funded by contributions deposited into the Wolf Depredation
240
and Management Restricted Account in accordance with Section [
59-10-550.1
]
59-10-1309
.
241
(3) (a) The Wolf Depredation and Management Restricted Account shall earn interest.
242
(b) Interest earned on the Wolf Depredation and Management Restricted Account shall
243
be deposited into the Wolf Depredation and Management Restricted Account.
244
(4) (a) Subject to Subsection (4)(b), contributions and interest deposited into the Wolf
245
Depredation and Management Restricted Account shall be used by the Division of Wildlife
246
Resources for:
247
(i) payments for livestock depredation by wolves; or
248
(ii) wolf management.
249
(b) Contributions and interest deposited into the Wolf Depredation and Management
250
Restricted Account may be used for the purposes described in Subsection (4)(a) only to the
251
extent permitted by federal law.
252
Section 5.
Section
26-18a-3
is amended to read:
253
26-18a-3. Purpose of committee.
254
(1) The committee shall work to:
255
(a) provide financial assistance for initial medical expenses of children who need organ
256
transplants;
257
(b) obtain the assistance of volunteer and public service organizations; and
258
(c) fund activities as the committee designates for the purpose of educating the public
259
about the need for organ donors.
260
(2) (a) The committee is responsible for awarding financial assistance funded by the
261
trust account.
262
(b) The financial assistance awarded by the committee under Subsection (1)(a) shall be
263
in the form of interest free loans. The committee may establish terms for repayment of the
264
loans, including a waiver of the requirement to repay any awards if, in the committee's
265
judgment, repayment of the loan would impose an undue financial burden on the recipient.
266
(c) In making financial awards under Subsection (1)(a), the committee shall consider:
267
(i) need;
268
(ii) coordination with or enhancement of existing services or financial assistance,
269
including availability of insurance or other state aid;
270
(iii) the success rate of the particular organ transplant procedure needed by the child;
271
and
272
(iv) the extent of the threat to the child's life without the organ transplant.
273
(3) The committee may only provide the assistance described in this section to children
274
who have resided in Utah, or whose legal guardians have resided in Utah for at least six months
275
prior to the date of assistance under this section.
276
(4) (a) The committee may expend up to 5% of its annual appropriation for
277
administrative costs associated with the allocation of funds from the trust account.
278
(b) The administrative costs shall be used for the costs associated with staffing the
279
committee and for State Tax Commission costs in implementing Section [
59-10-550
]
280
59-10-1308
.
281
(5) The committee shall make an annual report to the Health and Human Services
282
Appropriations Subcommittee regarding the programs and services funded by contributions to
283
the trust account.
284
Section 6.
Section
26-18a-4
is amended to read:
285
26-18a-4. Creation of Kurt Oscarson Children's Organ Transplant Trust
286
Account.
287
(1) There is created a restricted account within the General Fund pursuant to Section
288
51-5-4
known as the Kurt Oscarson Children's Organ Transplant Trust Account. Private
289
contributions received under this section and Section [
59-10-550
]
59-10-1308
shall be
290
deposited into the trust account to be used only for the programs and purposes described in
291
Section
26-18a-3
.
292
(2) Money shall be appropriated from the trust account to the committee in accordance
293
with Title 63, Chapter 38, Budgetary Procedures Act.
294
(3) In addition to funds received under Section [
59-10-550
]
59-10-1308
, the committee
295
may accept transfers, grants, gifts, bequests, or any money made available from any source to
296
implement this chapter.
297
Section 7.
Section
26-48-102
is amended to read:
298
26-48-102. Cat and Dog Community Spay and Neuter Program Restricted
299
Account -- Interest -- Use of contributions and interest.
300
(1) There is created within the General Fund the Cat and Dog Community Spay and
301
Neuter Program Restricted Account.
302
(2) The account shall be funded by contributions deposited into the Cat and Dog
303
Community Spay and Neuter Program Restricted Account in accordance with Section
304
[
59-10-550.2
]
59-10-1310
.
305
(3) (a) The Cat and Dog Community Spay and Neuter Program Restricted Account
306
shall earn interest.
307
(b) Interest earned on the Cat and Dog Community Spay and Neuter Program
308
Restricted Account shall be deposited into the Cat and Dog Community Spay and Neuter
309
Program Restricted Account.
310
(4) The department shall distribute contributions and interest deposited into the Cat and
311
Dog Community Spay and Neuter Program Restricted Account to one or more organizations
312
that:
313
(a) are exempt from federal income taxation under Section 501(c)(3), Internal Revenue
314
Code;
315
(b) operate a mobile spay and neuter clinic for cats and dogs;
316
(c) provide annual spay and neuter services at the mobile spay and neuter clinic
317
described in Subsection (4)(b):
318
(i) to one or more communities in at least 20 counties in the state; and
319
(ii) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
320
and
321
(d) (i) spay and neuter cats and dogs owned by persons having low incomes; and
322
(ii) have established written guidelines for determining what constitutes a person
323
having a low income in accordance with any rules made by the department as authorized by
324
Subsection (5)(c).
325
(5) (a) An organization described in Subsection (4) may apply to the department to
326
receive a distribution in accordance with Subsection (4).
327
(b) An organization that receives a distribution from the department in accordance with
328
Subsection (4):
329
(i) shall expend the distribution only to spay or neuter dogs and cats:
330
(A) owned by persons having low incomes;
331
(B) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
332
(C) through a statewide voucher program; and
333
(D) at a location that:
334
(I) is not a mobile spay and neuter clinic; and
335
(II) does not receive any funding from a governmental entity; and
336
(ii) may not expend the distribution for any administrative cost relating to an
337
expenditure authorized by Subsection (5)(b)(i).
338
(c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
339
department may make rules:
340
(i) providing procedures and requirements for an organization to apply to the
341
department to receive a distribution in accordance with Subsection (4); and
342
(ii) to define what constitutes a person having a low income.
343
Section 8.
Section
31A-32a-101
is amended to read:
344
31A-32a-101. Title and scope.
345
(1) This chapter is known as the "Medical Care Savings Account Act."
346
(2) (a) This chapter applies only to a medical care savings [accounts] account
347
established for the purpose of seeking a tax [deduction] credit under Section [
59-10-114
]
348
59-10-1021
.
349
(b) This chapter does not apply to a medical care savings [accounts that will not be
350
subject to tax deductions under Section
59-10-114
] account with respect to which a tax credit is
351
not claimed under Section
59-10-1021
.
352
Section 9.
Section
31A-32a-103
is amended to read:
353
31A-32a-103. Establishing medical care savings accounts.
354
[(1) For tax years beginning 1995, both of the following apply:]
355
(1) For a taxable year beginning on or after January 1, 1995:
356
(a) an employer, except as otherwise provided by contract or a collective bargaining
357
agreement, may offer a medical care savings account program to the employer's employees;
358
[and] or
359
(b) a resident individual may establish a medical care savings account program for the
360
individual or for the individual's dependents.
361
(2) (a) A contribution into an account made by an employer on behalf of an employee,
362
or made by an individual account holder may not exceed the greater of:
363
[(a)] (i) $2,000 in any [tax] taxable year; or
364
(ii) an amount of money equal to the sum of all eligible medical expenses paid by the
365
employee or account holder [in] for that [tax] taxable year on behalf of the employee, account
366
holder, or the employee's or account holder's spouse or dependents.
367
(b) For purposes of Subsection (2)(a)(ii), eligible medical expenses [as defined in
368
Subsection
31A-32a-102
(5),] are limited to expenses in [that tax year which] the taxable year
369
that an insurance carrier has applied to the employee's or account holder's deductible.
370
(3) An employer that offers a medical care savings account program shall, before
371
making any contributions:
372
(a) inform all employees in writing of the fact that these contributions may not be
373
deductible under the federal tax laws; and
374
(b) obtain from the employee a written election to participate in the medical care
375
savings account program.
376
(4) Except as provided in Sections
31A-32a-105
and
59-10-114
, principal contributed
377
to and interest earned on a medical care savings account and money reimbursed to an employee
378
or account holder for eligible medical expenses are exempt from taxation.
379
(5) (a) An employer may select a single account administrator for all of the employer's
380
employee's medical care savings accounts.
381
(b) If a single account administrator is not selected, an employer may contribute
382
directly to the account holder's individual medical care savings account.
383
Section 10.
Section
31A-32a-104
is amended to read:
384
31A-32a-104. Administration of medical care savings account.
385
(1) An account administrator shall administer the medical care savings account from
386
which the payment of claims is made and has a fiduciary duty to the person for whose benefit
387
the account administrator administers an account.
388
(2) (a) Except as provided in Subsection
31A-32a-105
(1), the account administrator
389
shall use the funds held in a medical care savings account solely for the purpose of paying or
390
reimbursing the employee or account holder for eligible medical expenses of the employee or
391
account holder or of the employee's or account holder's dependents.
392
(b) The commissioner shall adopt rules concerning the coordination of benefits
393
between a medical care savings account and medical expenses payable from automobile
394
insurance policies, workers' compensation insurance policies, or other health care insurance
395
policies or contracts.
396
(3) The employee or account holder may submit documentation of eligible medical
397
expenses paid by the employee or account holder in the [tax] taxable year to the account
398
administrator, and the account administrator shall reimburse the employee or account holder
399
from the employee's or account holder's account for eligible medical expenses.
400
(4) If an employer makes contributions to a medical care savings account program on a
401
periodic installment basis, the employer may advance to an employee an amount necessary to
402
cover eligible medical expenses incurred that exceed the amount in the employee's medical
403
care savings account at the time the expense is incurred if the employee agrees to repay the
404
advance.
405
Section 11.
Section
31A-32a-105
is amended to read:
406
31A-32a-105. Withdrawals -- Termination -- Transfers.
407
(1) Subject to Subsection (3), if the employee or account holder withdraws money for
408
any purpose other than a medical expense at any time in which the balance in the account is
409
below $4,000 [all of the following apply]:
410
(a) the amount of the withdrawal [is income for the purposes of Title 59, Chapter 10,
411
Individual Income Tax Act] shall be added to adjusted gross income in accordance with
412
Section
59-10-114
; and
413
(b) the administrator shall withhold from the amount of the withdrawal, and on behalf
414
of the employee or account holder shall pay a penalty to the State Tax Commission equal to
415
10% of the amount of the withdrawal.
416
(2) If an employee or account holder withdraws money from the employee's or account
417
holder's medical care savings account for any purpose other than a medical expense, but the
418
withdrawal occurs when the balance in the medical care savings account is over $4,000, and
419
the withdrawal will not result in the account balance dropping below $4,000, the amount of the
420
withdrawal:
421
(a) is not subject to the penalties described in Subsection (1)(b); and
422
[(b) is subject to taxation as provided in Subsection (1)(a).]
423
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
424
(3) The amount of a disbursement of any assets of a medical care savings account
425
pursuant to a filing for protection under [Title 11 of the United States Code,] 11 U.S.C. Sec.
426
101 to 1330, by an employee, account holder, or person for whose benefit the account was
427
established:
428
(a) is not considered a withdrawal for purposes of this section; and
429
[(b) is subject to taxation under Title 59, Chapter 10, Individual Income Tax Act.]
430
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
431
(4) (a) Upon the death of the employee or account holder, the account administrator
432
shall distribute the principal and accumulated interest of the medical care savings account to
433
the estate of the employee or account holder.
434
(b) A distribution under this Subsection (4) is not subject to the penalties described in
435
Subsection (1)(b).
436
(5) (a) If an employee is no longer employed by an employer that participates in a
437
medical care savings account program, and if the employee's account is administered by the
438
employer's account administrator, the money in the medical care savings account may be used
439
for the benefit of the employee or the employee's dependents in accordance with this chapter,
440
and [remains exempt from taxation] may not be added to adjusted gross income under Section
441
59-10-114
if the employee, not more than 60 days after the employee's final day of
442
employment:
443
(i) transfers the account to a new account administrator; or
444
(ii) (A) requests in writing to the former employer's account administrator that the
445
account remain with that administrator; and
446
(B) the account administrator agrees to retain the account.
447
(b) Not more than 30 days after the expiration of the 60 days described in Subsection
448
(5)(a), if an account administrator has not accepted the former employee's account, the
449
employer shall mail a check to the former employee at the employee's last-known address equal
450
to the amount in the account on that day.
451
(c) The amount mailed to the employee [is subject to taxation pursuant to Subsection
452
(1)(a)] under Subsection (5)(b) shall be added to adjusted gross income in accordance with
453
Section
59-10-114
, but is not subject to the penalties under Subsection (1)(b).
454
(d) If an employee becomes employed with a different employer that participates in a
455
medical care savings account program, the employee may transfer the employee's medical care
456
savings account to that new employer's account administrator.
457
(e) If an account holder becomes an employee of an employer that participates in a
458
medical care savings account program, the account holder may transfer the account holder's
459
account to the employer's account administrator.
460
Section 12.
Section
31A-32a-106
is amended to read:
461
31A-32a-106. Regulation of account administrators -- Administration of addition
462
to adjusted gross income and tax credit -- Rulemaking authority.
463
(1) The department shall regulate account administrators and may adopt rules
464
necessary to administer this chapter.
465
(2) The State Tax Commission may adopt rules necessary to monitor and implement
466
the [tax deductions established by this chapter and Section
59-10-114
.]:
467
(a) amounts required to be added to adjusted gross income in accordance with Sections
468
31A-32a-105
and
59-10-114
; or
469
(b) amount claimed as a tax credit in accordance with Section
59-10-1021
.
470
Section 13.
Section
31A-32a-107
is amended to read:
471
31A-32a-107. Penalties for noncompliance with tax provisions.
472
(1) An account administrator who fails to comply with [the statutes and rules
473
governing the tax deduction established by this chapter and Section
59-10-114
] a provision
474
described in Subsection (2) is subject to:
475
[(1)] (a) the civil penalties provided in Section
59-1-401
; and
476
[(2)] (b) interest at the rate and in the manner provided in Section
59-1-402
.
477
(2) The following provisions apply to Subsection (1):
478
(a) a provision of this chapter relating to:
479
(i) an addition to income made in accordance with Section
59-10-114
; or
480
(ii) a tax credit allowed by Section
59-10-1021
; or
481
(b) a provision of Title 59, Chapter 10, Individual Income Tax Act, relating to:
482
(i) an addition to income made in accordance with Section
59-10-114
; or
483
(ii) a tax credit allowed by Section
59-10-1021
.
484
Section 14.
Section
48-2c-117
is amended to read:
485
48-2c-117. Taxation of limited liability companies.
486
A company established under this chapter or a foreign company transacting business in
487
this state shall be taxed as provided in [Section
59-10-801
] Subsection
59-10-1403
(4).
488
Section 15.
Section
53B-8a-106
is amended to read:
489
53B-8a-106. Account agreements.
490
The Utah Educational Savings Plan Trust may enter into account agreements with
491
account owners on behalf of beneficiaries under the following terms and agreements:
492
(1) (a) An account agreement may require an account owner to agree to invest a
493
specific amount of money in the Utah Educational Savings Plan Trust for a specific period of
494
time for the benefit of a specific beneficiary, not to exceed an amount determined by the
495
program administrator.
496
(b) Account agreements may be amended to provide for adjusted levels of payments
497
based upon changed circumstances or changes in educational plans.
498
(c) An account owner may make additional optional payments as long as the total
499
payments for a specific beneficiary do not exceed the total estimated higher education costs as
500
determined by the program administrator.
501
(d) Subject to Subsection (1)(f), the maximum amount of a qualified investment that a
502
corporation that is an account owner may subtract from unadjusted income for a taxable year in
503
accordance with Title 59, Chapter 7, Corporate Franchise and Income Taxes, is [$1,560]
504
$1,650 for each individual beneficiary for the taxable year beginning on or after January 1,
505
[2006] 2008, but beginning on or before December 31, [2006] 2008.
506
(e) Subject to Subsection (1)(f), the maximum amount of a qualified investment that
507
may be [subtracted from federal taxable income of a resident or nonresident individual for a
508
taxable year in accordance with Section
59-10-114
, a resident or nonresident estate or trust for
509
a taxable year in accordance with Section
59-10-202
, or] used as the basis for claiming a tax
510
credit [for a taxable year by a resident or nonresident individual] in accordance with Section
511
[
59-10-1206.1
]
59-10-1017
, is:
512
(i) for a resident or nonresident estate or trust that is an account owner, [$1,560] $1,650
513
for each individual beneficiary for the taxable year beginning on or after January 1, [2006]
514
2008, but beginning on or before December 31, [2006] 2008;
515
(ii) for a resident or nonresident individual that is an account owner, other than a
516
husband and wife who are account owners and file a single return jointly, [$1,560] $1,650 for
517
each individual beneficiary for the taxable year beginning on or after January 1, [2006] 2008,
518
but beginning on or before December 31, [2006] 2008; or
519
(iii) for a husband and wife who are account owners and file a single return jointly,
520
[$3,120] $3,300 for each individual beneficiary:
521
(A) for the taxable year beginning on or after January 1, [2006] 2008, but beginning on
522
or before December 31, [2006] 2008; and
523
(B) regardless of whether the Utah Educational Savings Plan Trust has entered into:
524
(I) a separate account agreement with each spouse; or
525
(II) a single account agreement with both spouses jointly.
526
(f) (i) For taxable years beginning on or after January 1, [2007] 2009, the program
527
administrator shall increase or decrease the maximum amount of a qualified investment
528
described in Subsections (1)(d) and (1)(e)(i) and (ii), by a percentage equal to the percentage
529
difference between the consumer price index for the preceding calendar year and the consumer
530
price index for the calendar year [2005] 2007.
531
(ii) After making an increase or decrease required by Subsection (1)(f)(i), the program
532
administrator shall:
533
(A) round the maximum amount of the qualified investments described in Subsections
534
(1)(d) and (1)(e)(i) and (ii) increased or decreased under Subsection (1)(f)(i) to the nearest ten
535
dollar increment; and
536
(B) increase or decrease the maximum amount of the qualified investment described in
537
Subsection (1)(e)(iii) so that the maximum amount of the qualified investment described in
538
Subsection (1)(e)(iii) is equal to the product of:
539
(I) the maximum amount of the qualified investment described in Subsection (1)(e)(ii)
540
as rounded under Subsection (1)(f)(ii)(A); and
541
(II) two.
542
(iii) For purposes of Subsections (1)(f)(i) and (ii), the program administrator shall
543
calculate the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue
544
Code.
545
(2) (a) (i) Beneficiaries designated in account agreements must be designated after
546
birth and before age 19 for an account owner to:
547
(A) subtract a qualified investment from income under[:(I)] Title 59, Chapter 7,
548
Corporate Franchise and Income Taxes; or
549
[(II) Section
59-10-114
; or]
550
[(III) Section
59-10-202
; or]
551
(B) use a qualified investment as the basis for claiming a tax credit in accordance with
552
Section [
59-10-1206.1
]
59-10-1017
.
553
(ii) If the beneficiary is designated after birth and before age 19, the payment of
554
benefits provided under the account agreement must begin not later than the beneficiary's 27th
555
birthday.
556
(b) (i) Account owners may designate [beneficiaries] a beneficiary age 19 or older, but
557
investments for [those beneficiaries] that beneficiary are not eligible [for subtraction from
558
federal taxable income.] to be:
559
(A) subtracted from income under Title 59, Chapter 7, Corporate Franchise and Income
560
Taxes; or
561
(B) used as the basis for claiming a tax credit in accordance with Section
59-10-1017
.
562
(ii) If a beneficiary age 19 or older is designated, the payment of benefits provided
563
under the account agreement must begin not later than ten years from the account agreement
564
date.
565
(3) Each account agreement shall state clearly that there are no guarantees regarding
566
moneys in the Utah Educational Savings Plan Trust as to the return of principal and that losses
567
could occur.
568
(4) Each account agreement shall provide that:
569
(a) [no] a contributor to, or designated beneficiary under, an account agreement may
570
not direct the investment of any contributions or earnings on contributions;
571
(b) [no] any part of the money in any account may not be used as security for a loan;
572
and
573
(c) [no] an account owner may not borrow from the Utah Educational Savings Plan
574
Trust.
575
(5) The execution of an account agreement by the trust may not guarantee in any way
576
that higher education costs will be equal to projections and estimates provided by the Utah
577
Educational Savings Plan Trust or that the beneficiary named in any participation agreement
578
will:
579
(a) be admitted to an institution of higher education;
580
(b) if admitted, be determined a resident for tuition purposes by the institution of
581
higher education, unless the account agreement is vested;
582
(c) be allowed to continue attendance at the institution of higher education following
583
admission; or
584
(d) graduate from the institution of higher education.
585
(6) [Beneficiaries] A beneficiary may be changed as permitted by the rules and
586
regulations of the board upon written request of the account owner prior to the date of
587
admission of any beneficiary under an account agreement by an institution of higher education
588
so long as the substitute beneficiary is eligible for participation.
589
(7) [Account agreements] An account agreement may be freely amended throughout
590
[their terms] the term of the account agreement in order to enable [account owners] an account
591
owner to increase or decrease the level of participation, change the designation of beneficiaries,
592
and carry out similar matters as authorized by rule.
593
(8) Each account agreement shall provide that:
594
(a) the account agreement may be canceled upon the terms and conditions, and upon
595
payment of the fees and costs set forth and contained in the board's rules and regulations; and
596
(b) the program administrator may amend the agreement unilaterally and retroactively,
597
if necessary, to maintain the Utah Educational Savings Plan Trust as a qualified tuition
598
program under Section 529, Internal Revenue Code.
599
Section 16.
Section
59-10-103
is amended to read:
600
59-10-103. Definitions.
601
(1) As used in this chapter:
602
(a) "Adjusted gross income":
603
(i) for a resident or nonresident individual, is as defined in Section 62, Internal
604
Revenue Code; or
605
(ii) for a resident or nonresident estate or trust, is as calculated in Section 67(e),
606
Internal Revenue Code.
607
[(b) "Adoption expenses" means:]
608
[(i) any actual medical and hospital expenses of the mother of the adopted child which
609
are incident to the child's birth;]
610
[(ii) any welfare agency fees or costs;]
611
[(iii) any child placement service fees or costs;]
612
[(iv) any legal fees or costs; or]
613
[(v) any other fees or costs relating to an adoption.]
614
[(c) "Adult with a disability" means an individual who:]
615
[(i) is 18 years of age or older;]
616
[(ii) is eligible for services under Title 62A, Chapter 5, Services for People with
617
Disabilities; and]
618
[(iii) is not enrolled in:]
619
[(A) an education program for students with disabilities that is authorized under
620
Section
53A-15-301
; or]
621
[(B) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind.]
622
[(d) (i) For purposes of Subsection
59-10-114
(2)(l), "capital gain transaction" means a
623
transaction that results in a:]
624
[(A) short-term capital gain; or]
625
[(B) long-term capital gain.]
626
[(ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
627
the commission may by rule define the term "transaction."]
628
[(e) "Commercial domicile" means the principal place from which the trade or business
629
of a Utah small business corporation is directed or managed.]
630
[(f)] (b) "Corporation" includes:
631
(i) [associations] an association;
632
(ii) a joint stock [companies] company; and
633
(iii) an insurance [companies] company.
634
[(g) "Dependent child with a disability" means an individual 21 years of age or younger
635
who:]
636
[(i) (A) is diagnosed by a school district representative under rules adopted by the State
637
Board of Education as having a disability classified as:]
638
[(I) autism;]
639
[(II) deafness;]
640
[(III) preschool developmental delay;]
641
[(IV) dual sensory impairment;]
642
[(V) hearing impairment;]
643
[(VI) intellectual disability;]
644
[(VII) multidisability;]
645
[(VIII) orthopedic impairment;]
646
[(IX) other health impairment;]
647
[(X) traumatic brain injury; or]
648
[(XI) visual impairment;]
649
[(B) is not receiving residential services from:]
650
[(I) the Division of Services for People with Disabilities created under Section
651
62A-5-102
; or]
652
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
653
and]
654
[(C) is enrolled in:]
655
[(I) an education program for students with disabilities that is authorized under Section
656
53A-15-301
; or]
657
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
658
or]
659
[(ii) is identified under guidelines of the Department of Health as qualified for:]
660
[(A) Early Intervention; or]
661
[(B) Infant Development Services.]
662
[(h)] (c) "Distributable net income" is as defined in Section 643, Internal Revenue
663
Code.
664
[(i)] (d) "Employee" is as defined in Section
59-10-401
.
665
[(j)] (e) "Employer" is as defined in Section
59-10-401
.
666
[(k)] (f) "Federal taxable income":
667
(i) for a resident or nonresident individual, means taxable income as defined by Section
668
63, Internal Revenue Code; or
669
(ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and
670
(b), Internal Revenue Code.
671
[(l)] (g) "Fiduciary" means:
672
(i) a guardian;
673
(ii) a trustee;
674
(iii) an executor;
675
(iv) an administrator;
676
(v) a receiver;
677
(vi) a conservator; or
678
(vii) any person acting in any fiduciary capacity for any individual.
679
(h) "Guaranteed annuity interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
680
[(m)] (i) "Homesteaded land diminished from the Uintah and Ouray Reservation"
681
means the homesteaded land that was held to have been diminished from the Uintah and Ouray
682
Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
683
[(n)] (j) "Individual" means a natural person and includes aliens and minors.
684
[(o)] (k) "Irrevocable trust" means a trust in which the settlor may not revoke or
685
terminate all or part of the trust without the consent of a person who has a substantial beneficial
686
interest in the trust and the interest would be adversely affected by the exercise of the settlor's
687
power to revoke or terminate all or part of the trust.
688
[(p) For purposes of Subsection
59-10-114
(2)(l), "long-term capital gain" is as defined
689
in Section 1222, Internal Revenue Code.]
690
(l) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.
691
[(q)] (m) "Nonresident individual" means an individual who is not a resident of this
692
state.
693
[(r)] (n) "Nonresident trust" or "nonresident estate" means a trust or estate which is not
694
a resident estate or trust.
695
[(s)] (o) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
696
unincorporated organization:
697
(A) through or by means of which any business, financial operation, or venture is
698
carried on; and
699
(B) which is not, within the meaning of this chapter:
700
(I) a trust;
701
(II) an estate; or
702
(III) a corporation.
703
(ii) "Partnership" does not include any organization not included under the definition of
704
"partnership" in Section 761, Internal Revenue Code.
705
(iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
706
organization described in Subsection (1)[(s)](o)(i).
707
[(t) "Qualifying military servicemember" means a member of:]
708
[(i) The Utah Army National Guard;]
709
[(ii) The Utah Air National Guard; or]
710
[(iii) the following if the member is assigned to a unit that is located in the state:]
711
[(A) The Army Reserve;]
712
[(B) The Naval Reserve;]
713
[(C) The Air Force Reserve;]
714
[(D) The Marine Corps Reserve; or]
715
[(E) The Coast Guard Reserve.]
716
[(u) "Qualifying stock" means stock that is:]
717
[(i) (A) common; or]
718
[(B) preferred;]
719
[(ii) as defined by the commission by rule, originally issued to:]
720
[(A) a resident or nonresident individual; or]
721
[(B) a partnership if the resident or nonresident individual making a subtraction from
722
federal taxable income in accordance with Subsection
59-10-114
(2)(l):]
723
[(I) was a partner when the stock was issued; and]
724
[(II) remains a partner until the last day of the taxable year for which the resident or
725
nonresident individual makes the subtraction from federal taxable income in accordance with
726
Subsection
59-10-114
(2)(l); and]
727
[(iii) issued:]
728
[(A) by a Utah small business corporation;]
729
[(B) on or after January 1, 2003; and]
730
[(C) for:]
731
[(I) money; or]
732
[(II) other property, except for stock or securities.]
733
(p) "Qualified nongrantor charitable lead trust" means a trust:
734
(i) that is irrevocable;
735
(ii) that has a trust term measured by:
736
(A) a fixed term of years; or
737
(B) the life of a person living on the day on which the trust is created;
738
(iii) under which:
739
(A) a portion of the value of the trust assets is distributed during the trust term:
740
(I) to an organization described in Section 170(c), Internal Revenue Code; and
741
(II) as a:
742
(Aa) guaranteed annuity interest; or
743
(Bb) unitrust interest; and
744
(B) assets remaining in the trust at the termination of the trust term are distributed to a
745
beneficiary:
746
(I) designated in the trust; and
747
(II) that is not an organization described in Section 170(c), Internal Revenue Code;
748
(iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue
749
Code; and
750
(v) under which the grantor of the trust is not treated as the owner of any portion of the
751
trust for federal income tax purposes.
752
[(v)] (q) (i) "Resident individual" means:
753
(A) an individual who is domiciled in this state for any period of time during the
754
taxable year, but only for the duration of the period during which the individual is domiciled in
755
this state; or
756
(B) an individual who is not domiciled in this state but:
757
(I) maintains a permanent place of abode in this state; and
758
(II) spends in the aggregate 183 or more days of the taxable year in this state.
759
(ii) For purposes of Subsection (1)[(v)] (q)(i)(B), a fraction of a calendar day shall be
760
counted as a whole day.
761
[(w)] (r) "Resident estate" or "resident trust" is as defined in Section
75-7-103
.
762
[(x) For purposes of Subsection
59-10-114
(2)(l), "short-term capital gain" is as defined
763
in Section 1222, Internal Revenue Code.]
764
(s) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.
765
(t) "State income tax percentage for a nonresident estate or trust" means a percentage
766
equal to a nonresident estate's or trust's state taxable income for the taxable year divided by the
767
nonresident estate's or trust's total adjusted gross income for that taxable year after making the
768
adjustments required by:
769
(i) Section
59-10-202
;
770
(ii) Section
59-10-207
;
771
(iii) Section
59-10-209.1
; or
772
(iv) Section
59-10-210
;
773
(u) "State income tax percentage for a nonresident individual" means a percentage
774
equal to a nonresident individual's state taxable income for the taxable year divided by the
775
difference between:
776
(i) the nonresident individual's total adjusted gross income for that taxable year, after
777
making the:
778
(A) additions and subtractions required by Section
59-10-114
; and
779
(B) adjustments required by Section
59-10-115
; and
780
(ii) if the nonresident individual described in Subsection (1)(u)(i) is a servicemember,
781
the compensation the servicemember receives for military service if the servicemember is
782
serving in compliance with military orders.
783
(v) "State income tax percentage for a part-year resident individual" means, for a
784
taxable year, a fraction:
785
(i) the numerator of which is the sum of:
786
(A) subject to Subsections
59-10-1404
(3) and (4), for the time period during the
787
taxable year that the part-year resident individual is a resident, the part-year resident
788
individual's total adjusted gross income for that time period, after making the:
789
(I) additions and subtractions required by Section
59-10-114
; and
790
(II) adjustments required by Section
59-10-115
; and
791
(B) for the time period during the taxable year that the part-year resident individual is a
792
nonresident, an amount calculated by:
793
(I) determining the part-year resident individual's adjusted gross income for that time
794
period, after making the:
795
(Aa) additions and subtractions required by Section
59-10-114
; and
796
(Bb) adjustments required by Section
59-10-115
; and
797
(II) calculating the portion of the amount determined under Subsection (1)(v)(i)(B)(I)
798
that is derived from Utah sources in accordance with Section
59-10-117
; and
799
(ii) the denominator of which is the difference between:
800
(A) the part-year resident individual's total adjusted gross income for that taxable year,
801
after making the:
802
(I) additions and subtractions required by Section
59-10-114
; and
803
(II) adjustments required by Section
59-10-115
; and
804
(B) if the part-year resident individual is a servicemember, any compensation the
805
servicemember receives for military service during the portion of the taxable year that the
806
servicemember is a nonresident if the servicemember is serving in compliance with military
807
orders.
808
[(y)] (w) "Taxable income" or "state taxable income":
809
(i) subject to Subsection [
59-10-302
(2)]
59-10-1404
(3), for a resident individual [other
810
than a resident individual described in Subsection (1)(y)(iii)], means the resident individual's
811
[federal taxable] adjusted gross income after making the:
812
(A) additions and subtractions required by Section
59-10-114
; and
813
(B) adjustments required by Section
59-10-115
;
814
(ii) for a nonresident individual [other than a nonresident individual described in
815
Subsection (1)(y)(iii), is as defined in Section
59-10-116
;], is an amount calculated by:
816
(A) determining the nonresident individual's adjusted gross income for the taxable
817
year, after making the:
818
(I) additions and subtractions required by Section
59-10-114
; and
819
(II) adjustments required by Section
59-10-115
; and
820
(B) calculating the portion of the amount determined under Subsection (1)(w)(ii)(A)
821
that is derived from Utah sources in accordance with Section
59-10-117
;
822
[(iii) for a resident or nonresident individual that collects and pays a tax described in
823
Part 12, Single Rate Individual Income Tax Act, is as defined in Section
59-10-1202
;]
824
[(iv)] (iii) for a resident estate or trust, is as calculated under Section
59-10-201.1
; and
825
[(v)] (iv) for a nonresident estate or trust, is as calculated under Section
59-10-204
.
826
[(z)] (x) "Taxpayer" means any individual, estate, [or] trust, or beneficiary of an estate
827
or trust, [whose income is] that has income subject in whole or part to the tax imposed by this
828
chapter.
829
(y) "Trust term" means a time period:
830
(i) beginning on the day on which a qualified nongrantor charitable lead trust is
831
created; and
832
(ii) ending on the day on which the qualified nongrantor charitable lead trust described
833
in Subsection (1)(y)(i) terminates.
834
[(aa)] (z) "Uintah and Ouray Reservation" means the lands recognized as being
835
included within the Uintah and Ouray Reservation in:
836
(i) Hagen v. Utah, 510 U.S. 399 (1994); and
837
(ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
838
[(bb) (i) "Utah small business corporation" means a corporation that:]
839
[(A) is a small business corporation as defined in Section 1244(c)(3), Internal Revenue
840
Code;]
841
[(B) except as provided in Subsection (1)(bb)(ii), meets the requirements of Section
842
1244(c)(1)(C), Internal Revenue Code; and]
843
[(C) has its commercial domicile in this state.]
844
[(ii) Notwithstanding Subsection (1)(bb)(i)(B), the time period described in Section
845
1244(c)(1)(C) and Section 1244(c)(2), Internal Revenue Code, for determining the source of a
846
corporation's aggregate gross receipts shall end on the last day of the taxable year for which the
847
resident or nonresident individual makes a subtraction from federal taxable income in
848
accordance with Subsection
59-10-114
(2)(l).]
849
(aa) "Unadjusted income" means an amount equal to the difference between:
850
(i) the total income required to be reported by a resident or nonresident estate or trust
851
on the resident or nonresident estate's or trust's federal income tax return for estates and trusts
852
for the taxable year; and
853
(ii) the sum of the following:
854
(A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust:
855
(I) for administering the resident or nonresident estate or trust; and
856
(II) that the resident or nonresident estate or trust deducts as allowed on the resident or
857
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
858
year;
859
(B) the income distribution deduction that a resident or nonresident estate or trust
860
deducts under Section 651 or 661, Internal Revenue Code, as allowed on the resident or
861
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
862
year;
863
(C) the amount that a resident or nonresident estate or trust deducts as a deduction for
864
estate tax or generation skipping transfer tax under Section 691(c), Internal Revenue Code, as
865
allowed on the resident or nonresident estate's or trust's federal income tax return for estates
866
and trusts for the taxable year; and
867
(D) the amount that a resident or nonresident estate or trust deducts as a personal
868
exemption under Section 642(b), Internal Revenue Code, as allowed on the resident or
869
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
870
year.
871
(bb) "Unitrust interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
872
(cc) "Ute tribal member" means a person who is enrolled as a member of the Ute
873
Indian Tribe of the Uintah and Ouray Reservation.
874
(dd) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
875
(ee) "Wages" is as defined in Section
59-10-401
.
876
(2) (a) Any term used in this chapter has the same meaning as when used in
877
comparable context in the laws of the United States relating to federal income taxes unless a
878
different meaning is clearly required.
879
(b) Any reference to the Internal Revenue Code or to the laws of the United States shall
880
mean the Internal Revenue Code or other provisions of the laws of the United States relating to
881
federal income taxes that are in effect for the taxable year.
882
(c) Any reference to a specific section of the Internal Revenue Code or other provision
883
of the laws of the United States relating to federal income taxes shall include any
884
corresponding or comparable provisions of the Internal Revenue Code as [hereafter] amended,
885
redesignated, or reenacted.
886
Section 17.
Section
59-10-104
is amended to read:
887
59-10-104. Tax basis -- Tax rate -- Exemption.
888
(1) [Except as provided in Subsection (5) or Part 12, Single Rate Individual Income
889
Tax Act, for] For taxable years beginning on or after January 1, [2006] 2008, [but beginning on
890
or before December 31, 2007,] a tax is imposed on the state taxable income of [every] a
891
resident individual as provided in this section.
892
[(2) For an individual, other than a husband and wife or head of household required to
893
use the tax table under Subsection (3), the tax under this section is imposed in accordance with
894
the following income brackets:]
895
[If the state taxable income is: The tax is:]
896
[Less than or equal to $1,000 2.3% of the state taxable income]
897
[Greater than $1,000 but less than $23, plus 3.3% of state taxable]
898
[or equal to $2,000 income greater than $1,000]
899
[Greater than $2,000 but less than $56, plus 4.2% of state taxable]
900
[or equal to $3,000 income greater than $2,000]
901
[Greater than $3,000 but less than $98, plus 5.2% of state taxable]
902
[or equal to $4,000 income greater than $3,000]
903
[Greater than $4,000 but less than $150, plus 6% of state taxable]
904
[or equal to $5,500 income greater than $4,000]
905
[Greater than $5,500 $240, plus 6.98% of state taxable]
906
[income greater than $5,500]
907
[(3) For a husband and wife filing a single return jointly, or a head of household as
908
defined in Section 2(b), Internal Revenue Code, filing a single return, the tax under this section
909
is imposed in accordance with the following income brackets:]
910
[If the state taxable income is: The tax is:]
911
[Less than or equal to $2,000 2.3% of the state taxable income]
912
[Greater than $2,000 but less than $46, plus 3.3% of state taxable]
913
[or equal to $4,000 income greater than $2,000]
914
[Greater than $4,000 but less than $112, plus 4.2% of state taxable]
915
[or equal to $6,000 income greater than $4,000]
916
[Greater than $6,000 but less than $196, plus 5.2% of state taxable]
917
[or equal to $8,000 income greater than $6,000]
918
[Greater than $8,000 but less than $300, plus 6% of state taxable]
919
[or equal to $11,000 income greater than $8,000]
920
[Greater than $11,000 $480, plus 6.98% of state taxable]
921
[income greater than $11,000]
922
[(4) (a) For taxable years beginning on or after January 1, 2009, the commission shall:]
923
[(i) make the following adjustments to the income brackets under Subsection (2):]
924
[(A) increase or decrease the income brackets under Subsection (2) by a percentage
925
equal to the percentage difference between the consumer price index for the preceding calendar
926
year and the consumer price index for the calendar year 2007; and]
927
[(B) after making an increase or decrease under Subsection (4)(a)(i)(A), round the
928
income brackets under Subsection (2) to the nearest whole dollar;]
929
[(ii) after making the adjustments described in Subsection (4)(a)(i) to the income
930
brackets under Subsection (2), adjust the income brackets under Subsection (3) so that for each
931
income bracket under Subsection (2) there is a corresponding income bracket under Subsection
932
(3) that is equal to the product of:]
933
[(A) each income bracket under Subsection (2); and]
934
[(B) two; and]
935
[(iii) to the extent necessary to reflect an adjustment under Subsection (4)(a)(i) or (ii):]
936
[(A) increase or decrease the amount of tax under Subsection (2) or (3) prior to adding
937
in the portion of the tax calculated as a percentage of state taxable income; and]
938
[(B) after making an increase or decrease under Subsection (4)(a)(iii)(A), round the
939
amount of tax under Subsection (2) or (3) to the nearest whole dollar.]
940
[(b) The commission may not increase or decrease the tax rate percentages provided in
941
Subsection (2) or (3).]
942
[(c) For purposes of Subsection (4)(a)(i), the commission shall calculate the consumer
943
price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.]
944
(2) For purposes of Subsection (1), for a taxable year, the tax is an amount equal to the
945
product of:
946
(a) the resident individual's state taxable income for that taxable year; and
947
(b) 5%.
948
[(5)] (3) This section does not apply to a resident individual exempt from taxation
949
under Section
59-10-104.1
.
950
Section 18.
Section
59-10-104.1
is amended to read:
951
59-10-104.1. Exemption from taxation.
952
(1) For purposes of this section:
953
(a) "Personal exemptions" means the total exemption amount an individual is allowed
954
to claim for the taxable year under Section 151, Internal Revenue Code, for:
955
(i) the individual;
956
(ii) the individual's spouse; and
957
(iii) the individual's dependents.
958
(b) "Standard deduction":
959
(i) [except as provided in Subsection (1)(b)(ii),] means the standard deduction an
960
individual is allowed to claim for the taxable year under Section 63, Internal Revenue Code;
961
and
962
(ii) notwithstanding Subsection (1)(b)(i), does not include an additional amount
963
allowed under Section 63(f), Internal Revenue Code, for an individual or an individual's spouse
964
who is:
965
(A) blind; or
966
(B) 65 years of age or older.
967
(2) For taxable years beginning on or after January 1, 2002, an individual is exempt
968
from a tax imposed by Section
59-10-104
or
59-10-116
[or described in Section
59-10-1203
]
969
if the individual's adjusted gross income on the individual's federal individual income tax
970
return for the taxable year is less than or equal to the sum of the individual's:
971
(a) personal exemptions for that taxable year; and
972
(b) standard deduction for that taxable year.
973
Section 19.
Section
59-10-110
is amended to read:
974
59-10-110. Disallowance of federal tax credits.
975
[No] A credit applied directly to the income tax calculated for federal income tax
976
purposes [pursuant to] in accordance with the Internal Revenue Code [shall] may not be
977
applied in calculating the tax due under this chapter.
978
Section 20.
Section
59-10-114
is amended to read:
979
59-10-114. Additions to and subtractions from adjusted gross income of an
980
individual.
981
(1) There shall be added to [federal taxable] adjusted gross income of a resident or
982
nonresident individual:
983
[(a) the amount of any income tax imposed by this or any predecessor Utah individual
984
income tax law and the amount of any income tax imposed by the laws of another state, the
985
District of Columbia, or a possession of the United States, to the extent deducted from adjusted
986
gross income in determining federal taxable income;]
987
[(b)] (a) a lump sum distribution that the taxpayer does not include in adjusted gross
988
income on the taxpayer's federal individual income tax return for the taxable year;
989
[(c)] (b) [for taxable years beginning on or after January 1, 2002,] the amount of a
990
child's income calculated under Subsection [(5)] (4) that:
991
(i) a parent elects to report on the parent's federal individual income tax return for the
992
taxable year; and
993
(ii) the parent does not include in adjusted gross income on the parent's federal
994
individual income tax return for the taxable year;
995
[(d) 25% of the personal exemptions, as defined and calculated in the Internal Revenue
996
Code;]
997
[(e)] (c) (i) a withdrawal from a medical care savings account and any penalty imposed
998
[in] for the taxable year if:
999
[(i)] (A) the resident or nonresident individual [did] does not deduct [or include] the
1000
amounts on the resident or nonresident individual's federal individual income tax return
1001
[pursuant to] under Section 220, Internal Revenue Code;
1002
[(ii)] (I) the withdrawal is subject to Subsections
31A-32a-105
(1) and (2); and
1003
[(iii)] (II) the withdrawal is [deducted
by]:
1004
(Aa) subtracted on a return the resident or nonresident individual [under Subsection
1005
(2)(h);] files under this chapter for a taxable year beginning on or before December 31, 2007;
1006
or
1007
(Bb) used as the basis for a resident or nonresident individual to claim a tax credit
1008
under Section
59-10-1021
;
1009
(ii) a disbursement required to be added to adjusted gross income in accordance with
1010
Subsection
31A-32a-105
(3); or
1011
(iii) an amount required to be added to adjusted gross income in accordance with
1012
Subsection
31A-32a-105
(5)(c);
1013
[(f)] (d) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
1014
Incentive Program, from the account of a resident or nonresident individual who is an account
1015
owner as defined in Section
53B-8a-102
, for the taxable year for which the amount is
1016
withdrawn, if that amount withdrawn from the account of the resident or nonresident individual
1017
who is the account owner:
1018
(i) is not expended for higher education costs as defined in Section
53B-8a-102
; and
1019
(ii) is:
1020
(A) subtracted by the resident or nonresident individual:
1021
(I) who is the account owner; and
1022
[(II) in accordance with Subsection (2)(i); or]
1023
(II) on the resident or nonresident individual's return filed under this chapter for a
1024
taxable year beginning on or before December 31, 2007; or
1025
(B) used as the basis for the resident or nonresident individual who is the account
1026
owner to claim a tax credit under Section [
59-10-1206.1
]
59-10-1017
;
1027
[(g)] (e) except as provided in Subsection (6), [for taxable years beginning on or after
1028
January 1, 2003,] for bonds, notes, and other evidences of indebtedness acquired on or after
1029
January 1, 2003, the interest from bonds, notes, and other evidences of indebtedness issued by
1030
one or more of the following entities:
1031
(i) a state other than this state;
1032
(ii) the District of Columbia;
1033
(iii) a political subdivision of a state other than this state; or
1034
(iv) an agency or instrumentality of an entity described in Subsections (1)[(g)](e)(i)
1035
through (iii);
1036
[(h)] (f) subject to Subsection (2)[(n)](c), any distribution received by a resident
1037
beneficiary of a resident trust of income that was taxed at the trust level for federal tax
1038
purposes, but was subtracted from state taxable income of the trust pursuant to Subsection
1039
59-10-202
(2)[(c)](b);
1040
[(i)] (g) any distribution received by a resident beneficiary of a nonresident trust of
1041
undistributed distributable net income realized by the trust on or after January 1, 2004, if that
1042
undistributed distributable net income was taxed at the trust level for federal tax purposes, but
1043
was not taxed at the trust level by any state, with undistributed distributable net income
1044
considered to be distributed from the most recently accumulated undistributed distributable net
1045
income; and
1046
[(j)] (h) any adoption expense:
1047
(i) for which a resident or nonresident individual receives reimbursement from another
1048
person; and
1049
(ii) to the extent to which the resident or nonresident individual [deducts] subtracts that
1050
adoption expense:
1051
[(A) under Subsection (2)(c); or]
1052
(A) on a return filed under this chapter for a taxable year beginning on or before
1053
December 31, 2007; or
1054
(B) from federal taxable income on a federal individual income tax return.
1055
(2) There shall be subtracted from [federal taxable] adjusted gross income of a resident
1056
or nonresident individual:
1057
(a) the difference between:
1058
[(a)] (i) the interest or a dividend on [obligations or securities] an obligation or security
1059
of the United States [and its possessions or of any] or an authority, commission, [or]
1060
instrumentality, or possession of the United States, to the extent that interest or dividend is:
1061
(A) included in adjusted gross income for federal income tax purposes for the taxable
1062
year [but]; and
1063
(B) exempt from state income taxes under the laws of the United States[, but the
1064
amount subtracted under this Subsection (2)(a) shall be reduced by]; and
1065
(ii) any interest on indebtedness incurred or continued to purchase or carry the
1066
[obligations or securities] obligation or security described in [this] Subsection (2)(a)(i)[, and by
1067
any expenses incurred in the production of interest or dividend income described in this
1068
Subsection (2)(a) to the extent that such expenses, including amortizable bond premiums, are
1069
deductible in determining federal taxable income];
1070
[(b) 1/2 of the net amount of any income tax paid or payable to the United States after
1071
all allowable credits, as reported on the United States individual income tax return of the
1072
taxpayer for the same taxable year;]
1073
[(c) the amount of adoption expenses for one of the following taxable years as elected
1074
by the resident or nonresident individual:]
1075
[(i) regardless of whether a court issues an order granting the adoption, the taxable year
1076
in which the adoption expenses are:]
1077
[(A) paid; or]
1078
[(B) incurred;]
1079
[(ii) the taxable year in which a court issues an order granting the adoption; or]
1080
[(iii) any year in which the resident or nonresident individual may claim the federal
1081
adoption expenses credit under Section 23, Internal Revenue Code;]
1082
[(d) amounts received by taxpayers under age 65 as retirement income which, for
1083
purposes of this section, means pensions and annuities, paid from an annuity contract
1084
purchased by an employer under a plan which meets the requirements of Section 404(a)(2),
1085
Internal Revenue Code, or purchased by an employee under a plan which meets the
1086
requirements of Section 408, Internal Revenue Code, or paid by the United States, a state, or
1087
political subdivision thereof, or the District of Columbia, to the employee involved or the
1088
surviving spouse;]
1089
[(e) for each taxpayer age 65 or over before the close of the taxable year, a $7,500
1090
personal retirement exemption;]
1091
[(f) 75% of the amount of the personal exemption, as defined and calculated in the
1092
Internal Revenue Code, for each dependent child with a disability and adult with a disability
1093
who is claimed as a dependent on a taxpayer's return;]
1094
[(g) subject to the limitations of Subsection (3)(e), amounts a taxpayer pays during the
1095
taxable year for health care insurance, as defined in Title 31A, Chapter 1, General Provisions:]
1096
[(i) for:]
1097
[(A) the taxpayer;]
1098
[(B) the taxpayer's spouse; and]
1099
[(C) the taxpayer's dependents; and]
1100
[(ii) to the extent the taxpayer does not deduct the amounts under Section 125, 162, or
1101
213, Internal Revenue Code, in determining federal taxable income for the taxable year;]
1102
[(h) (i) except as provided in this Subsection (2)(h), the amount of a contribution made
1103
during the taxable year on behalf of the taxpayer to a medical care savings account and interest
1104
earned on a contribution to a medical care savings account established pursuant to Title 31A,
1105
Chapter 32a, Medical Care Savings Account Act, to the extent the contribution is accepted by
1106
the account administrator as provided in the Medical Care Savings Account Act, and if the
1107
taxpayer did not deduct or include amounts on the taxpayer's federal individual income tax
1108
return pursuant to Section 220, Internal Revenue Code; and]
1109
[(ii) a contribution deductible under this Subsection (2)(h) may not exceed either of the
1110
following:]
1111
[(A) the maximum contribution allowed under the Medical Care Savings Account Act
1112
for the tax year multiplied by two for taxpayers who file a joint return, if neither spouse is
1113
covered by health care insurance as defined in Section
31A-1-301
or self-funded plan that
1114
covers the other spouse, and each spouse has a medical care savings account; or]
1115
[(B) the maximum contribution allowed under the Medical Care Savings Account Act
1116
for the tax year for taxpayers:]
1117
[(I) who do not file a joint return; or]
1118
[(II) who file a joint return, but do not qualify under Subsection (2)(h)(ii)(A);]
1119
[(i) subject to Subsection (1)(f), the amount of a qualified investment as defined in
1120
Section
53B-8a-102
that:]
1121
[(i) a resident or nonresident individual who is an account owner as defined in Section
1122
53B-8a-102
makes during the taxable year;]
1123
[(ii) the resident or nonresident individual described in Subsection (2)(i)(i) does not
1124
deduct on a federal individual income tax return; and]
1125
[(iii) does not exceed the maximum amount of the qualified investment that may be
1126
subtracted from federal taxable income for a taxable year in accordance with Subsections
1127
53B-8a-106
(1)(e) and (f);]
1128
[(j) for taxable years beginning on or after January 1, 2000, any amounts paid for
1129
premiums for long-term care insurance as defined in Section
31A-1-301
to the extent the
1130
amounts paid for long-term care insurance were not deducted under Section 213, Internal
1131
Revenue Code, in determining federal taxable income;]
1132
[(k)] (b) for taxable years beginning on or after January 1, 2000, if the conditions of
1133
Subsection [(4)] (3)(a) are met, the amount of income derived by a Ute tribal member:
1134
(i) during a time period that the Ute tribal member resides on homesteaded land
1135
diminished from the Uintah and Ouray Reservation; and
1136
(ii) from a source within the Uintah and Ouray Reservation;
1137
[(l) (i) for taxable years beginning on or after January 1, 2003, the total amount of a
1138
resident or nonresident individual's short-term capital gain or long-term capital gain on a
1139
capital gain transaction:]
1140
[(A) that occurs on or after January 1, 2003;]
1141
[(B) if 70% or more of the gross proceeds of the capital gain transaction are expended:]
1142
[(I) to purchase qualifying stock in a Utah small business corporation; and]
1143
[(II) within a 12-month period after the day on which the capital gain transaction
1144
occurs; and]
1145
[(C) if, prior to the purchase of the qualifying stock described in Subsection
1146
(2)(l)(i)(B)(I), the resident or nonresident individual did not have an ownership interest in the
1147
Utah small business corporation that issued the qualifying stock; and]
1148
[(ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1149
the commission may make rules:]
1150
[(A) defining the term "gross proceeds"; and]
1151
[(B) for purposes of Subsection (2)(l)(i)(C), prescribing the circumstances under which
1152
a resident or nonresident individual has an ownership interest in a Utah small business
1153
corporation;]
1154
[(m) for the taxable year beginning on or after January 1, 2005, but beginning on or
1155
before December 31, 2005, the first $2,200 of income a qualifying military servicemember
1156
receives:]
1157
[(i) for service:]
1158
[(A) as a qualifying military servicemember; or]
1159
[(B) under an order into active service in accordance with Section
39-1-5
; and]
1160
[(ii) to the extent that income is included in adjusted gross income on that resident or
1161
nonresident individual's federal individual income tax return for that taxable year;]
1162
[(n)] (c) an amount received by a resident or nonresident individual or distribution
1163
received by a resident or nonresident beneficiary of a resident trust:
1164
(i) if that amount or distribution constitutes a refund of taxes imposed by:
1165
(A) a state; or
1166
(B) the District of Columbia; and
1167
(ii) to the extent that amount or distribution is included in adjusted gross income for
1168
that taxable year on the federal individual income tax return of the resident or nonresident
1169
individual or resident or nonresident beneficiary of a resident trust;
1170
[(o)] (d) the amount of a railroad retirement benefit:
1171
(i) paid:
1172
(A) in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231 et
1173
seq.;
1174
(B) to a resident or nonresident individual; and
1175
(C) for the taxable year; and
1176
(ii) to the extent that railroad retirement benefit is included in adjusted gross income on
1177
that resident or nonresident individual's federal individual income tax return for that taxable
1178
year; and
1179
[(p)] (e) an amount:
1180
(i) received by an enrolled member of an American Indian tribe; and
1181
(ii) to the extent that the state is not authorized or permitted to impose a tax under this
1182
part on that amount in accordance with:
1183
(A) federal law;
1184
(B) a treaty; or
1185
(C) a final decision issued by a court of competent jurisdiction.
1186
[(3) (a) For purposes of Subsection (2)(d), the amount of retirement income subtracted
1187
for taxpayers under 65 shall be the lesser of the amount included in federal taxable income, or
1188
$4,800, except that:]
1189
[(i) for married taxpayers filing joint returns, for each $1 of adjusted gross income
1190
earned over $32,000, the amount of the retirement income exemption that may be subtracted
1191
shall be reduced by 50 cents;]
1192
[(ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
1193
earned over $16,000, the amount of the retirement income exemption that may be subtracted
1194
shall be reduced by 50 cents; and]
1195
[(iii) for individual taxpayers, for each $1 of adjusted gross income earned over
1196
$25,000, the amount of the retirement income exemption that may be subtracted shall be
1197
reduced by 50 cents.]
1198
[(b) For purposes of Subsection (2)(e), the amount of the personal retirement
1199
exemption shall be further reduced according to the following schedule:]
1200
[(i) for married taxpayers filing joint returns, for each $1 of adjusted gross income
1201
earned over $32,000, the amount of the personal retirement exemption shall be reduced by 50
1202
cents;]
1203
[(ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
1204
earned over $16,000, the amount of the personal retirement exemption shall be reduced by 50
1205
cents; and]
1206
[(iii) for individual taxpayers, for each $1 of adjusted gross income earned over
1207
$25,000, the amount of the personal retirement exemption shall be reduced by 50 cents.]
1208
[(c) For purposes of Subsections (3)(a) and (b), adjusted gross income shall be
1209
calculated by adding to adjusted gross income any interest income not otherwise included in
1210
adjusted gross income.]
1211
[(d) For purposes of determining ownership of items of retirement income common
1212
law doctrine will be applied in all cases even though some items may have originated from
1213
service or investments in a community property state. Amounts received by the spouse of a
1214
living retiree because of the retiree's having been employed in a community property state are
1215
not deductible as retirement income of such spouse.]
1216
[(e) For purposes of Subsection (2)(g), a subtraction for an amount paid for health care
1217
insurance as defined in Title 31A, Chapter 1, General Provisions, is not allowed:]
1218
[(i) for an amount that is reimbursed or funded in whole or in part by the federal
1219
government, the state, or an agency or instrumentality of the federal government or the state;
1220
and]
1221
[(ii) for a taxpayer who is eligible to participate in a health plan maintained and funded
1222
in whole or in part by the taxpayer's employer or the taxpayer's spouse's employer.]
1223
[(4)] (3) (a) A subtraction for an amount described in Subsection (2)[(k)](b) is allowed
1224
only if:
1225
(i) the taxpayer is a Ute tribal member; and
1226
(ii) the governor and the Ute tribe execute and maintain an agreement meeting the
1227
requirements of this Subsection [(4)] (3).
1228
(b) The agreement described in Subsection [(4)] (3)(a):
1229
(i) may not:
1230
(A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
1231
(B) provide a subtraction under this section greater than or different from the
1232
subtraction described in Subsection (2)[(k)](b); or
1233
(C) affect the power of the state to establish rates of taxation; and
1234
(ii) shall:
1235
(A) provide for the implementation of the subtraction described in Subsection
1236
(2)[(k)](b);
1237
(B) be in writing;
1238
(C) be signed by:
1239
(I) the governor; and
1240
(II) the chair of the Business Committee of the Ute tribe;
1241
(D) be conditioned on obtaining any approval required by federal law; and
1242
(E) state the effective date of the agreement.
1243
(c) (i) The governor shall report to the commission by no later than February 1 of each
1244
year regarding whether or not an agreement meeting the requirements of this Subsection [(4)]
1245
(3) is in effect.
1246
(ii) If an agreement meeting the requirements of this Subsection [(4)] (3) is terminated,
1247
the subtraction permitted under Subsection (2)[(k)](b) is not allowed for taxable years
1248
beginning on or after the January 1 following the termination of the agreement.
1249
(d) For purposes of Subsection (2)[(k)](b) and in accordance with Title 63, Chapter
1250
46a, Utah Administrative Rulemaking Act, the commission may make rules:
1251
(i) for determining whether income is derived from a source within the Uintah and
1252
Ouray Reservation; and
1253
(ii) that are substantially similar to how adjusted gross income derived from Utah
1254
sources is determined under Section
59-10-117
.
1255
[(5)] (4) (a) For purposes of this Subsection [(5)] (4), "Form 8814" means:
1256
(i) the federal individual income tax Form 8814, Parents' Election To Report Child's
1257
Interest and Dividends; or
1258
(ii) (A) [for taxable years beginning on or after January 1, 2002,] a form designated by
1259
the commission in accordance with Subsection [(5)] (4)(a)(ii)(B) as being substantially similar
1260
to 2000 Form 8814 if for purposes of federal individual income taxes the information
1261
contained on 2000 Form 8814 is reported on a form other than Form 8814; and
1262
(B) for purposes of Subsection [(5)] (4)(a)(ii)(A) and in accordance with Title 63,
1263
Chapter 46a, Utah Administrative Rulemaking Act, the commission may make rules
1264
designating a form as being substantially similar to 2000 Form 8814 if for purposes of federal
1265
individual income taxes the information contained on 2000 Form 8814 is reported on a form
1266
other than Form 8814.
1267
(b) The amount of a child's income added to adjusted gross income under Subsection
1268
(1)[(c)](b) is equal to the difference between:
1269
(i) the lesser of:
1270
(A) the base amount specified on Form 8814; and
1271
(B) the sum of the following reported on Form 8814:
1272
(I) the child's taxable interest;
1273
(II) the child's ordinary dividends; and
1274
(III) the child's capital gain distributions; and
1275
(ii) the amount not taxed that is specified on Form 8814.
1276
[(6)] (5) Notwithstanding Subsection (1)[(g)](e), interest from bonds, notes, and other
1277
evidences of indebtedness issued by an entity described in Subsections (1)[(g)](e)(i) through
1278
(iv) may not be added to [federal taxable] adjusted gross income of a resident or nonresident
1279
individual if, as annually determined by the commission:
1280
(a) for an entity described in Subsection (1)[(g)](e)(i) or (ii), the entity and all of the
1281
political subdivisions, agencies, or instrumentalities of the entity do not impose a tax based on
1282
income on any part of the bonds, notes, and other evidences of indebtedness of this state; or
1283
(b) for an entity described in Subsection (1)[(g)](e)(iii) or (iv), the following do not
1284
impose a tax based on income on any part of the bonds, notes, and other evidences of
1285
indebtedness of this state:
1286
(i) the entity; or
1287
(ii) (A) the state in which the entity is located; or
1288
(B) the District of Columbia, if the entity is located within the District of Columbia.
1289
Section 21.
Section
59-10-115
is amended to read:
1290
59-10-115. Adjustments to adjusted gross income.
1291
(1) The commission shall allow an adjustment to [federal taxable] adjusted gross
1292
income of a [taxpayer] resident or nonresident individual if the [taxpayer] resident or
1293
nonresident individual would otherwise:
1294
(a) receive a double tax benefit under this part; or
1295
(b) suffer a double tax detriment under this part.
1296
(2) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
1297
commission may make rules to allow for the adjustment to [federal taxable] adjusted gross
1298
income required by Subsection (1).
1299
Section 22.
Section
59-10-116
is amended to read:
1300
59-10-116. Tax on nonresident individual -- Calculation -- Exemption.
1301
[(1) For purposes of this section:]
1302
[(a) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.]
1303
[(b) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.]
1304
[(c) "State income tax percentage" means a percentage equal to a nonresident
1305
individual's adjusted gross income for the taxable year received from Utah sources, as
1306
determined under Section
59-10-117
, divided by the difference between:]
1307
[(i) the nonresident individual's total adjusted gross income for that taxable year; and]
1308
[(ii) if the nonresident individual described in Subsection (1)(c)(i) is a servicemember,
1309
the compensation the servicemember receives for military service if the servicemember is
1310
serving in compliance with military orders.]
1311
[(d) "State taxable income" means a nonresident individual's federal taxable income
1312
after making the:]
1313
[(i) additions and subtractions required by Section
59-10-114
; and]
1314
[(ii) adjustments required by Section
59-10-115
.]
1315
[(e) "Unapportioned state tax" means the product of the:]
1316
[(i) difference between:]
1317
[(A) a nonresident individual's state taxable income; and]
1318
[(B) if the nonresident individual described in Subsection (1)(e)(i)(A) is a
1319
servicemember, compensation the servicemember receives for military service if the
1320
servicemember is serving in compliance with military orders; and]
1321
[(ii) tax rate imposed under Section
59-10-104
.]
1322
[(2)] (1) Except as provided in Subsection [(3)] (2) [or Part 12, Single Rate Individual
1323
Income Tax Act], a tax is imposed on a nonresident individual in an amount equal to the
1324
product of the [nonresident individual's]:
1325
[(a) unapportioned state tax; and]
1326
[(b) state income tax percentage.]
1327
(a) nonresident individual's state taxable income; and
1328
(b) percentage listed in Subsection
59-10-104
(2).
1329
[(3)] (2) This section does not apply to a nonresident individual exempt from taxation
1330
under Section
59-10-104.1
.
1331
[(4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1332
for purposes of Subsection (1), the commission may by rule define what constitutes
1333
compensation.]
1334
Section 23.
Section
59-10-117
is amended to read:
1335
59-10-117. State taxable income derived from Utah sources.
1336
(1) For purposes of Section
59-10-116
, [adjusted gross] state taxable income [derived
1337
from Utah sources] includes those items includable in [adjusted gross] state taxable income
1338
attributable to or resulting from:
1339
(a) the ownership in this state of any interest in real or tangible personal property,
1340
including real property or property rights from which ["]gross income from mining[,"] as
1341
defined by Section 613(c), Internal Revenue Code, is derived; or
1342
(b) the carrying on of a business, trade, profession, or occupation in this state.
1343
(2) For the purposes of Subsection (1):
1344
(a) income from intangible personal property, including annuities, dividends, interest,
1345
and gains from the disposition of intangible personal property shall constitute income derived
1346
from Utah sources only to the extent that [such] the income is from property employed in a
1347
trade, business, profession, or occupation carried on in this state;
1348
(b) [deductions] a deduction with respect to a capital [losses] loss, net long-term capital
1349
[gains] gain, [and] or net operating [losses] loss shall be based solely on income, gain, loss, and
1350
deduction connected with Utah sources, under rules prescribed by the commission in
1351
accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, but otherwise
1352
shall be determined in the same manner as the corresponding federal deductions;
1353
(c) [salaries, wages, commissions, and] a salary, wage, commission, or compensation
1354
for personal services rendered outside this state [shall] may not be considered to be derived
1355
from Utah sources;
1356
(d) a nonresident shareholder's distributive share of ordinary income, gain, loss, and
1357
deduction derived from or connected with Utah sources shall be determined under Section
1358
59-10-118
;
1359
(e) a nonresident, other than a dealer holding property primarily for sale to customers
1360
in the ordinary course of the dealer's trade or business, may not be considered to carry on a
1361
trade, business, profession, or occupation in this state solely by reason of the purchase or sale
1362
of property for the nonresident's own account;
1363
(f) if a trade, business, profession, or occupation is carried on partly within and partly
1364
without this state, [items] an item of income, gain, loss, [and deductions] or a deduction
1365
derived from or connected with Utah sources shall be determined in accordance with [the
1366
provisions of] Section
59-10-118
;
1367
(g) a nonresident partner's distributive share of partnership income, gain, loss, and
1368
deduction derived from or connected with Utah sources shall be determined under Section
1369
[
59-10-303
]
59-10-1405
;
1370
(h) the share of a nonresident estate or trust [and nonresident beneficiaries] or a
1371
nonresident beneficiary of any estate or trust in income, gain, loss, [and] or deduction derived
1372
from or connected with Utah sources shall be determined under Section
59-10-207
; and
1373
(i) any dividend, interest, or distributive share of income, gain, or loss from a real
1374
estate investment trust, as defined in Section
59-7-116.5
, distributed or allocated to a
1375
nonresident investor in the trust, including any shareholder, beneficiary, or owner of a
1376
beneficial interest in the trust, shall be income from intangible personal property under
1377
Subsection (2)(a), and shall constitute income derived from Utah sources only to the extent the
1378
nonresident investor is employing its beneficial interest in the trust in a trade, business,
1379
profession, or occupation carried on by the investor in this state.
1380
Section 24.
Section
59-10-118
is amended to read:
1381
59-10-118. Division of income for tax purposes.
1382
(1) As used in this section [unless the context otherwise requires]:
1383
(a) "Business income" means income arising from transactions and activity in the
1384
regular course of [the] a taxpayer's trade or business and includes income from tangible and
1385
intangible property if the acquisition, management, and disposition of the property constitutes
1386
integral parts of the taxpayer's regular trade or business operations.
1387
(b) "Commercial domicile" means the principal place from which the trade or business
1388
of [the] a taxpayer is directed or managed.
1389
[(c) "Compensation" means wages, salaries, commissions, and any other form of
1390
remuneration paid to employee for personal services.]
1391
[(d)] (c) "Nonbusiness income" means all income other than business income.
1392
[(e)] (d) "Sales" means all gross receipts of [the] a taxpayer not allocated under
1393
Subsections (3) through (7).
1394
[(f)] (e) "State" means any state of the United States, the District of Columbia, the
1395
commonwealth of Puerto Rico, [and] or any possession of the United States.
1396
(2) [Any] A taxpayer having business income [which] that is taxable both within and
1397
without this state, shall allocate and apportion [his] the taxpayer's net income as provided in
1398
this section.
1399
(3) Rents and royalties from real or tangible personal property, capital gains, interest,
1400
dividends, or patent or copyright royalties, to the extent that they constitute nonbusiness
1401
income, shall be allocated as provided in Subsections (4) through (7).
1402
(4) (a) Net rents and royalties from real property located in this state are allocable to
1403
this state.
1404
(b) Net rents and royalties from tangible personal property are allocable to this state:
1405
(i) if and to the extent that the property is utilized in this state; or
1406
(ii) in their entirety if the taxpayer's commercial domicile is in this state and the
1407
taxpayer is not organized under the laws of or taxable in the state in which the property is
1408
utilized.
1409
(c) The extent of utilization of tangible personal property in a state is determined by
1410
multiplying the rents and royalties by a fraction, the numerator of which is the number of days
1411
of physical location of the property in the state during the rental or royalty period in the taxable
1412
year and the denominator of which is the number of days of physical location of the property
1413
everywhere during all rental or royalty periods in the taxable year. If the physical location of
1414
the property during the rental or royalty period is unknown or unascertainable by the taxpayer,
1415
tangible personal property is utilized in the state in which the property was located at the time
1416
the rental or royalty payer obtained possession.
1417
(5) (a) Capital gains and losses from sales of real property located in this state are
1418
allocable to this state.
1419
(b) Capital gains and losses from sales of tangible personal property are allocable to
1420
this state if:
1421
(i) the property [had] has a situs in this state at the time of the sale; or
1422
(ii) the taxpayer's commercial domicile is in this state and the taxpayer is not taxable in
1423
the state in which the property had a situs.
1424
(c) Capital gains and losses from sales of intangible personal property are allocable to
1425
this state if the taxpayer's commercial domicile is in this state.
1426
(6) Interest and dividends are allocable to this state if the taxpayer's commercial
1427
domicile is in this state.
1428
(7) (a) Patent and copyright royalties are allocable to this state:
1429
(i) if and to the extent that the patent or copyright is utilized by the payer in this state;
1430
or
1431
(ii) if and to the extent that the patent or copyright is utilized by the payer in a state in
1432
which the taxpayer is not taxable and the taxpayer's commercial domicile is in this state.
1433
(b) A patent is utilized in a state to the extent that it is employed in production,
1434
fabrication, manufacturing, or other processing in the state or to the extent that a patented
1435
product is produced in the state. If the basis of receipts from patent royalties does not permit
1436
allocation to states or if the accounting procedures do not reflect states of utilization, the patent
1437
is utilized in the state in which the taxpayer's commercial domicile is located.
1438
(8) All business income shall be apportioned to this state [by multiplying the income
1439
by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales
1440
factor, and the denominator of which is three] using the same methods, procedures, and
1441
requirements of Sections
59-7-311
through
59-7-320
.
1442
[(9) The property factor is a fraction, the numerator of which is the average value of the
1443
taxpayer's real and tangible personal property owned or rented and used in this state during the
1444
tax period and the denominator of which is the average value of all the taxpayer's real and
1445
tangible personal property owned or rented and used during the tax period.]
1446
[(10) Property owned by the taxpayer is valued at its original cost. Property rented by
1447
the taxpayer is valued at eight times the net annual rental rate. Net annual rental rate is the
1448
annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from
1449
subrentals.]
1450
[(11) The average value of property shall be determined by averaging the values at the
1451
beginning and ending of the tax period but the commission may require the averaging of
1452
monthly values during the tax period, if reasonably required to reflect properly the average
1453
value of the taxpayer's property.]
1454
[(12) The payroll factor is a fraction, the numerator of which is the total amount paid in
1455
this state during the tax period by the taxpayer for compensation, and the denominator of which
1456
is the total compensation paid everywhere during the tax period.]
1457
[(13) Compensation is paid in this state if:]
1458
[(a) the individual's service is performed entirely within the state; or]
1459
[(b) the individual's service is performed both within and without the state, but the
1460
service performed without the state is incidental to the individual's service within the state; or]
1461
[(c) some of the service is performed in the state and:]
1462
[(i) the base of operations or, if there is no base of operations, the place from which the
1463
service is directed or controlled is in the state; or]
1464
[(ii) the base of operations or the place from which the service is directed or controlled
1465
is not in any state in which some part of the service is performed, but the individual's residence
1466
is in this state.]
1467
[(14) The sales factor is a fraction, the numerator of which is the total sales of the
1468
taxpayer in this state during the tax period, and the denominator of which is the total sales of
1469
the taxpayer everywhere during the tax period.]
1470
[(15) Sales of tangible personal property are in this state if the property is delivered or
1471
shipped to a purchaser within this state regardless of the f.o.b. point or other conditions of the
1472
sale.]
1473
[(16) Sales, other than sales of tangible personal property, are in this state if:]
1474
[(a) the income-producing activity is performed in this state; or]
1475
[(b) the income-producing activity is performed both in and outside this state and a
1476
greater proportion of the income-producing activity is performed in this state than in any other
1477
state, based on costs of performance.]
1478
[(17) If the allocation and apportionment provisions of this chapter do not fairly
1479
represent the extent of the taxpayer's business activity in this state, the taxpayer may petition
1480
for or the commission may require, in respect of all or any part of the taxpayer's business
1481
activity, if reasonable:]
1482
[(a) separate accounting;]
1483
[(b) the exclusion of any one or more of the factors;]
1484
[(c) the inclusion of one or more additional factors which will fairly represent the
1485
taxpayer's business activity in this state; or]
1486
[(d) the employment of any other method to effectuate an equitable allocation and
1487
apportionment of the taxpayer's income.]
1488
Section 25.
Section
59-10-119
is amended to read:
1489
59-10-119. Returns by husband and wife, either or both of whom is a
1490
nonresident.
1491
(1) If the [federal taxable] adjusted gross income of a husband and wife [(] who are
1492
both nonresidents of this state[)] is reported or determined on separate federal individual
1493
income tax returns, [their] the husband's and wife's state taxable incomes in this state shall be
1494
separately determined.
1495
(2) If the [federal taxable] adjusted gross income of a husband and wife [(] who are
1496
both nonresidents[)] of this state is reported or determined on a joint federal individual income
1497
tax return [their], the husband's and wife's tax shall be reported or determined in this state on a
1498
joint return.
1499
(3) (a) If [either husband or wife] one spouse is a nonresident