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First Substitute S.B. 247

Senator Wayne A. Harper proposes the following substitute bill:


             1     
AMENDMENTS TO REVENUE AND TAXATION

             2     
2013 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Wayne A. Harper

             5     
House Sponsor: Francis D. Gibson

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill addresses the Multistate Tax Compact and related provisions.
             10      Highlighted Provisions:
             11          This bill:
             12          .    repeals the Multistate Tax Compact;
             13          .    enacts the Multistate Tax Compact, excluding certain provisions from the repealed
             14      version of the Multistate Tax Compact;
             15          .    amends provisions within the Multistate Tax Compact part addressing the State Tax
             16      Commission's authority related to the Multistate Tax Commission;
             17          .    provides a repeal date for the Multistate Tax Compact enacted by this bill;
             18          .    repeals obsolete language; and
             19          .    makes technical and conforming changes.
             20      Money Appropriated in this Bill:
             21          None
             22      Other Special Clauses:
             23          This bill provides effective dates.
             24      Utah Code Sections Affected:
             25      AMENDS:


             26          59-1-809, as renumbered and amended by Laws of Utah 1987, Chapter 3
             27          63I-1-259, as last amended by Laws of Utah 2012, Chapter 9
             28      ENACTS:
             29          59-1-801.5, Utah Code Annotated 1953
             30      REPEALS:
             31          59-1-801, as last amended by Laws of Utah 2010, Chapter 155
             32     
             33      Be it enacted by the Legislature of the state of Utah:
             34          Section 1. Section 59-1-801.5 is enacted to read:
             35          59-1-801.5. Purpose of compact -- Definitions -- Elements of income tax laws --
             36      Elements of sales and use tax laws -- The Multistate Tax Commission -- Uniform
             37      regulations and forms -- Interstate audits -- Entry into force and withdrawal -- Effect on
             38      other laws and jurisdiction -- Construction and severability.
             39          The "Multistate Tax Compact" is hereby enacted into law and entered into with all
             40      jurisdictions legally joining therein, in the form substantially as follows:
             41     
ARTICLE I. PURPOSES

             42          The purposes of this compact are to:
             43          1. Facilitate proper determination of state and local tax liability of multistate taxpayers.
             44          2. Promote uniformity or compatibility in significant components of tax systems.
             45          3. Facilitate taxpayer convenience and compliance in the filing of tax returns and in
             46      other phases of tax administration.
             47          4. Avoid duplicative taxation.
             48     
ARTICLE II. DEFINITIONS

             49          As used in this compact:
             50          1. "State" means a state of the United States, the District of Columbia, the
             51      Commonwealth of Puerto Rico, or any territory or possession of the United States.
             52          2. "Subdivision" means any governmental unit or special district of a state.
             53          3. "Taxpayer" means any corporation, partnership, firm, association, governmental unit
             54      or agency, or person acting as a business entity in more than one state.
             55          4. "Income tax" means a tax imposed on or measured by net income including any tax
             56      imposed on or measured by an amount arrived at by deducting expenses from gross income,


             57      one or more forms of which expenses are not specifically and directly related to particular
             58      transactions.
             59          5. "Capital stock tax" means a tax measured in any way by the capital of a corporation
             60      considered in its entirety.
             61          6. "Gross receipts tax" means a tax, other than a sales tax, which is imposed on or
             62      measured by the gross volume of business, in terms of gross receipts or in other terms, and in
             63      the determination of which no deduction is allowed which would constitute the tax an income
             64      tax.
             65          7. "Sales tax" means a tax imposed with respect to the transfer for a consideration of
             66      ownership, possession, or custody of tangible personal property or the rendering of services
             67      measured by the price of the tangible personal property transferred or services rendered and
             68      which is required by state or local law to be separately stated from the sales price by the seller,
             69      or which is customarily separately stated from the sales price, but does not include a tax
             70      imposed exclusively on the sale of a specifically identified commodity or article or class of
             71      commodities or articles.
             72          8. "Use tax" means a nonrecurring tax, other than a sales tax, which (a) is imposed on
             73      or with respect to the exercise or enjoyment of any right or power over tangible personal
             74      property incident to the ownership, possession, or custody of that property or the leasing of that
             75      property from another including any consumption, keeping, retention, or other use of tangible
             76      personal property, and (b) is complementary to a sales tax.
             77          9. "Tax" means an income tax, capital stock tax, gross receipts tax, sales tax, use tax,
             78      and any other tax which has a multistate impact, except that the provisions of Article V of this
             79      compact shall apply only to the taxes specifically designated therein.
             80     
ARTICLE III. ELEMENTS OF INCOME TAX LAWS (intentionally omitted)

             81     
ARTICLE IV. DIVISION OF INCOME (intentionally omitted)

             82     
ARTICLE V. ELEMENTS OF SALES AND USE TAX LAWS

             83     
Tax Credit

             84          1. Each purchaser liable for a use tax on tangible personal property shall be entitled to
             85      full credit for the combined amount or amounts of legally imposed sales or use taxes paid by
             86      him with respect to the same property to another state and any subdivision thereof. The credit
             87      shall be applied first against the amount of any use tax due the state, and any unused portion of


             88      the credit shall then be applied against the amount of any use tax due a subdivision.
             89     
Exemption Certificates, Vendors May Rely

             90          2. Whenever a vendor receives and accepts in good faith from a purchaser a resale or
             91      other exemption certificate or other written evidence of exemption authorized by the
             92      appropriate state or subdivision taxing authority, the vendor shall be relieved of liability for a
             93      sales or use tax with respect to the transaction.
             94     
ARTICLE VI. THE COMMISSION

             95     
Organization and Management

             96          1. (a) The Multistate Tax Commission is hereby established. It shall be composed of
             97      one "member" from each party state who shall be the head of the state agency charged with the
             98      administration of the types of taxes to which this compact applies. If there is more than one
             99      such agency the state shall provide by law for the selection of the commission member from
             100      the heads of the relevant agencies. State law may provide that a member of the commission be
             101      represented by an alternate but only if there is on file with the commission written notification
             102      of the designation and identity of the alternate. The attorney general of each party state or his
             103      designee, or other counsel if the laws of the party state specifically provide, shall be entitled to
             104      attend the meetings of the commission, but shall not vote. Such attorneys general, designees,
             105      or other counsel shall receive all notices of meetings required under paragraph 1(e) of this
             106      article.
             107          (b) Each party state shall provide by law for the selection of representatives from its
             108      subdivisions affected by this compact to consult with the commission member from that state.
             109          (c) Each member shall be entitled to one vote. The commission shall not act unless a
             110      majority of the members are present, and no action shall be binding unless approved by a
             111      majority of the total number of members.
             112          (d) The commission shall adopt an official seal to be used as it may provide.
             113          (e) The commission shall hold an annual meeting and such other regular meetings as
             114      its bylaws may provide and such special meetings as its executive committee may determine.
             115      The commission bylaws shall specify the dates of the annual and any other regular meetings,
             116      and shall provide for the giving of notice of annual, regular, and special meetings. Notices of
             117      special meetings shall include the reasons therefor and an agenda of the items to be considered.
             118          (f) The commission shall elect annually, from among its members, a chairman, a


             119      vice-chairman, and a treasurer. The commission shall appoint an executive director who shall
             120      serve at its pleasure, and it shall fix his duties and compensation. The executive director shall
             121      be secretary of the commission. The commission shall make provision for the bonding of such
             122      of its officers and employees as it may deem appropriate.
             123          (g) Irrespective of the civil service, personnel, or other merit system laws of any party
             124      state, the executive director shall appoint or discharge such personnel as may be necessary for
             125      the performance of the functions of the commission and shall fix their duties and
             126      compensation. The commission bylaws shall provide for personnel policies and programs.
             127          (h) The commission may borrow, accept, or contract for the services of personnel from
             128      any state, the United States, or any other governmental entity.
             129          (i) The commission may accept for any of its purposes and functions any and all
             130      donations and grants of money, equipment, supplies, materials, and services, conditional or
             131      otherwise, from any governmental entity, and may utilize and dispose of the same.
             132          (j) The commission may establish one or more offices for the transacting of its
             133      business.
             134          (k) The commission shall adopt bylaws for the conduct of its business. The
             135      commission shall publish its bylaws in convenient form, and shall file a copy of the bylaws and
             136      any amendments thereto with the appropriate agency or officer in each of the party states.
             137          (l) The commission annually shall make to the governor and legislature of each party
             138      state a report covering its activities for the preceding year. Any donation or grant accepted by
             139      the commission or services borrowed shall be reported in the annual report of the commission,
             140      and shall include the nature, amount, and conditions, if any, of the donation, gift, grant, or
             141      services borrowed and the identity of the donor or lender. The commission may make
             142      additional reports as it may deem desirable.
             143     
Committees

             144          2. (a) To assist in the conduct of its business when the full commission is not meeting,
             145      the commission shall have an executive committee of seven members, including the chairman,
             146      vice-chairman, treasurer, and four other members elected annually by the commission. The
             147      executive committee, subject to the provisions of this compact and consistent with the policies
             148      of the commission, shall function as provided in the bylaws of the commission.
             149          (b) The commission may establish advisory and technical committees, membership on


             150      which may include private persons and public officials, in furthering any of its activities. Such
             151      committees may consider any matter of concern to the commission, including problems of
             152      special interest to any party state and problems dealing with particular types of taxes.
             153          (c) The commission may establish such additional committees as its bylaws may
             154      provide.
             155     
Powers

             156          3. In addition to powers conferred elsewhere in this compact, the commission shall
             157      have power to:
             158          (a) study state and local tax systems and particular types of state and local taxes;
             159          (b) develop and recommend proposals for an increase in uniformity or compatibility of
             160      state and local tax laws with a view toward encouraging the simplification and improvement of
             161      state and local tax law and administration;
             162          (c) compile and publish information as in its judgment would assist the party states in
             163      implementation of the compact and taxpayers in complying with state and local tax laws; and
             164          (d) do all things necessary and incidental to the administration of its functions pursuant
             165      to this compact.
             166     
Finance

             167          4. (a) The commission shall submit to the governor or designated officer or officers of
             168      each party state a budget of its estimated expenditures for such period as may be required by
             169      the laws of that state for presentation to the legislature thereof.
             170          (b) Each of the commission's budgets of estimated expenditures shall contain specific
             171      recommendations of the amounts to be appropriated by each of the party states. The total
             172      amount of appropriations requested under any such budget shall be apportioned among the
             173      party states as follows: one-tenth in equal shares; and the remainder in proportion to the
             174      amount of revenue collected by each party state and its subdivisions from income taxes, capital
             175      stock taxes, gross receipts taxes, sales and use taxes. In determining such amounts, the
             176      commission shall employ such available public sources of information as, in its judgment,
             177      present the most equitable and accurate comparisons among the party states. Each of the
             178      commission's budgets of estimated expenditures and requests for appropriations shall indicate
             179      the sources used in obtaining information employed in applying the formula contained in this
             180      paragraph.


             181          (c) The commission shall not pledge the credit of any party state. The commission may
             182      meet any of its obligations in whole or in part with funds available to it under paragraph 1(i) of
             183      this article; provided that the commission takes specific action setting aside such funds prior to
             184      incurring any obligation to be met in whole or in part in such manner. Except where the
             185      commission makes use of funds available to it under paragraph 1(i), the commission shall not
             186      incur any obligation prior to the allotment of funds by the party states adequate to meet the
             187      same.
             188          (d) The commission shall keep accurate accounts of all receipts and disbursements.
             189      The receipts and disbursements of the commission shall be subject to the audit and accounting
             190      procedures established under its bylaws. All receipts and disbursements of funds handled by
             191      the commission shall be audited yearly by a certified or licensed public accountant and the
             192      report of the audit shall be included in and become part of the annual report of the commission.
             193          (e) The accounts of the commission shall be open at any reasonable time for inspection
             194      by duly constituted officers of the party states and by any persons authorized by the
             195      commission.
             196          (f) Nothing contained in this article shall be construed to prevent commission
             197      compliance with laws relating to audit or inspection of accounts by or on behalf of any
             198      government contributing to the support of the commission.
             199     
ARTICLE VII. UNIFORM REGULATIONS AND FORMS

             200          1. Whenever any two or more party states, or subdivisions of party states, have uniform
             201      or similar provisions of law relating to an income tax, the commission may adopt uniform
             202      regulations for any phase of the administration of such law, including assertion of jurisdiction
             203      to tax, or prescribing uniform tax forms.
             204          2. Prior to the adoption of any regulations, the commission shall:
             205          (a) as provided in its bylaws, hold at least one public hearing on due notice to all
             206      affected party states and subdivisions thereof and to all taxpayers and other persons who have
             207      made timely request of the commission for advance notice of its regulation-making
             208      proceedings; and
             209          (b) afford all affected party states and subdivisions and interested persons an
             210      opportunity to submit relevant written data and views, which shall be considered fully by the
             211      commission.


             212          3. The commission shall submit any regulations adopted by it to the appropriate
             213      officials of all party states and subdivisions to which they might apply. Each such state and
             214      subdivision shall consider any such regulation for adoption in accordance with its own laws
             215      and procedures.
             216     
ARTICLE VIII. INTERSTATE AUDITS

             217          1. This article shall be in force only in those party states that specifically provide
             218      therefor by statute.
             219          2. Any party state or subdivision thereof desiring to make or participate in an audit of
             220      any accounts, books, papers, records, or other documents may request the commission to
             221      perform the audit on its behalf. In responding to the request, the commission shall have access
             222      to and may examine, at any reasonable time, such accounts, books, papers, records, and other
             223      documents and any relevant property or stock of merchandise. The commission may enter into
             224      agreements with party states or their subdivisions for assistance in performance of the audit.
             225      The commission shall make charges, to be paid by the state or local government or
             226      governments for which it performs the service, for any audits performed by it in order to
             227      reimburse itself for the actual costs incurred in making the audit.
             228          3. The commission may require the attendance of any person within the state where it
             229      is conducting an audit or part thereof at a time and place fixed by it within such state for the
             230      purpose of giving testimony with respect to any account, book, paper, document, other record,
             231      property, or stock of merchandise being examined in connection with the audit. If the person is
             232      not within the jurisdiction, he may be required to attend for such purpose at any time and place
             233      fixed by the commission within the state of which he is a resident; provided that such state has
             234      adopted this article.
             235          4. The commission may apply to any court having power to issue compulsory process
             236      for orders in aid of its powers and responsibilities pursuant to this article and any and all such
             237      courts shall have jurisdiction to issue such orders. Failure of any person to obey any such order
             238      shall be punishable as contempt of the issuing court. If the party or subject matter on account
             239      of which the commission seeks an order is within the jurisdiction of the court to which
             240      application is made, such application may be to a court in the state or subdivision on behalf of
             241      which the audit is being made or a court in the state in which the object of the order being
             242      sought is situated. The provisions of this paragraph apply only to courts in a state that has


             243      adopted this article.
             244          5. The commission may decline to perform any audit requested if it finds that its
             245      available personnel or other resources are insufficient for the purpose or that, in the terms
             246      requested, the audit is impracticable of satisfactory performance. If the commission, on the
             247      basis of its experience, has reason to believe that an audit of a particular taxpayer, either at a
             248      particular time or on a particular schedule, would be of interest to a number of party states or
             249      their subdivisions, it may offer to make the audit or audits, the offer to be contingent on
             250      sufficient participation therein as determined by the commission.
             251          6. Information obtained by any audit pursuant to this article shall be confidential and
             252      available only for tax purposes to party states, their subdivisions or the United States.
             253      Availability of information shall be in accordance with the laws of the states or subdivisions on
             254      whose account the commission performs the audit, and only through the appropriate agencies
             255      or officers of such states or subdivisions. Nothing in this article shall be construed to require
             256      any taxpayer to keep records for any period not otherwise required by law.
             257          7. Other arrangements made or authorized pursuant to law for cooperative audit by or
             258      on behalf of the party states or any of their subdivisions are not superseded or invalidated by
             259      this article.
             260          8. In no event shall the commission make any charge against a taxpayer for an audit.
             261          9. As used in this article, "tax," in addition to the meaning ascribed to it in Article II,
             262      means any tax or license fee imposed in whole or in part for revenue purposes.
             263     
ARTICLE IX. ARBITRATION (intentionally omitted)

             264     
ARTICLE X. ENTRY INTO FORCE AND WITHDRAWAL

             265          1. This compact shall enter into force when enacted into law by any seven states.
             266      Thereafter, this compact shall become effective as to any other state upon its enactment thereof.
             267      The commission shall arrange for notification of all party states whenever there is a new
             268      enactment of the compact.
             269          2. Any party state may withdraw from this compact by enacting a statute repealing the
             270      same. No withdrawal shall affect any liability already incurred by or chargeable to a party state
             271      prior to the time of such withdrawal.
             272          3. No proceeding commenced before an arbitration board prior to the withdrawal of a
             273      state and to which the withdrawing state or any subdivision thereof is a party shall be


             274      discontinued or terminated by the withdrawal, nor shall the board thereby lose jurisdiction over
             275      any of the parties to the proceeding necessary to make a binding determination therein.
             276     
ARTICLE XI. EFFECT ON OTHER LAWS AND JURISDICTION

             277          Nothing in this compact shall be construed to:
             278          (a) affect the power of any state or subdivision thereof to fix rates of taxation;
             279          (b) apply to any tax or fixed fee imposed for the registration of a motor vehicle or any
             280      tax on motor fuel, other than a sales tax; provided that the definition of "tax" in Article VIII 9
             281      may apply for the purposes of that article and the commission's powers of study and
             282      recommendation pursuant to Article VI 3 may apply;
             283          (c) withdraw or limit the jurisdiction of any state or local court or administrative officer
             284      or body with respect to any person, corporation or other entity or subject matter, except to the
             285      extent that such jurisdiction is expressly conferred by or pursuant to this compact upon another
             286      agency or body; or
             287          (d) supersede or limit the jurisdiction of any court of the United States.
             288     
ARTICLE XII. CONSTRUCTION AND SEVERABILITY

             289          This compact shall be liberally construed so as to effectuate the purposes thereof. The
             290      provisions of this compact shall be severable and if any phrase, clause, sentence, or provision
             291      of this compact is declared to be contrary to the constitution of any state or of the United States
             292      or the applicability thereof to any government, agency, person, or circumstance is held invalid,
             293      the validity of the remainder of this compact and the applicability thereof to any government,
             294      agency, person, or circumstance shall not be affected thereby. If this compact shall be held
             295      contrary to the constitution of any state participating therein, the compact shall remain in full
             296      force and effect as to the remaining party states and in full force and effect as to the state
             297      affected as to all severable matters.
             298          Section 2. Section 59-1-809 is amended to read:
             299           59-1-809. Commission authority related to the Multistate Tax Commission.
             300          (1) The commission may participate in an audit, tax enforcement, or tax administration
             301      with the Multistate Tax Commission, a taxing official of another state, the District of
             302      Columbia, or the United States or its territories.
             303          (2) The [Utah State Tax Commission] commission may [at its discretion] furnish to the
             304      Multistate Tax Commission, [the] a taxing [officials] official of [any other] another state, the


             305      District of Columbia, [and] or the United States [and] or its territories, any information
             306      contained in:
             307          (a) a tax [returns and reports,] return or report, a related [schedules, and documents]
             308      schedule, or a document filed pursuant to the tax laws of this state[, or in]; or
             309          (b) the report of an audit or investigation made with respect [thereto] a tax return or
             310      report, a related schedule, or a document described in Subsection (2)(a).
             311          Section 3. Section 63I-1-259 is amended to read:
             312           63I-1-259. Repeal dates, Title 59.
             313          (1) Sections 59-1-801.5 and 59-1-808 are repealed on June 30, 2014.
             314          [(1)] (2) Subsection 59-2-924 (3)(g) is repealed on December 31, 2016.
             315          [(2)] (3) Section 59-2-924.3 is repealed on December 31, 2016.
             316          [(3)] (4) Section 59-9-102.5 is repealed December 31, 2020.
             317          [(4) The language in Subsection 59-12-205 (3)(a) that reads "Except as provided in
             318      Subsection (3)(e)," is repealed January 1, 2013.]
             319          [(5) Subsection 59-12-205 (3)(e), requiring a distribution to a qualifying city to be
             320      reduced, is repealed January 1, 2013.]
             321          Section 4. Repealer.
             322          This bill repeals:
             323          Section 59-1-801, Purpose of compact -- Definitions -- Elements of income tax laws
             324      -- Allocation and apportionment of income -- Elements of sales and use tax laws -- The
             325      commission -- Uniform regulations and forms -- Interstate audits -- Arbitration -- Entry
             326      into force and withdrawal -- Effect on other laws and jurisdiction -- Construction and
             327      severability.
             328          Section 5. Effective date.
             329          (1) Except as provided in Subsections (2) and (3), this bill takes effect on July 1, 2013.
             330          (2) Section 59-1-801 is repealed June 30, 2013.
             331          (3) The actions affecting Section 59-1-809 take effect on July 1, 2014.


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