H.B. 273

This document includes House Committee Amendments incorporated into the bill on Thu, Feb 6, 2014 at 11:57 AM by lerror. --> This document includes House Floor Amendments incorporated into the bill on Fri, Feb 14, 2014 at 12:54 PM by jeyring. -->              1     

PROPERTY TAX RESIDENTIAL EXEMPTION AMENDMENTS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: V. Lowry Snow

             5     
Senate Sponsor: Stephen H. Urquhart

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies provisions related to the property tax residential exemption.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    addresses qualification and application requirements for the property tax residential
             14      exemption; and
             15          .    makes technical and conforming changes.
             16      Money Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          This bill takes effect on January 1, 2015.
             20      Utah Code Sections Affected:
             21      AMENDS:
             22           17-41-101 , as last amended by Laws of Utah 2009, Chapter 376
             23           59-2-102 , as last amended by Laws of Utah 2013, Chapters 19 and 322
             24           59-2-103 , as last amended by Laws of Utah 2004, Chapters 90 and 281
             25           59-2-103.5 , as last amended by Laws of Utah 2013, Chapter 19
             26           59-2-804 , as enacted by Laws of Utah 2008, Chapter 283
             27           59-7-302 , as last amended by Laws of Utah 2010, Chapter 155


             28     
             29      Be it enacted by the Legislature of the state of Utah:
             30          Section 1. Section 17-41-101 is amended to read:
             31           17-41-101. Definitions.
             32          As used in this chapter:
             33          (1) "Advisory board" means:
             34          (a) for an agriculture protection area, the agriculture protection area advisory board
             35      created as provided in Section 17-41-201 ; and
             36          (b) for an industrial protection area, the industrial protection area advisory board
             37      created as provided in Section 17-41-201 .
             38          (2) (a) "Agriculture production" means production for commercial purposes of crops,
             39      livestock, and livestock products.
             40          (b) "Agriculture production" includes the processing or retail marketing of any crops,
             41      livestock, and livestock products when more than 50% of the processed or merchandised
             42      products are produced by the farm operator.
             43          (3) "Agriculture protection area" means a geographic area created under the authority
             44      of this chapter that is granted the specific legal protections contained in this chapter.
             45          (4) "Applicable legislative body" means:
             46          (a) with respect to a proposed agriculture protection area or industrial protection area:
             47          (i) the legislative body of the county in which the land proposed to be included in an
             48      agriculture protection area or industrial protection area is located, if the land is within the
             49      unincorporated part of the county; or
             50          (ii) the legislative body of the city or town in which the land proposed to be included in
             51      an agriculture protection area or industrial protection area is located; and
             52          (b) with respect to an existing agriculture protection area or industrial protection area:
             53          (i) the legislative body of the county in which the agriculture protection area or
             54      industrial protection area is located, if the agriculture protection area or industrial protection
             55      area is within the unincorporated part of the county; or
             56          (ii) the legislative body of the city or town in which the agriculture protection area or
             57      industrial protection area is located.
             58          (5) "Board" means the Board of Oil, Gas, and Mining created in Section 40-6-4 .


             59          (6) "Crops, livestock, and livestock products" includes:
             60          (a) land devoted to the raising of useful plants and animals with a reasonable
             61      expectation of profit, including:
             62          (i) forages and sod crops;
             63          (ii) grains and feed crops;
             64          (iii) livestock as defined in [Subsection] Section 59-2-102 [(27)(d)];
             65          (iv) trees and fruits; or
             66          (v) vegetables, nursery, floral, and ornamental stock; or
             67          (b) land devoted to and meeting the requirements and qualifications for payments or
             68      other compensation under a crop-land retirement program with an agency of the state or federal
             69      government.
             70          (7) "Division" means the Division of Oil, Gas, and Mining created in Section 40-6-15 .
             71          (8) "Industrial protection area" means a geographic area created under the authority of
             72      this chapter that is granted the specific legal protections contained in this chapter.
             73          (9) "Mine operator" means a natural person, corporation, association, partnership,
             74      receiver, trustee, executor, administrator, guardian, fiduciary, agent, or other organization or
             75      representative, either public or private, including a successor, assign, affiliate, subsidiary, and
             76      related parent company, that, as of January 1, 2009:
             77          (a) owns, controls, or manages a mining use under a large mine permit issued by the
             78      division or the board; and
             79          (b) has produced commercial quantities of a mineral deposit from the mining use.
             80          (10) "Mineral deposit" has the same meaning as defined in Section 40-8-4 , but
             81      excludes:
             82          (a) building stone, decorative rock, and landscaping rock; and
             83          (b) consolidated rock that:
             84          (i) is not associated with another deposit of minerals;
             85          (ii) is or may be extracted from land; and
             86          (iii) is put to uses similar to the uses of sand, gravel, and other aggregates.
             87          (11) "Mining protection area" means land where a vested mining use occurs, including
             88      each surface or subsurface land or mineral estate that a mine operator with a vested mining use
             89      owns or controls.


             90          (12) "Mining use":
             91          (a) means:
             92          (i) the full range of activities, from prospecting and exploration to reclamation and
             93      closure, associated with the exploitation of a mineral deposit; and
             94          (ii) the use of the surface and subsurface and groundwater and surface water of an area
             95      in connection with the activities described in Subsection (12)(a)(i) that have been, are being, or
             96      will be conducted; and
             97          (b) includes, whether conducted on-site or off-site:
             98          (i) any sampling, staking, surveying, exploration, or development activity;
             99          (ii) any drilling, blasting, excavating, or tunneling;
             100          (iii) the removal, transport, treatment, deposition, and reclamation of overburden,
             101      development rock, tailings, and other waste material;
             102          (iv) any removal, transportation, extraction, beneficiation, or processing of ore;
             103          (v) any smelting, refining, autoclaving, or other primary or secondary processing
             104      operation;
             105          (vi) the recovery of any mineral left in residue from a previous extraction or processing
             106      operation;
             107          (vii) a mining activity that is identified in a work plan or permitting document;
             108          (viii) the use, operation, maintenance, repair, replacement, or alteration of a building,
             109      structure, facility, equipment, machine, tool, or other material or property that results from or is
             110      used in a surface or subsurface mining operation or activity;
             111          (ix) any accessory, incidental, or ancillary activity or use, both active and passive,
             112      including a utility, private way or road, pipeline, land excavation, working, embankment, pond,
             113      gravel excavation, mining waste, conveyor, power line, trackage, storage, reserve, passive use
             114      area, buffer zone, and power production facility;
             115          (x) the construction of a storage, factory, processing, or maintenance facility; and
             116          (xi) any activity described in Subsection 40-8-4 (14)(a).
             117          (13) (a) "Municipal" means of or relating to a city or town.
             118          (b) "Municipality" means a city or town.
             119          (14) "New land" means surface or subsurface land or mineral estate that a mine
             120      operator gains ownership or control of, whether or not that land or mineral estate is included in


             121      the mine operator's large mine permit.
             122          (15) "Off-site" has the same meaning as provided in Section 40-8-4 .
             123          (16) "On-site" has the same meaning as provided in Section 40-8-4 .
             124          (17) "Planning commission" means:
             125          (a) a countywide planning commission if the land proposed to be included in the
             126      agriculture protection area or industrial protection area is within the unincorporated part of the
             127      county and not within a township;
             128          (b) a township planning commission if the land proposed to be included in the
             129      agriculture protection area or industrial protection area is within a township; or
             130          (c) a planning commission of a city or town if the land proposed to be included in the
             131      agriculture protection area or industrial protection area is within a city or town.
             132          (18) "Political subdivision" means a county, city, town, school district, local district, or
             133      special service district.
             134          (19) "Proposal sponsors" means the owners of land in agricultural production or
             135      industrial use who are sponsoring the proposal for creating an agriculture protection area or
             136      industrial protection area, respectively.
             137          (20) "State agency" means each department, commission, board, council, agency,
             138      institution, officer, corporation, fund, division, office, committee, authority, laboratory, library,
             139      unit, bureau, panel, or other administrative unit of the state.
             140          (21) "Unincorporated" means not within a city or town.
             141          (22) "Vested mining use" means a mining use:
             142          (a) by a mine operator; and
             143          (b) that existed or was conducted or otherwise engaged in before a political subdivision
             144      prohibits, restricts, or otherwise limits a mining use.
             145          Section 2. Section 59-2-102 is amended to read:
             146           59-2-102. Definitions.
             147          As used in this chapter and title:
             148          (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
             149      engaging in dispensing activities directly affecting agriculture or horticulture with an
             150      airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
             151      rotorcraft's use for agricultural and pest control purposes.


             152          (2) "Air charter service" means an air carrier operation which requires the customer to
             153      hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
             154      trip.
             155          (3) "Air contract service" means an air carrier operation available only to customers
             156      who engage the services of the carrier through a contractual agreement and excess capacity on
             157      any trip and is not available to the public at large.
             158          (4) "Aircraft" is as defined in Section 72-10-102 .
             159          (5) (a) Except as provided in Subsection (5)(b), "airline" means an air carrier that:
             160          (i) operates:
             161          (A) on an interstate route; and
             162          (B) on a scheduled basis; and
             163          (ii) offers to fly one or more passengers or cargo on the basis of available capacity on a
             164      regularly scheduled route.
             165          (b) "Airline" does not include an:
             166          (i) air charter service; or
             167          (ii) air contract service.
             168          (6) "Assessment roll" means a permanent record of the assessment of property as
             169      assessed by the county assessor and the commission and may be maintained manually or as a
             170      computerized file as a consolidated record or as multiple records by type, classification, or
             171      categories.
             172          (7) (a) "Certified revenue levy" means a property tax levy that provides an amount of
             173      ad valorem property tax revenue equal to the sum of:
             174          (i) the amount of ad valorem property tax revenue to be generated statewide in the
             175      previous year from imposing a school minimum basic tax rate, as specified in Subsection
             176      53A-17a-135 (1)(a), or multicounty assessing and collecting levy, as specified in Section
             177      59-2-1602 ; and
             178          (ii) the product of:
             179          (A) new growth, as defined in:
             180          (I) Section 59-2-924 ; and
             181          (II) rules of the commission; and
             182          (B) the school minimum basic tax rate or multicounty assessing and collecting levy


             183      certified by the commission for the previous year.
             184          (b) For purposes of this Subsection (7), "ad valorem property tax revenue" does not
             185      include property tax revenue received by a taxing entity from personal property that is:
             186          (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
             187          (ii) semiconductor manufacturing equipment.
             188          (c) For purposes of calculating the certified revenue levy described in this Subsection
             189      (7), the commission shall use:
             190          (i) the taxable value of real property assessed by a county assessor contained on the
             191      assessment roll;
             192          (ii) the taxable value of real and personal property assessed by the commission; and
             193          (iii) the taxable year end value of personal property assessed by a county assessor
             194      contained on the prior year's assessment roll.
             195          (8) "County-assessed commercial vehicle" means:
             196          (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
             197      Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
             198      property in furtherance of the owner's commercial enterprise;
             199          (b) any passenger vehicle owned by a business and used by its employees for
             200      transportation as a company car or vanpool vehicle; and
             201          (c) vehicles that are:
             202          (i) especially constructed for towing or wrecking, and that are not otherwise used to
             203      transport goods, merchandise, or people for compensation;
             204          (ii) used or licensed as taxicabs or limousines;
             205          (iii) used as rental passenger cars, travel trailers, or motor homes;
             206          (iv) used or licensed in this state for use as ambulances or hearses;
             207          (v) especially designed and used for garbage and rubbish collection; or
             208          (vi) used exclusively to transport students or their instructors to or from any private,
             209      public, or religious school or school activities.
             210          (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,
             211      "designated tax area" means a tax area created by the overlapping boundaries of only the
             212      following taxing entities:
             213          (i) a county; and


             214          (ii) a school district.
             215          (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
             216      by the overlapping boundaries of:
             217          (i) the taxing entities described in Subsection (9)(a); and
             218          (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
             219      and the boundaries of the city or town are identical; or
             220          (B) a special service district if the boundaries of the school district under Subsection
             221      (9)(a) are located entirely within the special service district.
             222          (10) "Eligible judgment" means a final and unappealable judgment or order under
             223      Section 59-2-1330 :
             224          (a) that became a final and unappealable judgment or order no more than 14 months
             225      prior to the day on which the notice required by Section 59-2-919.1 is required to be mailed;
             226      and
             227          (b) for which a taxing entity's share of the final and unappealable judgment or order is
             228      greater than or equal to the lesser of:
             229          (i) $5,000; or
             230          (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
             231      previous fiscal year.
             232          (11) (a) "Escaped property" means any property, whether personal, land, or any
             233      improvements to the property, subject to taxation and is:
             234          (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
             235      to the wrong taxpayer by the assessing authority;
             236          (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
             237      comply with the reporting requirements of this chapter; or
             238          (iii) undervalued because of errors made by the assessing authority based upon
             239      incomplete or erroneous information furnished by the taxpayer.
             240          (b) Property that is undervalued because of the use of a different valuation
             241      methodology or because of a different application of the same valuation methodology is not
             242      "escaped property."
             243          (12) "Fair market value" means the amount at which property would change hands
             244      between a willing buyer and a willing seller, neither being under any compulsion to buy or sell


             245      and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
             246      market value" shall be determined using the current zoning laws applicable to the property in
             247      question, except in cases where there is a reasonable probability of a change in the zoning laws
             248      affecting that property in the tax year in question and the change would have an appreciable
             249      influence upon the value.
             250          (13) "Farm machinery and equipment," for purposes of the exemption provided under
             251      Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
             252      handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
             253      tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
             254      equipment used primarily for agricultural purposes; but does not include vehicles required to be
             255      registered with the Motor Vehicle Division or vehicles or other equipment used for business
             256      purposes other than farming.
             257          (14) "Geothermal fluid" means water in any form at temperatures greater than 120
             258      degrees centigrade naturally present in a geothermal system.
             259          (15) "Geothermal resource" means:
             260          (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
             261      and
             262          (b) the energy, in whatever form, including pressure, present in, resulting from, created
             263      by, or which may be extracted from that natural heat, directly or through a material medium.
             264          (16) (a) "Goodwill" means:
             265          (i) acquired goodwill that is reported as goodwill on the books and records:
             266          (A) of a taxpayer; and
             267          (B) that are maintained for financial reporting purposes; or
             268          (ii) the ability of a business to:
             269          (A) generate income:
             270          (I) that exceeds a normal rate of return on assets; and
             271          (II) resulting from a factor described in Subsection (16)(b); or
             272          (B) obtain an economic or competitive advantage resulting from a factor described in
             273      Subsection (16)(b).
             274          (b) The following factors apply to Subsection (16)(a)(ii):
             275          (i) superior management skills;


             276          (ii) reputation;
             277          (iii) customer relationships;
             278          (iv) patronage; or
             279          (v) a factor similar to Subsections (16)(b)(i) through (iv).
             280          (c) "Goodwill" does not include:
             281          (i) the intangible property described in Subsection (20)(a) or (b);
             282          (ii) locational attributes of real property, including:
             283          (A) zoning;
             284          (B) location;
             285          (C) view;
             286          (D) a geographic feature;
             287          (E) an easement;
             288          (F) a covenant;
             289          (G) proximity to raw materials;
             290          (H) the condition of surrounding property; or
             291          (I) proximity to markets;
             292          (iii) value attributable to the identification of an improvement to real property,
             293      including:
             294          (A) reputation of the designer, builder, or architect of the improvement;
             295          (B) a name given to, or associated with, the improvement; or
             296          (C) the historic significance of an improvement; or
             297          (iv) the enhancement or assemblage value specifically attributable to the interrelation
             298      of the existing tangible property in place working together as a unit.
             299          (17) "Governing body" means:
             300          (a) for a county, city, or town, the legislative body of the county, city, or town;
             301          (b) for a local district under Title 17B, Limited Purpose Local Government Entities -
             302      Local Districts, the local district's board of trustees;
             303          (c) for a school district, the local board of education; or
             304          (d) for a special service district under Title 17D, Chapter 1, Special Service District
             305      Act:
             306          (i) the legislative body of the county or municipality that created the special service


             307      district, to the extent that the county or municipal legislative body has not delegated authority
             308      to an administrative control board established under Section 17D-1-301 ; or
             309          (ii) the administrative control board, to the extent that the county or municipal
             310      legislative body has delegated authority to an administrative control board established under
             311      Section 17D-1-301 .
             312          (18) (a) For purposes of Section 59-2-103 :
             313          (i) "household" means the association of persons who live in the same dwelling,
             314      sharing its furnishings, facilities, accommodations, and expenses; and
             315          (ii) "household" includes married individuals, who are not legally separated, that have
             316      established domiciles at separate locations within the state.
             317          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             318      commission may make rules defining the term "domicile."
             319          (19) (a) Except as provided in Subsection (19)(c), "improvement" means a building,
             320      structure, fixture, fence, or other item that is permanently attached to land, regardless of
             321      whether the title has been acquired to the land, if:
             322          (i) (A) attachment to land is essential to the operation or use of the item; and
             323          (B) the manner of attachment to land suggests that the item will remain attached to the
             324      land in the same place over the useful life of the item; or
             325          (ii) removal of the item would:
             326          (A) cause substantial damage to the item; or
             327          (B) require substantial alteration or repair of a structure to which the item is attached.
             328          (b) "Improvement" includes:
             329          (i) an accessory to an item described in Subsection (19)(a) if the accessory is:
             330          (A) essential to the operation of the item described in Subsection (19)(a); and
             331          (B) installed solely to serve the operation of the item described in Subsection (19)(a);
             332      and
             333          (ii) an item described in Subsection (19)(a) that:
             334          (A) is temporarily detached from the land for repairs; and
             335          (B) remains located on the land.
             336          (c) Notwithstanding Subsections (19)(a) and (b), "improvement" does not include:
             337          (i) an item considered to be personal property pursuant to rules made in accordance


             338      with Section 59-2-107 ;
             339          (ii) a moveable item that is attached to land:
             340          (A) for stability only; or
             341          (B) for an obvious temporary purpose;
             342          (iii) (A) manufacturing equipment and machinery; or
             343          (B) essential accessories to manufacturing equipment and machinery;
             344          (iv) an item attached to the land in a manner that facilitates removal without substantial
             345      damage to:
             346          (A) the land; or
             347          (B) the item; or
             348          (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
             349      transportable factory-built housing unit is considered to be personal property under Section
             350      59-2-1503 .
             351          (20) "Intangible property" means:
             352          (a) property that is capable of private ownership separate from tangible property,
             353      including:
             354          (i) money;
             355          (ii) credits;
             356          (iii) bonds;
             357          (iv) stocks;
             358          (v) representative property;
             359          (vi) franchises;
             360          (vii) licenses;
             361          (viii) trade names;
             362          (ix) copyrights; and
             363          (x) patents;
             364          (b) a low-income housing tax credit;
             365          (c) goodwill; or
             366          (d) a renewable energy tax credit or incentive, including:
             367          (i) a federal renewable energy production tax credit under Section 45, Internal Revenue
             368      Code;


             369          (ii) a federal energy credit for qualified renewable electricity production facilities under
             370      Section 48, Internal Revenue Code;
             371          (iii) a federal grant for a renewable energy property under American Recovery and
             372      Reinvestment Act of 2009, Pub. L. No. 111-5, Section 1603; and
             373          (iv) a tax credit under Subsection 59-7-614 (2)(c).
             374          (21) "Livestock" means:
             375          (a) a domestic animal;
             376          (b) a fur-bearing animal;
             377          (c) a honeybee; or
             378          (d) poultry.
             379          [(21)] (22) "Low-income housing tax credit" means:
             380          (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
             381      or
             382          (b) a low-income housing tax credit under:
             383          (i) Section 59-7-607 ; or
             384          (ii) Section 59-10-1010 .
             385          [(22)] (23) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and
             386      uranium.
             387          [(23)] (24) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
             388      valuable mineral.
             389          [(24)] (25) "Mining" means the process of producing, extracting, leaching, evaporating,
             390      or otherwise removing a mineral from a mine.
             391          [(25)] (26) (a) "Mobile flight equipment" means tangible personal property that is:
             392          (i) owned or operated by an:
             393          (A) air charter service;
             394          (B) air contract service; or
             395          (C) airline; and
             396          (ii) (A) capable of flight;
             397          (B) attached to an aircraft that is capable of flight; or
             398          (C) contained in an aircraft that is capable of flight if the tangible personal property is
             399      intended to be used:


             400          (I) during multiple flights;
             401          (II) during a takeoff, flight, or landing; and
             402          (III) as a service provided by an air charter service, air contract service, or airline.
             403          (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
             404      engine that is rotated:
             405          (A) at regular intervals; and
             406          (B) with an engine that is attached to the aircraft.
             407          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             408      commission may make rules defining the term "regular intervals."
             409          [(26)] (27) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal,
             410      salts, sand, rock, gravel, and all carboniferous materials.
             411          (28) "Part-year residential property" means property that is not residential property on
             412      January 1 of a calendar year but becomes residential property after January 1 of the calendar
             413      year.
             414          [(27)] (29) "Personal property" includes:
             415          (a) every class of property as defined in Subsection [(28)] (30) that is the subject of
             416      ownership and not included within the meaning of the terms "real estate" and "improvements";
             417          (b) gas and water mains and pipes laid in roads, streets, or alleys;
             418          (c) bridges and ferries;
             419          (d) livestock[, which, for the purposes of the exemption provided under Section
             420      59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish]; and
             421          (e) outdoor advertising structures as defined in Section 72-7-502 .
             422          [(28)] (30) (a) "Property" means property that is subject to assessment and taxation
             423      according to its value.
             424          (b) "Property" does not include intangible property as defined in this section.
             425          [(29)] (31) "Public utility," for purposes of this chapter, means the operating property
             426      of a railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
             427      company, electrical corporation, telephone corporation, sewerage corporation, or heat
             428      corporation where the company performs the service for, or delivers the commodity to, the
             429      public generally or companies serving the public generally, or in the case of a gas corporation
             430      or an electrical corporation, where the gas or electricity is sold or furnished to any member or


             431      consumers within the state for domestic, commercial, or industrial use. Public utility also
             432      means the operating property of any entity or person defined under Section 54-2-1 except water
             433      corporations.
             434          [(30)] (32) (a) Subject to Subsection [(30)] (32)(b), "qualifying exempt primary
             435      residential rental personal property" means household furnishings, furniture, and equipment
             436      that:
             437          (i) are used exclusively within a dwelling unit that is the primary residence of a tenant;
             438          (ii) are owned by the owner of the dwelling unit that is the primary residence of a
             439      tenant; and
             440          (iii) after applying the residential exemption described in Section 59-2-103 , are exempt
             441      from taxation under this chapter in accordance with Subsection 59-2-1115 (2).
             442          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             443      commission may by rule define the term "dwelling unit" for purposes of this Subsection [(30)]
             444      (32) and Subsection [(33)] (35).
             445          [(31)] (33) "Real estate" or "real property" includes:
             446          (a) the possession of, claim to, ownership of, or right to the possession of land;
             447          (b) all mines, minerals, and quarries in and under the land, all timber belonging to
             448      individuals or corporations growing or being on the lands of this state or the United States, and
             449      all rights and privileges appertaining to these; and
             450          (c) improvements.
             451          [(32)] (34) "Relationship with an owner of the property's land surface rights" means a
             452      relationship described in Subsection 267(b), Internal Revenue Code:
             453          (a) except that notwithstanding Subsection 267(b), Internal Revenue Code, the term
             454      25% shall be substituted for the term 50% in Subsection 267(b), Internal Revenue Code; and
             455          (b) using the ownership rules of Subsection 267(c), Internal Revenue Code, for
             456      determining the ownership of stock.
             457          [(33)] (35) (a) Subject to Subsection [(33)] (35)(b), "residential property," for the
             458      purposes of the reductions and adjustments under this chapter, means any property used for
             459      residential purposes as a primary residence.
             460          (b) Subject to Subsection [(33)] (35)(c), "residential property":
             461          (i) except as provided in Subsection [(33)] (35)(b)(ii), includes household furnishings,


             462      furniture, and equipment if the household furnishings, furniture, and equipment are:
             463          (A) used exclusively within a dwelling unit that is the primary residence of a tenant;
             464      and
             465          (B) owned by the owner of the dwelling unit that is the primary residence of a tenant;
             466      and
             467          (ii) does not include property used for transient residential use.
             468          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             469      commission may by rule define the term "dwelling unit" for purposes of Subsection [(30)] (32)
             470      and this Subsection [(33)] (35).
             471          [(34)] (36) "Split estate mineral rights owner" means a person who:
             472          (a) has a legal right to extract a mineral from property;
             473          (b) does not hold more than a 25% interest in:
             474          (i) the land surface rights of the property where the wellhead is located; or
             475          (ii) an entity with an ownership interest in the land surface rights of the property where
             476      the wellhead is located;
             477          (c) is not an entity in which the owner of the land surface rights of the property where
             478      the wellhead is located holds more than a 25% interest; and
             479          (d) does not have a relationship with an owner of the land surface rights of the property
             480      where the wellhead is located.
             481          [(35)] (37) (a) "State-assessed commercial vehicle" means:
             482          (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
             483      to transport passengers, freight, merchandise, or other property for hire; or
             484          (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
             485      transports the vehicle owner's goods or property in furtherance of the owner's commercial
             486      enterprise.
             487          (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
             488      are specified in Subsection (8)(c) as county-assessed commercial vehicles.
             489          [(36)] (38) "Taxable value" means fair market value less any applicable reduction
             490      allowed for residential property under Section 59-2-103 .
             491          [(37)] (39) "Tax area" means a geographic area created by the overlapping boundaries
             492      of one or more taxing entities.


             493          [(38)] (40) "Taxing entity" means any county, city, town, school district, special taxing
             494      district, local district under Title 17B, Limited Purpose Local Government Entities - Local
             495      Districts, or other political subdivision of the state with the authority to levy a tax on property.
             496          [(39)] (41) "Tax roll" means a permanent record of the taxes charged on property, as
             497      extended on the assessment roll and may be maintained on the same record or records as the
             498      assessment roll or may be maintained on a separate record properly indexed to the assessment
             499      roll. It includes tax books, tax lists, and other similar materials.
             500          Section 3. Section 59-2-103 is amended to read:
             501           59-2-103. Rate of assessment of property -- Residential property.
             502          (1) All tangible taxable property located within the state shall be assessed and taxed at
             503      a uniform and equal rate on the basis of its fair market value, as valued on January 1, unless
             504      otherwise provided by law.
             505          (2) Subject to Subsections [(3) and (4), beginning on January 1, 1995] (3) through (5)
             506      and Section 59-2-103.5 , for a calendar year, the fair market value of residential property
             507      located within the state [shall be reduced by 45%, representing a residential exemption allowed
             508      under Utah Constitution Article XIII, Section 2.] is allowed a residential exemption equal to a
             509      45% reduction in the value of the property.
             510          (3) Part-year residential property located within the state is allowed the residential
             511      exemption described in Subsection (2) if the part-year residential property is used as residential
             512      property for 183 or more consecutive calendar days during the calendar year for which the
             513      owner seeks to obtain the residential exemption.
             514          [(3)] (4) No more than one acre of land per residential unit may qualify for the
             515      residential exemption described in Subsection (2).
             516          [(4)] (5) (a) Except as provided in Subsection [(4)] (5)(b)(ii), [beginning on January 1,
             517      2005, the] a residential exemption described in Subsection (2) is limited to one primary
             518      residence per household.
             519          (b) An owner of multiple [residential properties] primary residences located within the
             520      state is allowed a residential exemption under Subsection (2) for:
             521          (i) subject to Subsection [(4)] (5)(a), the primary residence of the owner; and
             522          (ii) each residential property that is the primary residence of a tenant.
             523          Section 4. Section 59-2-103.5 is amended to read:


             524           59-2-103.5. Procedures to obtain an exemption for residential property --
             525      Procedure if property owner or property no longer qualifies to receive a residential
             526      exemption.
             527          [(1) Subject to the other provisions of this section, a county legislative body may by
             528      ordinance require that in order for residential property to be allowed a residential exemption in
             529      accordance with Section 59-2-103 , an owner of the residential property shall file with the
             530      county board of equalization a statement:]
             531          (1) For residential property other than part-year residential property, a county
             532      legislative body may adopt an ordinance that requires an owner to file an application with the
             533      county board of equalization before a residential exemption under Section 59-2-103 may be
             534      applied to the value of the residential property if:
             535          (a) the residential property was ineligible for the residential exemption during the
             536      calendar year immediately preceding the calendar year for which the owner is seeking to have
             537      the residential exemption applied to the value of the residential property;
             538          (b) an ownership interest in the residential property changes; or
             539          (c) the county board of equalization determines that there is reason to believe that the
             540      residential property no longer qualifies for the residential exemption.
             541          (2) (a) The application described in Subsection (1) shall:
             542          [(a) ] (i) be on a form [prescribed by] the commission prescribes by rule and makes
             543      available to the counties;
             544          [(b) ] (ii) be signed by all of the owners of the residential property;
             545          [(c) certifying] (iii) certify that the residential property is residential property; and
             546          [(d) containing] (iv) contain other information as [required by] the commission
             547      requires by rule.
             548          [(2) (a) Subject to Section 59-2-103 and except as provided in Subsection (3), a county
             549      board of equalization shall allow an owner described in Subsection (1) a residential exemption
             550      for the residential property described in Subsection (1) if:]
             551          [(i) the county legislative body enacts the ordinance described in Subsection (1); and]
             552          [(ii) the county board of equalization determines that the requirements of Subsection
             553      (1) are met.]
             554          [(b) A county board of equalization may require an owner of the residential property


             555      described in Subsection (1) to file the statement described in Subsection (1) only if:]
             556          [(i) that residential property was ineligible for the residential exemption authorized
             557      under Section 59-2-103 during the calendar year immediately preceding the calendar year for
             558      which the owner is seeking to claim the residential exemption for that residential property;]
             559          [(ii) an ownership interest in that residential property changes; or]
             560          [(iii) the county board of equalization determines that there is reason to believe that
             561      that residential property no longer qualifies for the residential exemption in accordance with
             562      Section 59-2-103 .]
             563          [(3) Notwithstanding Subsection (2)(a), if a county legislative body does not enact an
             564      ordinance requiring an owner to file a statement in accordance with this section, the county
             565      board of equalization:]
             566          [(a) may not require an owner to file a statement for residential property to be eligible
             567      for a residential exemption in accordance with Section 59-2-103 ; and]
             568          [(b) shall allow a residential exemption for residential property in accordance with
             569      Section 59-2-103 .]
             570          [(4) (a) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             571      the commission shall make rules providing:]
             572          [(i) the form for the statement described in Subsection (1); and]
             573          [(ii) the contents of the form for the statement described in Subsection (1).]
             574          [(b) The commission shall make the form described in Subsection (4)(a) available to
             575      counties.]
             576          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             577      commission may make rules prescribing the contents of the form described in Subsection
             578      (2)(a).
             579          (3) (a) Regardless of whether a county legislative body adopts an ordinance described
             580      in Subsection (1), before a residential exemption may be applied to the value of part-year
             581      residential property, an owner of the property shall:
             582          (i) file the application described in Subsection (2)(a) with the county board of
             583      equalization; and
             584          (ii) include as part of the application described in Subsection (2)(a) a statement that
             585      certifies:


             586          (A) the date the part-year residential property became residential property; H. [ and ] .H
             587          (B) that the part-year residential property H. [ is ] will be .H used as residential
             587a      property for 183 or
             588      more consecutive calendar days during the calendar year for which the owner seeks to obtain
             589      the residential exemption H. [ . ] ; and
             589a          (C) that the owner, or a member of the owner's household, may not claim a residential
             589b      exemption for any property for the calendar year for which the owner seeks to obtain the
             589c      residential exemption, other than the part-year residential property, or as allowed under
             589d      Section 59-2-103 with respect to the primary residence or household furnishings, furniture,
             589e      and equipment of the owner's tenant. .H
             590          (b) An owner may not obtain a residential exemption for part-year residential property
             591      unless the owner files an application under this Subsection (3) on or before H. [ August 31 ]
             591a      November 30 .H of the
             592      calendar year for which the owner seeks to obtain the residential exemption.
             593          (c) If an owner files an application under this Subsection (3) on or after May 1 of the
             594      calendar year for which the owner seeks to obtain the residential exemption, the county board
             595      of equalization may require the owner to pay an application fee of not to exceed $50.
             596          [(5)] (4) Except as provided in Subsection [(6)] (5), if a property owner no longer
             597      qualifies to receive a residential exemption authorized under Section 59-2-103 for [that] the
             598      property owner's primary residence, the property owner shall:
             599          (a) file a written statement with the county board of equalization of the county in which
             600      the property is located:
             601          (i) on a form provided by the county board of equalization; and
             602          (ii) notifying the county board of equalization that the property owner no longer
             603      qualifies to receive a residential exemption authorized under Section 59-2-103 for [that] the
             604      property owner's primary residence; and
             605          (b) declare on the property owner's individual income tax return under Chapter 10,
             606      Individual Income Tax Act, for the taxable year for which the property owner no longer
             607      qualifies to receive a residential exemption authorized under Section 59-2-103 for [that] the
             608      property owner's primary residence, that the property owner no longer qualifies to receive a
             609      residential exemption authorized under Section 59-2-103 for [that] the property owner's
             610      primary residence.
             611          [(6)] (5) A property owner is not required to file a written statement or make the
             612      declaration described in Subsection [(5)] (4) if the property owner:
             613          (a) changes primary residences;
             614          (b) qualified to receive a residential exemption authorized under Section 59-2-103 for
             615      the residence that was the property owner's former primary residence; and
             616          (c) qualifies to receive a residential exemption authorized under Section 59-2-103 for


             617      the residence that is the property owner's current primary residence.
             618          [(7) (a)] (6) Subsections (2) through [(6)] (5) do not apply to qualifying exempt
             619      primary residential rental personal property.
             620          [(b) (i)] (7) (a) For the first calendar year in which a [taxpayer qualifies for an
             621      exemption described in Subsection (2)] property owner qualifies to receive a residential
             622      exemption under Section 59-2-103 , a county assessor may require the [taxpayer] property
             623      owner to file a signed statement described in Section 59-2-306 .
             624          [(ii)] (b) Notwithstanding Section 59-2-306 , for a calendar year after the calendar year
             625      described in Subsection (7)[(b)(i)](a) in which a [taxpayer] property owner qualifies for an
             626      exemption described in Subsection 59-2-1115 (2) for qualifying exempt primary residential
             627      rental personal property, a signed statement described in Section 59-2-306 with respect to the
             628      qualifying exempt primary residential rental personal property may only require the [taxpayer]
             629      property owner to certify, under penalty of perjury, that the [taxpayer] property owner qualifies
             630      for the exemption under Subsection 59-2-1115 (2).
             631          Section 5. Section 59-2-804 is amended to read:
             632           59-2-804. Interstate allocation of mobile flight equipment.
             633          (1) As used in this section:
             634          (a) "Aircraft type" means a particular model of aircraft as designated by the
             635      manufacturer of the aircraft.
             636          (b) "Airline ground hours calculation" means an amount equal to the product of:
             637          (i) the total number of hours aircraft owned or operated by an airline are on the ground,
             638      calculated by aircraft type; and
             639          (ii) the cost percentage.
             640          (c) "Airline revenue ton miles" means, for an airline, the total revenue ton miles during
             641      the calendar year that immediately precedes the January 1 described in Section 59-2-103 .
             642          (d) "Cost percentage" means a fraction, calculated by aircraft type, the numerator of
             643      which is the airline's average cost of the aircraft type and the denominator of which is the
             644      airline's average cost of the aircraft type:
             645          (i) owned or operated by the airline; and
             646          (ii) that has the lowest average cost.
             647          (e) "Ground hours factor" means the product of:


             648          (i) a fraction, the numerator of which is the Utah ground hours calculation and the
             649      denominator of which is the airline ground hours calculation; and
             650          (ii) .50.
             651          (f) (i) Except as provided in Subsection (1)(f)(ii), "mobile flight equipment" is as
             652      defined in Section 59-2-102 .
             653          (ii) "Mobile flight equipment" does not include tangible personal property described in
             654      Subsection 59-2-102 [(25)](26) owned by an:
             655          (A) air charter service; or
             656          (B) air contract service.
             657          (g) "Mobile flight equipment allocation factor" means the sum of:
             658          (i) the ground hours factor; and
             659          (ii) the revenue ton miles factor.
             660          (h) "Revenue ton miles" is determined in accordance with 14 C.F.R. Part 241.
             661          (i) "Revenue ton miles factor" means the product of:
             662          (i) a fraction, the numerator of which is the Utah revenue ton miles and the
             663      denominator of which is the airline revenue ton miles; and
             664          (ii) .50.
             665          (j) "Utah ground hours calculation" means an amount equal to the product of:
             666          (i) the total number of hours aircraft owned or operated by an airline are on the ground
             667      in this state, calculated by aircraft type; and
             668          (ii) the cost percentage.
             669          (k) "Utah revenue ton miles" means, for an airline, the total revenue ton miles within
             670      the borders of this state:
             671          (i) during the calendar year that immediately precedes the January 1 described in
             672      Section 59-2-103 ; and
             673          (ii) from flight stages that originate or terminate in this state.
             674          (2) For purposes of the assessment of an airline's mobile flight equipment by the
             675      commission, a portion of the value of the airline's mobile flight equipment shall be allocated to
             676      the state by calculating the product of:
             677          (a) the total value of the mobile flight equipment; and
             678          (b) the mobile flight equipment allocation factor.


             679          Section 6. Section 59-7-302 is amended to read:
             680           59-7-302. Definitions -- Determination of when a taxpayer is considered to be a
             681      sales factor weighted taxpayer.
             682          (1) As used in this part, unless the context otherwise requires:
             683          (a) "Aircraft type" means a particular model of aircraft as designated by the
             684      manufacturer of the aircraft.
             685          (b) "Airline" is as defined in Section 59-2-102 .
             686          (c) "Airline revenue ton miles" means, for an airline, the total revenue ton miles during
             687      the airline's tax period.
             688          (d) "Business income" means income arising from transactions and activity in the
             689      regular course of the taxpayer's trade or business and includes income from tangible and
             690      intangible property if the acquisition, management, and disposition of the property constitutes
             691      integral parts of the taxpayer's regular trade or business operations.
             692          (e) "Commercial domicile" means the principal place from which the trade or business
             693      of the taxpayer is directed or managed.
             694          (f) "Compensation" means wages, salaries, commissions, and any other form of
             695      remuneration paid to employees for personal services.
             696          (g) (i) Except as provided in Subsection (1)(g)(ii), "mobile flight equipment" is as
             697      defined in Section 59-2-102 .
             698          (ii) "Mobile flight equipment" does not include:
             699          (A) a spare engine; or
             700          (B) tangible personal property described in Subsection 59-2-102 [(25)](26) owned by
             701      an:
             702          (I) air charter service; or
             703          (II) air contract service.
             704          (h) "Nonbusiness income" means all income other than business income.
             705          (i) "Revenue ton miles" is determined in accordance with 14 C.F.R. Part 241.
             706          (j) "Sales" means all gross receipts of the taxpayer not allocated under Sections
             707      59-7-306 through 59-7-310 .
             708          (k) Subject to Subsection (2), "sales factor weighted taxpayer" means:
             709          (i) for a taxpayer that is not a unitary group, regardless of the number of economic


             710      activities the taxpayer performs, a taxpayer having greater than 50% of the taxpayer's total sales
             711      everywhere generated by economic activities:
             712          (A) performed by the taxpayer; and
             713          (B) classified in a NAICS code of the 2002 or 2007 North American Industry
             714      Classification System of the federal Executive Office of the President, Office of Management
             715      and Budget, except for:
             716          (I) a NAICS code within NAICS Sector 21, Mining;
             717          (II) a NAICS code within NAICS Sector 31-33, Manufacturing;
             718          (III) a NAICS code within NAICS Sector 48-49, Transportation and Warehousing;
             719          (IV) a NAICS code within NAICS Sector 51, Information, except for NAICS
             720      Subsector 519, Other Information Services; or
             721          (V) a NAICS code within NAICS Sector 52, Finance and Insurance; or
             722          (ii) for a taxpayer that is a unitary group, a taxpayer having greater than 50% of the
             723      taxpayer's total sales everywhere generated by economic activities:
             724          (A) performed by the unitary group; and
             725          (B) classified in a NAICS code of the 2002 or 2007 North American Industry
             726      Classification System of the federal Executive Office of the President, Office of Management
             727      and Budget, except for:
             728          (I) a NAICS code within NAICS Sector 21, Mining;
             729          (II) a NAICS code within NAICS Sector 31-33, Manufacturing;
             730          (III) a NAICS code within NAICS Sector 48-49, Transportation and Warehousing;
             731          (IV) a NAICS code within NAICS Sector 51, Information, except for NAICS
             732      Subsector 519, Other Information Services; or
             733          (V) a NAICS code within NAICS Sector 52, Finance and Insurance.
             734          (l) "State" means any state of the United States, the District of Columbia, the
             735      Commonwealth of Puerto Rico, any territory or possession of the United States, and any
             736      foreign country or political subdivision thereof.
             737          (m) "Transportation revenue" means revenue an airline earns from:
             738          (i) transporting a passenger or cargo; or
             739          (ii) from miscellaneous sales of merchandise as part of providing transportation
             740      services.


             741          (n) "Utah revenue ton miles" means, for an airline, the total revenue ton miles within
             742      the borders of this state:
             743          (i) during the airline's tax period; and
             744          (ii) from flight stages that originate or terminate in this state.
             745          (2) The following apply to Subsection (1)(k):
             746          (a) (i) Subject to the other provisions of this Subsection (2), a taxpayer shall for each
             747      taxable year determine whether the taxpayer is a sales factor weighted taxpayer.
             748          (ii) A taxpayer shall make the determination required by Subsection (2)(a)(i) before the
             749      due date for filing the taxpayer's return under this chapter for the taxable year, including
             750      extensions.
             751          (iii) For purposes of making the determination required by Subsection (2)(a)(i), total
             752      sales everywhere include only the total sales everywhere:
             753          (A) as determined in accordance with this part; and
             754          (B) made during the taxable year for which a taxpayer makes the determination
             755      required by Subsection (2)(a)(i).
             756          (b) A taxpayer that files a return as a unitary group for a taxable year is considered to
             757      be a unitary group for that taxable year.
             758          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             759      commission may define the term "economic activity" consistent with the use of the term
             760      "activity" in the 2007 North American Industry Classification System of the federal Executive
             761      Office of the President, Office of Management and Budget.
             762          Section 7. Effective date.
             763          This bill takes effect on January 1, 2015.




Legislative Review Note
    as of 1-14-14 9:59 AM


Office of Legislative Research and General Counsel


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