H.B. 345

This document includes House Committee Amendments incorporated into the bill on Fri, Feb 20, 2004 at 12:14 PM by chopkin. --> 1

EARNED INCOME TAX CREDIT
2 2004 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Jackie Biskupski
5
6 LONG TITLE
7 General Description:
8 This bill amends the Individual Income Tax Act.
9 Highlighted Provisions:
10 This bill:
11 . provides for a refundable state earned income tax credit that is a certain percentage
12 of the federal earned income tax credit;
13 . requires the State Tax Commission to increase or decrease for inflation or deflation
14 federal adjusted gross income amounts used in determining the tax credit; and
15 . grants rulemaking authority to the State Tax Commission to provide procedures for
16 issuing refunds under certain circumstances to a resident or nonresident individual
17 claiming the tax credit.
18 Monies Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 None
22 Utah Code Sections Affected:
23 ENACTS:
24 59-10-136, Utah Code Annotated 1953
25
26 Be it enacted by the Legislature of the state of Utah:
27 Section 1. Section 59-10-136 is enacted to read:

28 59-10-136. H DEFINITIONS -- h State earned income tax credit.
29 (1) As used in this section:
30 (a) "federal adjusted gross income" is as defined in Section 62, Internal Revenue Code;
31 H [ and ] h
32 (b) "federal earned income tax credit" means the amount of the federal earned income
33 tax credit an individual is allowed for the taxable year in accordance with Section 32, Internal
34 Revenue Code H [ . ] ; AND
34a (c) NOTWITHSTANDING SECTION 59-10-103, "NONRESIDENT INDIVIDUAL" MEANS AN
34b INDIVIDUAL WHO:
34c (i) IS NOT A RESIDENT OF THIS STATE; AND
34d (ii) HAS FEDERAL ADJUSTED GROSS INCOME DERIVED FROM UTAH SOURCES AS
34e CALCULATED UNDER SECTION 59-10-117. h
35 (2) H [ For ] SUBJECT TO SUBSECTION (4), FOR h taxable years beginning on or after
35a January 1, 2005, a resident or nonresident
36 individual may claim as provided in this section a refundable earned income tax credit as
37 follows:
38 (a) the tax credit is equal to 10% of the federal earned income tax credit if:
39 (i) the federal adjusted gross income of the following is less than or equal to $5,000:
40 (A) a husband and wife filing a single tax return jointly; or
41 (B) a head of household; or
42 (ii) the federal adjusted gross income of a resident or nonresident individual other than
43 the following is less than or equal to $2,500:
44 (A) a husband and wife filing a single tax return jointly; or
45 (B) a head of household;
46 (b) the tax credit is equal to 7% of the federal earned income tax credit if:
47 (i) the federal adjusted gross income of the following is greater than $5,000 but less
48 than or equal to $15,000:
49 (A) a husband and wife filing a single tax return jointly; or
50 (B) a head of household; or
51 (ii) the federal adjusted gross income of a resident or nonresident individual other than
52 the following is greater than $2,500 but less than or equal to $7,500:
53 (A) a husband and wife filing a single tax return jointly; or
54 (B) a head of household; or
55 (c) the tax credit is equal to 4% of the federal earned income tax credit if:
56 (i) the federal adjusted gross income of the following is greater than $15,000 but less
57 than or equal to $25,000:
58 (A) a husband and wife filing a single tax return jointly; or

59 (B) a head of household; or
60 (ii) the federal adjusted gross income of a resident or nonresident individual other than
61 the following is greater than $7,500 but less than or equal to $12,500:
62 (A) a husband and wife filing a single tax return jointly; or
63 (B) a head of household.
64 (3) (a) For taxable years beginning on or after January 1, 2006, the commission shall
65 increase or decrease the federal adjusted gross income amounts provided for in Subsection (2)
66 by a percentage equal to the percentage difference between the consumer price index for the
67 preceding calendar year and the consumer price index for calendar year 2004.
68 (b) For purposes of Subsection (3)(a), the commission shall calculate the consumer
69 price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
69a H (4) THE TAX CREDIT FOR A NONRESIDENT INDIVIDUAL IS LIMITED TO AN AMOUNT
69b EQUAL TO THE PRODUCT OF:
69c (a) THE TAX CREDIT CALCULATED UNDER SUBSECTION (2); AND
69d (b) A PERCENTAGE CALCULATED BY DIVIDING THE NONRESIDENT INDIVIDUAL'S FEDERAL
69e ADJUSTED GROSS INCOME DERIVED FROM UTAH SOURCES FOR THE TAXABLE YEAR, AS
69f CALCULATED UNDER SECTION 59-10-117, BY THE NONRESIDENT INDIVIDUAL'S TOTAL FEDERAL
69g ADJUSTED GROSS INCOME FOR THAT SAME TAXABLE YEAR. h
70 H [ (4) ] (5) h A resident or nonresident individual may not claim a tax credit under this
70a section if
71 the resident or nonresident individual's federal adjusted gross income is greater than the
72 greatest amount of federal adjusted gross income for which a tax credit is allowed under
73 Subsection (2)(c).
74 H [ (5) ] (6) h A resident or nonresident individual may not carry forward or carry back the tax
75 credit provided for under this section.
76 H [ (6) ] (7) h In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
76a the
77 commission may make rules providing procedures for issuing a refund to a resident or
78 nonresident individual for the tax credit provided for under this section if the tax credit exceeds
79 the resident or nonresident individual's tax liability under this chapter for the taxable year for
80 which the resident or nonresident individual claims the tax credit.




Legislative Review Note
as of 2-5-04 6:26 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel