S.B. 206

1

PROPERTY TAX AMENDMENTS
2 2004 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Howard A. Stephenson
5
6 LONG TITLE
7 General Description:
8 This bill modifies the Property Tax Act to change the definition of an improvement and
9 designates certain personal property.
10 Highlighted Provisions:
11 This bill:
12 . modifies the definition of an improvement for purposes of the Property Tax Act;
13 and
14 . requires the Tax Commission to designate certain items as personal property for
15 purposes of the Property Tax Act in accordance with Tax Commission rules in
16 effect on January 1, 2004.
17 Monies Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 This bill provides a coordination clause.
21 Utah Code Sections Affected:
22 AMENDS:
23 59-2-102, as last amended by Chapter 113, Laws of Utah 2003
24 ENACTS:
25 59-2-107, Utah Code Annotated 1953
26
27 Be it enacted by the Legislature of the state of Utah:

28 Section 1. Section 59-2-102 is amended to read:
29 59-2-102. Definitions.
30 As used in this chapter and title:
31 (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
32 engaging in dispensing activities directly affecting agriculture or horticulture with an
33 airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
34 rotorcraft's use for agricultural and pest control purposes.
35 (2) "Air charter service" means an air carrier operation which requires the customer to
36 hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
37 trip.
38 (3) "Air contract service" means an air carrier operation available only to customers
39 who engage the services of the carrier through a contractual agreement and excess capacity on
40 any trip and is not available to the public at large.
41 (4) "Aircraft" is as defined in Section 72-10-102 .
42 (5) "Airline" means any air carrier operating interstate routes on a scheduled basis
43 which offers to fly passengers or cargo on the basis of available capacity on regularly scheduled
44 routes.
45 (6) "Assessment roll" means a permanent record of the assessment of property as
46 assessed by the county assessor and the commission and may be maintained manually or as a
47 computerized file as a consolidated record or as multiple records by type, classification, or
48 categories.
49 (7) "Certified revenue levy" means a property tax levy that provides the same amount
50 of ad valorem property tax revenue as was collected for the prior year, plus new growth, but
51 exclusive of revenue from collections from redemptions, interest, and penalties.
52 (8) "County-assessed commercial vehicle" means:
53 (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
54 Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
55 property in furtherance of the owner's commercial enterprise;
56 (b) any passenger vehicle owned by a business and used by its employees for
57 transportation as a company car or vanpool vehicle; and
58 (c) vehicles which are:

59 (i) especially constructed for towing or wrecking, and which are not otherwise used to
60 transport goods, merchandise, or people for compensation;
61 (ii) used or licensed as taxicabs or limousines;
62 (iii) used as rental passenger cars, travel trailers, or motor homes;
63 (iv) used or licensed in this state for use as ambulances or hearses;
64 (v) especially designed and used for garbage and rubbish collection; or
65 (vi) used exclusively to transport students or their instructors to or from any private,
66 public, or religious school or school activities.
67 (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,
68 "designated tax area" means a tax area created by the overlapping boundaries of only the
69 following taxing entities:
70 (i) a county; and
71 (ii) a school district.
72 (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
73 by the overlapping boundaries of:
74 (i) the taxing entities described in Subsection (9)(a); and
75 (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
76 and the boundaries of the city or town are identical; or
77 (B) a special service district if the boundaries of the school district under Subsection
78 (9)(a) are located entirely within the special service district.
79 (10) "Eligible judgment" means a final and unappealable judgment or order under
80 Section 59-2-1330 :
81 (a) that became a final and unappealable judgment or order no more than 14 months
82 prior to the day on which the notice required by Subsection 59-2-919 (4) is required to be
83 mailed; and
84 (b) for which a taxing entity's share of the final and unappealable judgment or order is
85 greater than or equal to the lesser of:
86 (i) $5,000; or
87 (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
88 previous fiscal year.
89 (11) (a) "Escaped property" means any property, whether personal, land, or any

90 improvements to the property, subject to taxation and is:
91 (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
92 to the wrong taxpayer by the assessing authority;
93 (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
94 comply with the reporting requirements of this chapter; or
95 (iii) undervalued because of errors made by the assessing authority based upon
96 incomplete or erroneous information furnished by the taxpayer.
97 (b) Property which is undervalued because of the use of a different valuation
98 methodology or because of a different application of the same valuation methodology is not
99 "escaped property."
100 (12) "Fair market value" means the amount at which property would change hands
101 between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
102 and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
103 market value" shall be determined using the current zoning laws applicable to the property in
104 question, except in cases where there is a reasonable probability of a change in the zoning laws
105 affecting that property in the tax year in question and the change would have an appreciable
106 influence upon the value.
107 (13) "Farm machinery and equipment," for purposes of the exemption provided under
108 Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
109 handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
110 tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
111 equipment used primarily for agricultural purposes; but does not include vehicles required to be
112 registered with the Motor Vehicle Division or vehicles or other equipment used for business
113 purposes other than farming.
114 (14) "Geothermal fluid" means water in any form at temperatures greater than 120
115 degrees centigrade naturally present in a geothermal system.
116 (15) "Geothermal resource" means:
117 (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
118 and
119 (b) the energy, in whatever form, including pressure, present in, resulting from, created
120 by, or which may be extracted from that natural heat, directly or through a material medium.

121 [(16) "Improvements" includes all buildings, structures, fixtures, fences, and
122 improvements erected upon or affixed to the land, whether the title has been acquired to the
123 land or not.]
124 (16) (a) Except as provided in Subsection (16)(c), "improvement" means a building,
125 structure, fixture, fence, or other item that is permanently attached to land if:
126 (i) (A) attachment to land is essential to the operation or use of the item; and
127 (B) the manner of attachment to land suggests that the item will remain attached to the
128 land in the same place over the useful life of the item; or
129 (ii) removal of the item would:
130 (A) cause substantial damage to the item; or
131 (B) require substantial alteration or repair of a structure to which the item is attached.
132 (b) "Improvement" includes:
133 (i) an accessory to an item described in Subsection (16)(a) if the accessory is:
134 (A) essential to the operation of the item described in Subsection (16)(a); and
135 (B) installed solely to serve the operation of the item described in Subsection (16)(a);
136 and
137 (ii) an item described in Subsection (16)(a) that:
138 (A) is temporarily detached from the land for repairs; and
139 (B) remains located on the real property.
140 (c) Notwithstanding Subsections (16)(a) and (b), "improvement" does not include:
141 (i) an item considered to be personal property pursuant to rules made in accordance
142 with Section 59-2-107 ;
143 (ii) a moveable item that is attached to real property:
144 (A) for stability only; or
145 (B) for an obvious temporary purpose;
146 (iii) (A) manufacturing equipment and machinery; or
147 (B) essential accessories to manufacturing equipment and machinery; or
148 (iv) an item attached to the land in a manner that facilitates removal without substantial
149 damage to:
150 (A) the land; or
151 (B) the item.

152 (17) "Intangible property" means:
153 (a) property that is capable of private ownership separate from tangible property,
154 including:
155 (i) moneys;
156 (ii) credits;
157 (iii) bonds;
158 (iv) stocks;
159 (v) representative property;
160 (vi) franchises;
161 (vii) licenses;
162 (viii) trade names;
163 (ix) copyrights; and
164 (x) patents; or
165 (b) a low-income housing tax credit.
166 (18) "Low-income housing tax credit" means:
167 (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
168 or
169 (b) a low-income housing tax credit under:
170 (i) Section 59-7-607 ; or
171 (ii) Section 59-10-129 .
172 (19) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
173 (20) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
174 valuable mineral.
175 (21) "Mining" means the process of producing, extracting, leaching, evaporating, or
176 otherwise removing a mineral from a mine.
177 (22) (a) "Mobile flight equipment" means tangible personal property that is:
178 (i) owned or operated by an:
179 (A) air charter service;
180 (B) air contract service; or
181 (C) airline; and
182 (ii) (A) capable of flight;

183 (B) attached to an aircraft that is capable of flight; or
184 (C) contained in an aircraft that is capable of flight if the tangible personal property is
185 intended to be used:
186 (I) during multiple flights;
187 (II) during a takeoff, flight, or landing; and
188 (III) as a service provided by an air charter service, air contract service, or airline.
189 (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
190 engine that is rotated:
191 (A) at regular intervals; and
192 (B) with an engine that is attached to the aircraft.
193 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
194 the commission may make rules defining the term "regular intervals."
195 (23) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts,
196 sand, rock, gravel, and all carboniferous materials.
197 (24) "Personal property" includes:
198 (a) every class of property as defined in Subsection (25) which is the subject of
199 ownership and not included within the meaning of the terms "real estate" and "improvements";
200 (b) gas and water mains and pipes laid in roads, streets, or alleys;
201 (c) bridges and ferries; and
202 (d) livestock which, for the purposes of the exemption provided under Section
203 59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish.
204 (25) (a) "Property" means property that is subject to assessment and taxation according
205 to its value.
206 (b) "Property" does not include intangible property as defined in this section.
207 (26) "Public utility," for purposes of this chapter, means the operating property of a
208 railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
209 company, electrical corporation, telephone corporation, sewerage corporation, or heat
210 corporation where the company performs the service for, or delivers the commodity to, the
211 public generally or companies serving the public generally, or in the case of a gas corporation
212 or an electrical corporation, where the gas or electricity is sold or furnished to any member or
213 consumers within the state for domestic, commercial, or industrial use. Public utility also

214 means the operating property of any entity or person defined under Section 54-2-1 except water
215 corporations.
216 (27) "Real estate" or "real property" includes:
217 (a) the possession of, claim to, ownership of, or right to the possession of land;
218 (b) all mines, minerals, and quarries in and under the land, all timber belonging to
219 individuals or corporations growing or being on the lands of this state or the United States, and
220 all rights and privileges appertaining to these; and
221 (c) improvements.
222 (28) "Residential property," for the purposes of the reductions and adjustments under
223 this chapter, means any property used for residential purposes as a primary residence. It does
224 not include property used for transient residential use or condominiums used in rental pools.
225 (29) For purposes of Subsection 59-2-801 (1)(e), "route miles" means the number of
226 miles calculated by the commission that is:
227 (a) measured in a straight line by the commission; and
228 (b) equal to the distance between a geographical location that begins or ends:
229 (i) at a boundary of the state; and
230 (ii) where an aircraft:
231 (A) takes off; or
232 (B) lands.
233 (30) (a) "State-assessed commercial vehicle" means:
234 (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
235 to transport passengers, freight, merchandise, or other property for hire; or
236 (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
237 transports the vehicle owner's goods or property in furtherance of the owner's commercial
238 enterprise.
239 (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
240 are specified in Subsection (8)(c) as county-assessed commercial vehicles.
241 (31) "Taxable value" means fair market value less any applicable reduction allowed for
242 residential property under Section 59-2-103 .
243 (32) "Tax area" means a geographic area created by the overlapping boundaries of one
244 or more taxing entities.

245 (33) "Taxing entity" means any county, city, town, school district, special taxing
246 district, or any other political subdivision of the state with the authority to levy a tax on
247 property.
248 (34) "Tax roll" means a permanent record of the taxes charged on property, as extended
249 on the assessment roll and may be maintained on the same record or records as the assessment
250 roll or may be maintained on a separate record properly indexed to the assessment roll. It
251 includes tax books, tax lists, and other similar materials.
252 Section 2. Section 59-2-107 is enacted to read:
253 59-2-107. Classes of personal property -- Rulemaking authority.
254 The commission shall make rules:
255 (1) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;
256 (2) defining classes of items considered to be personal property for purposes of this
257 chapter;
258 (3) defining items that fall into the classes established under Subsection (2); and
259 (4) defining any class or item as personal property if the commission defined that class
260 or item as personal property prior to January 1, 2004, by:
261 (a) a rule made in accordance with Title 63, Chapter 46a, Utah Administrative
262 Rulemaking Act;
263 (b) a published decision of the commission; or
264 (c) an official schedule published by the commission.
265 Section 3. Coordinating S.B. 206 with S.B. 171.
266 If this S.B. 206 and S.B. 171, Property Tax Treatment of Transportable Factory-Built
267 Housing Units, both pass, it is the intent of the Legislature that in preparing the Utah Code
268 database for publication, the Office of Legislative Research and General Counsel shall combine
269 the amendments so that Subsection 59-2-102 (16) reads as follows:
270 "(16) (a) Except as provided in Subsection (16)(c), "improvement" means a building,
271 structure, fixture, fence, or other item that is permanently attached to land, regardless of
272 whether the title has been acquired to the land, if:
273 (i) (A) attachment to land is essential to the operation or use of the item; and
274 (B) the manner of attachment to land suggests that the item will remain attached to the
275 land in the same place over the useful life of the item; or

276 (ii) removal of the item would:
277 (A) cause substantial damage to the item; or
278 (B) require substantial alteration or repair of a structure to which the item is attached.
279 (b) "Improvement" includes:
280 (i) an accessory to an item described in Subsection (16)(a) if the accessory is:
281 (A) essential to the operation of the item described in Subsection (16)(a); and
282 (B) installed solely to serve the operation of the item described in Subsection (16)(a);
283 and
284 (ii) an item described in Subsection (16)(a) that:
285 (A) is temporarily detached from the land for repairs; and
286 (B) remains located on the land.
287 (c) Notwithstanding Subsections (16)(a) and (b), "improvement" does not include:
288 (i) an item considered to be personal property pursuant to rules made in accordance
289 with Section 59-2-107 ;
290 (ii) a moveable item that is attached to land:
291 (A) for stability only; or
292 (B) for an obvious temporary purpose;
293 (iii) (A) manufacturing equipment and machinery; or
294 (B) essential accessories to manufacturing equipment and machinery; or
295 (iv) an item attached to the land in a manner that facilitates removal without substantial
296 damage to:
297 (A) the land; or
298 (B) the item; or
299 (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
300 transportable factory-built housing unit is considered to be personal property under Section
301 59-2-1503 ."

Legislative Review Note
as of 2-13-04 12:16 PM

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

Office of Legislative Research and General Counsel