S.B. 128 Enrolled

CALCULATION OF INTEREST ON TAX
OVERPAYMENTS
2005 GENERAL SESSION
STATE OF UTAH
Sponsor: Howard A. Stephenson

LONG TITLE
General Description:
This bill modifies the Revenue and Taxation title relating to the calculation of interest
on tax overpayments.
Highlighted Provisions:
This bill:
. prescribes the calculation of interest on tax overpayments if an amended return is
filed; and
. makes technical changes.
Monies Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
59-1-402, as last amended by Chapter 93, Laws of Utah 1994

Be it enacted by the Legislature of the state of Utah:
Section 1. Section 59-1-402 is amended to read:
59-1-402. Interest.
(1) Notwithstanding Subsections (2) and (3), the rate of interest applicable to certain
installment sales for the purposes of the corporate franchise tax shall be determined pursuant to
Section 453A, Internal Revenue Code, as provided in Section 59-7-112 .

(2) Except as otherwise provided for by law, the interest rate for a calendar year for all
taxes and fees administered by the commission shall be calculated based on the federal
short-term rate determined by the Secretary of the Treasury under Section 6621, Internal Revenue
Code, and in effect for the preceding fourth calendar quarter.
(3) The interest rate calculation shall be as follows:
(a) [In] except as provided in Subsection (6), in the case of overpayments and refunds,
[except as otherwise provided in Subsection (6),] simple interest shall be calculated at the rate of
two percentage points above the federal short-term rate[.]; or
(b) [In] in the case of underpayments, deficiencies, and delinquencies, simple interest
shall be calculated at the rate of two percentage points above the federal short-term rate.
(4) (a) [If] Except as provided in Subsection (4)(c), if any overpayment of tax or fee
administered by the commission is refunded within 90 days after the last date prescribed for
filing the return of such tax or fee, no interest shall be allowed on the overpayment.
(b) [If] Except as provided in Subsection (4)(c), if the return is filed after the last date
prescribed for filing the return, no interest shall be allowed on the overpayment if the
overpayment is refunded within 90 days after the date the return is filed.
[(c) If a refund of an overpayment is requested, and if interest may be calculated in
accordance with this section,]
(c) (i) Notwithstanding Subsection (4)(a) or (b), in the case of an amended return, interest
on an overpayment shall be allowed:
(A) for a time period:
(I) that begins on the later of:
(Aa) the date the original return was filed; or
(Bb) the due date for filing the original return not including any extensions for filing the
original return; and
(II) that ends on the date the commission receives the amended return; and
(B) if the commission does not make a refund of an overpayment under this Subsection
(4)(c) within a 90-day period after the date the commission receives the amended return, for a

time period:
(I) that begins 91 days after the commission receives the amended return; and
(II) subject to Subsection (4)(c)(ii), that ends on the date that the commission completes
processing the refund of the overpayment.
(ii) For purposes of Subsection (4)(c)(i)(B)(II), interest shall be calculated forward from
the preparation date of the refund document to allow for processing.
(5) Interest on any underpayment, deficiency, or delinquency of any tax or fee
administered by the [tax] commission shall be computed from the time the original return is due,
excluding any filing or payment extensions, to the date the payment is received.
(6) (a) [Interest] Notwithstanding Subsection (3)(a), interest on refunds may not be paid
on any overpayment [which] that arises from a statute [which] that is determined to be invalid
under state or federal law or declared unconstitutional under the constitution of the United States
or Utah if the basis for the refund is the retroactive application of a judicial decision upholding
the claim of unconstitutionality or the invalidation of a statute.
(b) For purposes of this Subsection (6):
(i) "[Final] final judicial decision" means a final ruling by a court of this state or the
United States for which the time for any further review or proceeding has expired[.]; and
(ii) "[Retroactive] retroactive application of a judicial decision" means the application of
a final judicial decision [which] that:
(A) invalidates a state or federal taxation statute; and [which]
(B) requires the state to provide refunds for overpayments that were made:
(I) prior to the final judicial decision; or [for overpayments made]
(II) during the 180-day period after the final judicial decision.
(7) This section does not apply to:
(a) Title 41, Chapter 1a, Motor Vehicle Act, except for Section 41-1a-301 ;
(b) Title 41, Chapter 3, Motor Vehicle Business Regulation Act;
[(a) Title 59,] (c) Chapter 2, Property Tax Act, except for Section 59-2-1309 [, Title 59,];
(d) Chapter 3 [or 4,], Tax Equivalent Property Act;

(e) Chapter 4, Privilege Tax; or
(f) Chapter 13, Part 5[;], Interstate Agreements.
[(b) Title 41, Chapter 1a, except for Section 41-1a-301 , or Title 41, Chapter 3.]