H.B. 147

1

REVISIONS TO DISTRIBUTION OF SALES
2 AND USE TAX REVENUE
3 2006 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Scott L Wyatt
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill amends the Local Sales and Use Tax Act to provide counties and
11 municipalities options relating to the distribution of revenue from this local sales and
12 use tax.
13 Highlighted Provisions:
14 This bill:
15 . defines terms;
16 . establishes a procedure for a county, and a majority of the municipalities within a
17 county, to agree to an alternate distribution formula for certain local option sales
18 and use tax revenues within the incorporated and unincorporated areas of the
19 county;
20 . provides that an agreement described in the preceding paragraph must be approved
21 by a majority vote of the voters in the incorporated and unincorporated area of the
22 county;
23 . provides requirements relating to an election for a vote required by this bill;
24 . provides that if the incorporated and unincorporated areas of a county adopt an
25 alternate distribution formula described in this bill, the revenue normally paid to
26 each municipality and county:
27 . will be paid to the county; and

28 . will be distributed by the county in accordance with the adopted alternate
29 distribution formula;
30 . establishes requirements for an alternate distribution formula and a written
31 agreement relating to the formula;
32 . establishes requirements relating to the distribution of the local option sales and use
33 tax revenue under this bill;
34 . provides that, notwithstanding an alternate distribution formula adopted under this
35 bill, a county or municipality to which the alternate distribution formula applies may
36 not receive less revenue than it received during the same month of the year before
37 the alternate distribution formula was adopted;
38 . provides an exception to the preceding paragraph by requiring that if the total
39 distribution to the county and municipalities to which the alternate distribution
40 formula applies is less than the total distribution received during the same month of
41 the year before the alternate distribution formula was adopted, the distribution to the
42 county and each municipality within the county will be proportionally reduced;
43 . establishes a procedure for a county, and a majority of the municipalities within a
44 county, to reinstate the local option sales and use tax revenue distribution formula
45 that applies to counties and municipalities that have not adopted an alternate
46 distribution formula under this bill; and
47 . makes technical changes.
48 Monies Appropriated in this Bill:
49 None
50 Other Special Clauses:
51 This bill takes effect on July 1, 2006.
52 Utah Code Sections Affected:
53 AMENDS:
54 59-12-205 (Effective 07/01/06), as last amended by Chapter 158, Laws of Utah 2005
55 ENACTS:
56 59-12-205.5, Utah Code Annotated 1953
57
58 Be it enacted by the Legislature of the state of Utah:

59 Section 1. Section 59-12-205 (Effective 07/01/06) is amended to read:
60 59-12-205 (Effective 07/01/06). Ordinances to conform with statutory
61 amendments -- Distribution of tax revenues -- Rulemaking authority -- Determination of
62 population.
63 (1) Each county, city, and town, in order to maintain in effect sales and use tax
64 ordinances adopted pursuant to Section 59-12-204 , shall, within 30 days of any amendment of
65 any applicable provisions of Part 1, Tax Collection, adopt amendments of their respective sales
66 and use tax ordinances to conform with the amendments to Part 1, Tax Collection, insofar as
67 they relate to sales and use taxes.
68 (2) Except as provided in Subsection (7) and Section 59-12-205.5 :
69 (a) 50% of each dollar collected from the sales and use tax authorized by this part shall
70 be paid to each county, city, and town on the basis of the percentage that the population of the
71 county, city, or town bears to the total population of all counties, cities, and towns in the state;
72 and
73 (b) notwithstanding Sections 59-12-207.1 through 59-12-207.3 , 50% of each dollar
74 collected from the sales and use tax authorized by this part shall be paid to each county, city,
75 and town on the basis of the location where the transaction is consummated as determined
76 under this section.
77 (3) For purposes of Subsection (2)(b), the location where a transaction is consummated
78 is determined in accordance with Subsections (4) through (6).
79 (4) (a) For a transaction that is reported to the commission on a return other than a
80 simplified electronic return, the location where the transaction is consummated is determined
81 in accordance with Subsections (4)(b) through (h).
82 (b) (i) Except as provided in Subsections (4)(c) through (h), for a transaction described
83 in Subsection (4)(b)(ii), the location where the transaction is consummated is the place of
84 business of the seller.
85 (ii) Subsection (4)(b)(i) applies to a transaction other than a transaction described in:
86 (A) Subsection (4)(c)(ii);
87 (B) Subsection (4)(d)(ii);
88 (C) Subsection (4)(e)(ii);
89 (D) Subsection (4)(f)(ii);

90 (E) Subsection (4)(g)(ii); or
91 (F) Subsection (4)(h).
92 (c) (i) Notwithstanding Subsection (4)(b), for a transaction described in Subsection
93 (4)(c)(ii), the location where the transaction is consummated is determined by allocating the
94 total revenues remitted to the commission each month that are generated by the tax imposed
95 under this section on the transactions described in Subsection (4)(c)(ii):
96 (A) to each local taxing jurisdiction; and
97 (B) on the basis of the population of each local taxing jurisdiction as compared to the
98 population of the state.
99 (ii) Subsection (4)(c)(i) applies to a transaction:
100 (A) made by a seller described in Subsection 59-12-107 (1)(b); and
101 (B) involving tangible personal property that is shipped from outside the state.
102 (d) (i) Notwithstanding Subsection (4)(b), for a transaction described in Subsection
103 (4)(d)(ii), the location where the transaction is consummated is determined by allocating the
104 total revenues reported to the commission each month that are generated by the tax imposed
105 under this section on the transactions described in Subsection (4)(d)(ii):
106 (A) to local taxing jurisdictions within a county; and
107 (B) on the basis of the proportion of total revenues generated by the transactions
108 described in Subsection (4)(b)(ii) that are reported to the commission for that month within a
109 local taxing jurisdiction within that county as compared to the total revenues generated by the
110 transactions described in Subsection (4)(b)(ii) that are reported to the commission for that
111 month within all local taxing jurisdictions within that county.
112 (ii) Subsection (4)(d)(i) applies to a transaction:
113 (A) made from a location in the state other than a fixed place of business in the state;
114 or
115 (B) (I) made by a seller described in Subsection 59-12-107 (1)(a); and
116 (II) involving tangible personal property that is shipped from outside the state.
117 (e) (i) Notwithstanding Subsection (4)(b), for a transaction described in Subsection
118 (4)(e)(ii), the location where the transaction is consummated is determined by allocating the
119 total revenues reported to the commission each month that are generated by the tax imposed
120 under this section on the transactions described in Subsection (4)(e)(ii):

121 (A) to local taxing jurisdictions; and
122 (B) on the basis of the proportion of the total revenues generated by the transactions
123 described in Subsection (4)(b)(ii) that are reported to the commission for that month within
124 each local taxing jurisdiction as compared to the total revenues generated by the transactions
125 described in Subsection (4)(b)(ii) that are reported to the commission for that month within the
126 state.
127 (ii) Subsection (4)(e)(i) applies to a transaction involving tangible personal property
128 purchased with a direct payment permit in accordance with Section 59-12-107.1 .
129 (f) (i) Notwithstanding Subsection (4)(b), for a transaction described in Subsection
130 (4)(f)(ii), the location where the transaction is consummated is each location where the good or
131 service described in Subsection 59-12-107.2 (1)(b) is used.
132 (ii) Subsection (4)(f)(i) applies to a transaction involving a good or service:
133 (A) described in Subsection 59-12-107.2 (1)(b);
134 (B) that is concurrently available for use in more than one location; and
135 (C) is purchased using the form described in Section 59-12-107.2 .
136 (g) (i) Notwithstanding Subsection (4)(b), for a transaction described in Subsection
137 (4)(g)(ii), the location where the transaction is consummated is determined by allocating the
138 total revenues reported to the commission each month that are generated by the tax imposed
139 under this section on the transactions described in Subsection (4)(g)(ii):
140 (A) to local taxing jurisdictions; and
141 (B) on the basis of the proportion of the total revenues generated by the transactions
142 described in Subsection (4)(b)(ii) that are reported to the commission for that month within
143 each local taxing jurisdiction as compared to the total revenues generated by the transactions
144 described in Subsection (4)(b)(ii) that are reported to the commission for that month within the
145 state.
146 (ii) Subsection (4)(g)(i) applies to a transaction involving a purchase of direct mail if
147 the purchaser of the direct mail provides to the seller the form described in Subsection
148 59-12-107.3 (1)(a) at the time of the purchase of the direct mail.
149 (h) Notwithstanding Subsection (4)(b), for a transaction involving the sale of a service
150 described in Section 59-12-207.4 , the location where the transaction is consummated is the
151 same as the location of the transaction determined under Section 59-12-207.4 .

152 (5) (a) For a transaction that is reported to the commission on a simplified electronic
153 return, the location where the transaction is consummated is determined in accordance with
154 Subsections (5)(b) through (e).
155 (b) (i) Except as provided in Subsections (5)(c) through (e), the location where a
156 transaction is consummated is determined by allocating the total revenues reported to the
157 commission each month on the simplified electronic return:
158 (A) to local taxing jurisdictions; and
159 (B) on the basis of the proportion of the total revenues generated by the transactions
160 described in Subsection (4)(b)(ii) that are reported to the commission in accordance with
161 Subsection (5)(b)(ii) for that month within each local taxing jurisdiction as compared to the
162 total revenues generated by the transactions described in Subsection (4)(b)(ii) that are reported
163 to the commission in accordance with Subsection (5)(b)(ii) for that month within the state.
164 (ii) In making the allocations required by Subsection (5)(b)(i), the commission shall
165 use the total revenues generated by the transactions described in Subsection (4)(b)(ii) reported
166 to the commission:
167 (A) in the report required by Subsection 59-12-105 (2); and
168 (B) if a local taxing jurisdiction reports revenues to the commission in accordance with
169 Subsection (5)(b)(iii), in the report made in accordance with Subsection (5)(b)(iii).
170 (iii) (A) For purposes of this Subsection (5)(b), a local taxing jurisdiction may report to
171 the commission the revenues generated by a tax imposed by this chapter within the local taxing
172 jurisdiction if a seller:
173 (I) opens an additional place of business within the local taxing jurisdiction after the
174 seller makes an initial application for a license under Section 59-12-106 ; and
175 (II) estimates that the additional place of business will increase by 5% or more the
176 revenues generated by a tax imposed by this chapter within the local taxing jurisdiction.
177 (B) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
178 the commission may make rules providing procedures and requirements for making the report
179 described in this Subsection (5)(b).
180 (c) (i) Notwithstanding Subsection (5)(b), for a transaction described in Subsection
181 (5)(c)(ii), the location where the transaction is consummated is determined by allocating the
182 total revenues reported to the commission each month that are generated by the tax imposed

183 under this section on the transactions described in Subsection (5)(c)(ii):
184 (A) to local taxing jurisdictions within a county; and
185 (B) on the basis of the proportion of the total revenues generated by the transactions
186 described in Subsection (4)(b)(ii) that are reported to the commission for that month within a
187 local taxing jurisdiction within that county as compared to the total revenues generated by the
188 transactions described in Subsection (4)(b)(ii) that are reported to the commission for that
189 month within all local taxing jurisdictions within that county.
190 (ii) Subsection (5)(c)(i) applies to a transaction:
191 (A) made from a location in the state other than a fixed place of business in the state;
192 or
193 (B) (I) made by a seller described in Subsection 59-12-107 (1)(a); and
194 (II) involving tangible personal property that is shipped from outside the state.
195 (d) Notwithstanding Subsection (5)(b), for a transaction made by a seller described in
196 Subsection 59-12-107 (1)(b), the location where the transaction is consummated is determined
197 by allocating the total revenues remitted to the commission each month that are generated by
198 the tax imposed under this section on the transactions made by a seller described in Subsection
199 59-12-107 (1)(b):
200 (i) to each local taxing jurisdiction; and
201 (ii) on the basis of the population of each local taxing jurisdiction as compared to the
202 population of the state.
203 (e) (i) Notwithstanding Subsection (5)(b), for a transaction described in Subsection
204 (5)(e)(ii), the location where the transaction is consummated is determined by allocating the
205 total revenues reported to the commission each month that are generated by the tax imposed
206 under this section on the transactions described in Subsection (5)(e)(ii):
207 (A) to local taxing jurisdictions; and
208 (B) on the basis of the proportion of the total revenues generated by the transactions
209 described in Subsection (4)(b)(ii) that are reported to the commission for that month within
210 each local taxing jurisdiction as compared to the total revenues generated by the transactions
211 described in Subsection (4)(b)(ii) that are reported to the commission for that month within the
212 state.
213 (ii) Subsection (5)(e)(i) applies to a transaction involving tangible personal property

214 purchased with a direct payment permit in accordance with Section 59-12-107.1 .
215 (6) For purposes of Subsections (4) and (5) and in accordance with Title 63, Chapter
216 46a, Utah Administrative Rulemaking Act, the commission may make rules defining what
217 constitutes a fixed place of business in the state.
218 (7) (a) Notwithstanding Subsection (2), a county, city, or town may not receive a tax
219 revenue distribution less than .75% of the taxable sales within the boundaries of the county,
220 city, or town.
221 (b) The commission shall proportionally reduce quarterly distributions to any county,
222 city, or town that, but for the reduction, would receive a distribution in excess of 1% of the
223 sales and use tax revenue collected within the boundaries of the county, city, or town.
224 (8) (a) Population figures for purposes of this section shall be based on the most recent
225 official census or census estimate of the United States Census Bureau.
226 (b) If a needed population estimate is not available from the United States Census
227 Bureau, population figures shall be derived from the estimate from the Utah Population
228 Estimates Committee created by executive order of the governor.
229 (9) The population of a county for purposes of this section shall be determined solely
230 from the unincorporated area of the county.
231 Section 2. Section 59-12-205.5 is enacted to read:
232 59-12-205.5. Alternate distribution formula for revenue from local option sales
233 and use tax -- Agreement on formula -- Elections -- Return to original distribution
234 formula.
235 (1) As used in this section:
236 (a) "Alternate disbursal area" means the incorporated and unincorporated area of a
237 county that is designated as an alternate disbursal area by the commission under Subsection (3).
238 (b) "Alternate distribution formula" means a formula for the division and distribution,
239 among a county and municipalities within a county, of the countywide distribution, if that
240 formula:
241 (i) is different than the formula required by Section 59-12-205 ;
242 (ii) subject to Subsection (1)(b)(iii), divides and distributes the countywide distribution
243 by distributing to each county and municipality within the county:
244 (A) a percentage of the revenues on the basis of the percentage that the population of

245 the unincorporated area of the county and the portion of each municipality that lies within the
246 county bears to the total population of the county; and
247 (B) notwithstanding Sections 59-12-207.1 through 59-12-207.3 , a percentage of the
248 revenues on the basis of the location where the transaction is consummated as determined
249 under Section 59-12-205 ;
250 (iii) is drafted so that the sum of the percentage described in Subsection (1)(b)(ii)(A)
251 and the percentage described in Subsection (1)(b)(ii)(B) is equal to 100%; and
252 (iv) is drafted so that the percentage described in Subsection (1)(b)(ii)(B) does not
253 exceed 50%.
254 (c) "Countywide distribution" means the revenue generated by a tax under this part,
255 that is required under Section 59-12-205 to be paid to a county, and to each municipality within
256 a county for the portion of the municipality that is within the county.
257 (d) "Managing county" means the legislative body of a county that has been designated
258 as an alternate disbursal area under Subsection (3).
259 (e) "Municipality" is as defined in Section 10-1-104 .
260 (f) "Predesignation year" means the one-year period immediately preceding the day on
261 which a particular alternate distribution formula is first in effect for a county.
262 (2) Notwithstanding Subsection 59-12-205 (2), if the commission designates a county
263 as an alternate disbursal area:
264 (a) the commission may not make the distributions required by Section 59-12-205
265 directly to a municipality; and
266 (b) shall pay the countywide distribution to the managing county.
267 (3) A county shall be designated as an alternate disbursal area by the commission on
268 the first day of the first calendar month after a 90-day period beginning on the day on which the
269 commission receives written notice from the county that an alternate distribution formula is
270 approved under Subsection (3)(b), if:
271 (a) subject to Subsections (4) and (5), the county legislative body and a majority of the
272 municipalities that are, in whole or in part, within that county agree, in writing, to an alternate
273 distribution formula; and
274 (b) in accordance with Subsection (8), after the agreement described in Subsection
275 (3)(a) is reached, the alternate distribution formula is approved by a majority vote of the legal

276 voters residing in the incorporated and unincorporated areas of the county.
277 (4) The legislative body of a municipality shall determine whether a municipality
278 agrees to an alternate distribution formula.
279 (5) The agreement described in Subsection (3)(a) shall require that the entire
280 countywide distribution be distributed by the managing county to the county and the
281 municipalities within the county:
282 (a) except as provided in Subsection (7), in accordance with the alternate distribution
283 formula described in Subsection (3)(a); and
284 (b) within a time period, specified in the agreement, that may not exceed 30 days after
285 the day on which the countywide distribution is paid to the managing county by the
286 commission.
287 (6) The managing county of an alternate disbursal area:
288 (a) shall receive the countywide distribution from the commission;
289 (b) except as provided in Subsection (7), shall distribute the countywide distribution to
290 the county and each municipality within the county in accordance with the agreement described
291 in Subsection (3)(a);
292 (c) may not withhold any amount of the countywide distribution that is due to the
293 county or a municipality under the agreement described in Subsection (3)(a) for any reason;
294 and
295 (d) may not pay any portion of the countywide distribution to any person other than the
296 county or a municipality within the county.
297 (7) (a) Except as provided in Subsection (7)(c), if, for any month of the current year,
298 the portion of the countywide distribution required to be distributed to a county or municipality
299 within the county under the alternate distribution formula is less than the amount received
300 under this part by the county, or by the municipality for the portion of the municipality that is
301 within the county, for the same month of the predesignation year, the managing county shall
302 increase the distribution to the county or municipality by the difference between:
303 (i) the amount required to be paid to the county or municipality under the alternate
304 distribution formula; and
305 (ii) the amount received under this part by the county, or by the municipality for the
306 portion of the municipality that is within the county, for the same month of the predesignation

307 year.
308 (b) If the distribution to a county or a municipality within the county is increased under
309 Subsection (7)(a), the distribution to a county that is not increased under Subsection (7)(a), and
310 each municipality within the county that is not increased under Subsection (7)(a), shall be
311 proportionally reduced to offset the sum of the increases made under Subsection (7)(a) for each
312 county and municipality within the county.
313 (c) If the countywide distribution for any month of the current year is less than the
314 countywide distribution for the same month of the predesignation year, the managing county
315 shall distribute to the county, and each municipality within the county, the amount received by
316 the county, or by the municipality for the portion of the municipality within the county, for the
317 same month of the predesignation year, proportionally reduced to offset the difference between:
318 (i) the countywide distribution for the month of the current year; and
319 (ii) the countywide distribution for the same month of the predesignation year.
320 (8) The election required by Subsection (3)(b):
321 (a) may be held:
322 (i) on the day of a regular general election, described in Section 20A-1-201 ; or
323 (ii) on the day of a municipal general election, described in Section 20A-1-202 ;
324 (b) shall be conducted in accordance with Title 20A, Election Code; and
325 (c) shall be conducted with a ballot that includes:
326 (i) a printed number and ballot title;
327 (ii) a description of:
328 (A) the formula that is used within the county, at the time of the election, for the
329 division and distribution of revenue from the sales and use tax authorized by this part among
330 the county and municipalities, or portions of municipalities, that are within the county; and
331 (B) the alternate distribution formula that is proposed on the ballot;
332 (iii) a question asking voters to indicate whether the proposed alternate distribution
333 formula should be approved; and
334 (iv) the words "YES" and "NO", each followed by a square which the voter may select
335 or mark to indicate the voter's vote.
336 (9) Subject to Subsection (10), the commission shall remove a county's designation as
337 an alternate disbursal area if:

338 (a) subject to Subsection (11), the county legislative body and a majority of the
339 municipalities that are, in whole or in part, within that county, agree, in writing, to remove the
340 designation as an alternate disbursal area; and
341 (b) in accordance with Subsection (12), after the agreement described in Subsection
342 (9)(a) is reached, adoption of the distribution formula described in Section 59-12-205 is
343 approved by a majority vote of the legal voters residing in the incorporated and unincorporated
344 areas of the county.
345 (10) (a) The commission shall remove a county's designation as an alternate disbursal
346 area on the first day of the first calendar month after a 90-day period beginning on the day on
347 which the commission receives written notice from the county that the distribution formula has
348 been approved under Subsection (9)(b).
349 (b) Beginning on the day that the commission removes a county's designation as an
350 alternate disbursal area under Subsection (10)(a), the commission shall distribute revenue
351 generated by the sales and use tax authorized by this part to the county and each municipality
352 within the county as required by Section 59-12-205 .
353 (11) The legislative body of a municipality shall determine whether a municipality
354 agrees to removal of the designation as an alternate disbursal area under Subsection (9)(a).
355 (12) The election, described in Subsection (9)(b):
356 (a) may be held:
357 (i) on the day of a regular general election, described in Section 20A-1-201 ; or
358 (ii) on the day of a municipal general election, described in Section 20A-1-202 ;
359 (b) shall be conducted in accordance with Title 20A, Election Code; and
360 (c) shall be conducted with a ballot that includes:
361 (i) a printed number and ballot title;
362 (ii) a description of:
363 (A) the formula that is used within the county, at the time of the election, for the
364 division and distribution of revenue from the sales and use tax authorized by this part among
365 the county and municipalities, or portions of municipalities, that are within the county; and
366 (B) the distribution formula described in Section 59-12-205 ;
367 (iii) a question asking voters to indicate whether the distribution formula described in
368 Section 59-12-205 should be approved; and

369 (iv) the words "YES" and "NO", each followed by a square which the voter may select
370 or mark to indicate the voter's vote.
371 (13) An alternate disbursal area may change from one alternate distribution formula to
372 another alternate distribution formula by complying with the procedures in Subsection (3).
373 Section 3. Effective date.
374 This bill takes effect on July 1, 2006.




Legislative Review Note
as of 1-23-06 4:37 PM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel