S.B. 34 Enrolled

1

GROSS RECEIPTS TAX AMENDMENTS,
2 REPEAL AND PUBLIC UTILITY TARIFFS
3 2006 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Mike Dmitrich
6 House Sponsor: Wayne A. Harper
7
8 LONG TITLE
9 General Description:
10 This bill modifies the Public Utilities title and the Revenue and Taxation title to repeal
11 and modify gross receipts taxes and require certain public utilities to file new tariffs
12 with the Public Service Commission.
13 Highlighted Provisions:
14 This bill:
15 . requires certain public utilities to file new tariffs with the Public Service
16 Commission and establishes procedures for filing those tariffs;
17 . decreases the gross receipts tax rate on certain corporations not required to pay
18 corporate franchise or income tax;
19 . repeals the Gross Receipts Tax on Electrical Corporations chapter;
20 . repeals obsolete language;
21 . and makes technical changes.
22 Monies Appropriated in this Bill:
23 None
24 Other Special Clauses:
25 This bill provides an effective date.
26 This bill provides revisor instructions.
27 Utah Code Sections Affected:
28 AMENDS:
29 11-13-303, as renumbered and amended by Chapter 286, Laws of Utah 2002

30 59-6-102, as last amended by Chapter 28, Laws of Utah 2002
31 59-8-104, as last amended by Chapter 286, Laws of Utah 2002
32 ENACTS:
33 54-7-12.9, Utah Code Annotated 1953
34 REPEALS:
35 54-7-12.2, as enacted by Chapter 278, Laws of Utah 1995
36 59-8a-101, as enacted by Chapter 278, Laws of Utah 1995
37 59-8a-102, as enacted by Chapter 278, Laws of Utah 1995
38 59-8a-103, as enacted by Chapter 278, Laws of Utah 1995
39 59-8a-104, as last amended by Chapter 273, Laws of Utah 1996
40 59-8a-105, as enacted by Chapter 278, Laws of Utah 1995
41 59-8a-106, as enacted by Chapter 278, Laws of Utah 1995
42
43 Be it enacted by the Legislature of the state of Utah:
44 Section 1. Section 11-13-303 is amended to read:
45 11-13-303. Source of project entity's payment of sales and use tax -- Gross
46 receipts taxes for facilities providing additional project capacity.
47 (1) A project entity is not exempt from sales and use taxes under Title 59, Chapter 12,
48 Sales and Use Tax Act, to the extent provided in Subsection 59-12-104 (2).
49 (2) A project entity may make payments or prepayments of sales and use taxes, as
50 provided in Title 63, Chapter 51, Resource Development, from the proceeds of revenue bonds
51 issued under Section 11-13-218 or other revenues of the project entity.
52 (3) (a) This Subsection (3) applies with respect to facilities providing additional project
53 capacity.
54 (b) (i) The in lieu excise tax imposed under Title 59, Chapter 8, Gross Receipts Tax on
55 Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, shall be
56 imposed collectively on all gross receipts derived with respect to the ownership interests of all
57 project entities and other public agencies in facilities providing additional project capacity as

58 though all such ownership interests were held by a single project entity.
59 (ii) The in lieu excise tax shall be calculated as though the gross receipts derived with
60 respect to all such ownership interests were received by a single taxpayer that has no other
61 gross receipts.
62 (iii) The gross receipts attributable to such ownership interests shall consist solely of
63 gross receipts that are expended by each project entity and other public agency holding an
64 ownership interest in the facilities for the operation or maintenance of or ordinary repairs or
65 replacements to the facilities.
66 (iv) For purposes of calculating the in lieu excise tax, the determination of whether
67 there is a tax rate and, if so, what the tax rate is shall be governed by Section 59-8-104 , except
68 that the $10,000,000 figures in [Subsection] Section 59-8-104 [(1)] indicating the amount of
69 gross receipts that determine the applicable tax rate shall be replaced with $5,000,000.
70 (c) Each project entity and public agency owning an interest in the facilities providing
71 additional project capacity shall be liable only for the portion of the gross receipts tax referred
72 to in Subsection (3)(b) that is proportionate to its percentage ownership interest in the facilities
73 and may not be liable for any other gross receipts taxes with respect to its percentage
74 ownership interest in the facilities.
75 (d) No project entity or other public agency that holds an ownership interest in the
76 facilities may be subject to the taxes imposed under Title 59, Chapter 7, Corporate Franchise
77 and Income [Tax] Taxes, [or Title 59, Chapter 8a, Gross Receipts Tax on Electrical
78 Corporations,] with respect to those facilities.
79 (4) For purposes of calculating the gross receipts tax imposed on a project entity or
80 other public agency under Title 59, Chapter 8, Gross Receipts Tax on Certain Corporations Not
81 Required to Pay Corporate Franchise or Income Tax Act, or Subsection (3), gross receipts
82 include only gross receipts from the first sale of capacity, services, or other benefits and do not
83 include gross receipts from any subsequent sale, resale, or layoff of the capacity, services, or
84 other benefits.
85 Section 2. Section 54-7-12.9 is enacted to read:

86 54-7-12.9. Gross receipts tax decrease on electrical corporations -- Tariffs --
87 Procedure.
88 (1) As used in this section:
89 (a) "gross receipts tax" means the tax:
90 (i) imposed by Title 59, Chapter 8a, Gross Receipts Tax on Electrical Corporations
91 Act; and
92 (ii) repealed by this bill; and
93 (b) (i) "electrical corporation" includes every corporation, cooperative association, and
94 person, their lessees, trustees, and receivers, owning, controlling, operating, or managing any
95 electric plant, or in any way furnishing electric power for public service or to its consumers or
96 members for domestic, commercial, or industrial use, within this state, that:
97 (A) pays property taxes under Title 59, Chapter 2, Property Tax Act; and
98 (B) is subject to rate regulation by the commission; and
99 (ii) "electrical corporation" does not include independent energy producers, or
100 electricity that is generated on or distributed by the producer solely for the producer's own use,
101 the use of the producer's tenants, or for the use of members of an association of unit owners
102 formed under Title 57, Chapter 8, Condominium Ownership Act, and not for sale to the public
103 generally.
104 (2) An electrical corporation shall:
105 (a) file new tariffs with the commission on or before July 31, 2006 as part of its 2006
106 general rate case revenue requirement:
107 (i) reflecting the decrease in the electrical corporation's rates as a result of the repeal of
108 the gross receipts tax by this bill; and
109 (ii) spreading the amount of the decrease described in Subsection (2)(a)(i) among all
110 classes of the electrical corporation's customers on the same basis that the gross receipts tax
111 was allocated to each class of the electrical corporation's customers under the rates effective on
112 the day on which the rate determined by the commission take effect under the electrical
113 corporation's 2006 general rate case filed on or before September 1, 2006; and

114 (b) on or before the day on which the electrical corporation files new tariffs with the
115 commission under Subsection (2)(a), file with the commission a complete report of the
116 calculation of the allocation required by this section.
117 Section 3. Section 59-6-102 is amended to read:
118 59-6-102. Producer's obligation to deduct and withhold payments -- Amount --
119 Exempt payments -- Credit against tax.
120 (1) Except as provided in Subsection (2), each producer shall deduct and withhold
121 from each payment being made to any person in respect to production of minerals in this state,
122 but not including that to which the producer is entitled, an amount equal to 5% of the amount
123 which would have otherwise been payable to the person entitled to the payment.
124 (2) Notwithstanding Subsection (1), the obligation to deduct and withhold from
125 payments as provided in Subsection (1) does not apply to those payments which are payable to:
126 (a) the United States, this state, or an agency or political subdivision of the United
127 States or this state;
128 (b) an organization that is exempt from the taxes imposed by Chapter 7, Corporate
129 Franchise and Income Taxes, in accordance with Subsection 59-7-102 (1)(a); or
130 (c) an Indian or Indian tribe if the amounts accruing are subject to the supervision of
131 the United States or an agency of the United States.
132 (3) (a) A person who files a tax return with the state in accordance with the following
133 is entitled to a credit against the tax reflected on the return for the amount withheld by the
134 producer under Subsection (1):
135 (i) Chapter 7, Corporate Franchise and Income Taxes;
136 (ii) Chapter 8, Gross Receipts Tax on Certain Corporations not Required to Pay
137 Corporate Franchise or Income Tax Act; or
138 [(iii) Chapter 8a, Gross Receipts Tax on Electrical Corporations Act; or]
139 [(iv)] (iii) Chapter 10, Individual Income Tax Act.
140 (b) If the amount withheld under Subsection (1) is greater than the tax due on the
141 return, the person making the return is entitled to a refund in the amount of the overpayment.

142 Section 4. Section 59-8-104 is amended to read:
143 59-8-104. Rate -- Change of rate.
144 (1) [For taxable years beginning] Beginning on or after July 1, [1996] 2006, and
145 subject to Section 11-13-303 , an in lieu excise tax is imposed on the gross receipts of a
146 taxpayer engaging in business in the state of Utah in each taxable year as follows:
147 Gross Receipts Amount Rate of Tax
148 Not in excess of $10,000,000 None
149 In excess of $10,000,000 but not
150 in excess of $500,000,000 [.8613%] .6250%
151 In excess of $500,000,000 but not
152 in excess of $1,000,000,000 [1.3214%] .9375%
153 In excess of $1,000,000,000 [1.7520%] 1.2500%
154 [(2) A taxpayer subject to the in lieu excise tax under Subsection (1) is not required to
155 pay the tax imposed under Title 59, Chapter 8a, Gross Receipts Tax on Electrical Corporations
156 Act.]
157 (2) It is the intent of the Legislature that, as a result of the tax rate decrease provided in
158 Section 59-8-104 of this bill, all or a portion of any cost decrease received by a taxpayer as a
159 result of the tax rate decrease be used in whole or in part for expenditures, scholarships, or
160 grants that will benefit the citizens of this state.
161 Section 5. Repealer.
162 This bill repeals:
163 Section 54-7-12.2, Property tax decrease -- Rate decrease -- Procedure.
164 Section 59-8a-101, Title.
165 Section 59-8a-102, Purpose.
166 Section 59-8a-103, Definitions.
167 Section 59-8a-104, Rate -- Change of rate.
168 Section 59-8a-105, Time for filing of return -- Other applicable provisions.
169 Section 59-8a-106, Rulemaking authority.

170 Section 6. Effective date.
171 (1) Except as provided in Subsection (2), this bill takes effect on July 1, 2006.
172 (2) The amendments to Section 54-7-12.9 and the repeal of Title 59, Chapter 8a, Gross
173 Receipts Tax on Electrical Corporations Act, take effect on the later of:
174 (a) July 1, 2006, or
175 (b) the day on which the rates determined by the commission take effect under the
176 electrical corporation's 2006 general rate case filed on or before September 1, 2006.
177 Section 7. Revisor instructions.
178 It is the intent of the Legislature that, in preparing the Utah Code database for
179 publication, the Office of Legislative Research and General Counsel shall replace the
180 references in Subsections 54-7-12.9(1)(a)(ii), (2)(a)(i), and Subsection 59-8-104 (2) from "this
181 bill" to the bill's designated section and chapter number in the Laws of Utah.