First Substitute S.B. 74

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Senate 2nd Reading Amendments 2-12-2007 rd/rlr This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Mon, Feb 12, 2007 at 3:22 PM by rday. --> Senator Howard A. Stephenson proposes the following substitute bill:

1 PENALTIES RELATING TO TAXES, FEES,
2 OR CHARGES
3 2007 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Howard A. Stephenson
6 House Sponsor: John Dougall

7 Cosponsor:

Curtis S. Bramble

8
9 LONG TITLE
10 General Description:
11 This bill amends the State Tax Commission chapter relating to penalties S. and related
11a payments .S .
12 Highlighted Provisions:
13 This bill:
14 . defines terms;
15 . modifies penalty S. and related payments .S provisions that apply to taxes, fees, or
15a charges with respect to the
16 failure to:
17 . file a return; or
18 . pay a tax, fee, or charge due;
19 . enacts uncodified language requiring the Utah Tax Review Commission to conduct
20 a study on penalties relating to taxes, fees, or charges; and
21 . makes technical changes.
22 Monies Appropriated in this Bill:
23 None
24 Other Special Clauses:
25 None

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Senate 2nd Reading Amendments 2-12-2007 rd/rlr 26

Utah Code Sections Affected:
27 AMENDS:
28 59-1-401, as last amended by Chapters 67 and 255, Laws of Utah 2004
28a S. 59-7-507, as last amended by Chapter 311, Laws of Utah 1995
28b 59-10-516, as last amended by Chapter 332, Laws of Utah 1997 .S
29 Uncodified Material Affected:
30 ENACTS UNCODIFIED MATERIAL
31
32 Be it enacted by the Legislature of the state of Utah:
33 Section 1. Section 59-1-401 is amended to read:
34 59-1-401. Definitions -- Offenses and penalties -- Rulemaking authority -- Statute
35 of limitations -- Commission authority to waive, reduce, or compromise penalty or
36 interest.
37 [(1) (a) The penalty for failure to file a tax return within the time prescribed by law
38 including extensions is the greater of $20 or 10% of the unpaid tax due on the return.]
39 (1) As used in this section:
40 (a) (i) "Nonqualifying obligation" means a charge, fee, payment, or tax administered by
41 the commission.
42 (ii) "Nonqualifying obligation" does not include:
43 (A) beginning on the phase I activation date, a phase I obligation; or
44 (B) beginning on the phase II activation date, a phase II obligation.
45 (b) "Phase I activation date" means the earlier of:
46 (i) the day on which the commission's GenTax system is activated to administer all
47 phase I obligations; or
48 (ii) May 1, 2008.
49 (c) "Phase I obligation" means:
50 (i) a fee under Section 19-6-808 ;
51 (ii) a tax under Chapter 10, Part 1, Determination and Reporting of Tax Liability and
52 Information;
53 (iii) a tax under Chapter 10, Part 2, Trusts and Estates;
54 (iv) a tax under Chapter 10, Part 12, Single Rate Individual Income Tax Act; or
55 (v) a tax under Chapter 12, Sales and Use Tax Act.
56 (d) "Phase II activation date" means the earlier of:

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Senate 2nd Reading Amendments 2-12-2007 rd/rlr 57

(i) the day on which the commission's GenTax system is activated to administer all
58 phase II obligations; or
59 (ii) May 4, 2009.
60 (e) (i) "Phase II obligation" means:
61 (A) S. a payment under Chapter 6, Mineral Production Tax Withholding;
61a (B).S a tax under Chapter 7, Corporate Franchise and Income Taxes; S. [ or
62 (B) ] (C) .S a payment under Chapter 10, Part 4, Withholding of Tax S. ; or
62a (D) a tax paid on a return filed in accordance with Section 59-10-507 .S .
63 (ii) "Phase II obligation" does not include a payment of estimated tax under Section
64 59-7-504 .
65 (2) (a) The due date for filing a return is:
66 (i) if the person filing the return is not allowed by law an extension of time for filing
67 the return, the day on which the return is due as provided by law; or
68 (ii) if the person filing the return is allowed by law an extension of time for filing the
69 return, the last day of that extension of time.
70 (b) (i) A penalty in the amount described in Subsection (2)(b)(ii) is imposed if:
71 (A) a person is required to file a return with respect to a nonqualifying obligation; and
72 (B) the person described in Subsection (2)(b)(i)(A) files the return after the due date
73 described in Subsection (2)(a).
74 (ii) For purposes of Subsection (2)(b)(i), the penalty is an amount equal to the greater
75 of:
76 (A) $20; or
77 (B) 10% of the unpaid nonqualifying obligation due on the return.
78 (c) (i) A penalty in the amount described in Subsection (2)(c)(ii) is imposed if a person:
79 (A) (I) is required to file a return:
80 (Aa) on or after the phase I activation date; and
81 (Bb) with respect to a phase I obligation; and
82 (II) files the return after the due date described in Subsection (2)(a); or
83 (B) (I) is required to file a return:
84 (Aa) on or after the phase II activation date; and
85 (Bb) with respect to a phase II obligation; and
86 (II) files the return after the due date described in Subsection (2)(a).
87 (ii) For purposes of Subsection (2)(c)(i), the penalty is an amount equal to the greater

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89 (A) $20; or
90 (B) (I) 2% of the unpaid phase I obligation or phase II obligation due on the return if
91 the return is filed no later than five days after the due date described in Subsection (2)(a);
92 (II) 5% of the unpaid phase I obligation or phase II obligation due on the return if the
93 return is filed more than five days after the due date but no later than 15 days after the due date
94 described in Subsection (2)(a); or
95 (III) 10% of the unpaid phase I obligation or phase II obligation due on the return if the
96 return is filed more than 15 days after the due date described in Subsection (2)(a).
97 [(b)] (d) This Subsection [(1)] (2) does not apply to an amended [returns] return.
98 [(2) The penalty for failure to pay tax due shall be the greater of $20 or 10% of the
99 unpaid tax for:]
100 [(a) failure to pay any tax, as reported on a timely filed return;]
101 [(b) failure to pay any tax within 90 days of the due date of the return, if there was a
102 late filed return subject to the penalty provided under Subsection (1)(a);]
103 [(c) failure to pay any tax within 30 days of the date of mailing any notice of deficiency
104 of tax unless a petition for redetermination or a request for agency action is filed within 30 days
105 of the date of mailing the notice of deficiency;]
106 [(d) failure to pay any tax within 30 days after the date the commission's order
107 constituting final agency action resulting from a timely filed petition for redetermination or
108 request for agency action is issued or is considered to have been denied under Subsection
109 63-46b-13 (3)(b); and]
110 [(e) failure to pay any tax within 30 days after the date of a final judicial decision
111 resulting from a timely filed petition for judicial review.]
112 (3) (a) If a person fails to pay a tax, fee, or charge due, the person is subject to a penalty
113 as provided in this Subsection (3).
114 (b) (i) A penalty in the amount described in Subsection (3)(b)(ii) is imposed if:
115 (A) a person files a return with respect to a nonqualifying obligation on or before the
116 due date for filing a return described in Subsection (2)(a), but fails to pay the nonqualifying
117 obligation due on the return on or before that due date;
118 (B) a person:

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120 (II) fails to pay a nonqualifying obligation due on a return within a 90-day period after
121 the due date for filing a return described in Subsection (2)(a);
122 (C) a person:
123 (I) is mailed a notice of deficiency; and
124 (II) within a 30-day period after the day on which the notice of deficiency described in
125 Subsection (3)(b)(i)(C)(I) is mailed:
126 (Aa) does not file a petition for redetermination or a request for agency action; and
127 (Bb) fails to pay a nonqualifying obligation due on a return;
128 (D) (I) the commission:
129 (Aa) issues an order constituting final agency action resulting from a timely filed
130 petition for redetermination or a timely filed request for agency action; or
131 (Bb) is considered to have denied a request for reconsideration under Subsection
132 63-46b-13 (3)(b) resulting from a timely filed petition for redetermination or a timely filed
133 request for agency action; and
134 (II) a person fails to pay a nonqualifying obligation due on a return within a 30-day
135 period after the date the commission:
136 (Aa) issues the order constituting final agency action described in Subsection
137 (3)(b)(i)(D)(I)(Aa); or
138 (Bb) is considered to have denied the request for reconsideration described in
139 Subsection (3)(b)(i)(D)(I)(Bb); or
140 (E) a person fails to pay a nonqualifying obligation within a 30-day period after the
141 date of a final judicial decision resulting from a timely filed petition for judicial review.
142 (ii) For purposes of Subsection (3)(b)(i), the penalty is an amount equal to the greater
143 of:
144 (A) $20; or
145 (B) 10% of the unpaid nonqualifying obligation due on the return.
146 (c) (i) This Subsection (3)(c) applies to a penalty:
147 (A) imposed on or after the phase I activation date with respect to a phase I obligation;
148 or
149 (B) imposed on or after the phase II activation date with respect to a phase II

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151 (ii) (A) The penalty described in Subsection (3)(c)(ii)(B) applies if a person:
152 (I) with respect to a phase I obligation:
153 (Aa) files a return on or before the due date for filing a return described in Subsection
154 (2)(a); and
155 (Bb) fails to pay the phase I obligation due on the return on or before the due date
156 described in Subsection (2)(a); or
157 (II) with respect to a phase II obligation:
158 (Aa) files a return on or before the due date for filing a return described in Subsection
159 (2)(a); and
160 (Bb) fails to pay the phase II obligation due on the return on or before the due date
161 described in Subsection (2)(a).
162 (B) For purposes of Subsection (3)(c)(ii)(A), the penalty is an amount equal to the
163 greater of:
164 (I) $20; or
165 (II) (Aa) 2% of the unpaid phase I obligation or phase II obligation due on the return if
166 the phase I obligation or phase II obligation due on the return is paid no later than five days
167 after the due date for filing a return described in Subsection (2)(a);
168 (Bb) 5% of the unpaid phase I obligation or phase II obligation due on the return if the
169 phase I obligation or phase II obligation due on the return is paid more than five days after the
170 due date for filing a return described in Subsection (2)(a) but no later than 15 days after that
171 due date; or
172 (Cc) 10% of the unpaid phase I obligation or phase II obligation due on the return if the
173 phase I obligation or phase II obligation due on the return is paid more than 15 days after the
174 due date for filing a return described in Subsection (2)(a).
175 (iii) (A) A person is subject to a penalty as provided in Subsection (3)(c)(iii)(B) if the
176 person:
177 (I) is subject to a penalty under Subsection (2)(c); and
178 (II) fails to pay a phase I obligation or phase II obligation due on a return within a
179 90-day period after the due date for filing a return described in Subsection (2)(a).
180 (B) For purposes of Subsection (3)(c)(iii)(A), the penalty is an amount equal to the

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182 (I) $20; or
183 (II) (Aa) 2% of the unpaid phase I obligation or phase II obligation due on the return if
184 the phase I obligation or phase II obligation due on the return is paid no later than five days
185 after the last day of the 90-day period described in Subsection (3)(c)(iii)(A)(II);
186 (Bb) 5% of the unpaid phase I obligation or phase II obligation due on the return if the
187 phase I obligation or phase II obligation due on the return is paid more than five days after the
188 last day of the 90-day period described in Subsection (3)(c)(iii)(A)(II) but no later than 15 days
189 after the last day of the 90-day period described in Subsection (3)(c)(iii)(A)(II); or
190 (Cc) 10% of the unpaid phase I obligation or phase II obligation due on the return if the
191 phase I obligation or phase II obligation due on the return is paid more than 15 days after the
192 last day of the 90-day period described in Subsection (3)(c)(iii)(A)(II).
193 (iv) (A) A person is subject to a penalty as provided in Subsection (3)(c)(iv)(B) if the
194 person:
195 (I) is mailed a notice of deficiency; and
196 (II) within a 30-day period after the day on which the notice of deficiency described in
197 Subsection (3)(c)(iv)(A)(I) is mailed:
198 (Aa) does not file a petition for redetermination or a request for agency action; and
199 (Bb) fails to pay a phase I obligation or phase II obligation due on a return.
200 (B) For purposes of Subsection (3)(c)(iv)(A), the penalty is an amount equal to the
201 greater of:
202 (I) $20; or
203 (II) (Aa) 2% of the unpaid phase I obligation or phase II obligation due on the return if
204 the phase I obligation or phase II obligation due on the return is paid no later than five days
205 after the last day of the 30-day period described in Subsection (3)(c)(iv)(A)(II);
206 (Bb) 5% of the unpaid phase I obligation or phase II obligation due on the return if the
207 phase I obligation or phase II obligation due on the return is paid more than five days after the
208 last day of the 30-day period described in Subsection (3)(c)(iv)(A)(II) but no later than 15 days
209 after the last day of the 30-day period described in Subsection (3)(c)(iv)(A)(II); or
210 (Cc) 10% of the unpaid phase I obligation or phase II obligation due on the return if the
211 phase I obligation or phase II obligation due on the return is paid more than 15 days after the

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213 (v) (A) A person is subject to a penalty as provided in Subsection (3)(c)(v)(B) if:
214 (I) the commission:
215 (Aa) issues an order constituting final agency action resulting from a timely filed
216 petition for redetermination or a timely filed request for agency action; or
217 (Bb) is considered to have denied a request for reconsideration under Subsection
218 63-46b-13 (3)(b) resulting from a timely filed petition for redetermination or a timely filed
219 request for agency action; and
220 (II) the person fails to pay a phase I obligation or phase II obligation due on a return
221 within a 30-day period after the date the commission:
222 (Aa) issues the order constituting final agency action described in Subsection
223 (3)(c)(v)(A)(I)(Aa); or
224 (Bb) is considered to have denied the request for reconsideration described in
225 Subsection (3)(c)(v)(A)(I)(Bb).
226 (B) For purposes of Subsection (3)(c)(v)(A), the penalty is an amount equal to the
227 greater of:
228 (I) $20; or
229 (II) (Aa) 2% of the unpaid phase I obligation or phase II obligation due on the return if
230 the phase I obligation or phase II obligation due on the return is paid no later than five days
231 after the last day of the 30-day period described in Subsection (3)(c)(v)(A)(II);
232 (Bb) 5% of the unpaid phase I obligation or phase II obligation due on the return if the
233 phase I obligation or phase II obligation due on the return is paid more than five days after the
234 last day of the 30-day period described in Subsection (3)(c)(v)(A)(II) but no later than 15 days
235 after the last day of the 30-day period described in Subsection (3)(c)(v)(A)(II); or
236 (Cc) 10% of the unpaid phase I obligation or phase II obligation due on the return if the
237 phase I obligation or phase II obligation due on the return is paid more than 15 days after the
238 last day of the 30-day period described in Subsection (3)(c)(v)(A)(II).
239 (vi) (A) A person is subject to a penalty as provided in Subsection (3)(c)(vi)(B) if
240 within a 30-day period after the date of a final judicial decision resulting from a timely filed
241 petition for judicial review, the person fails to pay a phase I obligation or phase II obligation.
242 (B) For purposes of Subsection (3)(c)(vi)(A), the penalty is an amount equal to the

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244 (I) $20; or
245 (II) (Aa) 2% of the unpaid phase I obligation or phase II obligation due on the return if
246 the phase I obligation or phase II obligation due on the return is paid no later than five days
247 after the last day of the 30-day period described in Subsection (3)(c)(vi)(A);
248 (Bb) 5% of the unpaid phase I obligation or phase II obligation due on the return if the
249 phase I obligation or phase II obligation due on the return is paid more than five days after the
250 last day of the 30-day period described in Subsection (3)(c)(vi)(A) but no later than 15 days
251 after the last day of the 30-day period described in Subsection (3)(c)(vi)(A); or
252 (Cc) 10% of the unpaid phase I obligation or phase II obligation due on the return if the
253 phase I obligation or phase II obligation due on the return is paid more than 15 days after the
254 last day of the 30-day period described in Subsection (3)(c)(vi)(A).
255 [(3)] (4) (a) Beginning January 1, 1995, in the case of any underpayment of estimated
256 tax or quarterly installments required by Sections 59-5-107 , 59-5-207 , 59-7-504 , and 59-9-104 ,
257 there shall be added a penalty in an amount determined by applying the interest rate provided
258 under Section 59-1-402 plus four percentage points to the amount of the underpayment for the
259 period of the underpayment.
260 (b) (i) For purposes of Subsection [(3)] (4)(a), the amount of the underpayment shall be
261 the excess of the required installment over the amount, if any, of the installment paid on or
262 before the due date for the installment.
263 (ii) The period of the underpayment shall run from the due date for the installment to
264 whichever of the following dates is the earlier:
265 (A) the original due date of the tax return, without extensions, for the taxable year; or
266 (B) with respect to any portion of the underpayment, the date on which that portion is
267 paid.
268 (iii) For purposes of this Subsection [(3)] (4), a payment of estimated tax shall be
269 credited against unpaid required installments in the order in which the installments are required
270 to be paid.
271 [(4) (a) In case of an extension of time to file an individual income tax or corporate
272 franchise tax return, if the lesser of 90% of the total tax reported on the tax return or 100% of
273 the prior year's tax is not paid by the due date of the return, not including extensions, a 2% per

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month penalty shall apply on the unpaid tax during the period of extension.]
275 [(b) If a return is not filed within the extension time period as provided in Section
276 59-7-505 or 59-10-516 , penalties as provided in Subsection (1) and Subsection (2)(b) shall be
277 added in lieu of the penalty assessed under this Subsection (4) as if no extension of time for
278 filing a return had been granted.]
279 (5) (a) Notwithstanding Subsection (2) and except as provided in Subsection (6), a
280 person allowed by law an extension of time for filing a corporate franchise or income tax return
281 under Chapter 7, Corporate Franchise and Income Taxes, or an individual income tax return
282 under Chapter 10, Individual Income Tax Act, is subject to a penalty in the amount described in
283 Subsection (5)(b) if, on or before the day on which the return is due as provided by law, not
284 including the extension of time, the person fails to pay S. [ the lesser of ] .S :
285 (i) S. [ 90% of the total tax reported on the return for the current taxable year ] for a person
285a filing a corporate franchise or income tax return under Chapter 7, Corporate Franchise and
285b Income Taxes, the payment required by Subsection 59-7-507(1)(b) .S ; or
286 (ii) S. [ 100% of the total tax liability for the taxable year immediately preceding the
287 current taxable year ] for a person filing an individual income tax return under Chapter 10,
287a Individual Income Tax Act, the payment required by Subsection 59-10-516(2) .S .
288 (b) For purposes of Subsection (5)(a), the penalty per month during the period of the
289 extension of time for filing the return is an amount equal to 1% of the unpaid tax due on the
290 return.
291 (6) (a) If a person does not file a return within an extension of time allowed by Section
292 59-7-505 or 59-10-516 S. , the person .S :
293 (i) S. [ the person ] .S is not subject to a penalty in the amount described in Subsection
293a (5)(b);
294 and
295 (ii) is subject to a penalty in the amount described in Subsection (6)(b).
296 (b) For purposes of Subsection (6)(a), the penalty is an amount equal to:
297 (i) for a penalty imposed with respect to a nonqualifying obligation, the sum of the
298 penalties prescribed in:
299 (A) Subsection (2)(b)(ii) for filing a return after the due date as described in Subsection
300 (2)(b)(i); and
301 (B) Subsection (3)(b)(ii) for the failure to pay described in Subsection (3)(b)(i)(B);
302 (ii) for a penalty imposed on or after the phase I activation date, with respect to a return
303 filed under Chapter 10, Part 1, Determination and Reporting of Tax Liability and Information,
304 Part 2, Trusts and Estates, or Part 12, Single Rate Individual Income Tax Act, the sum of the

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306 (A) Subsection (2)(c)(ii) for filing a return after the due date as described in Subsection
307 (2)(c)(i); and
308 (B) Subsection (3)(c)(iii)(B) for the failure to pay described in Subsection
309 (3)(c)(iii)(A); or
310 (iii) for a penalty imposed on or after the phase II activation date, with respect to a
311 corporate franchise or income tax return filed under Chapter 7, Corporate Franchise and
312 Income Taxes, the sum of the penalties prescribed in:
313 (A) Subsection (2)(c)(ii) for filing a return after the due date as described in Subsection
314 (2)(c)(i); and
315 (B) Subsection (3)(c)(iii)(B) for the failure to pay described in Subsection
316 (3)(c)(iii)(A).
317 [(5)] (7) (a) Additional penalties for underpayments of tax are as provided in
318 [Subsections (5)(a)(i) through (iv)] this Subsection (7)(a).
319 (i) Except as provided in Subsection [(5)] (7)(c), if any underpayment of tax is due to
320 negligence, the penalty is 10% of the underpayment.
321 (ii) Except as provided in Subsection [(5)] (7)(d), if any underpayment of tax is due to
322 intentional disregard of law or rule, the penalty is 15% of the underpayment.
323 (iii) For intent to evade the tax, the penalty is the greater of $500 per period or 50% of
324 the tax due.
325 (iv) If the underpayment is due to fraud with intent to evade the tax, the penalty is the
326 greater of $500 per period or 100% of the underpayment.
327 (b) If the commission determines that a person is liable for a penalty imposed under
328 Subsection [(5)] (7)(a)(ii), (iii), or (iv), the commission shall notify the taxpayer of the
329 proposed penalty.
330 (i) The notice of proposed penalty shall:
331 (A) set forth the basis of the assessment; and
332 (B) be mailed by registered mail, postage prepaid, to the person's last-known address.
333 (ii) Upon receipt of the notice of proposed penalty, the person against whom the
334 penalty is proposed may:
335 (A) pay the amount of the proposed penalty at the place and time stated in the notice;

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337 (B) proceed in accordance with the review procedures of Subsection [(5)] (7)(b)(iii).
338 (iii) Any person against whom a penalty has been proposed in accordance with this
339 Subsection [(5)] (7) may contest the proposed penalty by filing a petition for an adjudicative
340 proceeding with the commission.
341 (iv) (A) If the commission determines that a person is liable for a penalty under this
342 Subsection [(5)] (7), the commission shall assess the penalty and give notice and demand for
343 payment.
344 (B) The notice and demand for payment described in Subsection (7)(b)(iv)(A) shall be
345 mailed by registered mail, postage prepaid, to the person's last-known address.
346 (c) [Notwithstanding Subsection (5)(a)(i), a] A seller that voluntarily collects a tax
347 under Subsection 59-12-107 (1)(b) is not subject to the penalty under Subsection [(5)] (7)(a)(i)
348 if on or after July 1, 2001:
349 (i) a court of competent jurisdiction issues a final unappealable judgment or order
350 determining that:
351 (A) the seller meets one or more of the criteria described in Subsection
352 59-12-107 (1)(a); and
353 (B) the commission or a county, city, or town may require the seller to collect a tax
354 under Subsection 59-12-103 (2)(a) or (b); or
355 (ii) the commission issues a final unappealable administrative order determining that:
356 (A) the seller meets one or more of the criteria described in Subsection
357 59-12-107 (1)(a); and
358 (B) the commission or a county, city, or town may require the seller to collect a tax
359 under Subsection 59-12-103 (2)(a) or (b).
360 (d) [Notwithstanding Subsection (5)(a)(ii), a] A seller that voluntarily collects a tax
361 under Subsection 59-12-107 (1)(b) is not subject to the penalty under Subsection [(5)] (7)(a)(ii)
362 if:
363 (i) (A) a court of competent jurisdiction issues a final unappealable judgment or order
364 determining that:
365 (I) the seller meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
366 and

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368 under Subsection 59-12-103 (2)(a) or (b); or
369 (B) the commission issues a final unappealable administrative order determining that:
370 (I) the seller meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
371 and
372 (II) the commission or a county, city, or town may require the seller to collect a tax
373 under Subsection 59-12-103 (2)(a) or (b); and
374 (ii) the seller's intentional disregard of law or rule is warranted by existing law or by a
375 nonfrivolous argument for the extension, modification, or reversal of existing law or the
376 establishment of new law.
377 [(6)] (8) Except as provided in Section 59-12-105 , the penalty for failure to file an
378 information return, information report, or a complete supporting schedule is $50 for each
379 information return, information report, or supporting schedule up to a maximum of $1,000.
380 [(7)] (9) If any taxpayer, in furtherance of a frivolous position, has a prima facie intent
381 to delay or impede administration of the tax law and files a purported return that fails to
382 contain information from which the correctness of reported tax liability can be determined or
383 that clearly indicates that the tax liability shown must be substantially incorrect, the penalty is
384 $500.
385 [(8)] (10) (a) A seller that fails to remit a tax, fee, or charge monthly as required by
386 Subsection 59-12-108 (1)(a)(i):
387 (i) is subject to [the penalties] a penalty described in Subsection [(1)] (2); and
388 (ii) may not retain the percentage of sales and use taxes that would otherwise be
389 allowable under Subsection 59-12-108 (2).
390 (b) A seller that fails to remit a tax, fee, or charge by electronic funds transfer as
391 required by Subsection 59-12-108 (1)(a)(ii)(B):
392 (i) is subject to [the penalties] a penalty described in Subsection [(1)] (2); and
393 (ii) may not retain the percentage of sales and use taxes that would otherwise be
394 allowable under Subsection 59-12-108 (2).
395 [(9)] (11) (a) A person is subject to the penalty provided in Subsection [(9)] (11)(c) if
396 that person:
397 (i) commits an act described in Subsection [(9)] (11)(b) with respect to one or more of

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399 (A) a return;
400 (B) an affidavit;
401 (C) a claim; or
402 (D) a document similar to Subsections [(9)] (11)(a)(i)(A) through (C);
403 (ii) knows or has reason to believe that the document described in Subsection [(9)]
404 (11)(a)(i) will be used in connection with any material matter administered by the commission;
405 and
406 (iii) knows that the document described in Subsection [(9)] (11)(a)(i), if used in
407 connection with any material matter administered by the commission, would result in an
408 understatement of another person's liability for a tax, fee, or charge administered by the
409 commission.
410 (b) The following acts apply to Subsection [(9)] (11)(a)(i):
411 (i) preparing any portion of a document described in Subsection [(9)] (11)(a)(i);
412 (ii) presenting any portion of a document described in Subsection [(9)] (11)(a)(i);
413 (iii) procuring any portion of a document described in Subsection [(9)] (11)(a)(i);
414 (iv) advising in the preparation or presentation of any portion of a document described
415 in Subsection [(9)] (11)(a)(i);
416 (v) aiding in the preparation or presentation of any portion of a document described in
417 Subsection [(9)] (11)(a)(i);
418 (vi) assisting in the preparation or presentation of any portion of a document described
419 in Subsection [(9)] (11)(a)(i); or
420 (vii) counseling in the preparation or presentation of any portion of a document
421 described in Subsection [(9)] (11)(a)(i).
422 (c) For purposes of Subsection [(9)] (11)(a), the penalty:
423 (i) shall be imposed by the commission;
424 (ii) is $500 for each document described in Subsection [(9)] (11)(a)(i) with respect to
425 which the person described in Subsection [(9)] (11)(a) meets the requirements of Subsection
426 [(9)] (11)(a); and
427 (iii) is in addition to any other penalty provided by law.
428 (d) The commission may seek a court order to enjoin a person from engaging in

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- 15 - 429 conduct that is subject to a penalty under this Subsection [(9)] (11).
430 (e) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
431 commission may make rules prescribing the documents that are similar to Subsections [(9)]
432 (11)(a)(i)(A) through (C).
433 [(10)] (12) (a) As provided in Section 76-8-1101 , criminal offenses and penalties are as
434 provided in Subsections [(10)] (12)(b) through (e).
435 (b) (i) Any person who is required by this title or any laws the commission administers
436 or regulates to register with or obtain a license or permit from the commission, who operates
437 without having registered or secured a license or permit, or who operates when the registration,
438 license, or permit is expired or not current, is guilty of a class B misdemeanor.
439 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection [(10)] (12)(b)(i), the
440 penalty may not:
441 (A) be less than $500; or
442 (B) exceed $1,000.
443 (c) (i) Any person who, with intent to evade any tax or requirement of this title or any
444 lawful requirement of the commission, fails to make, render, sign, or verify any return or to
445 supply any information within the time required by law, or who makes, renders, signs, or
446 verifies any false or fraudulent return or statement, or who supplies any false or fraudulent
447 information, is guilty of a third degree felony.
448 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection [(10)] (12)(c)(i), the
449 penalty may not:
450 (A) be less than $1,000; or
451 (B) exceed $5,000.
452 (d) (i) Any person who intentionally or willfully attempts to evade or defeat any tax or
453 the payment of a tax is, in addition to other penalties provided by law, guilty of a second degree
454 felony.
455 (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection [(10)] (12)(d)(i), the
456 penalty may not:
457 (A) be less than $1,500; or
458 (B) exceed $25,000.
459 (e) (i) A person is guilty of a second degree felony if that person commits an act:

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- 16 - 460 (A) described in Subsection [(10)] (12)(e)(ii) with respect to one or more of the
461 following documents:
462 (I) a return;
463 (II) an affidavit;
464 (III) a claim; or
465 (IV) a document similar to Subsections [(10)] (12)(e)(i)(A)(I) through (III); and
466 (B) subject to Subsection [(10)] (12)(e)(iii), with knowledge that the document
467 described in Subsection [(10)] (12)(e)(i)(A):
468 (I) is false or fraudulent as to any material matter; and
469 (II) could be used in connection with any material matter administered by the
470 commission.
471 (ii) The following acts apply to Subsection [(10)] (12)(e)(i):
472 (A) preparing any portion of a document described in Subsection [(10)] (12)(e)(i)(A);
473 (B) presenting any portion of a document described in Subsection [(10)] (12)(e)(i)(A);
474 (C) procuring any portion of a document described in Subsection [(10)] (12)(e)(i)(A);
475 (D) advising in the preparation or presentation of any portion of a document described
476 in Subsection [(10)] (12)(e)(i)(A);
477 (E) aiding in the preparation or presentation of any portion of a document described in
478 Subsection [(10)] (12)(e)(i)(A);
479 (F) assisting in the preparation or presentation of any portion of a document described
480 in Subsection [(10)] (12)(e)(i)(A); or
481 (G) counseling in the preparation or presentation of any portion of a document
482 described in Subsection [(10)] (12)(e)(i)(A).
483 (iii) This Subsection [(10)] (12)(e) applies:
484 (A) regardless of whether the person for which the document described in Subsection
485 [(10)] (12)(e)(i)(A) is prepared or presented:
486 (I) knew of the falsity of the document described in Subsection [(10)] (12)(e)(i)(A); or
487 (II) consented to the falsity of the document described in Subsection [(10)]
488 (12)(e)(i)(A); and
489 (B) in addition to any other penalty provided by law.
490 (iv) Notwithstanding Section 76-3-301 , for purposes of this Subsection [(10)] (12)(e),

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Senate 2nd Reading Amendments 2-12-2007 rd/rlr 491

the penalty may not:
492 (A) be less than $1,500; or
493 (B) exceed $25,000.
494 (v) The commission may seek a court order to enjoin a person from engaging in
495 conduct that is subject to a penalty under this Subsection [(10)] (12)(e).
496 (vi) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
497 the commission may make rules prescribing the documents that are similar to Subsections
498 [(10)] (12)(e)(i)(A)(I) through (III).
499 (f) The statute of limitations for prosecution for a violation of this Subsection [(10)]
500 (12) is the later of six years:
501 (i) from the date the tax should have been remitted; or
502 (ii) after the day on which the person commits the criminal offense.
503 [(11)] (13) Upon making a record of its actions, and upon reasonable cause shown, the
504 commission may waive, reduce, or compromise any of the penalties or interest imposed under
505 this part.
506 Section 2. Utah Tax Review Commission study.
507 (1) During the 2007 interim, the Utah Tax Review Commission shall study penalties
508 relating to taxes, fees, and charges.
509 (2) The Utah Tax Review Commission shall make recommendations to the Revenue
510 and Taxation Interim Committee on or before the November interim meeting as to whether any
511 penalty provisions relating to a tax, fee, or charge should be modified or repealed.
511a S. Section 2. Section 59-7-507 is amended to read:
511b 59-7-507. Payment of tax.
511c (1) (a) If quarterly estimated payments are not made as provided in Section 59-7-504,
511d the amount of tax imposed by this chapter shall be paid no later than the original due date of
511e the return.
511f (b) If an extension of time is necessary for filing a return, as provided in Subsection
511g 59-7-505(3) or Section 59-7-803, payment must be made no later than the original due date of
511h the return in an amount equal to Text Box

the lesser of Text Box
:

511i Text Box

(i) The greater of: Text Box

511j Text Box

{ (i) Text Box
} Text Box
(A) Text Box
90% of the total Text Box
{ amount of Text Box
} tax Text Box
{ due with Text Box
} Text Box
reported on Text Box

511k the return Text Box

{ when filed Text Box
} Text Box
for the current taxable year; Text Box
or

511l Text Box

(B) Text Box
100% of the minimum tax Text Box
{ due under Text Box
} Text Box
described in Text Box
Section 59-7-104 Text Box
{ ,

511m whichever is greater Text Box
} ; or
511n (ii) 100% of the Text Box

{ amount of tax paid for the previous year Text Box
} Text Box
total tax liability for

511o the taxable year immediately preceding the current taxable year Text Box

.

511p (c) If payment is not made as provided in Subsection (1)(b), the commission shall .S

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Senate 2nd Reading Amendments 2-12-2007 rd/rlr 511q

S. add an extension penalty as provided in Section 59-1-401, until the tax is paid during the
511r period of extension.
511s (2) Text Box

(a) Text Box
At the request of the taxpayer, the commission may extend the time for

511t payment of the amount determined as the tax by the taxpayer, or any part Text Box

{ thereof Text Box
} Text Box
of

511u that amount Text Box

, for a period not to exceed six months from the date prescribed for the payment

511v of the tax. Text Box

{ In such case Text Box
}

511w Text Box

(b) For purposes of Subsection(2)(a), Text Box
the amount in respect of which the extension is

511x granted shall be paid on or before the date of the expiration of the period of the extension.
511y Text Box

Section 3. Section 59-10-516 is amended to read: Text Box

511z 59-10-516. Filing extension -- Payment of tax -- Penalty -- Foreign residency.
511aa (1) (a) The commission shall allow a taxpayer an extension of time for filing returns.
511ab (b) The extension under Subsection (1)(a) may not exceed six months.
511ac (2) (a) Except as provided in Subsection (2)(b), the commission may not impose on a
511ad taxpayer during the extension period prescribed under Subsection (1) a penalty under Section
511ae 59-1-401 if the taxpayer pays, on or before the 15th day of the fourth month following the close
511af of the taxpayer's taxable year Text Box

, the lesser of Text Box
:

511ag (i) Text Box

{ at least Text Box
} 90% of the total tax reported on the Text Box
{ income tax Text Box
} return

511ah Text Box

{ when it is filed Text Box
} Text Box
for the current taxable year Text Box
; or

511ai Text Box

{ (ii) an amount equal to the total amount of tax reported on the income tax return

511aj for the previous year. Text Box
}
511ak Text Box

(ii) 100% of the total tax liability for the taxable year immediately preceding the

511al current taxable year. Text Box

511am (b) If a taxpayer fails to meet the requirements of Subsection (2)(a), the commission
511an may apply to the total balance due a penalty as provided in Section 59-1-401.
511ao (3) If any federal income tax return filing is lawfully delayed pending a determination
511ap of qualification for federal tax exemption due to residency outside of the United States, a
511aq taxpayer shall file a return within 30 days after that determination is made. .S