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First Substitute S.B. 239


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Senate 2nd Reading Amendments 3-7-2011 kc/sch
This document includes Senate Committee Amendments incorporated into the bill on Tue, Mar 1, 2011 at 1:42 PM by rday. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Mon, Mar 7, 2011 at 4:01 PM by kcallred. -->
Senator Kevin T. Van Tassell proposes the following substitute bill:


             1     
MOTOR AND SPECIAL FUEL TAX AMENDMENTS

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Kevin T. Van Tassell

             5     
House Sponsor: ____________

             6     

             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Motor and Special Fuel Tax Act by amending provisions relating
             10      to motor and special fuel.
             11      Highlighted Provisions:
             12          This bill:
             13          .    increases the motor and special fuel tax rate;
             14          .    increases the tax rate imposed on compressed natural gas;
             15          .    provides that the motor fuel and special fuel tax rate shall be increased every two
             16      years;
             17          .    provides procedures for implementing the motor fuel and special fuel tax rate
             18      adjustment;
             19          .    grants the State Tax Commission rulemaking authority to establish rules to
             20      implement the motor fuel and special fuel tax rate increase provisions;
             21          .    repeals certain tax rate decal posting requirements; S. [ and ]
             21a          . increases the amount of the cap on the motor fuel tax revenue refund into the
             21b      Off-Highway Vehicle Account; and .S
             22          .    makes technical changes.
             23      Money Appropriated in this Bill:
             24          None
             25      Other Special Clauses:



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Senate 2nd Reading Amendments 3-7-2011 kc/sch

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Senate Committee Amendments 3-1-2011 rd/sch
             26
         This bill takes effect on July 1, 2011.
             27          This bill coordinates with H.B. 184, Motor and Special Fuel Tax Act Amendments, by
             28      making substantive amendments.
             29      Utah Code Sections Affected:
             30      AMENDS:
             31          59-13-201, as last amended by Laws of Utah 2010, Chapter 308
             32          59-13-301, as last amended by Laws of Utah 2008, Chapters 153 and 382
             33      REPEALS:
             34          59-13-104, as enacted by Laws of Utah 1998, Chapter 253
             35      Utah Code Sections Affected by Coordination Clause:
             36          59-13-301, as last amended by Laws of Utah 2008, Chapters 153 and 382
             37     

             38      Be it enacted by the Legislature of the state of Utah:
             39          Section 1. Section 59-13-201 is amended to read:
             40           59-13-201. Rate -- Tax basis -- Exemptions -- Revenue deposited in the
             41      Transportation Fund -- Restricted account for boating uses -- Refunds -- Reduction of tax
             42      in limited circumstances.
             43          (1) (a) Subject to the provisions of this section, a tax is imposed at the rate of [24-1/2]
             44      29 1/2 cents per gallon upon all motor fuel that is sold, used, or received for sale or used in this
             45      state.
             46          (b) In lieu of the tax imposed under Subsection (1)(a) and subject to the provisions of
             47      this section, a tax is imposed at the rate of 3/19 of the rate imposed under Subsection (1)(a),
             48      rounded up to the nearest penny, upon all motor fuels that meet the definition of clean fuel in
             49      Section 59-13-102 and are sold, used, or received for sale or use in this state.
             50          (c) (i) Beginning on or after January 1, 2013, the commission shall, every two years in
             51      the odd year, increase the rate imposed under Subsection (1)(a) by S. [ .75 cents ] 3/4 of one cent .S .
             52          (ii) The adjusted fuel tax rate shall take effect on January 1 in a year that the fuel tax
             53      rate is required to be adjusted in accordance with Subsection (1)(c)(i).
             54          (iii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             55      the commission S. [ shall ] may .S make rules implementing the provisions of this Subsection
             55a      (1)(c).
             56          (2) Any increase or decrease in tax rate applies to motor fuel that is imported to the



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             57
     state or sold at refineries in the state on or after the effective date of the rate change.
             58          (3) (a) No motor fuel tax is imposed upon:
             59          (i) motor fuel that is brought into and sold in this state in original packages as purely
             60      interstate commerce sales;
             61          (ii) motor fuel that is exported from this state if proof of actual exportation on forms
             62      prescribed by the commission is made within 180 days after exportation;
             63          (iii) motor fuel or components of motor fuel that is sold and used in this state and
             64      distilled from coal, oil shale, rock asphalt, bituminous sand, or solid hydrocarbons located in
             65      this state; or
             66          (iv) motor fuel that is sold to the United States government, this state, or the political
             67      subdivisions of this state.
             68          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             69      commission shall make rules governing the procedures for administering the tax exemption
             70      provided under Subsection (3)(a)(iv).
             71          (4) The commission may either collect no tax on motor fuel exported from the state or,
             72      upon application, refund the tax paid.
             73          (5) (a) All revenue received by the commission under this part shall be deposited daily
             74      with the state treasurer and credited to the Transportation Fund.
             75          (b) An appropriation from the Transportation Fund shall be made to the commission to
             76      cover expenses incurred in the administration and enforcement of this part and the collection of
             77      the motor fuel tax.
             78          (6) (a) The commission shall determine what amount of motor fuel tax revenue is
             79      received from the sale or use of motor fuel used in motorboats registered under the provisions
             80      of the State Boating Act, and this amount shall be deposited in a restricted revenue account in
             81      the General Fund of the state.
             82          (b) The funds from this account shall be used for the construction, improvement,
             83      operation, and maintenance of state-owned boating facilities and for the payment of the costs
             84      and expenses of the Division of Parks and Recreation in administering and enforcing the State
             85      Boating Act.
             86          (7) (a) The United States government or any of its instrumentalities, this state, or a
             87      political subdivision of this state that has purchased motor fuel from a licensed distributor or



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Senate 2nd Reading Amendments 3-7-2011 kc/sch
             88
     from a retail dealer of motor fuel and has paid the tax on the motor fuel as provided in this
             89      section is entitled to a refund of the tax and may file with the commission for a quarterly
             90      refund.
             91          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             92      commission shall make rules governing the application and refund provided for in Subsection
             93      (7)(a).
             94          (8) (a) The commission shall refund annually into the Off-Highway Vehicle Account in
             95      the General Fund an amount equal to the lesser of the following:
             96          (i) .5% of the motor fuel tax revenues collected under this section; or
             97          (ii) S. [ $1,050,000 ] $1,300,000 .S .
             98          (b) This amount shall be used as provided in Section 41-22-19 .
             99          (9) (a) Beginning on April 1, 2001, a tax imposed under this section on motor fuel that
             100      is sold, used, or received for sale or use in this state is reduced to the extent provided in
             101      Subsection (9)(b) if:
             102          (i) a tax imposed on the basis of the sale, use, or receipt for sale or use of the motor
             103      fuel is paid to the Navajo Nation;
             104          (ii) the tax described in Subsection (9)(a)(i) is imposed without regard to whether or
             105      not the person required to pay the tax is an enrolled member of the Navajo Nation; and
             106          (iii) the commission and the Navajo Nation execute and maintain an agreement as
             107      provided in this Subsection (9) for the administration of the reduction of tax.
             108          (b) (i) If but for Subsection (9)(a) the motor fuel is subject to a tax imposed by this
             109      section:
             110          (A) the state shall be paid the difference described in Subsection (9)(b)(ii) if that
             111      difference is greater than $0; and
             112          (B) a person may not require the state to provide a refund, a credit, or similar tax relief
             113      if the difference described in Subsection (9)(b)(ii) is less than or equal to $0.
             114          (ii) The difference described in Subsection (9)(b)(i) is equal to the difference between:
             115          (A) the amount of tax imposed on the motor fuel by this section; less
             116          (B) the tax imposed and collected by the Navajo Nation on the motor fuel.
             117          (c) For purposes of Subsections (9)(a) and (b), the tax paid to the Navajo Nation under
             118      a tax imposed by the Navajo Nation on the basis of the sale, use, or receipt for sale or use of



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             119
     motor fuel does not include any interest or penalties a taxpayer may be required to pay to the
             120      Navajo Nation.
             121          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             122      commission shall make rules governing the procedures for administering the reduction of tax
             123      provided under this Subsection (9).
             124          (e) The agreement required under Subsection (9)(a):
             125          (i) may not:
             126          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
             127          (B) provide a reduction of taxes greater than or different from the reduction described
             128      in this Subsection (9); or
             129          (C) affect the power of the state to establish rates of taxation;
             130          (ii) shall:
             131          (A) be in writing;
             132          (B) be signed by:
             133          (I) the chair of the commission or the chair's designee; and
             134          (II) a person designated by the Navajo Nation that may bind the Navajo Nation;
             135          (C) be conditioned on obtaining any approval required by federal law;
             136          (D) state the effective date of the agreement; and
             137          (E) state any accommodation the Navajo Nation makes related to the construction and
             138      maintenance of state highways and other infrastructure within the Utah portion of the Navajo
             139      Nation; and
             140          (iii) may:
             141          (A) notwithstanding Section 59-1-403 , authorize the commission to disclose to the
             142      Navajo Nation information that is:
             143          (I) contained in a document filed with the commission; and
             144          (II) related to the tax imposed under this section;
             145          (B) provide for maintaining records by the commission or the Navajo Nation; or
             146          (C) provide for inspections or audits of distributors, carriers, or retailers located or
             147      doing business within the Utah portion of the Navajo Nation.
             148          (f) (i) If, on or after April 1, 2001, the Navajo Nation changes the tax rate of a tax
             149      imposed on motor fuel, any change in the reduction of taxes under this Subsection (9) as a



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             150
     result of the change in the tax rate is not effective until the first day of the calendar quarter after
             151      a 60-day period beginning on the date the commission receives notice:
             152          (A) from the Navajo Nation; and
             153          (B) meeting the requirements of Subsection (9)(f)(ii).
             154          (ii) The notice described in Subsection (9)(f)(i) shall state:
             155          (A) that the Navajo Nation has changed or will change the tax rate of a tax imposed on
             156      motor fuel;
             157          (B) the effective date of the rate change of the tax described in Subsection (9)(f)(ii)(A);
             158      and
             159          (C) the new rate of the tax described in Subsection (9)(f)(ii)(A).
             160          (g) If the agreement required by Subsection (9)(a) terminates, a reduction of tax is not
             161      permitted under this Subsection (9) beginning on the first day of the calendar quarter after a
             162      30-day period beginning on the day the agreement terminates.
             163          (h) If there is a conflict between this Subsection (9) and the agreement required by
             164      Subsection (9)(a), this Subsection (9) governs.
             165          Section 2. Section 59-13-301 is amended to read:
             166           59-13-301. Tax basis -- Rate -- Exemptions -- Revenue deposited with treasurer
             167      and credited to Transportation Fund -- Reduction of tax in limited circumstances.
             168          (1) (a) Except as provided in Subsections (2), (3), (11), and (12) and Section
             169      59-13-304 , a tax is imposed at the same rate imposed under Subsection 59-13-201 (1)[(a)] on
             170      the:
             171          (i) removal of undyed diesel fuel from any refinery;
             172          (ii) removal of undyed diesel fuel from any terminal;
             173          (iii) entry into the state of any undyed diesel fuel for consumption, use, sale, or
             174      warehousing;
             175          (iv) sale of undyed diesel fuel to any person who is not registered as a supplier under
             176      this part unless the tax has been collected under this section;
             177          (v) any untaxed special fuel blended with undyed diesel fuel; or
             178          (vi) use of untaxed special fuel other than propane or electricity.
             179          (b) The tax imposed under this section shall only be imposed once upon any special
             180      fuel.



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             181
         (2) (a) No special fuel tax is imposed or collected upon dyed diesel fuel which:
             182          (i) is sold or used for any purpose other than to operate or propel a motor vehicle upon
             183      the public highways of the state, but this exemption applies only in those cases where the
             184      purchasers or the users of special fuel establish to the satisfaction of the commission that the
             185      special fuel was used for purposes other than to operate a motor vehicle upon the public
             186      highways of the state; or
             187          (ii) is sold to this state or any of its political subdivisions.
             188          (b) No special fuel tax is imposed on undyed diesel fuel or clean fuel that:
             189          (i) is sold to the United States government or any of its instrumentalities or to this state
             190      or any of its political subdivisions;
             191          (ii) is exported from this state if proof of actual exportation on forms prescribed by the
             192      commission is made within 180 days after exportation;
             193          (iii) is used in a vehicle off-highway;
             194          (iv) is used to operate a power take-off unit of a vehicle;
             195          (v) is used for off-highway agricultural uses;
             196          (vi) is used in a separately fueled engine on a vehicle that does not propel the vehicle
             197      upon the highways of the state; or
             198          (vii) is used in machinery and equipment not registered and not required to be
             199      registered for highway use.
             200          (3) No tax is imposed or collected on special fuel if it is:
             201          (a) (i) purchased for business use in machinery and equipment not registered and not
             202      required to be registered for highway use; and
             203          (ii) used pursuant to the conditions of a state implementation plan approved under Title
             204      19, Chapter 2, Air Conservation Act; or
             205          (b) propane or electricity.
             206          (4) Upon request of a buyer meeting the requirements under Subsection (3), the
             207      Division of Air Quality shall issue an exemption certificate that may be shown to a seller.
             208          (5) The special fuel tax shall be paid by the supplier.
             209          (6) (a) The special fuel tax shall be paid by every user who is required by Sections
             210      59-13-303 and 59-13-305 to obtain a special fuel user permit and file special fuel tax reports.
             211          (b) The user shall receive a refundable credit for special fuel taxes paid on purchases



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             212
     which are delivered into vehicles and for which special fuel tax liability is reported.
             213          (7) (a) Except as provided under Subsections (7)(b) and (c), all revenue received by the
             214      commission from taxes and license fees under this part shall be deposited daily with the state
             215      treasurer and credited to the Transportation Fund.
             216          (b) An appropriation from the Transportation Fund shall be made to the commission to
             217      cover expenses incurred in the administration and enforcement of this part and the collection of
             218      the special fuel tax.
             219          (c) Five dollars of each special fuel user trip permit fee paid under Section 59-13-303
             220      may be used by the commission as a dedicated credit to cover the costs of electronic
             221      credentialing as provided in Section 41-1a-303 .
             222          (8) The commission may either collect no tax on special fuel exported from the state
             223      or, upon application, refund the tax paid.
             224          (9) (a) The United States government or any of its instrumentalities, this state, or a
             225      political subdivision of this state that has purchased special fuel from a supplier or from a retail
             226      dealer of special fuel and has paid the tax on the special fuel as provided in this section is
             227      entitled to a refund of the tax and may file with the commission for a quarterly refund in a
             228      manner prescribed by the commission.
             229          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             230      commission shall make rules governing the application and refund provided for in Subsection
             231      (9)(a).
             232          (10) (a) The purchaser shall pay the tax on diesel fuel or clean fuel purchased for uses
             233      under Subsections (2)(b)(i), (iii), (iv), (v), (vi), and (vii) and apply for a refund for the tax paid
             234      as provided in Subsection (9) and this Subsection (10).
             235          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             236      commission shall make rules governing the application and refund for off-highway and
             237      nonhighway uses provided under Subsections (2)(b)(iii), (iv), (vi), and (vii).
             238          (c) A refund of tax paid under this part on diesel fuel used for nonhighway agricultural
             239      uses shall be made in accordance with the tax return procedures under Section 59-13-202 .
             240          (11) (a) Beginning on April 1, 2001, a tax imposed under this section on special fuel is
             241      reduced to the extent provided in Subsection (11)(b) if:
             242          (i) the Navajo Nation imposes a tax on the special fuel;



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             243
         (ii) the tax described in Subsection (11)(a)(i) is imposed without regard to whether the
             244      person required to pay the tax is an enrolled member of the Navajo Nation; and
             245          (iii) the commission and the Navajo Nation execute and maintain an agreement as
             246      provided in this Subsection (11) for the administration of the reduction of tax.
             247          (b) (i) If but for Subsection (11)(a) the special fuel is subject to a tax imposed by this
             248      section:
             249          (A) the state shall be paid the difference described in Subsection (11)(b)(ii) if that
             250      difference is greater than $0; and
             251          (B) a person may not require the state to provide a refund, a credit, or similar tax relief
             252      if the difference described in Subsection (11)(b)(ii) is less than or equal to $0.
             253          (ii) The difference described in Subsection (11)(b)(i) is equal to the difference
             254      between:
             255          (A) the amount of tax imposed on the special fuel by this section; less
             256          (B) the tax imposed and collected by the Navajo Nation on the special fuel.
             257          (c) For purposes of Subsections (11)(a) and (b), the tax paid to the Navajo Nation on
             258      the special fuel does not include any interest or penalties a taxpayer may be required to pay to
             259      the Navajo Nation.
             260          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             261      commission shall make rules governing the procedures for administering the reduction of tax
             262      provided under this Subsection (11).
             263          (e) The agreement required under Subsection (11)(a):
             264          (i) may not:
             265          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
             266          (B) provide a reduction of taxes greater than or different from the reduction described
             267      in this Subsection (11); or
             268          (C) affect the power of the state to establish rates of taxation;
             269          (ii) shall:
             270          (A) be in writing;
             271          (B) be signed by:
             272          (I) the chair of the commission or the chair's designee; and
             273          (II) a person designated by the Navajo Nation that may bind the Navajo Nation;



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Senate 2nd Reading Amendments 3-7-2011 kc/sch
             274
         (C) be conditioned on obtaining any approval required by federal law;
             275          (D) state the effective date of the agreement; and
             276          (E) state any accommodation the Navajo Nation makes related to the construction and
             277      maintenance of state highways and other infrastructure within the Utah portion of the Navajo
             278      Nation; and
             279          (iii) may:
             280          (A) notwithstanding Section 59-1-403 , authorize the commission to disclose to the
             281      Navajo Nation information that is:
             282          (I) contained in a document filed with the commission; and
             283          (II) related to the tax imposed under this section;
             284          (B) provide for maintaining records by the commission or the Navajo Nation; or
             285          (C) provide for inspections or audits of suppliers, distributors, carriers, or retailers
             286      located or doing business within the Utah portion of the Navajo Nation.
             287          (f) (i) If, on or after April 1, 2001, the Navajo Nation changes the tax rate of a tax
             288      imposed on special fuel, any change in the amount of the reduction of taxes under this
             289      Subsection (11) as a result of the change in the tax rate is not effective until the first day of the
             290      calendar quarter after a 60-day period beginning on the date the commission receives notice:
             291          (A) from the Navajo Nation; and
             292          (B) meeting the requirements of Subsection (11)(f)(ii).
             293          (ii) The notice described in Subsection (11)(f)(i) shall state:
             294          (A) that the Navajo Nation has changed or will change the tax rate of a tax imposed on
             295      special fuel;
             296          (B) the effective date of the rate change of the tax described in Subsection
             297      (11)(f)(ii)(A); and
             298          (C) the new rate of the tax described in Subsection (11)(f)(ii)(A).
             299          (g) If the agreement required by Subsection (11)(a) terminates, a reduction of tax is not
             300      permitted under this Subsection (11) beginning on the first day of the calendar quarter after a
             301      30-day period beginning on the day the agreement terminates.
             302          (h) If there is a conflict between this Subsection (11) and the agreement required by
             303      Subsection (11)(a), this Subsection (11) governs.
             304          (12) Beginning on [January 1, 2009] July 1, S. [ 2011 ] 2012 .S , a tax imposed under this
             304a      section on



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             305
     compressed natural gas is imposed at a reduced rate of [8-1/2] 10 cents per gasoline gallon
             306      equivalent [to be increased or decreased proportionately with any increase or decrease in the
             307      rate in Subsection 59-13-201 (1)(a)].
             308          Section 3. Repealer.
             309          This bill repeals:
             310          Section 59-13-104, Tax rate decals -- Posted on pump.
             311          Section 4. Effective date.
             312          This bill takes effect on July 1, S. [ 2011 ] 2012 .S .
             313          Section 5. Coordinating S.B. 239 with H.B. 184 -- Substantive amendments.
             314          If this S.B. 239 and H.B. 184, Motor and Special Fuel Tax Act Amendments, both pass,
             315      it is the intent of the Legislature that the Office of Legislative Research and General Counsel,
             316      in preparing the Utah Code database for publication, modify Subsection 59-13-301 (12)(b) to
             317      read as follows:
             318          "(b) Beginning on July 1, 2011, a tax imposed under this section on liquified natural
             319      gas is imposed at a reduced rate of 10 cents per gasoline gallon equivalent."


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