Download Zipped Introduced WordPerfect HB0323S01.ZIP
[Status][Bill Documents][Fiscal Note][Bills Directory]

First Substitute H.B. 323

Representative David G. Butterfield proposes the following substitute bill:


             1     
SALES AND USE TAX COLLECTION AMENDMENTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: David G. Butterfield

             5     
Senate Sponsor: Lyle W. Hillyard

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill makes changes to the collection and remittance of sales and use taxes.
             10      Highlighted Provisions:
             11          This bill:
             12          .    changes the timing of sales and use tax collection and remittance for certain sales
             13      involving delivery, installation, or the conversion of tangible personal property into
             14      real property;
             15          .    addresses a deduction for bad debt; and
             16          .    makes technical and conforming changes.
             17      Money Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          This bill takes effect on July 1, 2012.
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          59-12-107, as last amended by Laws of Utah 2009, Chapter 212
             24     
             25      Be it enacted by the Legislature of the state of Utah:


             26          Section 1. Section 59-12-107 is amended to read:
             27           59-12-107. Collection, remittance, and payment of tax by sellers or other persons
             28      -- Returns -- Reports -- Direct payment by purchaser of vehicle -- Other liability for
             29      collection -- Rulemaking authority -- Credits -- Treatment of bad debt -- Penalties.
             30          (1) (a) Except as provided in Subsection (1)(d) [or], Section 59-12-107.1 , or Section
             31      59-12-123 , and subject to Subsection (1)(e), each seller shall pay or collect and remit the sales
             32      and use taxes imposed by this chapter if within this state the seller:
             33          (i) has or utilizes:
             34          (A) an office;
             35          (B) a distribution house;
             36          (C) a sales house;
             37          (D) a warehouse;
             38          (E) a service enterprise; or
             39          (F) a place of business similar to Subsections (1)(a)(i)(A) through (E);
             40          (ii) maintains a stock of goods;
             41          (iii) regularly solicits orders, regardless of whether or not the orders are accepted in the
             42      state, unless the seller's only activity in the state is:
             43          (A) advertising; or
             44          (B) solicitation by:
             45          (I) direct mail;
             46          (II) electronic mail;
             47          (III) the Internet;
             48          (IV) telecommunications service; or
             49          (V) a means similar to Subsection (1)(a)(iii)(A) or (B);
             50          (iv) regularly engages in the delivery of property in the state other than by:
             51          (A) common carrier; or
             52          (B) United States mail; or
             53          (v) regularly engages in an activity directly related to the leasing or servicing of
             54      property located within the state.
             55          (b) A seller that does not meet one or more of the criteria provided for in Subsection
             56      (1)(a):


             57          (i) except as provided in Subsection (1)(b)(ii), may voluntarily:
             58          (A) collect a tax on a transaction described in Subsection 59-12-103 (1); and
             59          (B) remit the tax to the commission as provided in this part; or
             60          (ii) notwithstanding Subsection (1)(b)(i), shall collect a tax on a transaction described
             61      in Subsection 59-12-103 (1) if Section 59-12-103.1 requires the seller to collect the tax.
             62          (c) The collection and remittance of a tax under this chapter by a seller that is
             63      registered under the agreement may not be used as a factor in determining whether that seller is
             64      required by Subsection (1)(a) to:
             65          (i) pay a tax, fee, or charge under:
             66          (A) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
             67          (B) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
             68          (C) Section 19-6-714 ;
             69          (D) Section 19-6-805 ;
             70          (E) Section 69-2-5 ;
             71          (F) Section 69-2-5.5 ;
             72          (G) Section 69-2-5.6 ; or
             73          (H) this title; or
             74          (ii) collect and remit a tax, fee, or charge under:
             75          (A) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
             76          (B) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
             77          (C) Section 19-6-714 ;
             78          (D) Section 19-6-805 ;
             79          (E) Section 69-2-5 ;
             80          (F) Section 69-2-5.5 ;
             81          (G) Section 69-2-5.6 ; or
             82          (H) this title.
             83          (d) A person shall pay a use tax imposed by this chapter on a transaction described in
             84      Subsection 59-12-103 (1) if:
             85          (i) the seller did not collect a tax imposed by this chapter on the transaction; and
             86          (ii) the person:
             87          (A) stores the tangible personal property or product transferred electronically in the


             88      state;
             89          (B) uses the tangible personal property or product transferred electronically in the state;
             90      or
             91          (C) consumes the tangible personal property or product transferred electronically in the
             92      state.
             93          (e) The ownership of property that is located at the premises of a printer's facility with
             94      which the retailer has contracted for printing and that consists of the final printed product,
             95      property that becomes a part of the final printed product, or copy from which the printed
             96      product is produced, shall not result in the retailer being considered to have or maintain an
             97      office, distribution house, sales house, warehouse, service enterprise, or other place of
             98      business, or to maintain a stock of goods, within this state.
             99          (f) (i) As used in this Subsection (1)(f):
             100          (A) "Affiliated group" is as defined in Section 59-7-101 , except that "affiliated group"
             101      includes a corporation that is qualified to do business but is not otherwise doing business in
             102      this state.
             103          (B) "Common ownership" is as defined in Section 59-7-101 .
             104          (C) "Related seller" means a seller that:
             105          (I) is not required to pay or collect and remit sales and use taxes under Subsection
             106      (1)(a) or Section 59-12-103.1 ;
             107          (II) is:
             108          (Aa) related to a seller that is required to pay or collect and remit sales and use taxes
             109      under Subsection (1)(a) as part of an affiliated group or because of common ownership; or
             110          (Bb) a limited liability company owned by the parent corporation of an affiliated group
             111      if that parent corporation of the affiliated group is required to pay or collect and remit sales and
             112      use taxes under Subsection (1)(a); and
             113          (III) does not voluntarily collect and remit a tax under Subsection (1)(b)(i).
             114          (ii) A seller is not required to pay or collect and remit sales and use taxes under
             115      Subsection (1)(a):
             116          (A) if the seller is a related seller;
             117          (B) if the seller to which the related seller is related does not engage in any of the
             118      following activities on behalf of the related seller:


             119          (I) advertising;
             120          (II) marketing;
             121          (III) sales; or
             122          (IV) other services; and
             123          (C) if the seller to which the related seller is related accepts the return of an item sold
             124      by the related seller, the seller to which the related seller is related accepts the return of that
             125      item:
             126          (I) sold by a seller that is not a related seller; and
             127          (II) on the same terms as the return of an item sold by that seller to which the related
             128      seller is related.
             129          (2) (a) Except as provided in Section 59-12-107.1 , a tax under this chapter shall be
             130      collected from a purchaser.
             131          (b) A seller may not collect as tax an amount, without regard to fractional parts of one
             132      cent, in excess of the tax computed at the rates prescribed by this chapter.
             133          (c) (i) Each seller shall:
             134          (A) give the purchaser a receipt for the tax collected; or
             135          (B) bill the tax as a separate item and declare the name of this state and the seller's
             136      sales and use tax license number on the invoice for the sale.
             137          (ii) The receipt or invoice is prima facie evidence that the seller has collected the tax
             138      and relieves the purchaser of the liability for reporting the tax to the commission as a
             139      consumer.
             140          (d) A seller is not required to maintain a separate account for the tax collected, but is
             141      considered to be a person charged with receipt, safekeeping, and transfer of public money.
             142          (e) Taxes collected by a seller pursuant to this chapter shall be held in trust for the
             143      benefit of the state and for payment to the commission in the manner and at the time provided
             144      for in this chapter.
             145          (f) If any seller, during any reporting period, collects as a tax an amount in excess of
             146      the lawful state and local percentage of total taxable sales allowed under this chapter, the seller
             147      shall remit to the commission the full amount of the tax imposed under this chapter, plus any
             148      excess.
             149          (g) If the accounting methods regularly employed by the seller in the transaction of the


             150      seller's business are such that reports of sales made during a calendar month or quarterly period
             151      will impose unnecessary hardships, the commission may accept reports at intervals that will, in
             152      the commission's opinion, better suit the convenience of the taxpayer or seller and will not
             153      jeopardize collection of the tax.
             154          (3) (a) Except as provided in Subsections (4) through (6) and Section 59-12-108 , the
             155      sales or use tax imposed by this chapter is due and payable to the commission quarterly on or
             156      before the last day of the month next succeeding each calendar quarterly period.
             157          (b) (i) Each seller shall, on or before the last day of the month next succeeding each
             158      calendar quarterly period, file with the commission a return for the preceding quarterly period.
             159          (ii) The seller shall remit with the return under Subsection (3)(b)(i) the amount of the
             160      tax required under this chapter to be collected or paid for the period covered by the return.
             161          (c) Except as provided in Subsection (4)(c), a return shall contain information and be in
             162      a form the commission prescribes by rule.
             163          (d) [The] (i) Subject to Subsection (3)(d)(ii), the sales tax as computed in the return
             164      shall be based [upon] on the total nonexempt sales made during the period[, including both
             165      cash and charge sales] for which the return is filed, including both cash and charge sales.
             166          (ii) For a sale that includes the delivery or installation of tangible personal property at a
             167      location other than a seller's place of business described in Subsection (1)(a)(i), if the delivery
             168      or installation is separately stated on an invoice or receipt, a seller may compute the tax due on
             169      the sale for purposes of Subsection (3)(d)(i) based on the amount the seller receives for that
             170      sale during each period for which the seller receives payment for the sale.
             171          (e) (i) The use tax as computed in the return shall be based [upon] on the total amount
             172      of purchases for storage, use, or other consumption in this state made during the period[,
             173      including both by cash and by charge] for which the return is filed, including both cash and
             174      charge purchases.
             175          (ii) (A) As used in this Subsection (3)(e)(ii), "qualifying purchaser" means a purchaser
             176      who is required to remit taxes under this chapter, but is not required to remit taxes monthly in
             177      accordance with Section 59-12-108 , and who converts tangible personal property into real
             178      property.
             179          (B) Subject to Subsections (3)(e)(ii)(C) and (D), a qualifying purchaser may remit the
             180      taxes due under this chapter on tangible personal property for which the qualifying purchaser


             181      claims an exemption as allowed under Subsection 59-12-104 (23) or (25) based on the period in
             182      which the qualifying purchaser receives payment, in accordance with Subsection (3)(e)(ii)(C),
             183      for the conversion of the tangible personal property into real property.
             184          (C) A qualifying purchaser remitting taxes due under this chapter in accordance with
             185      Subsection (3)(e)(ii)(B) shall remit an amount equal to the total amount of tax due on the
             186      qualifying purchaser's purchase of the tangible personal property that was converted into real
             187      property multiplied by a fraction, the numerator of which is the payment received in the period
             188      for the qualifying purchaser's sale of the tangible personal property that was converted into real
             189      property and the denominator of which is the entire sales price for the qualifying purchaser's
             190      sale of the tangible personal property that was converted into real property.
             191          (D) A qualifying purchaser may remit taxes due under this chapter in accordance with
             192      this Subsection (3)(e)(ii) only if the books and records that the qualifying purchaser keeps in
             193      the qualifying purchaser's regular course of business identify by reasonable and verifiable
             194      standards that the tangible personal property was converted into real property.
             195          (f) (i) Subject to Subsection (3)(f)(ii) and in accordance with Title 63G, Chapter 3,
             196      Utah Administrative Rulemaking Act, the commission may by rule extend the time for making
             197      returns and paying the taxes.
             198          (ii) An extension under Subsection (3)(f)(i) may not be for more than 90 days.
             199          (g) The commission may require returns and payment of the tax to be made for other
             200      than quarterly periods if the commission considers it necessary in order to ensure the payment
             201      of the tax imposed by this chapter.
             202          (h) (i) The commission may require a seller that files a simplified electronic return with
             203      the commission to file an additional electronic report with the commission.
             204          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             205      commission may make rules providing:
             206          (A) the information required to be included in the additional electronic report described
             207      in Subsection (3)(h)(i); and
             208          (B) one or more due dates for filing the additional electronic report described in
             209      Subsection (3)(h)(i).
             210          (4) (a) As used in this Subsection (4) and Subsection (5)(b), "remote seller" means a
             211      seller that is:


             212          (i) registered under the agreement;
             213          (ii) described in Subsection (1)(b); and
             214          (iii) not a:
             215          (A) model 1 seller;
             216          (B) model 2 seller; or
             217          (C) model 3 seller.
             218          (b) (i) Except as provided in Subsection (4)(b)(ii), a tax a remote seller collects in
             219      accordance with Subsection (1)(b) is due and payable:
             220          (A) to the commission;
             221          (B) annually; and
             222          (C) on or before the last day of the month immediately following the last day of each
             223      calendar year.
             224          (ii) The commission may require that a tax a remote seller collects in accordance with
             225      Subsection (1)(b) be due and payable:
             226          (A) to the commission; and
             227          (B) on the last day of the month immediately following any month in which the seller
             228      accumulates a total of at least $1,000 in agreement sales and use tax.
             229          (c) (i) If a remote seller remits a tax to the commission in accordance with Subsection
             230      (4)(b), the remote seller shall file a return:
             231          (A) with the commission;
             232          (B) with respect to the tax;
             233          (C) containing information prescribed by the commission; and
             234          (D) on a form prescribed by the commission.
             235          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             236      commission shall make rules prescribing:
             237          (A) the information required to be contained in a return described in Subsection
             238      (4)[(a)](c)(i); and
             239          (B) the form described in Subsection (4)(c)(i)(D).
             240          (d) A tax a remote seller collects in accordance with this Subsection (4) shall be
             241      calculated on the basis of the total amount of taxable transactions under Subsection
             242      59-12-103 (1) the remote seller completes, including:


             243          (i) a cash transaction; and
             244          (ii) a charge transaction.
             245          (5) (a) Except as provided in Subsection (5)(b), a tax a seller that files a simplified
             246      electronic return collects in accordance with this chapter is due and payable:
             247          (i) monthly on or before the last day of the month immediately following the month for
             248      which the seller collects a tax under this chapter; and
             249          (ii) for the month for which the seller collects a tax under this chapter.
             250          (b) A tax a remote seller that files a simplified electronic return collects in accordance
             251      with this chapter is due and payable as provided in Subsection (4).
             252          (6) (a) On each vehicle sale made by other than a regular licensed vehicle dealer, the
             253      purchaser shall pay the sales or use tax directly to the commission if the vehicle is subject to
             254      titling or registration under the laws of this state.
             255          (b) The commission shall collect the tax described in Subsection (6)(a) when the
             256      vehicle is titled or registered.
             257          (7) If any sale of tangible personal property or any other taxable transaction under
             258      Subsection 59-12-103 (1), is made by a wholesaler to a retailer, the wholesaler is not
             259      responsible for the collection or payment of the tax imposed on the sale and the retailer is
             260      responsible for the collection or payment of the tax imposed on the sale if:
             261          (a) the retailer represents that the personal property is purchased by the retailer for
             262      resale; and
             263          (b) the personal property is not subsequently resold.
             264          (8) If any sale of property or service subject to the tax is made to a person prepaying
             265      sales or use tax in accordance with Title 63M, Chapter 5, Resource Development Act, or to a
             266      contractor or subcontractor of that person, the person to whom such payment or consideration
             267      is payable is not responsible for the collection or payment of the sales or use tax and the person
             268      prepaying the sales or use tax is responsible for the collection or payment of the sales or use tax
             269      if the person prepaying the sales or use tax represents that the amount prepaid as sales or use
             270      tax has not been fully credited against sales or use tax due and payable under the rules
             271      promulgated by the commission.
             272          (9) (a) For purposes of this Subsection (9):
             273          (i) Except as provided in Subsection (9)(a)(ii), "bad debt" is as defined in Section 166,


             274      Internal Revenue Code.
             275          (ii) Notwithstanding Subsection (9)(a)(i), "bad debt" does not include:
             276          (A) an amount included in the purchase price of tangible personal property, a product
             277      transferred electronically, or a service that is:
             278          (I) not a transaction described in Subsection 59-12-103 (1); or
             279          (II) exempt under Section 59-12-104 ;
             280          (B) a financing charge;
             281          (C) interest;
             282          (D) a tax imposed under this chapter on the purchase price of tangible personal
             283      property, a product transferred electronically, or a service;
             284          (E) an uncollectible amount on tangible personal property or a product transferred
             285      electronically that:
             286          (I) is subject to a tax under this chapter; and
             287          (II) remains in the possession of a seller until the full purchase price is paid;
             288          (F) an expense incurred in attempting to collect any debt; or
             289          (G) an amount that a seller does not collect on repossessed property.
             290          (b) (i) [A] To the extent an amount remitted in accordance with Subsection (3)(d) or (e)
             291      later becomes bad debt, a seller may deduct the bad debt from the total amount from which a
             292      tax under this chapter is calculated on a return.
             293          (ii) A qualifying purchaser, as defined in Subsection (3)(e)(ii)(A), may deduct from the
             294      total amount of taxes due under this chapter the amount of tax the qualifying purchaser paid on
             295      the qualifying purchaser's purchase of tangible personal property converted into real property to
             296      the extent that:
             297          (A) tax was remitted in accordance with Subsection (3)(e) on that tangible personal
             298      property converted into real property;
             299          (B) the qualifying purchaser's sale of that tangible personal property converted into real
             300      property later becomes bad debt; and
             301          (C) the books and records that the qualifying purchaser keeps in the qualifying
             302      purchaser's regular course of business identify by reasonable and verifiable standards that the
             303      tangible personal property was converted into real property.
             304          (c) A seller may file a refund claim with the commission if:


             305          (i) the amount of bad debt for the time period described in Subsection (9)(e) exceeds
             306      the amount of the seller's sales that are subject to a tax under this chapter for that same time
             307      period; and
             308          (ii) as provided in Section 59-1-1410 .
             309          (d) A bad debt deduction under this section may not include interest.
             310          (e) A bad debt may be deducted under this Subsection (9) on a return for the time
             311      period during which the bad debt:
             312          (i) is written off as uncollectible in the seller's books and records; and
             313          (ii) would be eligible for a bad debt deduction:
             314          (A) for federal income tax purposes; and
             315          (B) if the seller were required to file a federal income tax return.
             316          (f) If a seller recovers any portion of bad debt for which the seller makes a deduction or
             317      claims a refund under this Subsection (9), the seller shall report and remit a tax under this
             318      chapter:
             319          (i) on the portion of the bad debt the seller recovers; and
             320          (ii) on a return filed for the time period for which the portion of the bad debt is
             321      recovered.
             322          (g) For purposes of reporting a recovery of a portion of bad debt under Subsection
             323      (9)(f), a seller shall apply amounts received on the bad debt in the following order:
             324          (i) in a proportional amount:
             325          (A) to the purchase price of the tangible personal property, product transferred
             326      electronically, or service; and
             327          (B) to the tax due under this chapter on the tangible personal property, product
             328      transferred electronically, or service; and
             329          (ii) to:
             330          (A) interest charges;
             331          (B) service charges; and
             332          (C) other charges.
             333          (h) A seller's certified service provider may make a deduction or claim a refund for bad
             334      debt on behalf of the seller:
             335          (i) in accordance with this Subsection (9); and


             336          (ii) if the certified service provider credits or refunds the entire amount of the bad debt
             337      deduction or refund to the seller.
             338          (i) A seller may allocate bad debt among the states that are members of the agreement
             339      if the seller's books and records support that allocation.
             340          (10) (a) A seller may not, with intent to evade any tax, fail to timely remit the full
             341      amount of tax required by this chapter.
             342          (b) A violation of this section is punishable as provided in Section 59-1-401 .
             343          (c) Each person who fails to pay any tax to the state or any amount of tax required to be
             344      paid to the state, except amounts determined to be due by the commission under Chapter 1,
             345      Part 14, Assessment, Collections, and Refunds Act, or Section 59-12-111 , within the time
             346      required by this chapter, or who fails to file any return as required by this chapter, shall pay, in
             347      addition to the tax, penalties and interest as provided in [Section] Sections 59-1-401 and
             348      59-1-402 .
             349          (d) For purposes of prosecution under this section, each quarterly tax period in which a
             350      seller, with intent to evade any tax, collects a tax and fails to timely remit the full amount of the
             351      tax required to be remitted, constitutes a separate offense.
             352          Section 2. Effective date.
             353          This bill takes effect on July 1, 2012.


[Bill Documents][Bills Directory]