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First Substitute H.B. 354

Representative Ryan D. Wilcox proposes the following substitute bill:


             1     
ALCOHOLIC BEVERAGE AMENDMENTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Ryan D. Wilcox

             5     
Senate Sponsor: John L. Valentine

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Alcoholic Beverage Control Act, the Public Safety Code, and
             10      revenue and taxation provisions to address the tracking of the effects of the abuse of
             11      alcoholic products and collection and use of certain mark ups and taxes.
             12      Highlighted Provisions:
             13          This bill:
             14          .    creates the Mark Up Holding Fund;
             15          .    provides for the remittance of a mark up to the State Tax Commission;
             16          .    creates a committee to establish a process to collect information related to abuse of
             17      alcoholic products;
             18          .    addresses certain reporting requirements related to the beer tax; and
             19          .    makes technical and conforming amendments.
             20      Money Appropriated in this Bill:
             21          None
             22      Other Special Clauses:
             23          This bill provides an effective date.
             24      Utah Code Sections Affected:
             25      AMENDS:


             26          32B-2-301, as enacted by Laws of Utah 2010, Chapter 276
             27          32B-2-304, as enacted by Laws of Utah 2010, Chapter 276
             28          32B-2-305, as enacted by Laws of Utah 2011, Chapter 334
             29          59-1-401, as last amended by Laws of Utah 2010, Chapter 233
             30          59-1-402, as last amended by Laws of Utah 2010, Chapter 233
             31          59-1-1402, as last amended by Laws of Utah 2010, Chapter 233
             32          59-15-106, as last amended by Laws of Utah 1998, Chapter 270
             33      ENACTS:
             34          53-1-119, Utah Code Annotated 1953
             35     
             36      Be it enacted by the Legislature of the state of Utah:
             37          Section 1. Section 32B-2-301 is amended to read:
             38           32B-2-301. State property -- Liquor Control Fund -- Mark Up Holding Fund.
             39          (1) The following are property of the state:
             40          (a) the money received [by the department] in the administration of this title, except as
             41      otherwise provided; and
             42          (b) property acquired, administered, possessed, or received by the department.
             43          (2) (a) There is created an enterprise fund known as the "Liquor Control Fund."
             44          (b) Except as provided in [Section] Sections 32B-3-205 and 32B-2-304 , money
             45      received in the administration of this title shall be [paid to the department and] transferred to
             46      the Liquor Control Fund.
             47          (3) (a) There is created an enterprise fund known as the "Mark Up Holding Fund."
             48          (b) In accordance with Section 32B-2-304 , the State Tax Commission shall deposit
             49      revenue remitted to the State Tax Commission from the mark up imposed under Section
             50      32B-2-304 into the Mark Up Holding Fund.
             51          (c) Money deposited into the Mark Up Holding Fund may be expended:
             52          (i) to the extent appropriated by the Legislature; and
             53          (ii) to fund the deposits required by Subsection 32B-2-304 (4) and Subsection
             54      32B-2-305 (4).
             55          [(c)] (4) The state treasurer shall by warrant draw from the Liquor Control Fund and, to
             56      the extent appropriated by the Legislature, from the Mark up Holding Fund, the expenses,


             57      debts, and liabilities incurred by the department in connection with the administration of this
             58      title or any other expense necessary for the administration of this title, including:
             59          [(i)] (a) salaries;
             60          [(ii)] (b) premiums, if any, on a bond for which the department pays premiums; and
             61          [(iii)] (c) an expenditure incurred in establishing, operating, or maintaining a state store
             62      or package agency.
             63          [(d)] (5) The department shall transfer annually from the Liquor Control Fund and the
             64      State Tax Commission shall transfer annually from the Mark Up Holding Fund to the General
             65      Fund a sum equal to the amount of net profit earned from the sale of liquor since the preceding
             66      transfer of money under this Subsection [(2)(d)] (5). The [transfer] transfers shall be calculated
             67      by no later than September 1 and made by no later than September 30 after a fiscal year.
             68          [(3)] (6) (a) By the end of each day, the department shall:
             69          (i) make a deposit to a qualified depository, as defined in Section 51-7-3 ; and
             70          (ii) report the deposit to the state treasurer.
             71          (b) A commissioner or department employee is not personally liable for a loss caused
             72      by the default or failure of a qualified depository.
             73          (c) Money deposited in a qualified depository is entitled to the same priority of
             74      payment as other public funds of the state.
             75          [(4)] (7) If the cash balance of the Liquor Control Fund is not adequate to cover a
             76      warrant drawn against the Liquor Control Fund by the state treasurer, the cash resources of the
             77      General Fund may be used to the extent necessary. At no time may the fund equity of the
             78      Liquor Control Fund fall below zero.
             79          Section 2. Section 32B-2-304 is amended to read:
             80           32B-2-304. Liquor price -- School lunch program -- Remittance of mark up.
             81          (1) For purposes of this section:
             82          (a) (i) "Landed case cost" means:
             83          (A) the cost of the product; and
             84          (B) inbound shipping costs incurred by the department.
             85          (ii) "Landed case cost" does not include the outbound shipping cost from a warehouse
             86      of the department to a state store.
             87          (b) "Proof gallon" has the same meaning as in 26 U.S.C. Sec. 5002.


             88          (c) Notwithstanding Section 32B-1-102 , "small brewer" means a brewer who
             89      manufactures in a calendar year less than 40,000 barrels of beer, heavy beer, and flavored malt
             90      beverage.
             91          (2) Except as provided in Subsection (3):
             92          (a) spirituous liquor sold by the department within the state shall be marked up in an
             93      amount not less than 86% above the landed case cost to the department;
             94          (b) wine sold by the department within the state shall be marked up in an amount not
             95      less than 86% above the landed case cost to the department;
             96          (c) heavy beer sold by the department within the state shall be marked up in an amount
             97      not less than 64.5% above the landed case cost to the department; and
             98          (d) a flavored malt beverage sold by the department within the state shall be marked up
             99      in an amount not less than 86% above the landed case cost to the department.
             100          (3) (a) Liquor sold by the department to a military installation in Utah shall be marked
             101      up in an amount not less than 15% above the landed case cost to the department.
             102          (b) Except for spirituous liquor sold by the department to a military installation in
             103      Utah, spirituous liquor that is sold by the department within the state shall be marked up 47%
             104      above the landed case cost to the department if:
             105          (i) the spirituous liquor is manufactured by a manufacturer producing less than 30,000
             106      proof gallons of spirituous liquor in a calendar year; and
             107          (ii) the manufacturer applies to the department for a reduced markup.
             108          (c) Except for wine sold by the department to a military installation in Utah, wine that
             109      is sold by the department within the state shall be marked up 47% above the landed case cost to
             110      the department if:
             111          (i) the wine is manufactured by a manufacturer producing less than 20,000 gallons of
             112      wine in a calendar year; and
             113          (ii) the manufacturer applies to the department for a reduced markup.
             114          (d) Except for heavy beer sold by the department to a military installation in Utah,
             115      heavy beer that is sold by the department within the state shall be marked up 30% above the
             116      landed case cost to the department if:
             117          (i) a small brewer manufactures the heavy beer; and
             118          (ii) the small brewer applies to the department for a reduced markup.


             119          (e) The department shall verify an amount described in Subsection (3)(b) [or], (c), or
             120      (d) pursuant to a federal or other verifiable production report.
             121          (4) The department shall deposit 10% of the total gross revenue from sales of liquor
             122      with the state treasurer to be credited to the Uniform School Fund and used to support the
             123      school lunch program administered by the State Board of Education under Section
             124      53A-19-201 .
             125          (5) This section does not prohibit the department from selling discontinued items at a
             126      discount.
             127          (6) (a) The department shall collect the mark up and remit the mark up collected by the
             128      department under this section:
             129          (i) to the State Tax Commission monthly on or before the last day of the month
             130      immediately following the last day of the previous month; and
             131          (ii) using a form prescribed by the State Tax Commission.
             132          (b) For liquor provided to a package agency on consignment, the department shall
             133      remit the mark up to the State Tax Commission for the month during which the liquor is
             134      provided to the package agency regardless of when the package agency pays the department for
             135      the liquor provided to the package agency.
             136          (c) The State Tax Commission shall deposit revenues remitted to it under Subsection
             137      (6)(a) into the Mark Up Holding Fund created in Section 32B-2-301 .
             138          (d) The assessment, collection, and refund of a mark up under this section shall be in
             139      accordance with Title 59, Chapter 1, Part 14, Assessment, Collection, and Refunds Act.
             140          (e) The department if it fails to comply with this Subsection (6) is subject to penalties
             141      as provided in Section 59-1-401 and interest as provided in Section 59-1-402 .
             142          (f) The State Tax Commission may make rules, in accordance with Title 63G, Chapter
             143      3, Utah Administrative Rulemaking Act, to establish procedures under this Subsection (6).
             144          Section 3. Section 32B-2-305 is amended to read:
             145           32B-2-305. Alcoholic Beverage Control Act Enforcement Fund.
             146          (1) As used in this section:
             147          (a) "Alcohol-related law enforcement officer" is as defined in Section 32B-1-201 .
             148          (b) "Enforcement ratio" is as defined in Section 32B-1-201 .
             149          (c) "Fund" means the Alcoholic Beverage Control Act Enforcement Fund created in


             150      this section.
             151          (2) There is created a restricted special revenue fund known as the "Alcoholic
             152      Beverage Control Act Enforcement Fund."
             153          (3) (a) The fund consists of:
             154          (i) deposits made under Subsection (4); and
             155          (ii) interest earned on the fund.
             156          (b) The fund shall earn interest. Interest on the fund shall be deposited into the fund.
             157          (4) After the deposit made under Section 32B-2-304 for the school lunch program, the
             158      department shall deposit 1% of the total gross revenue from the sale of liquor with the state
             159      treasurer to be credited to the fund to be used by the Department of Public Safety as provided
             160      in Subsection (5).
             161          (5) The Department of Public Safety shall expend money from the fund to supplement
             162      appropriations by the Legislature so that the Department of Public Safety maintains a sufficient
             163      number of alcohol-related law enforcement officers such that beginning on July 1, 2012, each
             164      year the enforcement ratio as of July 1 is equal to or less than the number specified in Section
             165      32B-1-201 .
             166          Section 4. Section 53-1-119 is enacted to read:
             167          53-1-119. Tracking effects of abuse of alcoholic products.
             168          (1) There is created a committee within the department known as the "Alcohol Abuse
             169      Tracking Committee" that consists of:
             170          (a) the commissioner, or the commissioner's designee;
             171          (b) the executive director of the Department of Health, or the executive director's
             172      designee;
             173          (c) the executive director of the Department of Human Services, or the executive
             174      director's designee;
             175          (d) the director of the Department of Alcoholic Beverage Control, or the director's
             176      designee;
             177          (e) the executive director of the Department of Workforce Services, or the executive
             178      director's designee;
             179          (f) the chair of the Utah Substance Abuse Advisory Council, or the chair's designee;
             180          (g) the state court administrator or the state court administrator's designee; and


             181          (h) the executive director of the Department of Technology Services, or the executive
             182      director's designee.
             183          (2) The commissioner, or the commissioner's designee, shall chair the committee.
             184          (3) (a) Four members of the committee constitutes a quorum.
             185          (b) A vote of the majority of the committee members present when a quorum is present
             186      is an action of the committee.
             187          (4) The committee shall meet at the call of the chair, except that the chair shall call a
             188      meeting at least quarterly.
             189          (5) The committee may adopt additional procedures or requirements for:
             190          (a) voting, when there is a tie of the committee members;
             191          (b) how meetings are to be called; and
             192          (c) the frequency of meetings.
             193          (6) The committee shall establish a process to collect for each fiscal year the following
             194      information:
             195          (a) the number of individuals statewide who are convicted of, plead guilty to, plead no
             196      contest to, plead guilty in a similar manner to, or resolve by diversion or its equivalent to a
             197      violation related to underage drinking of alcohol;
             198          (b) the number of individuals statewide who are convicted of, plead guilty to, plead no
             199      contest to, plead guilty in a similar manner to, or resolve by diversion or its equivalent to a
             200      violation related to driving under the influence of alcohol;
             201          (c) the number of violations statewide of Title 32B, Alcoholic Beverage Control Act,
             202      related to over-serving or over-consumption of an alcoholic product;
             203          (d) the cost of social services provided by the state related to abuse of alcohol,
             204      including services provided by the Division of Child and Family Services within the
             205      Department of Human Services;
             206          (e) where the alcoholic products are obtained that results in the violations or costs
             207      described in Subsections (6)(a) through (d); and
             208          (f) any information the committee determines can be collected and relates to the abuse
             209      of alcoholic products.
             210          (7) (a) The committee shall begin to collect the information described in Subsection (6)
             211      by January 1, 2013. For fiscal year 2012-13, the committee is required only to report the


             212      information collected between January 1, 2013 and June 30, 2013.
             213          (b) Beginning December 31, 2013, the committee shall report the information collected
             214      under Subsection (6) annually to the governor and Legislature by no later than the December
             215      31 immediately following the fiscal year for which the information is collected.
             216          (8) Prior to the October 2012 Interim meeting of the Business and Labor Interim
             217      Committee, the committee shall report to the Business and Labor Interim Committee:
             218          (a) a list of information to be collected;
             219          (b) standards to be used in collecting the information;
             220          (c) criteria to be used in determining the level and extent that alcohol is related or
             221      contributed to the activities for which data is to be collected; and
             222          (d) how the collection of data will verify the presence of alcohol, blood alcohol levels,
             223      and differentiate between persons using other substances of impairment and persons consuming
             224      alcoholic beverages.
             225          Section 5. Section 59-1-401 is amended to read:
             226           59-1-401. Definitions -- Offenses and penalties -- Rulemaking authority -- Statute
             227      of limitations -- Commission authority to waive, reduce, or compromise penalty or
             228      interest.
             229          (1) As used in this section:
             230          (a) "Activated tax, fee, or charge" means a tax, fee, or charge with respect to which the
             231      commission:
             232          (i) has implemented the commission's GenTax system; and
             233          (ii) at least 30 days before implementing the commission's GenTax system as described
             234      in Subsection (1)(a)(i), has provided notice in a conspicuous place on the commission's website
             235      stating:
             236          (A) the date the commission will implement the GenTax system with respect to the tax,
             237      fee, or charge; and
             238          (B) that, at the time the commission implements the GenTax system with respect to the
             239      tax, fee, or charge:
             240          (I) a person that files a return after the due date as described in Subsection (2)(a) is
             241      subject to the penalty described in Subsection (2)(c)(ii); and
             242          (II) a person that fails to pay the tax, fee, or charge as described in Subsection (3)(a) is


             243      subject to the penalty described in Subsection (3)(b)(ii).
             244          (b) "Activation date for a tax, fee, or charge" means with respect to a tax, fee, or
             245      charge, the later of:
             246          (i) the date on which the commission implements the commission's GenTax system
             247      with respect to the tax, fee, or charge; or
             248          (ii) 30 days after the date the commission provides the notice described in Subsection
             249      (1)(a)(ii) with respect to the tax, fee, or charge.
             250          (c) (i) Except as provided in Subsection (1)(c)(ii), "tax, fee, or charge" means:
             251          (A) a tax, fee, or charge the commission administers under:
             252          (I) this title;
             253          (II) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
             254          (III) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
             255          (IV) Section 19-6-410.5 ;
             256          (V) Section 19-6-714 ;
             257          (VI) Section 19-6-805 ;
             258          (VII) Section 32B-2-304 ;
             259          [(VII)] (VIII) Section 34A-2-202 ;
             260          [(VIII)] (IX) Section 40-6-14 ;
             261          [(IX)] (X) Section 69-2-5 ;
             262          [(X)] (XI) Section 69-2-5.5 ; or
             263          [(XI)] (XII) Section 69-2-5.6 ; or
             264          (B) another amount that by statute is subject to a penalty imposed under this section.
             265          (ii) "Tax, fee, or charge" does not include a tax, fee, or charge imposed under:
             266          (A) Title 41, Chapter 1a, Motor Vehicle Act, except for Section 41-1a-301 ;
             267          (B) Title 41, Chapter 3, Motor Vehicle Business Regulation Act;
             268          (C) Chapter 2, Property Tax Act, except for Section 59-2-1309 ;
             269          (D) Chapter 3, Tax Equivalent Property Act; or
             270          (E) Chapter 4, Privilege Tax.
             271          (d) "Unactivated tax, fee, or charge" means a tax, fee, or charge except for an activated
             272      tax, fee, or charge.
             273          (2) (a) The due date for filing a return is:


             274          (i) if the person filing the return is not allowed by law an extension of time for filing
             275      the return, the day on which the return is due as provided by law; or
             276          (ii) if the person filing the return is allowed by law an extension of time for filing the
             277      return, the earlier of:
             278          (A) the date the person files the return; or
             279          (B) the last day of that extension of time as allowed by law.
             280          (b) A penalty in the amount described in Subsection (2)(c) is imposed if a person files a
             281      return after the due date described in Subsection (2)(a).
             282          (c) For purposes of Subsection (2)(b), the penalty is an amount equal to the greater of:
             283          (i) if the return described in Subsection (2)(b) is filed with respect to an unactivated
             284      tax, fee, or charge:
             285          (A) $20; or
             286          (B) 10% of the unpaid unactivated tax, fee, or charge due on the return; or
             287          (ii) if the return described in Subsection (2)(b) is filed with respect to an activated tax,
             288      fee, or charge, beginning on the activation date for the tax, fee, or charge:
             289          (A) $20; or
             290          (B) (I) 2% of the unpaid activated tax, fee, or charge due on the return if the return is
             291      filed no later than five days after the due date described in Subsection (2)(a);
             292          (II) 5% of the unpaid activated tax, fee, or charge due on the return if the return is filed
             293      more than five days after the due date but no later than 15 days after the due date described in
             294      Subsection (2)(a); or
             295          (III) 10% of the unpaid activated tax, fee, or charge due on the return if the return is
             296      filed more than 15 days after the due date described in Subsection (2)(a).
             297          (d) This Subsection (2) does not apply to:
             298          (i) an amended return; or
             299          (ii) a return with no tax due.
             300          (3) (a) A person is subject to a penalty for failure to pay a tax, fee, or charge if:
             301          (i) the person files a return on or before the due date for filing a return described in
             302      Subsection (2)(a), but fails to pay the tax, fee, or charge due on the return on or before that due
             303      date;
             304          (ii) the person:


             305          (A) is subject to a penalty under Subsection (2)(b); and
             306          (B) fails to pay the tax, fee, or charge due on a return within a 90-day period after the
             307      due date for filing a return described in Subsection (2)(a);
             308          (iii) (A) the person is subject to a penalty under Subsection (2)(b); and
             309          (B) the commission estimates an amount of tax due for that person in accordance with
             310      Subsection 59-1-1406 (2);
             311          (iv) the person:
             312          (A) is mailed a notice of deficiency; and
             313          (B) within a 30-day period after the day on which the notice of deficiency described in
             314      Subsection (3)(a)(iv)(A) is mailed:
             315          (I) does not file a petition for redetermination or a request for agency action; and
             316          (II) fails to pay the tax, fee, or charge due on a return;
             317          (v) (A) the commission:
             318          (I) issues an order constituting final agency action resulting from a timely filed petition
             319      for redetermination or a timely filed request for agency action; or
             320          (II) is considered to have denied a request for reconsideration under Subsection
             321      63G-4-302 (3)(b) resulting from a timely filed petition for redetermination or a timely filed
             322      request for agency action; and
             323          (B) the person fails to pay the tax, fee, or charge due on a return within a 30-day period
             324      after the date the commission:
             325          (I) issues the order constituting final agency action described in Subsection
             326      (3)(a)(v)(A)(I); or
             327          (II) is considered to have denied the request for reconsideration described in
             328      Subsection (3)(a)(v)(A)(II); or
             329          (vi) the person fails to pay the tax, fee, or charge within a 30-day period after the date
             330      of a final judicial decision resulting from a timely filed petition for judicial review.
             331          (b) For purposes of Subsection (3)(a), the penalty is an amount equal to the greater of:
             332          (i) if the failure to pay a tax, fee, or charge as described in Subsection (3)(a) is with
             333      respect to an unactivated tax, fee, or charge:
             334          (A) $20; or
             335          (B) 10% of the unpaid unactivated tax, fee, or charge due on the return; or


             336          (ii) if the failure to pay a tax, fee, or charge as described in Subsection (3)(a) is with
             337      respect to an activated tax, fee, or charge, beginning on the activation date:
             338          (A) $20; or
             339          (B) (I) 2% of the unpaid activated tax, fee, or charge due on the return if the activated
             340      tax, fee, or charge due on the return is paid no later than five days after the due date for filing a
             341      return described in Subsection (2)(a);
             342          (II) 5% of the unpaid activated tax, fee, or charge due on the return if the activated tax,
             343      fee, or charge due on the return is paid more than five days after the due date for filing a return
             344      described in Subsection (2)(a) but no later than 15 days after that due date; or
             345          (III) 10% of the unpaid activated tax, fee, or charge due on the return if the activated
             346      tax, fee, or charge due on the return is paid more than 15 days after the due date for filing a
             347      return described in Subsection (2)(a).
             348          (4) (a) Beginning January 1, 1995, in the case of any underpayment of estimated tax or
             349      quarterly installments required by Sections 59-5-107 , 59-5-207 , 59-7-504 , and 59-9-104 , there
             350      shall be added a penalty in an amount determined by applying the interest rate provided under
             351      Section 59-1-402 plus four percentage points to the amount of the underpayment for the period
             352      of the underpayment.
             353          (b) (i) For purposes of Subsection (4)(a), the amount of the underpayment shall be the
             354      excess of the required installment over the amount, if any, of the installment paid on or before
             355      the due date for the installment.
             356          (ii) The period of the underpayment shall run from the due date for the installment to
             357      whichever of the following dates is the earlier:
             358          (A) the original due date of the tax return, without extensions, for the taxable year; or
             359          (B) with respect to any portion of the underpayment, the date on which that portion is
             360      paid.
             361          (iii) For purposes of this Subsection (4), a payment of estimated tax shall be credited
             362      against unpaid required installments in the order in which the installments are required to be
             363      paid.
             364          (5) (a) Notwithstanding Subsection (2) and except as provided in Subsection (6), a
             365      person allowed by law an extension of time for filing a corporate franchise or income tax return
             366      under Chapter 7, Corporate Franchise and Income Taxes, or an individual income tax return


             367      under Chapter 10, Individual Income Tax Act, is subject to a penalty in the amount described in
             368      Subsection (5)(b) if, on or before the day on which the return is due as provided by law, not
             369      including the extension of time, the person fails to pay:
             370          (i) for a person filing a corporate franchise or income tax return under Chapter 7,
             371      Corporate Franchise and Income Taxes, the payment required by Subsection 59-7-507 (1)(b); or
             372          (ii) for a person filing an individual income tax return under Chapter 10, Individual
             373      Income Tax Act, the payment required by Subsection 59-10-516 (2).
             374          (b) For purposes of Subsection (5)(a), the penalty per month during the period of the
             375      extension of time for filing the return is an amount equal to 2% of the tax due on the return,
             376      unpaid as of the day on which the return is due as provided by law.
             377          (6) If a person does not file a return within an extension of time allowed by Section
             378      59-7-505 or 59-10-516 , the person:
             379          (a) is not subject to a penalty in the amount described in Subsection (5)(b); and
             380          (b) is subject to a penalty in an amount equal to the sum of:
             381          (i) a late file penalty in an amount equal to the greater of:
             382          (A) $20; or
             383          (B) 10% of the tax due on the return, unpaid as of the day on which the return is due as
             384      provided by law, not including the extension of time; and
             385          (ii) a late pay penalty in an amount equal to the greater of:
             386          (A) $20; or
             387          (B) 10% of the unpaid tax due on the return, unpaid as of the day on which the return is
             388      due as provided by law, not including the extension of time.
             389          (7) (a) Additional penalties for an underpayment of a tax, fee, or charge are as provided
             390      in this Subsection (7)(a).
             391          (i) Except as provided in Subsection (7)(c), if any portion of an underpayment of a tax,
             392      fee, or charge is due to negligence, the penalty is 10% of the portion of the underpayment that
             393      is due to negligence.
             394          (ii) Except as provided in Subsection (7)(d), if any portion of an underpayment of a
             395      tax, fee, or charge is due to intentional disregard of law or rule, the penalty is 15% of the entire
             396      underpayment.
             397          (iii) If any portion of an underpayment is due to an intent to evade a tax, fee, or charge,


             398      the penalty is the greater of $500 per period or 50% of the entire underpayment.
             399          (iv) If any portion of an underpayment is due to fraud with intent to evade a tax, fee, or
             400      charge, the penalty is the greater of $500 per period or 100% of the entire underpayment.
             401          (b) If the commission determines that a person is liable for a penalty imposed under
             402      Subsection (7)(a)(ii), (iii), or (iv), the commission shall notify the person of the proposed
             403      penalty.
             404          (i) The notice of proposed penalty shall:
             405          (A) set forth the basis of the assessment; and
             406          (B) be mailed by certified mail, postage prepaid, to the person's last-known address.
             407          (ii) Upon receipt of the notice of proposed penalty, the person against whom the
             408      penalty is proposed may:
             409          (A) pay the amount of the proposed penalty at the place and time stated in the notice;
             410      or
             411          (B) proceed in accordance with the review procedures of Subsection (7)(b)(iii).
             412          (iii) A person against whom a penalty is proposed in accordance with this Subsection
             413      (7) may contest the proposed penalty by filing a petition for an adjudicative proceeding with
             414      the commission.
             415          (iv) (A) If the commission determines that a person is liable for a penalty under this
             416      Subsection (7), the commission shall assess the penalty and give notice and demand for
             417      payment.
             418          (B) The commission shall mail the notice and demand for payment described in
             419      Subsection (7)(b)(iv)(A):
             420          (I) to the person's last-known address; and
             421          (II) in accordance with Section 59-1-1404 .
             422          (c) A seller that voluntarily collects a tax under Subsection 59-12-107 (1)(b) is not
             423      subject to the penalty under Subsection (7)(a)(i) if on or after July 1, 2001:
             424          (i) a court of competent jurisdiction issues a final unappealable judgment or order
             425      determining that:
             426          (A) the seller meets one or more of the criteria described in Subsection
             427      59-12-107 (1)(a); and
             428          (B) the commission or a county, city, or town may require the seller to collect a tax


             429      under Subsections 59-12-103 (2)(a) through (d); or
             430          (ii) the commission issues a final unappealable administrative order determining that:
             431          (A) the seller meets one or more of the criteria described in Subsection
             432      59-12-107 (1)(a); and
             433          (B) the commission or a county, city, or town may require the seller to collect a tax
             434      under Subsections 59-12-103 (2)(a) through (d).
             435          (d) A seller that voluntarily collects a tax under Subsection 59-12-107 (1)(b) is not
             436      subject to the penalty under Subsection (7)(a)(ii) if:
             437          (i) (A) a court of competent jurisdiction issues a final unappealable judgment or order
             438      determining that:
             439          (I) the seller meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
             440      and
             441          (II) the commission or a county, city, or town may require the seller to collect a tax
             442      under Subsections 59-12-103 (2)(a) through (d); or
             443          (B) the commission issues a final unappealable administrative order determining that:
             444          (I) the seller meets one or more of the criteria described in Subsection 59-12-107 (1)(a);
             445      and
             446          (II) the commission or a county, city, or town may require the seller to collect a tax
             447      under Subsections 59-12-103 (2)(a) through (d); and
             448          (ii) the seller's intentional disregard of law or rule is warranted by existing law or by a
             449      nonfrivolous argument for the extension, modification, or reversal of existing law or the
             450      establishment of new law.
             451          (8) The penalty for failure to file an information return, information report, or a
             452      complete supporting schedule is $50 for each information return, information report, or
             453      supporting schedule up to a maximum of $1,000.
             454          (9) If a person, in furtherance of a frivolous position, has a prima facie intent to delay
             455      or impede administration of a law relating to a tax, fee, or charge and files a purported return
             456      that fails to contain information from which the correctness of reported tax, fee, or charge
             457      liability can be determined or that clearly indicates that the tax, fee, or charge liability shown is
             458      substantially incorrect, the penalty is $500.
             459          (10) (a) A seller that fails to remit a tax, fee, or charge monthly as required by


             460      Subsection 59-12-108 (1)(a):
             461          (i) is subject to a penalty described in Subsection (2); and
             462          (ii) may not retain the percentage of sales and use taxes that would otherwise be
             463      allowable under Subsection 59-12-108 (2).
             464          (b) A seller that fails to remit a tax, fee, or charge by electronic funds transfer as
             465      required by Subsection 59-12-108 (1)(a)(ii)(B):
             466          (i) is subject to a penalty described in Subsection (2); and
             467          (ii) may not retain the percentage of sales and use taxes that would otherwise be
             468      allowable under Subsection 59-12-108 (2).
             469          (11) (a) A person is subject to the penalty provided in Subsection (11)(c) if that person:
             470          (i) commits an act described in Subsection (11)(b) with respect to one or more of the
             471      following documents:
             472          (A) a return;
             473          (B) an affidavit;
             474          (C) a claim; or
             475          (D) a document similar to Subsections (11)(a)(i)(A) through (C);
             476          (ii) knows or has reason to believe that the document described in Subsection (11)(a)(i)
             477      will be used in connection with any material matter administered by the commission; and
             478          (iii) knows that the document described in Subsection (11)(a)(i), if used in connection
             479      with any material matter administered by the commission, would result in an understatement of
             480      another person's liability for a tax, fee, or charge.
             481          (b) The following acts apply to Subsection (11)(a)(i):
             482          (i) preparing any portion of a document described in Subsection (11)(a)(i);
             483          (ii) presenting any portion of a document described in Subsection (11)(a)(i);
             484          (iii) procuring any portion of a document described in Subsection (11)(a)(i);
             485          (iv) advising in the preparation or presentation of any portion of a document described
             486      in Subsection (11)(a)(i);
             487          (v) aiding in the preparation or presentation of any portion of a document described in
             488      Subsection (11)(a)(i);
             489          (vi) assisting in the preparation or presentation of any portion of a document described
             490      in Subsection (11)(a)(i); or


             491          (vii) counseling in the preparation or presentation of any portion of a document
             492      described in Subsection (11)(a)(i).
             493          (c) For purposes of Subsection (11)(a), the penalty:
             494          (i) shall be imposed by the commission;
             495          (ii) is $500 for each document described in Subsection (11)(a)(i) with respect to which
             496      the person described in Subsection (11)(a) meets the requirements of Subsection (11)(a); and
             497          (iii) is in addition to any other penalty provided by law.
             498          (d) The commission may seek a court order to enjoin a person from engaging in
             499      conduct that is subject to a penalty under this Subsection (11).
             500          (e) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             501      commission may make rules prescribing the documents that are similar to Subsections
             502      (11)(a)(i)(A) through (C).
             503          (12) (a) As provided in Section 76-8-1101 , criminal offenses and penalties are as
             504      provided in Subsections (12)(b) through (e).
             505          (b) (i) A person who is required by this title or any laws the commission administers or
             506      regulates to register with or obtain a license or permit from the commission, who operates
             507      without having registered or secured a license or permit, or who operates when the registration,
             508      license, or permit is expired or not current, is guilty of a class B misdemeanor.
             509          (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (12)(b)(i), the
             510      penalty may not:
             511          (A) be less than $500; or
             512          (B) exceed $1,000.
             513          (c) (i) A person who, with intent to evade a tax, fee, or charge or requirement of this
             514      title or any lawful requirement of the commission, fails to make, render, sign, or verify a return
             515      or to supply information within the time required by law, or who makes, renders, signs, or
             516      verifies a false or fraudulent return or statement, or who supplies false or fraudulent
             517      information, is guilty of a third degree felony.
             518          (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (12)(c)(i), the
             519      penalty may not:
             520          (A) be less than $1,000; or
             521          (B) exceed $5,000.


             522          (d) (i) A person who intentionally or willfully attempts to evade or defeat a tax, fee, or
             523      charge or the payment of a tax, fee, or charge is, in addition to other penalties provided by law,
             524      guilty of a second degree felony.
             525          (ii) Notwithstanding Section 76-3-301 , for purposes of Subsection (12)(d)(i), the
             526      penalty may not:
             527          (A) be less than $1,500; or
             528          (B) exceed $25,000.
             529          (e) (i) A person is guilty of a second degree felony if that person commits an act:
             530          (A) described in Subsection (12)(e)(ii) with respect to one or more of the following
             531      documents:
             532          (I) a return;
             533          (II) an affidavit;
             534          (III) a claim; or
             535          (IV) a document similar to Subsections (12)(e)(i)(A)(I) through (III); and
             536          (B) subject to Subsection (12)(e)(iii), with knowledge that the document described in
             537      Subsection (12)(e)(i)(A):
             538          (I) is false or fraudulent as to any material matter; and
             539          (II) could be used in connection with any material matter administered by the
             540      commission.
             541          (ii) The following acts apply to Subsection (12)(e)(i):
             542          (A) preparing any portion of a document described in Subsection (12)(e)(i)(A);
             543          (B) presenting any portion of a document described in Subsection (12)(e)(i)(A);
             544          (C) procuring any portion of a document described in Subsection (12)(e)(i)(A);
             545          (D) advising in the preparation or presentation of any portion of a document described
             546      in Subsection (12)(e)(i)(A);
             547          (E) aiding in the preparation or presentation of any portion of a document described in
             548      Subsection (12)(e)(i)(A);
             549          (F) assisting in the preparation or presentation of any portion of a document described
             550      in Subsection (12)(e)(i)(A); or
             551          (G) counseling in the preparation or presentation of any portion of a document
             552      described in Subsection (12)(e)(i)(A).


             553          (iii) This Subsection (12)(e) applies:
             554          (A) regardless of whether the person for which the document described in Subsection
             555      (12)(e)(i)(A) is prepared or presented:
             556          (I) knew of the falsity of the document described in Subsection (12)(e)(i)(A); or
             557          (II) consented to the falsity of the document described in Subsection (12)(e)(i)(A); and
             558          (B) in addition to any other penalty provided by law.
             559          (iv) Notwithstanding Section 76-3-301 , for purposes of this Subsection (12)(e), the
             560      penalty may not:
             561          (A) be less than $1,500; or
             562          (B) exceed $25,000.
             563          (v) The commission may seek a court order to enjoin a person from engaging in
             564      conduct that is subject to a penalty under this Subsection (12)(e).
             565          (vi) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             566      the commission may make rules prescribing the documents that are similar to Subsections
             567      (12)(e)(i)(A)(I) through (III).
             568          (f) The statute of limitations for prosecution for a violation of this Subsection (12) is
             569      the later of six years:
             570          (i) from the date the tax should have been remitted; or
             571          (ii) after the day on which the person commits the criminal offense.
             572          (13) Upon making a record of its actions, and upon reasonable cause shown, the
             573      commission may waive, reduce, or compromise any of the penalties or interest imposed under
             574      this part.
             575          Section 6. Section 59-1-402 is amended to read:
             576           59-1-402. Definitions -- Interest.
             577          (1) As used in this section:
             578          (a) "Final judicial decision" means a final ruling by a court of this state or the United
             579      States for which the time for any further review or proceeding has expired.
             580          (b) "Retroactive application of a judicial decision" means the application of a final
             581      judicial decision that:
             582          (i) invalidates a state or federal taxation statute; and
             583          (ii) requires the state to provide a refund for an overpayment that was made:


             584          (A) prior to the final judicial decision; or
             585          (B) during the 180-day period after the final judicial decision.
             586          (c) (i) Except as provided in Subsection (1)(c)(ii), "tax, fee, or charge" means:
             587          (A) a tax, fee, or charge the commission administers under:
             588          (I) this title;
             589          (II) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
             590          (III) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
             591          (IV) Section 19-6-410.5 ;
             592          (V) Section 19-6-714 ;
             593          (VI) Section 19-6-805 ;
             594          (VII) Section 32B-2-304 ;
             595          [(VII)] (VIII) Section 34A-2-202 ;
             596          [(VIII)] (IX) Section 40-6-14 ;
             597          [(IX)] (X) Section 69-2-5 ;
             598          [(X)] (XI) Section 69-2-5.5 ; or
             599          [(XI)] (XII) Section 69-2-5.6 ; or
             600          (B) another amount that by statute is subject to interest imposed under this section.
             601          (ii) "Tax, fee, or charge" does not include a tax, fee, or charge imposed under:
             602          (A) Title 41, Chapter 1a, Motor Vehicle Act, except for Section 41-1a-301 ;
             603          (B) Title 41, Chapter 3, Motor Vehicle Business Regulation Act;
             604          (C) Chapter 2, Property Tax Act, except for Section 59-2-1309 ;
             605          (D) Chapter 3, Tax Equivalent Property Act;
             606          (E) Chapter 4, Privilege Tax; or
             607          (F) Chapter 13, Part 5, Interstate Agreements.
             608          (2) Except as otherwise provided for by law, the interest rate for a calendar year for a
             609      tax, fee, or charge administered by the commission shall be calculated based on the federal
             610      short-term rate determined by the Secretary of the Treasury under Section 6621, Internal
             611      Revenue Code, in effect for the preceding fourth calendar quarter.
             612          (3) The interest rate calculation shall be as follows:
             613          (a) except as provided in Subsection (7), in the case of an overpayment or refund,
             614      simple interest shall be calculated at the rate of two percentage points above the federal


             615      short-term rate; or
             616          (b) in the case of an underpayment, deficiency, or delinquency, simple interest shall be
             617      calculated at the rate of two percentage points above the federal short-term rate.
             618          (4) Notwithstanding Subsection (2) or (3), the interest rate applicable to certain
             619      installment sales for purposes of a tax under Chapter 7, Corporate Franchise and Income Taxes,
             620      shall be determined in accordance with Section 453A, Internal Revenue Code, as provided in
             621      Section 59-7-112 .
             622          (5) (a) Except as provided in Subsection (5)(c), interest may not be allowed on an
             623      overpayment of a tax, fee, or charge if the overpayment of the tax, fee, or charge is refunded
             624      within:
             625          (i) 45 days after the last date prescribed for filing the return with respect to a tax under
             626      Chapter 7, Corporate Franchise and Income Taxes, or Chapter 10, Individual Income Tax Act,
             627      if the return is filed electronically; or
             628          (ii) 90 days after the last date prescribed for filing the return:
             629          (A) with respect to a tax, fee, or charge, except for a tax under Chapter 7, Corporate
             630      Franchise and Income Taxes, or Chapter 10, Individual Income Tax Act; or
             631          (B) if the return is not filed electronically.
             632          (b) Except as provided in Subsection (5)(c), if the return is filed after the last date
             633      prescribed for filing the return, interest may not be allowed on the overpayment if the
             634      overpayment is refunded within:
             635          (i) 45 days after the date the return is filed:
             636          (A) with respect to a tax under Chapter 7, Corporate Franchise and Income Taxes, or
             637      Chapter 10, Individual Income Tax Act; and
             638          (B) if the return is filed electronically; or
             639          (ii) 90 days after the date the return is filed:
             640          (A) with respect to a tax, fee, or charge, except for a tax under Chapter 7, Corporate
             641      Franchise and Income Taxes, or Chapter 10, Individual Income Tax Act; or
             642          (B) if the return is not filed electronically.
             643          (c) (i) In the case of an amended return, interest on an overpayment shall be allowed:
             644          (A) for a time period:
             645          (I) that begins on the later of:


             646          (Aa) the date the original return was filed; or
             647          (Bb) the due date for filing the original return not including any extensions for filing
             648      the original return; and
             649          (II) that ends on the date the commission receives the amended return; and
             650          (B) if the commission does not make a refund of an overpayment under this Subsection
             651      (5)(c):
             652          (I) if the amended return is with respect to a tax under Chapter 7, Corporate Franchise
             653      and Income Taxes, or Chapter 10, Individual Income Tax Act, and is filed electronically,
             654      within a 45-day period after the date the commission receives the amended return, for a time
             655      period:
             656          (Aa) that begins 46 days after the commission receives the amended return; and
             657          (Bb) subject to Subsection (5)(c)(ii), that ends on the date that the commission
             658      completes processing the refund of the overpayment; or
             659          (II) if the amended return is with respect to a tax, fee, or charge except for a tax under
             660      Chapter 7, Corporate Franchise and Income Taxes, or Chapter 10, Individual Income Tax Act,
             661      or is not filed electronically, within a 90-day period after the date the commission receives the
             662      amended return, for a time period:
             663          (Aa) that begins 91 days after the commission receives the amended return; and
             664          (Bb) subject to Subsection (5)(c)(ii), that ends on the date that the commission
             665      completes processing the refund of the overpayment.
             666          (ii) For purposes of Subsection (5)(c)(i)(B)(I)(Bb) or (5)(c)(i)(B)(II)(Bb), interest shall
             667      be calculated forward from the preparation date of the refund document to allow for
             668      processing.
             669          (6) Interest on any underpayment, deficiency, or delinquency of a tax, fee, or charge
             670      shall be computed from the time the original return is due, excluding any filing or payment
             671      extensions, to the date the payment is received.
             672          (7) Interest on a refund relating to a tax, fee, or charge may not be paid on any
             673      overpayment that arises from a statute that is determined to be invalid under state or federal
             674      law or declared unconstitutional under the constitution of the United States or Utah if the basis
             675      for the refund is the retroactive application of a judicial decision upholding the claim of
             676      unconstitutionality or the invalidation of a statute.


             677          Section 7. Section 59-1-1402 is amended to read:
             678           59-1-1402. Definitions.
             679          As used in this part:
             680          (1) "Administrative cost" means a fee imposed to cover:
             681          (a) the cost of filing;
             682          (b) the cost of administering a garnishment; or
             683          (c) a cost similar to Subsection (1)(a) or (b) as determined by the commission by rule
             684      made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
             685          (2) "Books and records" means the following made available in printed or electronic
             686      format:
             687          (a) an account;
             688          (b) a book;
             689          (c) an invoice;
             690          (d) a memorandum;
             691          (e) a paper;
             692          (f) a record; or
             693          (g) an item similar to Subsections (2)(a) through (f) as determined by the commission
             694      by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
             695          (3) "Deficiency" means:
             696          (a) the amount by which a tax, fee, or charge exceeds the difference between:
             697          (i) the sum of:
             698          (A) the amount shown as the tax, fee, or charge by a person on the person's return; and
             699          (B) any amount previously assessed, or collected without assessment, as a deficiency;
             700      and
             701          (ii) any amount previously abated, credited, refunded, or otherwise repaid with respect
             702      to that tax, fee, or charge; or
             703          (b) if a person does not show an amount as a tax, fee, or charge on the person's return,
             704      or if a person does not make a return, the amount by which the tax, fee, or charge exceeds:
             705          (i) the amount previously assessed, or collected without assessment, as a deficiency;
             706      and
             707          (ii) any amount previously abated, credited, refunded, or otherwise repaid with respect


             708      to that tax, fee, or charge.
             709          (4) "Garnishment" means any legal or equitable procedure through which one or more
             710      of the following are required to be withheld for payment of an amount a person owes:
             711          (a) an asset of the person held by another person; or
             712          (b) the earnings of the person.
             713          (5) "Liability" means the following that a person is required to remit to the
             714      commission:
             715          (a) a tax, fee, or charge;
             716          (b) an addition to a tax, fee, or charge;
             717          (c) an administrative cost;
             718          (d) interest that accrues in accordance with Section 59-1-402 ; or
             719          (e) a penalty that accrues in accordance with Section 59-1-401 .
             720          (6) (a) Subject to Subsection (6)(b), "mathematical error" is as defined in Section
             721      6213(g)(2), Internal Revenue Code.
             722          (b) The reference to Section 6213(g)(2), Internal Revenue Code, in Subsection (6)(a)
             723      means:
             724          (i) the reference to Section 6213(g)(2), Internal Revenue Code, in effect for the taxable
             725      year; or
             726          (ii) a corresponding or comparable provision of the Internal Revenue Code as
             727      amended, redesignated, or reenacted.
             728          (7) (a) Except as provided in Subsection (7)(b), "tax, fee, or charge" means:
             729          (i) a tax, fee, or charge the commission administers under:
             730          (A) this title;
             731          (B) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
             732          (C) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
             733          (D) Section 19-6-410.5 ;
             734          (E) Section 19-6-714 ;
             735          (F) Section 19-6-805 ;
             736          (G) Section 32B-2-304 ;
             737          [(G)] (H) Section 34A-2-202 ;
             738          [(H)] (I) Section 40-6-14 ;


             739          [(I)] (J) Section 69-2-5 ;
             740          [(J)] (K) Section 69-2-5.5 ; or
             741          [(K)] (L) Section 69-2-5.6 ; or
             742          (ii) another amount that by statute is administered by the commission.
             743          (b) "Tax, fee, or charge" does not include a tax, fee, or charge imposed under:
             744          (i) Title 41, Chapter 1a, Motor Vehicle Act, except for Section 41-1a-301 ;
             745          (ii) Title 41, Chapter 3, Motor Vehicle Business Regulation Act;
             746          (iii) Chapter 2, Property Tax Act;
             747          (iv) Chapter 3, Tax Equivalent Property Act;
             748          (v) Chapter 4, Privilege Tax; or
             749          (vi) Chapter 13, Part 5, Interstate Agreements.
             750          (8) "Transferee" means:
             751          (a) a devisee;
             752          (b) a distributee;
             753          (c) a donee;
             754          (d) an heir;
             755          (e) a legatee; or
             756          (f) a person similar to Subsections (8)(a) through (e) as determined by the commission
             757      by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
             758          Section 8. Section 59-15-106 is amended to read:
             759           59-15-106. Reports by brewers, wholesalers, and distributors outside the state.
             760          [(1) Every motor carrier as defined under Section 72-9-102 delivering any beer that has
             761      been shipped from outside of this state to a point within this state shall, before the last day of
             762      each month, report in writing all deliveries during the preceding month to the commission.
             763      The report shall be on forms prescribed by, and contain any information required by, the
             764      commission.]
             765          [(2)] Every brewer, wholesaler, or distributor outside the state, shipping beer into the
             766      state, for sale, use, or consumption within the state shall, before the last day of each month,
             767      [report in writing upon forms prescribed by the commission] file with the commission a return
             768      prescribed by the commission for the preceding calendar month and containing any information
             769      required by the commission.


             770          Section 9. Effective date.
             771          Except for Section 53-1-119 which takes effect May 8, 2012, this bill takes effect on
             772      July 1, 2012.


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