S.B. 155 Enrolled

             1     

APPORTIONMENT OF INCOME AMENDMENTS
             2      2014 GENERAL SESSION
             3      STATE OF UTAH
             4      Chief Sponsor: Curtis S. Bramble
             5      House Sponsor: Ryan D. Wilcox
             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends provisions related to the apportionment of income.
             10      Highlighted Provisions:
             11          This bill:
             12          .    amends a definition related to the apportionment of income for purposes of
             13      corporate franchise and income taxes; and
             14          .    makes technical and conforming changes.
             15      Money Appropriated in this Bill:
             16          None
             17      Other Special Clauses:
             18          This bill has retrospective operation for a taxable year beginning on or after January 1,
             19      2014.
             20      Utah Code Sections Affected:
             21      AMENDS:
             22           59-7-302 , as last amended by Laws of Utah 2010, Chapter 155
             23     
             24      Be it enacted by the Legislature of the state of Utah:
             25          Section 1. Section 59-7-302 is amended to read:
             26           59-7-302. Definitions -- Determination of when a taxpayer is considered to be a
             27      sales factor weighted taxpayer.
             28          (1) As used in this part, unless the context otherwise requires:
             29          (a) "Aircraft type" means a particular model of aircraft as designated by the

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             30      manufacturer of the aircraft.
             31          (b) "Airline" is as defined in Section 59-2-102 .
             32          (c) "Airline revenue ton miles" means, for an airline, the total revenue ton miles during
             33      the airline's tax period.
             34          (d) "Business income" means income arising from transactions and activity in the
             35      regular course of the taxpayer's trade or business and includes income from tangible and
             36      intangible property if the acquisition, management, and disposition of the property constitutes
             37      integral parts of the taxpayer's regular trade or business operations.
             38          (e) "Commercial domicile" means the principal place from which the trade or business
             39      of the taxpayer is directed or managed.
             40          (f) "Compensation" means wages, salaries, commissions, and any other form of
             41      remuneration paid to employees for personal services.
             42          (g) (i) Except as provided in Subsection (1)(g)(ii), "mobile flight equipment" is as
             43      defined in Section 59-2-102 .
             44          (ii) "Mobile flight equipment" does not include:
             45          (A) a spare engine; or
             46          (B) tangible personal property described in Subsection 59-2-102 (25) owned by an:
             47          (I) air charter service; or
             48          (II) air contract service.
             49          (h) "Nonbusiness income" means all income other than business income.
             50          (i) "Revenue ton miles" is determined in accordance with 14 C.F.R. Part 241.
             51          (j) "Sales" means all gross receipts of the taxpayer not allocated under Sections
             52      59-7-306 through 59-7-310 .
             53          (k) Subject to Subsection (2), "sales factor weighted taxpayer" means:
             54          (i) for a taxpayer that is not a unitary group, regardless of the number of economic
             55      activities the taxpayer performs, a taxpayer having greater than 50% of the taxpayer's total sales
             56      everywhere generated by economic activities[: (A) performed by the taxpayer; and (B)]
             57      performed by the taxpayer if the economic activities are classified in a NAICS code of the 2002

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             58      or 2007 North American Industry Classification System of the federal Executive Office of the
             59      President, Office of Management and Budget, except for:
             60          [(I)] (A) a NAICS code within NAICS Sector 21, Mining;
             61          (B) a NAICS code within NAICS Industry Group 2212, Natural Gas Distribution;
             62          [(II)] (C) a NAICS code within NAICS Sector 31-33, Manufacturing;
             63          [(III)] (D) a NAICS code within NAICS Sector 48-49, Transportation and
             64      Warehousing;
             65          [(IV)] (E) a NAICS code within NAICS Sector 51, Information, except for NAICS
             66      Subsector 519, Other Information Services; or
             67          [(V)] (F) a NAICS code within NAICS Sector 52, Finance and Insurance; or
             68          (ii) for a taxpayer that is a unitary group, a taxpayer having greater than 50% of the
             69      taxpayer's total sales everywhere generated by economic activities[: (A) performed by the
             70      unitary group; and (B)] performed by the taxpayer if the economic activities are classified in a
             71      NAICS code of the 2002 or 2007 North American Industry Classification System of the federal
             72      Executive Office of the President, Office of Management and Budget, except for:
             73          [(I)] (A) a NAICS code within NAICS Sector 21, Mining;
             74          (B) a NAICS code within NAICS Industry Group 2212, Natural Gas Distribution;
             75          [(II)] (C) a NAICS code within NAICS Sector 31-33, Manufacturing;
             76          [(III)] (D) a NAICS code within NAICS Sector 48-49, Transportation and
             77      Warehousing;
             78          [(IV)] (E) a NAICS code within NAICS Sector 51, Information, except for NAICS
             79      Subsector 519, Other Information Services; or
             80          [(V)] (F) a NAICS code within NAICS Sector 52, Finance and Insurance.
             81          (l) "State" means any state of the United States, the District of Columbia, the
             82      Commonwealth of Puerto Rico, any territory or possession of the United States, and any
             83      foreign country or political subdivision thereof.
             84          (m) "Transportation revenue" means revenue an airline earns from:
             85          (i) transporting a passenger or cargo; or

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             86          (ii) from miscellaneous sales of merchandise as part of providing transportation
             87      services.
             88          (n) "Utah revenue ton miles" means, for an airline, the total revenue ton miles within
             89      the borders of this state:
             90          (i) during the airline's tax period; and
             91          (ii) from flight stages that originate or terminate in this state.
             92          (2) The following apply to Subsection (1)(k):
             93          (a) (i) Subject to the other provisions of this Subsection (2), a taxpayer shall for each
             94      taxable year determine whether the taxpayer is a sales factor weighted taxpayer.
             95          (ii) A taxpayer shall make the determination required by Subsection (2)(a)(i) before the
             96      due date for filing the taxpayer's return under this chapter for the taxable year, including
             97      extensions.
             98          (iii) For purposes of making the determination required by Subsection (2)(a)(i), total
             99      sales everywhere include only the total sales everywhere:
             100          (A) as determined in accordance with this part; and
             101          (B) made during the taxable year for which a taxpayer makes the determination
             102      required by Subsection (2)(a)(i).
             103          (b) A taxpayer that files a return as a unitary group for a taxable year is considered to
             104      be a unitary group for that taxable year.
             105          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             106      commission may define the term "economic activity" consistent with the use of the term
             107      "activity" in the 2007 North American Industry Classification System of the federal Executive
             108      Office of the President, Office of Management and Budget.
             109          Section 2. Retrospective operation.
             110          This bill has retrospective operation for a taxable year beginning on or after January 1,
             111      2014.

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