1     
TAX COMMISSION LEVY PROCESS

2     
2016 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Wayne A. Harper

5     
House Sponsor: Mike K. McKell

6     

7     LONG TITLE
8     General Description:
9          This bill enacts a State Tax Commission levy process using a depository institution data
10     match system to collect certain amounts owed by a delinquent taxpayer.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms and modifies definitions;
14          ▸     enacts the Depository Institution Data Match System and Levy Act;
15          ▸     provides procedures and requirements for the depository institution data match
16     system and levy process, including:
17               •     requiring the State Tax Commission to develop and operate the database in
18     coordination with depository institutions;
19               •     addressing agreements between the State Tax Commission and depository
20     institutions;
21               •     requiring a depository institution to provide the State Tax Commission with
22     certain information;
23               •     establishing a levy process for collecting a liability from a delinquent taxpayer
24     using the depository institution data match system;
25               •     addressing duties of a depository institution and the State Tax Commission in
26     relation to the depository institution data match system and levy process;
27               •     addressing payments by the State Tax Commission to a depository institution;
28               •     addressing an amount levied or released in error;
29               •     addressing the confidentiality and disclosure of information;

30               •     addressing limits on a depository institution's liability; and
31               •     granting rulemaking authority to the State Tax Commission; and
32          ▸     makes technical and conforming changes.
33     Money Appropriated in this Bill:
34          None
35     Other Special Clauses:
36          This bill provides a special effective date.
37     Utah Code Sections Affected:
38     AMENDS:
39          7-1-1004, as last amended by Laws of Utah 2009, Chapter 381
40          59-1-1402, as last amended by Laws of Utah 2012, Chapter 357
41     ENACTS:
42          59-1-1701, Utah Code Annotated 1953
43          59-1-1702, Utah Code Annotated 1953
44          59-1-1703, Utah Code Annotated 1953
45          59-1-1704, Utah Code Annotated 1953
46          59-1-1705, Utah Code Annotated 1953
47          59-1-1706, Utah Code Annotated 1953
48          59-1-1707, Utah Code Annotated 1953
49          59-1-1708, Utah Code Annotated 1953
50          59-1-1709, Utah Code Annotated 1953
51          59-1-1710, Utah Code Annotated 1953
52          59-1-1711, Utah Code Annotated 1953
53          59-1-1712, Utah Code Annotated 1953
54          59-1-1713, Utah Code Annotated 1953
55          59-1-1714, Utah Code Annotated 1953
56          59-1-1715, Utah Code Annotated 1953
57          59-1-1716, Utah Code Annotated 1953

58          59-1-1717, Utah Code Annotated 1953
59     

60     Be it enacted by the Legislature of the state of Utah:
61          Section 1. Section 7-1-1004 is amended to read:
62          7-1-1004. Reimbursement of financial institution for costs of obtaining
63     information.
64          (1) [A] Except as provided in Subsection (2), a financial institution is entitled to
65     reimbursement by a governmental entity seeking information, for costs reasonably and directly
66     incurred in searching for, reproducing, or transporting a record required to be produced if the
67     financial institution produces the record:
68          (a) pursuant to written permission by all account holders of the account referenced in
69     the record in accordance with:
70          (i) Subsection 7-1-1001(2)(a); or
71          (ii) Subsection 7-1-1006(2)(b)(iii);
72          (b) in compliance with an order obtained under this part; or
73          (c) in compliance with an order of a court or administrative body of competent
74     jurisdiction.
75          (2) A depository institution is not allowed reimbursement under this section by the
76     State Tax Commission for information the depository institution provides or action the
77     depository institution takes in accordance with Title 59, Chapter 1, Part 17, Depository
78     Institution Data Match System and Levy Act.
79          [(2)] (3) The commissioner shall by rule establish the rates and conditions under which
80     a governmental entity shall reimburse a financial institution.
81          Section 2. Section 59-1-1402 is amended to read:
82          59-1-1402. Definitions.
83          As used in this part:
84          (1) "Administrative cost" means a fee imposed to cover:
85          (a) the cost of filing;

86          (b) the cost of administering a garnishment; [or]
87          (c) the amount the commission pays to a depository institution in accordance with Title
88     59, Chapter 1, Part 17, Depository Institution Data Match System and Levy Act; or
89          [(c)] (d) a cost similar to [Subsection (1)(a) or (b)] Subsections (1)(a) through (c) as
90     determined by the commission by rule made in accordance with Title 63G, Chapter 3, Utah
91     Administrative Rulemaking Act.
92          (2) "Books and records" means the following made available in printed or electronic
93     format:
94          (a) an account;
95          (b) a book;
96          (c) an invoice;
97          (d) a memorandum;
98          (e) a paper;
99          (f) a record; or
100          (g) an item similar to Subsections (2)(a) through (f) as determined by the commission
101     by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
102          (3) "Deficiency" means:
103          (a) the amount by which a tax, fee, or charge exceeds the difference between:
104          (i) the sum of:
105          (A) the amount shown as the tax, fee, or charge by a person on the person's return; and
106          (B) any amount previously assessed, or collected without assessment, as a deficiency;
107     and
108          (ii) any amount previously abated, credited, refunded, or otherwise repaid with respect
109     to that tax, fee, or charge; or
110          (b) if a person does not show an amount as a tax, fee, or charge on the person's return,
111     or if a person does not make a return, the amount by which the tax, fee, or charge exceeds:
112          (i) the amount previously assessed, or collected without assessment, as a deficiency;
113     and

114          (ii) any amount previously abated, credited, refunded, or otherwise repaid with respect
115     to that tax, fee, or charge.
116          (4) "Garnishment" means any legal or equitable procedure through which one or more
117     of the following are required to be withheld for payment of an amount a person owes:
118          (a) an asset of the person held by another person; or
119          (b) the earnings of the person.
120          (5) "Liability" means the following that a person is required to remit to the
121     commission:
122          (a) a tax, fee, or charge;
123          (b) an addition to a tax, fee, or charge;
124          (c) an administrative cost;
125          (d) interest that accrues in accordance with Section 59-1-402; or
126          (e) a penalty that accrues in accordance with Section 59-1-401.
127          (6) (a) Subject to Subsection (6)(b), "mathematical error" is as defined in Section
128     6213(g)(2), Internal Revenue Code.
129          (b) The reference to Section 6213(g)(2), Internal Revenue Code, in Subsection (6)(a)
130     means:
131          (i) the reference to Section 6213(g)(2), Internal Revenue Code, in effect for the taxable
132     year; or
133          (ii) a corresponding or comparable provision of the Internal Revenue Code as
134     amended, redesignated, or reenacted.
135          (7) (a) Except as provided in Subsection (7)(b), "tax, fee, or charge" means:
136          (i) a tax, fee, or charge the commission administers under:
137          (A) this title;
138          (B) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
139          (C) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
140          (D) Section 19-6-410.5;
141          (E) Section 19-6-714;

142          (F) Section 19-6-805;
143          (G) Section 32B-2-304;
144          (H) Section 34A-2-202;
145          (I) Section 40-6-14;
146          (J) Section 69-2-5;
147          (K) Section 69-2-5.5; or
148          (L) Section 69-2-5.6; or
149          (ii) another amount that by statute is administered by the commission.
150          (b) "Tax, fee, or charge" does not include a tax, fee, or charge imposed under:
151          (i) Title 41, Chapter 1a, Motor Vehicle Act, except for Section 41-1a-301;
152          (ii) Title 41, Chapter 3, Motor Vehicle Business Regulation Act;
153          (iii) Chapter 2, Property Tax Act;
154          (iv) Chapter 3, Tax Equivalent Property Act;
155          (v) Chapter 4, Privilege Tax; or
156          (vi) Chapter 13, Part 5, Interstate Agreements.
157          (8) "Transferee" means:
158          (a) a devisee;
159          (b) a distributee;
160          (c) a donee;
161          (d) an heir;
162          (e) a legatee; or
163          (f) a person similar to Subsections (8)(a) through (e) as determined by the commission
164     by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
165          Section 3. Section 59-1-1701 is enacted to read:
166     
Part 17. Depository Institution Data Match System and Levy Act

167          59-1-1701. Title.
168          This part is known as the "Depository Institution Data Match System and Levy Act."
169          Section 4. Section 59-1-1702 is enacted to read:

170          59-1-1702. Definitions.
171          As used in this part:
172          (1) "Agreement" means an agreement described in Section 59-1-1704 between a
173     depository institution and the commission.
174          (2) "Delinquent taxpayer" means a person against whom the commission is considered
175     to have obtained a judgment for a liability under Section 59-1-1414.
176          (3) "Depository institution" is a depository institution described in Section 7-1-103 that
177     holds or receives deposits, savings, or share accounts.
178          (4) "Depository institution data match system" means the database that the commission
179     develops, maintains, and operates in accordance with Section 59-1-1703.
180          (5) "Identifying information" means:
181          (a) the name of the account holder;
182          (b) the social security number of the account holder; or
183          (c) other identifying information.
184          (6) "Liability" means the same as that term is defined in Section 59-1-1402.
185          (7) "Satisfy a liability" means to pay in full a liability that is the subject of a levy under
186     this part.
187          Section 5. Section 59-1-1703 is enacted to read:
188          59-1-1703. Depository institution data match system.
189          (1) The commission shall develop, maintain, and operate a database as provided in this
190     section.
191          (2) The database described in Subsection (1):
192          (a) shall use automated data exchanges;
193          (b) shall identify a delinquent taxpayer by identifying information;
194          (c) may be accessed only by the commission or a depository institution;
195          (d) shall be used to determine whether a delinquent taxpayer identified in the database
196     has the same identifying information as that of an account holder at a depository institution;
197     and

198          (e) shall be updated by the commission on at least a quarterly basis.
199          Section 6. Section 59-1-1704 is enacted to read:
200          59-1-1704. Election to enter into an agreement.
201          (1) A depository institution that does business in this state may elect to use the
202     depository institution data match system to respond to judicial process against a delinquent
203     taxpayer.
204          (2) A depository institution may not make an election under Subsection (1) unless the
205     commission approves the election.
206          (3) A depository institution that elects to use the depository institution data match
207     system shall enter into an agreement with the commission.
208          (4) An agreement under this section shall:
209          (a) address the operation of the depository institution data match system;
210          (b) require the depository institution to comply with this part;
211          (c) address reimbursement to the depository institution for complying with this part;
212     and
213          (d) provide for the security and confidentiality of data contained in the depository
214     institution data match system.
215          (5) An election under this section does not preclude the commission from requiring a
216     depository institution to respond to judicial process against a delinquent taxpayer:
217          (a) by means other than the depository institution data match system; and
218          (b) as provided by law.
219          Section 7. Section 59-1-1705 is enacted to read:
220          59-1-1705. Requirement to access depository institution data match system.
221          (1) A depository institution that enters into an agreement with the commission in
222     accordance with Section 59-1-1704 shall access the depository institution data match system on
223     or before the 15th day of each calendar quarter.
224          (2) A depository institution that accesses the depository institution data match system
225     shall determine whether a delinquent taxpayer identified in the depository institution data

226     match system has the same identifying information as that of an account holder at the
227     depository institution.
228          Section 8. Section 59-1-1706 is enacted to read:
229          59-1-1706. Requirement for a depository institution to provide information to the
230     commission.
231          A depository institution that determines under Section 59-1-1705 that a delinquent
232     taxpayer identified in the depository institution data match system has the same identifying
233     information as that of an account holder at the depository institution shall provide the
234     commission, within five days after the day on which the depository institution accesses the
235     depository institution data match system:
236          (1) the name of the account holder;
237          (2) the address of the account holder;
238          (3) the account number of the account holder;
239          (4) the account balance of the account holder on the day that the depository institution
240     provides the commission the information required by this section;
241          (5) the type of account of the account holder;
242          (6) the social security number of the account holder;
243          (7) other information that identifies the account holder; and
244          (8) the name of, and contact information for, other account holders that have access to
245     the account.
246          Section 9. Section 59-1-1707 is enacted to read:
247          59-1-1707. Commission requirement to provide notice of levy to depository
248     institution -- Duration of levy.
249          (1) The commission shall provide, within three business days after a depository
250     institution provides the commission information described in Section 59-1-1706, a notice of
251     levy to the depository institution by electronic means:
252          (a) stating that the commission levies an amount equal to the liability of a delinquent
253     taxpayer that is an account holder at the depository institution; and

254          (b) identifying the account subject to levy.
255          (2) A levy described in Subsection (1) is valid until the earlier of:
256          (a) the day on which the commission releases the levy;
257          (b) the day on which the delinquent taxpayer satisfies the liability; or
258          (c) the day on which the depository institution releases, in accordance with Section
259     59-1-1711, the amounts deposited into the account of the delinquent taxpayer.
260          (3) The commission shall provide notice to a depository institution by electronic
261     means:
262          (a) if the commission releases a levy, no later than one business day after the day on
263     which the commission releases the levy; or
264          (b) if a delinquent taxpayer satisfies the liability, no later than one business day after
265     the day on which the delinquent taxpayer satisfies the liability.
266          Section 10. Section 59-1-1708 is enacted to read:
267          59-1-1708. Depository institution requirement to secure amount subject to levy in
268     account holder's account.
269          (1) Subject to Subsection (2), before the later of two business days after the day on
270     which, or 48 hours after the time at which, a depository institution receives a notice of levy
271     described in Section 59-1-1707 from the commission, the depository institution shall secure the
272     amount subject to levy in a delinquent taxpayer's account by prohibiting:
273          (a) any person that has access to the delinquent taxpayer's account from accessing the
274     amount; or
275          (b) the transfer or other disposition of the amount.
276          (2) For purposes of Subsection (1), a depository institution shall secure an amount
277     subject to levy regardless of whether a person other than the delinquent taxpayer has access to
278     the account or is an account holder.
279          Section 11. Section 59-1-1709 is enacted to read:
280          59-1-1709. Commission to send notice to delinquent taxpayer.
281          (1) The commission shall, within three business days after the day on which the

282     commission provides a notice of levy described in Section 59-1-1707 to a depository
283     institution, notify a delinquent taxpayer that the commission has issued the notice of levy to the
284     depository institution.
285          (2) The notice described in Subsection (1) shall:
286          (a) state the amount subject to levy as stated in the notice of levy described in Section
287     59-1-1707;
288          (b) notify the delinquent taxpayer that the depository institution is required to secure
289     the amount subject to levy in accordance with Section 59-1-1708;
290          (c) identify each account subject to levy at the depository institution; and
291          (d) describe the actions a delinquent taxpayer may take to:
292          (i) satisfy the liability; or
293          (ii) resolve an issue as to whether the commission has the authority to receive from a
294     depository institution the amount subject to levy at the depository institution.
295          Section 12. Section 59-1-1710 is enacted to read:
296          59-1-1710. Commission to determine portion of an amount subject to levy --
297     Process for resolution of dispute -- Extension of certain time periods -- District court
298     action -- Rulemaking authority.
299          (1) In accordance with this section, the commission, in consultation with the depository
300     institution, shall determine the portion of the amount subject to a levy under this part.
301          (2) The time period for making the determination required by Subsection (1):
302          (a) begins on the day on which the commission provides a notice of levy described in
303     Section 59-1-1707 to a depository institution; and
304          (b) ends on the first business day after a 21-day period beginning on the day described
305     in Subsection (2)(a).
306          (3) The commission shall provide notice to a depository institution, no later than the
307     last day of the time period described in Subsection (2), of the portion of the amount subject to a
308     levy under this part.
309          (4) The portion of an amount subject to levy under this part that the commission may

310     receive from a depository institution may not exceed the lesser of:
311          (a) the amount of the liability that is subject to the levy;
312          (b) the amount the commission would have been able to receive had the commission
313     obtained a writ of garnishment; or
314          (c) the balance of the delinquent taxpayer's account that a depository institution has
315     secured or will secure in accordance with Section 59-1-1708 minus any amounts that the
316     depository institution holds as a security interest.
317          (5) As part of the determination required by Subsection (1), the commission shall allow
318     a delinquent taxpayer to communicate with and provide information to the commission.
319          (6) The commission shall order a conference between the commission and the
320     delinquent taxpayer in accordance with Section 63G-4-102 if:
321          (a) the commission finds that there is a dispute as to an issue related to the
322     determination required by Subsection (1); or
323          (b) a delinquent taxpayer requests the conference to address a dispute as to an issue
324     related to the determination required by Subsection (1).
325          (7) The time period beginning on the day on which the commission orders a conference
326     in accordance with Subsection (6) and ending on the day on which the conference adjourns
327     may not be included in calculating a time period:
328          (a) during which a levy is valid;
329          (b) during which a depository institution is required to secure an amount in accordance
330     with Section 59-1-1708;
331          (c) for making the determination required by Subsection (1); or
332          (d) for requiring a depository institution to release a portion of an amount to the
333     commission in accordance with Section 59-1-1711.
334          (8) If a conference described in Subsection (6) does not result in the resolution of the
335     issues related to the determination required by Subsection (1), a delinquent taxpayer may file
336     an action in district court:
337          (a) within 14 days after the day on which a conference described in Subsection (6)

338     adjourns; and
339          (b) in the district court located in the county of residence or principal place of business
340     of the delinquent taxpayer.
341          (9) (a) Subject to Subsection (9)(b), the time period beginning on the day on which a
342     delinquent taxpayer files an action in accordance with Subsection (8) and ending on the day on
343     which the action becomes final may not be included in calculating a time period:
344          (i) during which a levy is valid;
345          (ii) during which a depository institution is required to secure an amount in accordance
346     with Section 59-1-1708;
347          (iii) for making the determination required by Subsection (1); or
348          (iv) for requiring a depository institution to release a portion of an amount to the
349     commission in accordance with Section 59-1-1711.
350          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
351     commission may make rules for determining when an action under this section becomes final.
352          Section 13. Section 59-1-1711 is enacted to read:
353          59-1-1711. Depository institution to release portion of amount subject to levy.
354          (1) Subject to the other provisions of this section, a depository institution shall release
355     the portion of the amount subject to a levy under this part that the commission may receive in
356     accordance with Section 59-1-1710 from the depository institution.
357          (2) On the first business day after the day on which the commission provides the notice
358     described in Subsection 59-1-1710(3) to the depository institution, the depository institution
359     shall release the lesser of the following:
360          (a) the portion of the amount the commission may receive in accordance with Section
361     59-1-1710 from the depository institution; or
362          (b) the balance of the delinquent taxpayer's account on the first business day after the
363     day on which the commission provides the notice described in Subsection 59-1-1710(3) to the
364     depository institution minus:
365          (i) the $10 reimbursement to the depository institution described in Section 59-1-1713;

366     and
367          (ii) the fees that an account holder agreed to pay the depository institution to process a
368     writ of garnishment in a deposit agreement.
369          Section 14. Section 59-1-1712 is enacted to read:
370          59-1-1712. Limitations on commission authority to levy.
371          (1) During the time period that a levy the commission imposes on the account of a
372     delinquent taxpayer is valid, the commission may not impose another levy on that account.
373          (2) The commission may impose a levy in accordance with the procedures and
374     requirements of this part on an account subject to a previous levy under this part if that
375     previous levy is no longer valid.
376          Section 15. Section 59-1-1713 is enacted to read:
377          59-1-1713. Commission payment to depository institution to secure amount
378     subject to levy.
379          In addition to any compensation that the commission pays to the depository institution
380     in accordance with an agreement, the commission shall pay the depository institution $10 if the
381     depository institution secures an amount subject to levy under Section 59-1-1708.
382          Section 16. Section 59-1-1714 is enacted to read:
383          59-1-1714. Amount levied or released in error -- Rulemaking authority.
384          (1) If the commission levies an amount in error, the commission shall:
385          (a) pay the cost of a depository institution charge incurred as a result of the levy; or
386          (b) if a person other than the commission pays the depository institution charge,
387     reimburse the person for the depository institution charge incurred as a result of the levy.
388          (2) If a depository institution releases an amount in an account holder's account to the
389     commission in error, the commission shall return the amount to the depository institution by
390     electronic means for deposit into the account holder's account.
391          (3) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
392     commission may make rules prescribing:
393          (a) what constitutes levying or releasing an amount in error; and

394          (b) the depository institution charges the commission shall pay.
395          Section 17. Section 59-1-1715 is enacted to read:
396          59-1-1715. Limits on a depository institution's authority to disclose or provide
397     notice -- Depository institution authority to provide information.
398          (1) Before a depository institution secures an amount subject to levy in a delinquent
399     taxpayer's account in accordance with Section 59-1-1708 and except as provided in Subsection
400     (2), a depository institution may not disclose or provide notice to an account holder at the
401     depository institution that the depository institution:
402          (a) provided information to the commission or the commission provided information to
403     the depository institution in relation to the account holder or the account holder's account in
404     accordance with this part; or
405          (b) took an action in relation to the account holder or the account holder's account in
406     accordance with this part.
407          (2) A depository institution may provide information to an account holder describing
408     the depository institution's duties under this part if the information the depository institution
409     provides does not identify that the depository institution:
410          (a) provides or has provided information to the commission in relation to a particular
411     account holder or account holder's account in accordance with this part; or
412          (b) takes or has taken an action in relation to a particular account holder or account
413     holder's account in accordance with this part.
414          Section 18. Section 59-1-1716 is enacted to read:
415          59-1-1716. Limits on depository institution liability.
416          A depository institution is not liable to a person for the following if the depository
417     institution acts in good faith:
418          (1) providing or failing to provide information; or
419          (2) taking or failing to take an action.
420          Section 19. Section 59-1-1717 is enacted to read:
421          59-1-1717. Confidentiality of information.

422          Except for the exchange of information between the commission and a depository
423     institution that is necessary to meet the requirements of this part, information the commission
424     obtains from a depository institution is subject to Section 59-1-403 as if the information had
425     been gained from a return filed with the commission.
426          Section 20. Effective date.
427          This bill takes effect on January 1, 2017.