1     
INCOME TAX CODE AMENDMENTS

2     
2018 SECOND SPECIAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Steve Eliason

5     
Senate Sponsor: Howard A. Stephenson

6     

7     LONG TITLE
8     General Description:
9          This bill amends income tax provisions.
10     Highlighted Provisions:
11          This bill:
12          ▸     prohibits a taxpayer from carrying a Utah net loss back to an earlier taxable year;
13          ▸     limits the amount of Utah net loss that a taxpayer may carry forward;
14          ▸     removes the 15-year time limit for a taxpayer to carry forward a Utah net loss;
15          ▸     modifies the calculation of the taxpayer tax credit to create a Utah personal
16     exemption; and
17          ▸     makes technical changes.
18     Money Appropriated in this Bill:
19          None
20     Other Special Clauses:
21          This bill provides a special effective date.
22          This bill provides retrospective operation.
23     Utah Code Sections Affected:
24     AMENDS:
25          59-7-101, as last amended by Laws of Utah 2011, Chapter 69
26          59-7-110 (Effective 01/01/19), as last amended by Laws of Utah 2018, Chapter 456
27          59-7-110 (Superseded 01/01/19), as last amended by Laws of Utah 2016, Chapters 311
28     and 323
29          59-7-522, as last amended by Laws of Utah 2015, First Special Session, Chapter 3
30          59-10-1018, as last amended by Laws of Utah 2018, Chapters 415 and 456
31     

32     Be it enacted by the Legislature of the state of Utah:
33          Section 1. Section 59-7-101 is amended to read:
34          59-7-101. Definitions.
35          As used in this chapter:
36          (1) "Adjusted income" means unadjusted income as modified by Sections 59-7-105
37     and 59-7-106.
38          (2) (a) "Affiliated group" means one or more chains of corporations that are connected
39     through stock ownership with a common parent corporation that meet the following
40     requirements:
41          (i) at least 80% of the stock of each of the corporations in the group, excluding the
42     common parent corporation, is owned by one or more of the other corporations in the group;
43     and
44          (ii) the common parent directly owns at least 80% of the stock of at least one of the
45     corporations in the group.
46          (b) "Affiliated group" does not include corporations that are qualified to do business
47     but are not otherwise doing business in this state.
48          (c) For purposes of this Subsection (2), "stock" does not include nonvoting stock which
49     is limited and preferred as to dividends.
50          (3) "Apportionable income" means adjusted income less nonbusiness income net of
51     related expenses, to the extent included in adjusted income.
52          (4) "Apportioned income" means apportionable income multiplied by the
53     apportionment fraction as determined in Section 59-7-311.
54          (5) "Business income" [is as] means the same as that term is defined in Section
55     59-7-302.
56          (6) (a) "Captive real estate investment trust" means a real estate investment trust if:
57          (i) the shares or beneficial interests of the real estate investment trust are not regularly
58     traded on an established securities market; and
59          (ii) more than 50% of the voting power or value of the shares or beneficial interests of
60     the real estate investment trust are directly, indirectly, or constructively:
61          (A) owned by a controlling entity of the real estate investment trust; or
62          (B) controlled by a controlling entity of the real estate investment trust.
63          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
64     commission may make rules defining "established securities market."
65          (7) (a) "Common ownership" means the direct or indirect control or ownership of more
66     than 50% of the outstanding voting stock of:
67          (i) a parent-subsidiary controlled group as defined in Section 1563, Internal Revenue
68     Code, except that 50% shall be substituted for 80%;
69          (ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue
70     Code; or
71          (iii) three or more corporations each of which is a member of a group of corporations
72     described in Subsection (2)(a)(i) or (ii), and one of which is:
73          (A) a common parent corporation included in a group of corporations described in
74     Subsection (2)(a)(i); and
75          (B) included in a group of corporations described in Subsection (2)(a)(ii).
76          (b) Ownership of outstanding voting stock shall be determined by Section 1563,
77     Internal Revenue Code.
78          (8) (a) "Controlling entity of a captive real estate investment trust" means an entity
79     that:
80          (i) is treated as an association taxable as a corporation under the Internal Revenue
81     Code;
82          (ii) is not exempt from federal income taxation under Section 501(a), Internal Revenue
83     Code; and
84          (iii) directly, indirectly, or constructively holds more than 50% of:
85          (A) the voting power of a captive real estate investment trust; or
86          (B) the value of the shares or beneficial interests of a captive real estate investment
87     trust.
88          (b) "Controlling entity of a captive real estate investment trust" does not include:
89          (i) a real estate investment trust, except for a captive real estate investment trust;
90          (ii) a qualified real estate investment subsidiary described in Section 856(i), Internal
91     Revenue Code, except for a qualified real estate investment trust subsidiary of a captive real
92     estate investment trust; or
93          (iii) a foreign real estate investment trust.
94          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
95     commission may make rules defining "established securities market."
96          (9) "Corporate return" or "return" includes a combined report.
97          (10) "Corporation" includes:
98          (a) entities defined as corporations under Sections 7701(a) and 7704, Internal Revenue
99     Code; and
100          (b) other organizations that are taxed as corporations for federal income tax purposes
101     under the Internal Revenue Code.
102          (11) "Dividend" means any distribution, including money or other type of property,
103     made by a corporation to its shareholders out of its earnings or profits accumulated after
104     December 31, 1930.
105          (12) (a) "Doing business" includes any transaction in the course of its business by a
106     domestic corporation, or by a foreign corporation qualified to do or doing intrastate business in
107     this state.
108          (b) Except as provided in Subsection 59-7-102(3), "doing business" includes:
109          (i) the right to do business through incorporation or qualification;
110          (ii) the owning, renting, or leasing of real or personal property within this state; and
111          (iii) the participation in joint ventures, working and operating agreements, the
112     performance of which takes place in this state.
113          (13) "Domestic corporation" means a corporation that is incorporated or organized
114     under the laws of this state.
115          (14) (a) "Farmers' cooperative" means an association, corporation, or other
116     organization that is:
117          (i) (A) an association, corporation, or other organization of[: (I)] farmers[;] or [(II)]
118     fruit growers; or
119          (B) an association, corporation, or other organization that is similar to an association,
120     corporation, or organization described in Subsection (14)(a)(i)(A); and
121          (ii) organized and operated on a cooperative basis to:
122          (A) (I) market the products of members of the cooperative or the products of other
123     producers; and
124          (II) return to the members of the cooperative or other producers the proceeds of sales
125     less necessary marketing expenses on the basis of the quantity of the products of a member or
126     producer or the value of the products of a member or producer; or
127          (B) (I) purchase supplies and equipment for the use of members of the cooperative or
128     other persons; and
129          (II) turn over the supplies and equipment described in Subsection (14)(a)(ii)(B)(I) at
130     actual costs plus necessary expenses to the members of the cooperative or other persons.
131          (b) (i) Subject to Subsection (14)(b)(ii), for purposes of this Subsection (14), the
132     commission by rule, made in accordance with Title 63G, Chapter 3, Utah Administrative
133     Rulemaking Act, shall define:
134          (A) the terms[: (I)] "member"[;] and [(II)] "producer"; and
135          (B) what constitutes an association, corporation, or other organization that is similar to
136     an association, corporation, or organization described in Subsection (14)(a)(i)(A).
137          (ii) The rules made under this Subsection (14)(b) shall be consistent with the filing
138     requirements under federal law for a farmers' cooperative.
139          (15) "Foreign corporation" means a corporation that is not incorporated or organized
140     under the laws of this state.
141          (16) (a) "Foreign operating company" means a corporation [if] that:
142          (i) [the corporation] is incorporated in the United States;
143          (ii) conducts at least 80% of the corporation's business activity, as determined under
144     Section 59-7-401, [is conducted] outside the United States; and
145          (iii) as calculated in accordance with Part 3, Allocation and Apportionment of Income -
146     Utah UDITPA Provisions, [the corporation] has:
147          (A) at least $1,000,000 of payroll located outside the United States; and
148          (B) at least $2,000,000 of property located outside the United States.
149          (b) "Foreign operating company" does not include a corporation that qualifies for the
150     Puerto Rico and possession tax credit as provided in Section 936, Internal Revenue Code.
151          (17) (a) "Foreign real estate investment trust" means:
152          (i) a business entity organized outside the laws of the United States if:
153          (A) at least 75% of the business entity's total asset value at the close of the business
154     entity's taxable year is represented by:
155          (I) real estate assets, as defined in Section 856(c)(5)(B), Internal Revenue Code;
156          (II) cash or cash equivalents; or
157          (III) one or more securities issued or guaranteed by the United States;
158          (B) the business entity is:
159          (I) not subject to income taxation:
160          (Aa) on amounts distributed to the business entity's beneficial owners; and
161          (Bb) in the jurisdiction in which the business entity is organized; or
162          (II) exempt from income taxation on an entity level in the jurisdiction in which the
163     business entity is organized;
164          (C) the business entity distributes at least 85% of the business entity's taxable income,
165     as computed in the jurisdiction in which the business entity is organized, to the holders of the
166     business entity's:
167          (I) shares or beneficial interests; and
168          (II) on an annual basis;
169          (D) (I) not more than 10% of the following is held directly, indirectly, or constructively
170     by a single person:
171          (Aa) the voting power of the business entity; or
172          (Bb) the value of the shares or beneficial interests of the business entity; or
173          (II) the shares of the business entity are regularly traded on an established securities
174     market; and
175          (E) the business entity is organized in a country that has a tax treaty with the United
176     States; or
177          (ii) a listed Australian property trust.
178          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
179     commission may make rules defining:
180          (i) "cash or cash equivalents";
181          (ii) "established securities market"; or
182          (iii) "listed Australian property trust."
183          (18) "Income" includes losses.
184          (19) "Internal Revenue Code" means Title 26 of the United States Code as effective
185     during the year in which Utah taxable income is determined.
186          (20) "Nonbusiness income" [is as] means the same as that term is defined in Section
187     59-7-302.
188          (21) "Real estate investment trust" [is as] means the same as that term is defined in
189     Section 856, Internal Revenue Code.
190          (22) "Related expenses" means:
191          (a) expenses directly attributable to nonbusiness income; and
192          (b) the portion of interest or other expense indirectly attributable to both nonbusiness
193     and business income [which] that bears the same ratio to the aggregate amount of such interest
194     or other expense, determined without regard to this Subsection (22), as the average amount of
195     the asset producing the nonbusiness income bears to the average amount of all assets of the
196     taxpayer within the taxable year.
197          [(24)] (23) "S corporation" means an S corporation as defined in Section 1361, Internal
198     Revenue Code.
199          [(23)] (24) "Safe harbor lease" means a lease that qualified as a safe harbor lease under
200     Section 168, Internal Revenue Code.
201          (25) "State of the United States" includes any of the 50 states or the District of
202     Columbia.
203          (26) (a) "Taxable year" means the calendar year or the fiscal year ending during such
204     calendar year upon the basis of which the adjusted income is computed.
205          (b) In the case of a return made for a fractional part of a year under this chapter or
206     under rules prescribed by the commission, "taxable year" includes the period for which such
207     return is made.
208          (27) "Taxpayer" means any corporation subject to the tax imposed by this chapter.
209          (28) "Threshold level of business activity" means business activity in the United States
210     equal to or greater than 20% of the corporation's total business activity as determined under
211     Section 59-7-401.
212          (29) "Unadjusted income" means federal taxable income as determined on a separate
213     return basis before intercompany eliminations as determined by the Internal Revenue Code,
214     before the net operating loss deduction and special deductions for dividends received.
215          (30) (a) "Unitary group" means a group of corporations that:
216          (i) are related through common ownership; and
217          (ii) by a preponderance of the evidence as determined by a court of competent
218     jurisdiction or the commission, are economically interdependent with one another as
219     demonstrated by the following factors:
220          (A) centralized management;
221          (B) functional integration; and
222          (C) economies of scale.
223          (b) "Unitary group" includes a captive real estate investment trust.
224          (c) "Unitary group" does not include an S corporation.
225          (31) "United States" includes the 50 states and the District of Columbia.
226          (32) "Utah net loss" means the current year Utah taxable income before Utah net loss
227     deduction, if determined to be less than zero.
228          (33) "Utah net loss deduction" means the amount of Utah net losses from other taxable
229     years that [may be carried back or carried] a taxpayer may carry forward to the current taxable
230     year in accordance with Section 59-7-110.
231          (34) (a) "Utah taxable income" means Utah taxable income before net loss deduction
232     less Utah net loss deduction.
233          (b) "Utah taxable income" includes income from tangible or intangible property located
234     or having situs in this state, regardless of whether carried on in intrastate, interstate, or foreign
235     commerce.
236          (35) "Utah taxable income before net loss deduction" means apportioned income plus
237     nonbusiness income allocable to Utah net of related expenses.
238          (36) (a) "Water's edge combined report" means a report combining the income and
239     activities of:
240          (i) all members of a unitary group that are:
241          (A) corporations organized or incorporated in the United States, including those
242     corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section
243     936, Internal Revenue Code, in accordance with Subsection (36)(b); and
244          (B) corporations organized or incorporated outside of the United States meeting the
245     threshold level of business activity; and
246          (ii) an affiliated group electing to file a water's edge combined report under Subsection
247     59-7-402(2).
248          (b) There is a rebuttable presumption that a corporation which qualifies for the Puerto
249     Rico and possession tax credit provided in Section 936, Internal Revenue Code, is part of a
250     unitary group.
251          (37) "Worldwide combined report" means the combination of the income and activities
252     of all members of a unitary group irrespective of the country in which the corporations are
253     incorporated or conduct business activity.
254          Section 2. Section 59-7-110 (Superseded 01/01/19) is amended to read:
255          59-7-110 (Superseded 01/01/19). Utah net loss -- Carryforward -- Deduction.
256          (1) [The amount of Utah net loss that shall be carried back or] A taxpayer shall
257     determine the amount of Utah net loss that the taxpayer may carry forward to offset income of
258     another taxable year [is determined] as provided in this section.
259          [(2) (a) Subject to the other provisions of this section, a Utah net loss from a taxable
260     year beginning before January 1, 1994, shall be carried back three taxable years preceding the
261     taxable year of the loss and any remaining loss shall be carried forward five taxable years
262     following the taxable year of the loss.]
263          [(b) (i) Subject to the other provisions of this section, a Utah net loss from a taxable
264     year beginning on or after January 1, 1994, may be carried back three taxable years preceding
265     the taxable year of the loss and carried forward 15 taxable years following the taxable year of
266     the loss.]
267          [(ii) If an election is made to forego the federal net operating loss carryback, a Utah net
268     loss is not eligible to be carried back unless an election is made for state purposes.]
269          (2) Subject to the other provisions of this section, a taxpayer:
270          (a) may carry forward a Utah net loss from a taxable year to a future taxable year; and
271          (b) may not carry back a Utah net loss from a taxable year.
272          (3) A taxpayer that carries forward a Utah net loss shall carry forward the Utah net loss
273     [shall be carried] to the earliest eligible year for which the Utah taxable income before net loss
274     deduction, minus Utah net losses from previous years [that were applied or required to be
275     applied] that a taxpayer applied or was required to apply to offset income, is not less than zero.
276          (4) (a) [Except as provided in] Subject to Subsection (4)(b), the amount of Utah net
277     loss that [shall be carried] a taxpayer may carry to the year identified in Subsection (3) is the
278     lesser of:
279          (i) the remaining Utah net loss after deduction of any amounts of the Utah net loss that
280     [were] a taxpayer carried to previous years; or
281          (ii) the remaining Utah taxable income before net loss deduction of the year identified
282     in Subsection (3) after deduction of Utah net losses from previous years [that were carried or
283     required to be carried] that a taxpayer carried or was required to carry to the year identified in
284     Subsection (3).
285          [(b) (i) The amount of Utah net loss carried back from a taxable year may not exceed
286     $1,000,000 in Utah taxable income for each return filed under this chapter in a taxable year.]
287          [(ii) A Utah net loss in excess of $1,000,000 may be carried forward.]
288          (b) (i) The amount of Utah net loss that a taxpayer may carry forward to a taxable year
289     may not exceed 80% of Utah taxable income computed without regard to the deduction
290     allowable under this section.
291          [(iii)] (ii) A taxpayer may carry a remaining Utah net loss [shall be available to be
292     carried] to one or more taxable years in accordance with this section.
293          (5) (a) (i) Subject to Subsection (5)(a)(ii), a corporation acquiring the assets or stock of
294     another corporation may not deduct any net loss incurred by the acquired corporation prior to
295     the date of acquisition.
296          (ii) Subsection (5)(a)(i) does not apply if the only change in the corporation is that of
297     the state of incorporation.
298          (b) An acquired corporation may deduct the acquired corporation's net losses incurred
299     before the date of acquisition against the acquired corporation's separate income as calculated
300     under Subsections (6) and (7) if the acquired corporation has continued to carry on a trade or
301     business substantially the same as that conducted before the acquisition.
302          (6) For purposes of Subsection (5)(b), the amount of net loss an acquired corporation
303     that is acquired by a unitary group may deduct is calculated by:
304          (a) subject to Subsection (7):
305          (i) except as provided in Subsection (6)(a)(ii), calculating the sum of:
306          (A) an amount determined by dividing the average value of the acquired corporation's
307     real and tangible personal property owned or rented and used in this state during the taxable
308     year by the average value of all of the unitary group's real and tangible personal property owned
309     or rented and used during the taxable year;
310          (B) an amount determined by dividing the total amount paid in this state during the
311     taxable year by the acquired corporation for compensation by the total compensation paid
312     everywhere by the unitary group during the taxable year; and
313          (C) an amount determined by:
314          (I) dividing the total sales of the acquired corporation in this state during the taxable
315     year by the total sales of the unitary group everywhere during the taxable year; and
316          (II) if the unitary group elects to calculate the fraction for apportioning business
317     income to this state using the method described in Subsection 59-7-311(2)(b), multiplying the
318     amount calculated under Subsection (6)(a)(i)(C)(I) by two; or
319          (ii) if the unitary group is required or elects to calculate the fraction for apportioning
320     business income to this state using the method described in Subsection 59-7-311(3), calculating
321     an amount determined by dividing the total sales of the acquired corporation in this state during
322     the taxable year by the total sales of the unitary group everywhere during the taxable year;
323          (b) dividing the amount calculated under Subsection (6)(a) by the same denominator of
324     the fraction the unitary group uses to apportion business income to this state:
325          (i) for that taxable year; and
326          (ii) in accordance with Section 59-7-311;
327          (c) multiplying the amount calculated under Subsection (6)(b) by the business income
328     of the unitary group for the taxable year that is subject to apportionment under Section
329     59-7-311; and
330          (d) calculating the sum of:
331          (i) the amount calculated under Subsection (6)(c); and
332          (ii) the following amounts allocable to the acquired corporation for the taxable year:
333          (A) nonbusiness income allocable to this state; or
334          (B) nonbusiness loss allocable to this state.
335          (7) The amounts calculated under Subsection (6)(a) shall be derived in the same
336     manner as those amounts are derived for purposes of apportioning the unitary group's business
337     income before deducting the net loss, including a modification made in accordance with
338     Section 59-7-320.
339          Section 3. Section 59-7-110 (Effective 01/01/19) is amended to read:
340          59-7-110 (Effective 01/01/19). Utah net loss -- Carryforward -- Deduction.
341          (1) A taxpayer shall determine the amount of Utah net loss that the taxpayer may carry
342     [back or] forward to offset income of another taxable year as provided in this section.
343          (2) [(a)] Subject to the other provisions of this section, a taxpayer [may]:
344          [(i) carry back a Utah net loss from a taxable year for three taxable years preceding the
345     taxable year of the loss; and]
346          [(ii)] (a) may carry forward a Utah net loss from a taxable year [for 15 taxable years
347     following the taxable year of the loss.] to a future taxable year; and
348          [(b) If a taxpayer elects to forego the federal net operating loss carryback, the taxpayer
349     may not carry back a Utah net loss unless the taxpayer makes an election for state purposes.]
350          (b) may not carry back a Utah net loss from a taxable year.
351          (3) A taxpayer that carries forward a Utah net loss shall carry forward the Utah net loss
352     to the earliest eligible year for which the Utah taxable income before net loss deduction, minus
353     Utah net losses from previous years that a taxpayer applied or was required to apply to offset
354     income, is not less than zero.
355          (4) (a) [Except as provided in] Subject to Subsection (4)(b), the amount of Utah net
356     loss that a taxpayer may carry to the year identified in Subsection (3) is the lesser of:
357          (i) the remaining Utah net loss after deduction of any amounts of the Utah net loss that
358     a taxpayer carried to previous years; or
359          (ii) the remaining Utah taxable income before net loss deduction of the year identified
360     in Subsection (3) after deduction of Utah net losses from previous years that a taxpayer carried
361     or was required to carry to the year identified in Subsection (3).
362          [(b) (i) The amount of Utah net loss that a taxpayer carries back from a taxable year
363     may not exceed $1,000,000 in Utah taxable income for each return filed under this chapter in a
364     taxable year.]
365          [(ii) A taxpayer may carry forward a Utah net loss in excess of $1,000,000.]
366          (b) (i) The amount of Utah net loss that a taxpayer may carry forward to a taxable year
367     may not exceed 80% of Utah taxable income computed without regard to the deduction
368     allowable under this section.
369          [(iii)] (ii) A taxpayer may carry a remaining Utah net loss to one or more taxable years
370     in accordance with this section.
371          (5) (a) (i) Subject to Subsection (5)(a)(ii), a corporation acquiring the assets or stock of
372     another corporation may not deduct any net loss incurred by the acquired corporation prior to
373     the date of acquisition.
374          (ii) Subsection (5)(a)(i) does not apply if the only change in the corporation is that of
375     the state of incorporation.
376          (b) An acquired corporation may deduct the acquired corporation's net losses incurred
377     before the date of acquisition against the acquired corporation's separate income as calculated
378     under Subsections (6) and (7) if the acquired corporation has continued to carry on a trade or
379     business substantially the same as that conducted before the acquisition.
380          (6) For purposes of Subsection (5)(b), the amount of net loss an acquired corporation
381     that is acquired by a unitary group may deduct is calculated by:
382          (a) subject to Subsection (7):
383          (i) except as provided in Subsection (6)(a)(ii), calculating the sum of:
384          (A) an amount determined by dividing the average value of the acquired corporation's
385     real and tangible personal property owned or rented and used in this state during the taxable
386     year by the average value of all of the unitary group's real and tangible personal property owned
387     or rented and used during the taxable year;
388          (B) an amount determined by dividing the total amount paid in this state during the
389     taxable year by the acquired corporation for compensation by the total compensation paid
390     everywhere by the unitary group during the taxable year; and
391          (C) an amount determined by:
392          (I) dividing the total sales of the acquired corporation in this state during the taxable
393     year by the total sales of the unitary group everywhere during the taxable year; and
394          (II) if the unitary group elects or is required to calculate the fraction for apportioning
395     business income to this state using the method described in Subsection 59-7-311(4) in taxable
396     year 2019 or taxable year 2020, multiplying the amount calculated under Subsection
397     (6)(a)(i)(C)(I) by , for the taxable year 2019, four, or, for the taxable year 2020, eight ; or
398          (ii) if the unitary group is required or elects to calculate the fraction for apportioning
399     business income to this state using the method described in Subsection 59-7-311(2), calculating
400     an amount determined by dividing the total sales of the acquired corporation in this state during
401     the taxable year by the total sales of the unitary group everywhere during the taxable year;
402          (b) dividing the amount calculated under Subsection (6)(a) by the same denominator of
403     the fraction the unitary group uses to apportion business income to this state for that taxable
404     year in accordance with Section 59-7-311;
405          (c) multiplying the amount calculated under Subsection (6)(b) by the business income
406     of the unitary group for the taxable year that is subject to apportionment under Section
407     59-7-311; and
408          (d) calculating the sum of:
409          (i) the amount calculated under Subsection (6)(c); and
410          (ii) the following amounts allocable to the acquired corporation for the taxable year:
411          (A) nonbusiness income allocable to this state; or
412          (B) nonbusiness loss allocable to this state.
413          (7) The amounts calculated under Subsection (6)(a) shall be derived in the same
414     manner as those amounts are derived for purposes of apportioning the unitary group's business
415     income before deducting the net loss, including a modification made in accordance with
416     Section 59-7-320.
417          Section 4. Section 59-7-522 is amended to read:
418          59-7-522. Overpayments.
419          (1) As used in this section, "overpayment" means the same as that term is defined in
420     Section 59-1-1409.
421          (2) (a) Subject to Subsection (2)(b), a claim for credit or refund of an overpayment that
422     is attributable to a Utah net loss [carry back or] carry forward shall be filed within three years
423     from the due date of the return for the taxable year of the Utah net loss.
424          (b) The three-year period described in Subsection (2)(a) shall be extended by any
425     extension of time provided in statute for filing the return described in Subsection (2)(a).
426          (3) The commission shall make a credit against or refund of any overpayment of a tax
427     under this chapter for a taxable year if, in accordance with Section 59-7-519:
428          (a) (i) a corporation agrees with the commissioner of internal revenue for an extension,
429     or a renewal of an extension, of the period for proposing and assessing a deficiency in federal
430     income tax for that taxable year; or
431          (ii) there is a change in or correction of federal taxable income for that taxable year;
432     and
433          (b) the corporation files a claim for the credit or refund before the expiration of the
434     time period within which the commission may assess a deficiency.
435          (4) The commission shall make a credit or refund within a 30-day period after the day
436     on which a court's decision to require the commission to credit or refund the amount of an
437     overpayment to a taxpayer is final.
438          Section 5. Section 59-10-1018 is amended to read:
439          59-10-1018. Definitions -- Nonrefundable taxpayer tax credits.
440          (1) As used in this section:
441          [(a) "Dependent adult with a disability" means an individual who:]
442          [(i) a claimant claims as a dependent under Section 151, Internal Revenue Code, on the
443     claimant's federal individual income tax return for the taxable year;]
444          [(ii) is not the claimant or the claimant's spouse; and]
445          [(iii) is:]
446          [(A) 18 years of age or older;]
447          [(B) eligible for services under Title 62A, Chapter 5, Services for People with
448     Disabilities; and]
449          [(C) not enrolled in an education program for students with disabilities that is
450     authorized under Section 53E-7-202.]
451          [(b) "Dependent child with a disability" means an individual 21 years of age or younger
452     who:]
453          [(i) a claimant claims as a dependent under Section 151, Internal Revenue Code, on the
454     claimant's federal individual income tax return for the taxable year;]
455          [(ii) is not the claimant or the claimant's spouse; and]
456          [(iii) is:]
457          [(A) an eligible student with a disability; or]
458          [(B) identified under guidelines of the Department of Health as qualified for Early
459     Intervention or Infant Development Services.]
460          [(c) "Eligible student with a disability" means an individual who is:]
461          [(i) diagnosed by a school district representative under rules the State Board of
462     Education adopts in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
463     Act, as having a disability classified as autism, deafness, preschool developmental delay, dual
464     sensory impairment, hearing impairment, intellectual disability, multidisability, orthopedic
465     impairment, other health impairment, traumatic brain injury, or visual impairment;]
466          [(ii) not receiving residential services from the Division of Services for People with
467     Disabilities created under Section 62A-5-102 or a school established under Title 53E, Chapter
468     8, Utah Schools for the Deaf and the Blind; and]
469          [(iii) (A) enrolled in an education program for students with disabilities that is
470     authorized under Section 53E-7-202; or]
471          [(B) a recipient of a scholarship awarded under Title 53F, Chapter 4, Part 3, Carson
472     Smith Scholarship Program.]
473          [(d)] (a) "Head of household filing status" means a head of household, as defined in
474     Section 2(b), Internal Revenue Code, who files a single federal individual income tax return for
475     the taxable year.
476          [(e)] (b) "Joint filing status" means:
477          (i) spouses who file a single return jointly under this chapter for a taxable year; or
478          (ii) a surviving spouse, as defined in Section 2(a), Internal Revenue Code, who files a
479     single federal individual income tax return for the taxable year.
480          (c) "Qualifying dependent" means an individual with respect to whom the claimant is
481     allowed to claim a tax credit under Section 24, Internal Revenue Code, on the claimant's
482     federal individual income tax return for the taxable year.
483          [(f)] (d) "Single filing status" means:
484          (i) a single individual who files a single federal individual income tax return for the
485     taxable year; or
486          (ii) a married individual who:
487          (A) does not file a single federal individual income tax return jointly with that married
488     individual's spouse for the taxable year; and
489          (B) files a single federal individual income tax return for the taxable year.
490          [(g)] (e) "State or local income tax" means the lesser of:
491          (i) the amount of state or local income tax that the claimant:
492          (A) pays for the taxable year; and
493          (B) reports on the claimant's federal individual income tax return for the taxable year,
494     regardless of whether the claimant is allowed an itemized deduction on the claimant's federal
495     individual income tax return for the taxable year for the full amount of state or local income tax
496     paid; and
497          (ii) $10,000.
498          [(h)] (f) (i) "Utah itemized deduction" means the amount the claimant deducts as
499     allowed as an itemized deduction on the claimant's federal individual income tax return for that
500     taxable year minus any amount of state or local income tax for the taxable year.
501          (ii) "Utah itemized deduction" does not include any amount of qualified business
502     income that the claimant subtracts as allowed by Section 199A, Internal Revenue Code, on the
503     claimant's federal income tax return for that taxable year.
504          (g) "Utah personal exemption" means, subject to Subsection (6), $565 multiplied by
505     the number of the claimant's qualifying dependents.
506          (2) Except as provided in Section 59-10-1002.2, and subject to Subsections (3) through
507     (5), a claimant may claim a nonrefundable tax credit against taxes otherwise due under this part
508     equal to the sum of:
509          (a) (i) for a claimant that deducts the standard deduction on the claimant's federal
510     individual income tax return for the taxable year, 6% of the amount the claimant deducts as
511     allowed as the standard deduction on the claimant's federal individual income tax return for
512     that taxable year; or
513          (ii) for a claimant that itemizes deductions on the claimant's federal individual income
514     tax return for the taxable year, 6% of the amount of the claimant's Utah itemized deduction;
515     and
516          (b) [the product of:] 6% of the claimant's Utah personal exemption.
517          [(i) 75% of the total amount the claimant deducts as allowed as a personal exemption
518     deduction on the claimant's federal individual income tax return for that taxable year, plus an
519     additional 75% of the amount the claimant deducts as allowed as a personal exemption
520     deduction on the claimant's federal individual income tax return for that taxable year with
521     respect to each dependent adult with a disability or dependent child with a disability; and]
522          [(ii) 6%.]
523          (3) A claimant may not carry forward or carry back a tax credit under this section.
524          (4) The tax credit allowed by Subsection (2) shall be reduced by $.013 for each dollar
525     by which a claimant's state taxable income exceeds:
526          (a) for a claimant who has a single filing status, $12,000;
527          (b) for a claimant who has a head of household filing status, $18,000; or
528          (c) for a claimant who has a joint filing status, $24,000.
529          (5) (a) For a taxable year beginning on or after January 1, 2009, the commission shall
530     increase or decrease annually the following dollar amounts by a percentage equal to the
531     percentage difference between the consumer price index for the preceding calendar year and
532     the consumer price index for calendar year 2007:
533          (i) the dollar amount listed in Subsection (4)(a); and
534          (ii) the dollar amount listed in Subsection (4)(b).
535          (b) After the commission increases or decreases the dollar amounts listed in Subsection
536     (5)(a), the commission shall round those dollar amounts listed in Subsection (5)(a) to the
537     nearest whole dollar.
538          (c) After the commission rounds the dollar amounts as required by Subsection (5)(b),
539     the commission shall increase or decrease the dollar amount listed in Subsection (4)(c) so that
540     the dollar amount listed in Subsection (4)(c) is equal to the product of:
541          (i) the dollar amount listed in Subsection (4)(a); and
542          (ii) two.
543          (d) For purposes of Subsection (5)(a), the commission shall calculate the consumer
544     price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
545          (6) (a) For a taxable year beginning on or after January 1, 2019, the commission shall
546     increase annually the Utah personal exemption amount listed in Subsection (1)(g) by a
547     percentage equal to the percentage by which the consumer price index for the preceding
548     calendar year exceeds the consumer price index for calendar year 2017.
549          (b) After the commission increases the Utah personal exemption amount as described
550     in Subsection (6)(a), the commission shall round the Utah personal exemption amount to the
551     nearest whole dollar.
552          (c) For purposes of Subsection (6)(a), the commission shall calculate the consumer
553     price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
554          Section 6. Effective date.
555          (1) Except as provided in Subsection (2), if approved by two-thirds of all the members
556     elected to each house, this bill takes effect upon approval by the governor, or the day following
557     the constitutional time limit of Utah Constitution, Article VII, Section 8, without the governor's
558     signature, or in the case of a veto, the date of veto override.
559          (2) The amendments to Section 59-7-110 (Effective 01/01/19) take effect on January 1,
560     2019.
561          Section 7. Retrospective operation.
562          The bill has retrospective operation for a taxable year beginning on or after January 1,
563     2018.