Senator Daniel McCay proposes the following substitute bill:


1     
TANGIBLE PERSONAL PROPERTY AMENDMENTS

2     
2019 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Daniel McCay

5     
House Sponsor: Karianne Lisonbee

6     

7     LONG TITLE
8     General Description:
9          This bill provides for the exemption of tangible personal property from property tax,
10     except for certain tangible personal property.
11     Highlighted Provisions:
12          This bill:
13          ▸     provides for the exemption of tangible personal property from property tax, except
14     for certain tangible personal property;
15          ▸     repeals existing provisions relating to the exemption of certain tangible personal
16     property from property tax; and
17          ▸     makes technical and conforming changes.
18     Money Appropriated in this Bill:
19          None
20     Other Special Clauses:
21          This bill provides a special effective date.
22     Utah Code Sections Affected:
23     AMENDS:
24          59-2-102, as last amended by Laws of Utah 2018, Chapters 415 and 456
25          59-2-103.5, as last amended by Laws of Utah 2014, Chapter 65
26          59-2-108, as last amended by Laws of Utah 2013, Chapter 248
27          59-2-1115, as last amended by Laws of Utah 2013, Chapters 19 and 147
28     

29     Be it enacted by the Legislature of the state of Utah:
30          Section 1. Section 59-2-102 is amended to read:
31          59-2-102. Definitions.
32          As used in this chapter and title:
33          (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
34     engaging in dispensing activities directly affecting agriculture or horticulture with an
35     airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
36     rotorcraft's use for agricultural and pest control purposes.
37          (2) "Air charter service" means an air carrier operation that requires the customer to
38     hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
39     trip.
40          (3) "Air contract service" means an air carrier operation available only to customers
41     that engage the services of the carrier through a contractual agreement and excess capacity on
42     any trip and is not available to the public at large.
43          (4) "Aircraft" means the same as that term is defined in Section 72-10-102.
44          (5) (a) Except as provided in Subsection (5)(b), "airline" means an air carrier that:
45          (i) operates:
46          (A) on an interstate route; and
47          (B) on a scheduled basis; and
48          (ii) offers to fly one or more passengers or cargo on the basis of available capacity on a
49     regularly scheduled route.
50          (b) "Airline" does not include an:
51          (i) air charter service; or
52          (ii) air contract service.
53          (6) "Assessment roll" means a permanent record of the assessment of property as
54     assessed by the county assessor and the commission and may be maintained manually or as a
55     computerized file as a consolidated record or as multiple records by type, classification, or
56     categories.
57          (7) "Base parcel" means a parcel of property that was legally:
58          (a) subdivided into two or more lots, parcels, or other divisions of land; or
59          (b) (i) combined with one or more other parcels of property; and
60          (ii) subdivided into two or more lots, parcels, or other divisions of land.
61          (8) (a) "Certified revenue levy" means a property tax levy that provides an amount of
62     ad valorem property tax revenue equal to the sum of:
63          (i) the amount of ad valorem property tax revenue to be generated statewide in the
64     previous year from imposing a multicounty assessing and collecting levy, as specified in
65     Section 59-2-1602; and
66          (ii) the product of:
67          (A) eligible new growth, as defined in Section 59-2-924; and
68          (B) the multicounty assessing and collecting levy certified by the commission for the
69     previous year.
70          (b) For purposes of this Subsection (8), "ad valorem property tax revenue" does not
71     include property tax revenue received by a taxing entity from personal property that is:
72          (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
73          (ii) semiconductor manufacturing equipment.
74          (c) For purposes of calculating the certified revenue levy described in this Subsection
75     (8), the commission shall use:
76          (i) the taxable value of real property assessed by a county assessor contained on the
77     assessment roll;
78          (ii) the taxable value of real and personal property assessed by the commission; and
79          (iii) the taxable year end value of personal property assessed by a county assessor
80     contained on the prior year's assessment roll.
81          (9) "County-assessed commercial vehicle" means:
82          (a) any commercial vehicle, trailer, or semitrailer that is not apportioned under Section
83     41-1a-301 and is not operated interstate to transport the vehicle owner's goods or property in
84     furtherance of the owner's commercial enterprise;
85          (b) any passenger vehicle owned by a business and used by its employees for
86     transportation as a company car or vanpool vehicle; and
87          (c) vehicles that are:
88          (i) especially constructed for towing or wrecking, and that are not otherwise used to
89     transport goods, merchandise, or people for compensation;
90          (ii) used or licensed as taxicabs or limousines;
91          (iii) used as rental passenger cars, travel trailers, or motor homes;
92          (iv) used or licensed in this state for use as ambulances or hearses;
93          (v) especially designed and used for garbage and rubbish collection; or
94          (vi) used exclusively to transport students or their instructors to or from any private,
95     public, or religious school or school activities.
96          (10) (a) Except as provided in Subsection (10)(b), for purposes of Section 59-2-801,
97     "designated tax area" means a tax area created by the overlapping boundaries of only the
98     following taxing entities:
99          (i) a county; and
100          (ii) a school district.
101          (b) "Designated tax area" includes a tax area created by the overlapping boundaries of
102     the taxing entities described in Subsection (10)(a) and:
103          (i) a city or town if the boundaries of the school district under Subsection (10)(a) and
104     the boundaries of the city or town are identical; or
105          (ii) a special service district if the boundaries of the school district under Subsection
106     (10)(a) are located entirely within the special service district.
107          (11) "Eligible judgment" means a final and unappealable judgment or order under
108     Section 59-2-1330:
109          (a) that became a final and unappealable judgment or order no more than 14 months
110     before the day on which the notice described in Section 59-2-919.1 is required to be provided;
111     and
112          (b) for which a taxing entity's share of the final and unappealable judgment or order is
113     greater than or equal to the lesser of:
114          (i) $5,000; or
115          (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
116     previous fiscal year.
117          (12) (a) "Escaped property" means any property, whether personal, land, or any
118     improvements to the property, that is subject to taxation and is:
119          (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
120     to the wrong taxpayer by the assessing authority;
121          (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
122     comply with the reporting requirements of this chapter; or
123          (iii) undervalued because of errors made by the assessing authority based upon
124     incomplete or erroneous information furnished by the taxpayer.
125          (b) "Escaped property" does not include property that is undervalued because of the use
126     of a different valuation methodology or because of a different application of the same valuation
127     methodology.
128          (13) "Fair market value" means the amount at which property would change hands
129     between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
130     and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
131     market value" shall be determined using the current zoning laws applicable to the property in
132     question, except in cases where there is a reasonable probability of a change in the zoning laws
133     affecting that property in the tax year in question and the change would have an appreciable
134     influence upon the value.
135          (14) (a) "Farm machinery and equipment," for purposes of the exemption provided
136     under Section 59-2-1101, means tractors, milking equipment and storage and cooling facilities,
137     feed handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters,
138     tillage tools, scales, combines, spreaders, sprayers, haying equipment, including balers and
139     cubers, and any other machinery or equipment used primarily for agricultural purposes.
140          (b) "Farm machinery and equipment" does not include vehicles required to be
141     registered with the Motor Vehicle Division or vehicles or other equipment used for business
142     purposes other than farming.
143          (15) "Geothermal fluid" means water in any form at temperatures greater than 120
144     degrees centigrade naturally present in a geothermal system.
145          (16) "Geothermal resource" means:
146          (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
147     and
148          (b) the energy, in whatever form, including pressure, present in, resulting from, created
149     by, or which may be extracted from that natural heat, directly or through a material medium.
150          (17) (a) "Goodwill" means:
151          (i) acquired goodwill that is reported as goodwill on the books and records that a
152     taxpayer maintains for financial reporting purposes; or
153          (ii) the ability of a business to:
154          (A) generate income that exceeds a normal rate of return on assets and that results from
155     a factor described in Subsection (17)(b); or
156          (B) obtain an economic or competitive advantage resulting from a factor described in
157     Subsection (17)(b).
158          (b) The following factors apply to Subsection (17)(a)(ii):
159          (i) superior management skills;
160          (ii) reputation;
161          (iii) customer relationships;
162          (iv) patronage; or
163          (v) a factor similar to Subsections (17)(b)(i) through (iv).
164          (c) "Goodwill" does not include:
165          (i) the intangible property described in Subsection (21)(a) or (b);
166          (ii) locational attributes of real property, including:
167          (A) zoning;
168          (B) location;
169          (C) view;
170          (D) a geographic feature;
171          (E) an easement;
172          (F) a covenant;
173          (G) proximity to raw materials;
174          (H) the condition of surrounding property; or
175          (I) proximity to markets;
176          (iii) value attributable to the identification of an improvement to real property,
177     including:
178          (A) reputation of the designer, builder, or architect of the improvement;
179          (B) a name given to, or associated with, the improvement; or
180          (C) the historic significance of an improvement; or
181          (iv) the enhancement or assemblage value specifically attributable to the interrelation
182     of the existing tangible property in place working together as a unit.
183          (18) "Governing body" means:
184          (a) for a county, city, or town, the legislative body of the county, city, or town;
185          (b) for a local district under Title 17B, Limited Purpose Local Government Entities -
186     Local Districts, the local district's board of trustees;
187          (c) for a school district, the local board of education; or
188          (d) for a special service district under Title 17D, Chapter 1, Special Service District
189     Act:
190          (i) the legislative body of the county or municipality that created the special service
191     district, to the extent that the county or municipal legislative body has not delegated authority
192     to an administrative control board established under Section 17D-1-301; or
193          (ii) the administrative control board, to the extent that the county or municipal
194     legislative body has delegated authority to an administrative control board established under
195     Section 17D-1-301.
196          (19) (a) For purposes of Section 59-2-103:
197          (i) "household" means the association of individuals who live in the same dwelling,
198     sharing its furnishings, facilities, accommodations, and expenses; and
199          (ii) "household" includes married individuals, who are not legally separated, that have
200     established domiciles at separate locations within the state.
201          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
202     commission may make rules defining the term "domicile."
203          (20) (a) Except as provided in Subsection (20)(c), "improvement" means a building,
204     structure, fixture, fence, or other item that is permanently attached to land, regardless of
205     whether the title has been acquired to the land, if:
206          (i) (A) attachment to land is essential to the operation or use of the item; and
207          (B) the manner of attachment to land suggests that the item will remain attached to the
208     land in the same place over the useful life of the item; or
209          (ii) removal of the item would:
210          (A) cause substantial damage to the item; or
211          (B) require substantial alteration or repair of a structure to which the item is attached.
212          (b) "Improvement" includes:
213          (i) an accessory to an item described in Subsection (20)(a) if the accessory is:
214          (A) essential to the operation of the item described in Subsection (20)(a); and
215          (B) installed solely to serve the operation of the item described in Subsection (20)(a);
216     and
217          (ii) an item described in Subsection (20)(a) that is temporarily detached from the land
218     for repairs and remains located on the land.
219          (c) "Improvement" does not include:
220          (i) an item considered to be personal property pursuant to rules made in accordance
221     with Section 59-2-107;
222          (ii) a moveable item that is attached to land for stability only or for an obvious
223     temporary purpose;
224          (iii) (A) manufacturing equipment and machinery; or
225          (B) essential accessories to manufacturing equipment and machinery;
226          (iv) an item attached to the land in a manner that facilitates removal without substantial
227     damage to the land or the item; or
228          (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
229     transportable factory-built housing unit is considered to be personal property under Section
230     59-2-1503.
231          (21) "Intangible property" means:
232          (a) property that is capable of private ownership separate from tangible property,
233     including:
234          (i) money;
235          (ii) credits;
236          (iii) bonds;
237          (iv) stocks;
238          (v) representative property;
239          (vi) franchises;
240          (vii) licenses;
241          (viii) trade names;
242          (ix) copyrights; and
243          (x) patents;
244          (b) a low-income housing tax credit;
245          (c) goodwill; or
246          (d) a renewable energy tax credit or incentive, including:
247          (i) a federal renewable energy production tax credit under Section 45, Internal Revenue
248     Code;
249          (ii) a federal energy credit for qualified renewable electricity production facilities under
250     Section 48, Internal Revenue Code;
251          (iii) a federal grant for a renewable energy property under American Recovery and
252     Reinvestment Act of 2009, Pub. L. No. 111-5, Section 1603; and
253          (iv) a tax credit under Subsection 59-7-614(5).
254          (22) "Livestock" means:
255          (a) a domestic animal;
256          (b) a fish;
257          (c) a fur-bearing animal;
258          (d) a honeybee; or
259          (e) poultry.
260          (23) "Low-income housing tax credit" means:
261          (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
262     or
263          (b) a low-income housing tax credit under Section 59-7-607 or Section 59-10-1010.
264          (24) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
265          (25) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
266     valuable mineral.
267          (26) "Mining" means the process of producing, extracting, leaching, evaporating, or
268     otherwise removing a mineral from a mine.
269          (27) (a) "Mobile flight equipment" means tangible personal property that is owned or
270     operated by an air charter service, air contract service, or airline and:
271          (i) is capable of flight or is attached to an aircraft that is capable of flight; or
272          (ii) is contained in an aircraft that is capable of flight if the tangible personal property
273     is intended to be used:
274          (A) during multiple flights;
275          (B) during a takeoff, flight, or landing; and
276          (C) as a service provided by an air charter service, air contract service, or airline.
277          (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
278     engine that is rotated at regular intervals with an engine that is attached to the aircraft.
279          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
280     commission may make rules defining the term "regular intervals."
281          (28) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts,
282     sand, rock, gravel, and all carboniferous materials.
283          (29) "Part-year residential property" means property that is not residential property on
284     January 1 of a calendar year but becomes residential property after January 1 of the calendar
285     year.
286          (30) "Personal property" includes:
287          (a) every class of property as defined in Subsection (31) that is the subject of
288     ownership and is not real estate or an improvement;
289          (b) any pipe laid in or affixed to land whether or not the ownership of the pipe is
290     separate from the ownership of the underlying land, even if the pipe meets the definition of an
291     improvement;
292          (c) bridges and ferries;
293          (d) livestock; and
294          (e) outdoor advertising structures as defined in Section 72-7-502.
295          (31) (a) "Property" means property that is subject to assessment and taxation according
296     to its value.
297          (b) "Property" does not include intangible property as defined in this section.
298          (32) "Public utility" means:
299          (a) for purposes of this chapter, the operating property of a railroad, gas corporation, oil
300     or gas transportation or pipeline company, coal slurry pipeline company, electrical corporation,
301     telephone corporation, sewerage corporation, or heat corporation where the company performs
302     the service for, or delivers the commodity to, the public generally or companies serving the
303     public generally, or in the case of a gas corporation or an electrical corporation, where the gas
304     or electricity is sold or furnished to any member or consumers within the state for domestic,
305     commercial, or industrial use; and
306          (b) the operating property of any entity or person defined under Section 54-2-1 except
307     water corporations.
308          [(33) (a) Subject to Subsection (33)(b), "qualifying exempt primary residential rental
309     personal property" means household furnishings, furniture, and equipment that:]
310          [(i) are used exclusively within a dwelling unit that is the primary residence of a
311     tenant;]
312          [(ii) are owned by the owner of the dwelling unit that is the primary residence of a
313     tenant; and]
314          [(iii) after applying the residential exemption described in Section 59-2-103, are
315     exempt from taxation under this chapter in accordance with Subsection 59-2-1115(2).]
316          [(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
317     the commission may by rule define the term "dwelling unit" for purposes of this Subsection
318     (33) and Subsection (36).]
319          [(34)] (33) "Real estate" or "real property" includes:
320          (a) the possession of, claim to, ownership of, or right to the possession of land;
321          (b) all mines, minerals, and quarries in and under the land, all timber belonging to
322     individuals or corporations growing or being on the lands of this state or the United States, and
323     all rights and privileges appertaining to these; and
324          (c) improvements.
325          [(35)] (34) (a) "Relationship with an owner of the property's land surface rights" means
326     a relationship described in Subsection 267(b), Internal Revenue Code, except that the term
327     25% shall be substituted for the term 50% in Subsection 267(b), Internal Revenue Code.
328          (b) For purposes of determining if a relationship described in Subsection 267(b),
329     Internal Revenue Code, exists, the ownership of stock shall be determined using the ownership
330     rules in Subsection 267(c), Internal Revenue Code.
331          [(36)] (35) (a) Subject to Subsection [(36)] (35)(b), "residential property," for purposes
332     of the reductions and adjustments under this chapter, means any property used for residential
333     purposes as a primary residence.
334          (b) Subject to Subsection [(36)] (35)(c), "residential property":
335          (i) except as provided in Subsection [(36)] (35)(b)(ii), includes household furnishings,
336     furniture, and equipment if the household furnishings, furniture, and equipment are:
337          (A) used exclusively within a dwelling unit that is the primary residence of a tenant;
338     and
339          (B) owned by the owner of the dwelling unit that is the primary residence of a tenant;
340     and
341          (ii) does not include property used for transient residential use.
342          (c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
343     commission may by rule define the term "dwelling unit" for purposes of [Subsection (33) and]
344     this Subsection [(36)] (35).
345          [(37)] (36) "Split estate mineral rights owner" means a person that:
346          (a) has a legal right to extract a mineral from property;
347          (b) does not hold more than a 25% interest in:
348          (i) the land surface rights of the property where the wellhead is located; or
349          (ii) an entity with an ownership interest in the land surface rights of the property where
350     the wellhead is located;
351          (c) is not an entity in which the owner of the land surface rights of the property where
352     the wellhead is located holds more than a 25% interest; and
353          (d) does not have a relationship with an owner of the land surface rights of the property
354     where the wellhead is located.
355          [(38)] (37) (a) "State-assessed commercial vehicle" means:
356          (i) any commercial vehicle, trailer, or semitrailer that operates interstate or intrastate to
357     transport passengers, freight, merchandise, or other property for hire; or
358          (ii) any commercial vehicle, trailer, or semitrailer that operates interstate and transports
359     the vehicle owner's goods or property in furtherance of the owner's commercial enterprise.
360          (b) "State-assessed commercial vehicle" does not include vehicles used for hire that are
361     specified in Subsection (9)(c) as county-assessed commercial vehicles.
362          [(39)] (38) "Subdivided lot" means a lot, parcel, or other division of land, that is a
363     division of a base parcel.
364          [(40) "Taxable value" means fair market value less any applicable reduction allowed
365     for residential property under Section 59-2-103.]
366          [(41)] (39) "Tax area" means a geographic area created by the overlapping boundaries
367     of one or more taxing entities.
368          (40) "Taxable value" means fair market value less any applicable reduction allowed for
369     residential property under Section 59-2-103.
370          [(42)] (41) "Taxing entity" means any county, city, town, school district, special taxing
371     district, local district under Title 17B, Limited Purpose Local Government Entities - Local
372     Districts, or other political subdivision of the state with the authority to levy a tax on property.
373          [(43)] (42) (a) "Tax roll" means a permanent record of the taxes charged on property,
374     as extended on the assessment roll, and may be maintained on the same record or records as the
375     assessment roll or may be maintained on a separate record properly indexed to the assessment
376     roll.
377          (b) "Tax roll" includes tax books, tax lists, and other similar materials.
378          Section 2. Section 59-2-103.5 is amended to read:
379          59-2-103.5. Procedures to obtain an exemption for residential property --
380     Procedure if property owner or property no longer qualifies to receive a residential
381     exemption.
382          (1) For residential property other than part-year residential property, a county
383     legislative body may adopt an ordinance that requires an owner to file an application with the
384     county board of equalization before a residential exemption under Section 59-2-103 may be
385     applied to the value of the residential property if:
386          (a) the residential property was ineligible for the residential exemption during the
387     calendar year immediately preceding the calendar year for which the owner is seeking to have
388     the residential exemption applied to the value of the residential property;
389          (b) an ownership interest in the residential property changes; or
390          (c) the county board of equalization determines that there is reason to believe that the
391     residential property no longer qualifies for the residential exemption.
392          (2) (a) The application described in Subsection (1) shall:
393          (i) be on a form the commission prescribes by rule and makes available to the counties;
394          (ii) be signed by all of the owners of the residential property;
395          (iii) certify that the residential property is residential property; and
396          (iv) contain other information as the commission requires by rule.
397          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
398     commission may make rules prescribing the contents of the form described in Subsection
399     (2)(a).
400          (3) (a) Regardless of whether a county legislative body adopts an ordinance described
401     in Subsection (1), before a residential exemption may be applied to the value of part-year
402     residential property, an owner of the property shall:
403          (i) file the application described in Subsection (2)(a) with the county board of
404     equalization; and
405          (ii) include as part of the application described in Subsection (2)(a) a statement that
406     certifies:
407          (A) the date the part-year residential property became residential property;
408          (B) that the part-year residential property will be used as residential property for 183 or
409     more consecutive calendar days during the calendar year for which the owner seeks to obtain
410     the residential exemption; and
411          (C) that the owner, or a member of the owner's household, may not claim a residential
412     exemption for any property for the calendar year for which the owner seeks to obtain the
413     residential exemption, other than the part-year residential property, or as allowed under Section
414     59-2-103 with respect to the primary residence or household furnishings, furniture, and
415     equipment of the owner's tenant.
416          (b) An owner may not obtain a residential exemption for part-year residential property
417     unless the owner files an application under this Subsection (3) on or before November 30 of the
418     calendar year for which the owner seeks to obtain the residential exemption.
419          (c) If an owner files an application under this Subsection (3) on or after May 1 of the
420     calendar year for which the owner seeks to obtain the residential exemption, the county board
421     of equalization may require the owner to pay an application fee of not to exceed $50.
422          (4) Except as provided in Subsection (5), if a property owner no longer qualifies to
423     receive a residential exemption authorized under Section 59-2-103 for the property owner's
424     primary residence, the property owner shall:
425          (a) file a written statement with the county board of equalization of the county in which
426     the property is located:
427          (i) on a form provided by the county board of equalization; and
428          (ii) notifying the county board of equalization that the property owner no longer
429     qualifies to receive a residential exemption authorized under Section 59-2-103 for the property
430     owner's primary residence; and
431          (b) declare on the property owner's individual income tax return under Chapter 10,
432     Individual Income Tax Act, for the taxable year for which the property owner no longer
433     qualifies to receive a residential exemption authorized under Section 59-2-103 for the property
434     owner's primary residence, that the property owner no longer qualifies to receive a residential
435     exemption authorized under Section 59-2-103 for the property owner's primary residence.
436          (5) A property owner is not required to file a written statement or make the declaration
437     described in Subsection (4) if the property owner:
438          (a) changes primary residences;
439          (b) qualified to receive a residential exemption authorized under Section 59-2-103 for
440     the residence that was the property owner's former primary residence; and
441          (c) qualifies to receive a residential exemption authorized under Section 59-2-103 for
442     the residence that is the property owner's current primary residence.
443          [(6) Subsections (2) through (5) do not apply to qualifying exempt primary residential
444     rental personal property.]
445          [(7) (a)] (6) For the first calendar year in which a property owner qualifies to receive a
446     residential exemption under Section 59-2-103, a county assessor may require the property
447     owner to file a signed statement described in Section 59-2-306.
448          [(b) Notwithstanding Section 59-2-306, for a calendar year after the calendar year
449     described in Subsection (7)(a) in which a property owner qualifies for an exemption described
450     in Subsection 59-2-1115(2) for qualifying exempt primary residential rental personal property,
451     a signed statement described in Section 59-2-306 with respect to the qualifying exempt primary
452     residential rental personal property may only require the property owner to certify, under
453     penalty of perjury, that the property owner qualifies for the exemption under Subsection
454     59-2-1115(2).]
455          Section 3. Section 59-2-108 is amended to read:
456          59-2-108. Tangible personal property -- Election for assessment and taxation of
457     noncapitalized personal property according to a schedule -- Determination of taxable
458     value.
459          (1) As used in this section:
460          (a) (i) "Acquisition cost" means all costs required to put an item of tangible personal
461     property into service; and
462          (ii) includes:
463          (A) the purchase price for a new or used item;
464          (B) the cost of freight and shipping;
465          (C) the cost of installation, engineering, erection, or assembly; and
466          (D) sales and use taxes.
467          (b) (i) "Item of taxable tangible personal property" does not include an improvement to
468     real property or a part that will become an improvement.
469          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
470     commission may make rules defining the term "item of taxable tangible personal property."
471          (c) "Noncapitalized personal property" means an item of tangible personal property:
472          (i) that has an acquisition cost of $1,000 or less; and
473          (ii) with respect to which a deduction is allowed under Section 162 or Section 179,
474     Internal Revenue Code, in the year of acquisition, regardless of whether a deduction is actually
475     claimed.
476          (d) "Taxable tangible personal property" means tangible personal property that is
477     subject to taxation under this chapter.
478          (2) (a) A person may make an election for the noncapitalized personal property owned
479     by the person to be assessed and taxed as provided in this section.
480          (b) Except as provided in Subsection (2)(c), a county may not require a person who
481     makes an election under this section to:
482          (i) itemize noncapitalized personal property on the signed statement described in
483     Section 59-2-306; or
484          (ii) track noncapitalized personal property.
485          (c) If a person's noncapitalized personal property for which the person makes an
486     election under this section is examined in accordance with Section 59-2-306, the person shall
487     provide proof of the acquisition cost of the noncapitalized personal property.
488          (3) (a) An election under this section may not be revoked.
489          (b) Except as provided in Subsection (3)(d), if a person makes an election under this
490     section with respect to noncapitalized personal property, the person shall pay taxes on the
491     noncapitalized personal property according to the schedule described in Subsection (4).
492          (c) If a person sells or otherwise disposes of an item of noncapitalized personal
493     property for which the person makes an election under this section prior to the fourth year after
494     acquisition, the person shall continue to pay taxes according to the schedule described in
495     Subsection (4).
496          (d) If a person makes an election under this section for noncapitalized personal
497     property acquired on or before December 31, 2012, at a time after the first year after
498     acquisition, the person shall pay taxes according to the taxable value for the applicable one or
499     more years after acquisition as determined by the schedule described in Subsection (4).
500          (e) If a person makes an election under this section, the person may not appeal the
501     values described in Subsection (4).
502          (4) The taxable value of noncapitalized personal property for which a person makes an
503     election under this section is calculated by applying the percent good factor against the
504     acquisition cost of the noncapitalized personal property as follows:
505      Noncapitalized Personal Property Schedule
506      Year after AcquisitionPercent Good of Acquisition Cost
507      First year after acquisition75%
508      Second year after acquisition50%
509      Third year after acquisition25%
510      Fourth year after acquisition0%
511          (5) The commission shall use acquisition cost, as defined in this section, to determine
512     the taxable value of tangible personal property.
513          Section 4. Section 59-2-1115 is amended to read:
514          59-2-1115. Tangible personal property exemption.
515          [(1) For purposes of this section:]
516          [(a) (i) "Acquisition cost" means all costs required to put an item of tangible personal
517     property into service; and]
518          [(ii) includes:]
519          [(A) the purchase price for a new or used item;]
520          [(B) the cost of freight and shipping;]
521          [(C) the cost of installation, engineering, erection, or assembly; and]
522          [(D) sales and use taxes.]
523          [(b) (i) "Item of taxable tangible personal property" does not include an improvement
524     to real property or a part that will become an improvement.]
525          [(ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
526     the commission may make rules defining the term "item of taxable tangible personal
527     property."]
528          [(c) (i) "Taxable tangible personal property" means tangible personal property that is
529     subject to taxation under this chapter.]
530          [(ii) "Taxable tangible personal property" does not include:]
531          (1) For purposes of this section, "Tangible personal property" does not include:
532          [(A)] (a) tangible personal property required by law to be registered with the state
533     before it is used:
534          [(I)] (i) on a public highway;
535          [(II)] (ii) on a public waterway;
536          [(III)] (iii) on public land; or
537          [(IV)] (iv) in the air;
538          [(B)] (b) a mobile home as defined in Section 41-1a-102; [or]
539          [(C)] (c) a manufactured home as defined in Section 41-1a-102[.]; or
540          (d) an improvement to real property or a part that will become an improvement.
541          [(2) (a) The taxable tangible personal property of a taxpayer is exempt from taxation if
542     the taxable tangible personal property has a total aggregate taxable value per county of $10,000
543     or less.]
544          [(b) In addition to the exemption under Subsection (2)(a), an item of taxable tangible
545     personal property, except for an item of noncapitalized personal property as defined in Section
546     59-2-108, is exempt from taxation if the item of taxable tangible personal property:]
547          [(i) has an acquisition cost of $1,000 or less;]
548          [(ii) has reached a percent good of 15% or less according to a personal property
549     schedule published by the commission pursuant to Section 59-2-107; and]
550          [(iii) is in a personal property schedule with a residual value of 15% or less.]
551          [(3) (a) For calendar years beginning on or after January 1, 2015, the commission shall
552     increase the dollar amount described in Subsection (2)(a):]
553          [(i) by a percentage equal to the percentage difference between the consumer price
554     index for the preceding calendar year and the consumer price index for calendar year 2013;
555     and]
556          [(ii) up to the nearest $100 increment.]
557          [(b) For purposes of this Subsection (3), the commission shall calculate the consumer
558     price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.]
559          [(c) If the percentage difference under Subsection (3)(a)(i) is zero or a negative
560     percentage, the consumer price index increase for the year is zero.]
561          [(4) (a) For the first calendar year in which a taxpayer qualifies for an exemption
562     described in Subsection (2), a county assessor may require the taxpayer to file a signed
563     statement described in Section 59-2-306.]
564          [(b) Notwithstanding Section 59-2-306 and subject to Subsection (5), for a calendar
565     year in which a taxpayer qualifies for an exemption described in Subsection (2) after the
566     calendar year described in Subsection (4)(a), a signed statement described in Section 59-2-306
567     with respect to the taxable tangible personal property that is exempt under Subsection (2) may
568     only require the taxpayer to certify, under penalty of perjury, that the taxpayer qualifies for the
569     exemption under Subsection (2).]
570          [(5) A signed statement with respect to qualifying exempt primary residential rental
571     personal property is as provided in Section 59-2-103.5.]
572          (2) All tangible personal property that is subject to taxation under this chapter is
573     exempt from property taxation except:
574          (a) a power transmission line or other tangible personal property used for generating or
575     delivering electrical power;
576          (b) tangible personal property used to carry out activities associated with the
577     exploitation of a petroleum or natural gas deposit;
578          (c) a petroleum or natural gas pipeline or other tangible personal property used to
579     maintain and facilitate a petroleum or natural gas pipeline; and
580          (d) tangible personal property obtained by the owner in a sale where the circumstances
581     of the sale qualify the tangible personal property for exemption from sales tax under Subsection
582     59-12-104(5), (11), (14), (15), (18), (29), (31), (33), (38), (44), (54), (55), (56), (57), (61), (62),
583     (63), (70), (73), (74), (76), (79), (80), (84), (86), or (88).
584          [(6)] (3) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
585     Act, the commission may make rules to administer this section and provide for uniform
586     implementation.
587          Section 5. Contingent effective date.
588          This bill takes effect on January 1, 2021, if the amendment to the Utah Constitution
589     proposed by S.J.R. 3, Proposal to Amend Utah Constitution - Tangible Personal Property Tax
590     Amendments, 2019 General Session, passes the Legislature and is approved by a majority of
591     those voting on it at the next regular general election.