1     
ACQUISITION COST DEFINITION

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Robert M. Spendlove

5     
Senate Sponsor: Lincoln Fillmore

6     

7     LONG TITLE
8     Committee Note:
9          The Revenue and Taxation Interim Committee recommended this bill.
10               Legislative Vote:     12 voting for     0 voting against     7 absent
11     General Description:
12          This bill defines the term "acquisition cost" for the property tax code.
13     Highlighted Provisions:
14          This bill:
15          ▸     defines the term "acquisition cost" for the property tax code; and
16          ▸     makes technical and conforming changes.
17     Money Appropriated in this Bill:
18          None
19     Other Special Clauses:
20          None
21     Utah Code Sections Affected:
22     AMENDS:
23          59-2-102, as last amended by Laws of Utah 2018, Chapters 415 and 456
24          59-2-103, as last amended by Laws of Utah 2014, Chapter 65
25          59-2-108, as last amended by Laws of Utah 2013, Chapter 248
26          59-2-801, as last amended by Laws of Utah 2008, Chapters 283 and 382
27          59-2-804, as last amended by Laws of Utah 2014, Chapter 65
28          59-2-1101 (Superseded 07/01/20), as last amended by Laws of Utah 2019, Chapter 453
29          59-2-1101 (Effective 07/01/20), as last amended by Laws of Utah 2019, Chapters 453
30     and 496
31          59-2-1115, as last amended by Laws of Utah 2019, Chapter 463
32          59-7-302, as last amended by Laws of Utah 2018, Chapters 456 and 471
33     

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

477          Section 4. Section 59-2-801 is amended to read:
478          59-2-801. Apportionment of property assessed by commission.
479          (1) As used in this section:
480          (a) (i) Except as provided in Subsection (1)(a)(ii), "designated tax area" means a tax
481     area created by the overlapping boundaries of only the following taxing entities:
482          (A) a county; and
483          (B) a school district.
484          (ii) "Designated tax area" includes a tax area created by the overlapping boundaries of
485     the taxing entities described in Subsection (1)(a)(i); and:
486          (A) a city or town if the boundaries of the school district under Subsection (1)(a)(i) and
487     the boundaries of the city or town are identical; or
488          (B) a special service district if the boundaries of the school district under Subsection
489     (1)(a)(i) are located entirely within the special service district.
490          (b) "Ground hours" means the total number of hours during the calendar year
491     immediately preceding the January 1 described in Section 59-2-103 that aircraft owned or
492     operated by the following are on the ground:
493          (i) an air charter service;
494          (ii) an air contract service; or
495          (iii) an airline.
496          [(1)] (2) Before May 25 of each year, the commission shall apportion to each tax area
497     the total assessment of all of the property the commission assesses as provided in Subsections
498     [(1)] (2)(a) through (f).
499          (a) (i) The commission shall apportion the assessments of the property described in
500     Subsection [(1)] (2)(a)(ii):
501          (A) to each tax area through which the public utility or company described in
502     Subsection [(1)] (2)(a)(ii) operates; and
503          (B) in proportion to the property's value in each tax area.
504          (ii) Subsection [(1)] (2)(a)(i) applies to property owned by:
505          (A) a public utility, except for the rolling stock of a public utility;
506          (B) a pipeline company;
507          (C) a power company;
508          (D) a canal company; or
509          (E) an irrigation company.
510          (b) The commission shall apportion the assessments of the rolling stock of a railroad:
511          (i) to the tax areas through which railroads operate; and
512          (ii) in the proportion that the length of the main tracks, sidetracks, passing tracks,
513     switches, and tramways of the railroads in each tax area bears to the total length of the main
514     tracks, sidetracks, passing tracks, switches, and tramways in the state.
515          (c) The commission shall apportion the assessments of the property of a car company
516     to:
517          (i) each tax area in which a railroad is operated; and
518          (ii) in the proportion that the length of the main tracks, passing tracks, sidetracks,
519     switches, and tramways of all of the railroads in each tax area bears to the total length of the
520     main tracks, passing tracks, sidetracks, switches, and tramways of all of the railroads in the
521     state.
522          (d) (i) The commission shall apportion the assessments of the property described in
523     Subsection [(1)] (2)(d)(ii) to each tax area in which the property is located.
524          (ii) Subsection [(1)] (2)(d)(i) applies to the following property:
525          (A) mines;
526          (B) mining claims; or
527          (C) mining property.
528          [(e) (i) As used in this Subsection (1)(e), "ground hours" means the total number of
529     hours during the calendar year immediately preceding the January 1 described in Section
530     59-2-103 that aircraft owned or operated by the following are on the ground:]
531          [(A) an air charter service;]
532          [(B) an air contract service; or]
533          [(C) an airline.]
534          [(ii)] (e) (i) The commission shall apportion the assessments of the property described
535     in Subsection [(1)(e)(iii)] (2)(e)(ii) to:
536          (A) each designated tax area; and
537          (B) in the proportion that the ground hours in each designated tax area bear to the total
538     ground hours in the state.
539          [(iii)] (ii) Subsection [(1)(e)(ii)] (2)(e)(i) applies to the mobile flight equipment owned
540     by an:
541          (A) air charter service;
542          (B) air contract service; or
543          (C) airline.
544          (f) (i) The commission shall apportion the assessments of the property described in
545     Subsection [(1)] (2)(f)(ii) to each tax area in which the property is located as of January 1 of
546     each year.
547          (ii) Subsection [(1)] (2)(f)(i) applies to the real and tangible personal property, other
548     than mobile flight equipment, owned by an:
549          (A) air charter service;
550          (B) air contract service; or
551          (C) airline.
552          [(2)] (3) (a) (i) (A) State-assessed commercial vehicles that weigh 12,001 pounds or
553     more shall be taxed at a statewide average rate which is calculated from the overall county
554     average tax rates from the preceding year, exclusive of the property subject to the statewide
555     uniform fee, weighted by lane miles of principal routes in each county.
556          (B) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
557     commission shall adopt rules to define "principal routes."
558          (ii) State-assessed commercial vehicles that weigh 12,000 pounds or less are subject to
559     the uniform fee provided in Section 59-2-405.1.
560          (b) The combined revenue from all state-assessed commercial vehicles shall be
561     apportioned to the counties based on:
562          (i) 40% by the percentage of lane miles of principal routes within each county as
563     determined by the commission; and
564          (ii) 60% by the percentage of total state-assessed vehicles having business situs in each
565     county.
566          (c) At least quarterly, the commission shall apportion the total taxes paid on
567     state-assessed commercial vehicles to the counties.
568          (d) Each county shall apportion its share of the revenues under this Subsection [(2)]
569     (3) to the taxing entities within its boundaries in the same proportion as the assessments of
570     other:
571          (i) real property;
572          (ii) tangible personal property; and
573          (iii) property assessed by the commission.
574          Section 5. Section 59-2-804 is amended to read:
575          59-2-804. Interstate allocation of mobile flight equipment.
576          (1) As used in this section:
577          (a) "Aircraft type" means a particular model of aircraft as designated by the
578     manufacturer of the aircraft.
579          (b) "Airline ground hours calculation" means an amount equal to the product of:
580          (i) the total number of hours aircraft owned or operated by an airline are on the ground,
581     calculated by aircraft type; and
582          (ii) the cost percentage.
583          (c) "Airline revenue ton miles" means, for an airline, the total revenue ton miles during
584     the calendar year that immediately precedes the January 1 described in Section 59-2-103.
585          (d) "Cost percentage" means a fraction, calculated by aircraft type, the numerator of
586     which is the airline's average cost of the aircraft type and the denominator of which is the
587     airline's average cost of the aircraft type:
588          (i) owned or operated by the airline; and
589          (ii) that has the lowest average cost.
590          (e) "Ground hours factor" means the product of:
591          (i) a fraction, the numerator of which is the Utah ground hours calculation and the
592     denominator of which is the airline ground hours calculation; and
593          (ii) .50.
594          (f) (i) Except as provided in Subsection (1)(f)(ii), "mobile flight equipment" is as
595     defined in Section 59-2-102.
596          (ii) "Mobile flight equipment" does not include tangible personal property described in
597     Subsection 59-2-102[(27)](25) owned by an:
598          (A) air charter service; or
599          (B) air contract service.
600          (g) "Mobile flight equipment allocation factor" means the sum of:
601          (i) the ground hours factor; and
602          (ii) the revenue ton miles factor.
603          (h) "Revenue ton miles" is determined in accordance with 14 C.F.R. Part 241.
604          (i) "Revenue ton miles factor" means the product of:
605          (i) a fraction, the numerator of which is the Utah revenue ton miles and the
606     denominator of which is the airline revenue ton miles; and
607          (ii) .50.
608          (j) "Utah ground hours calculation" means an amount equal to the product of:
609          (i) the total number of hours aircraft owned or operated by an airline are on the ground
610     in this state, calculated by aircraft type; and
611          (ii) the cost percentage.
612          (k) "Utah revenue ton miles" means, for an airline, the total revenue ton miles within
613     the borders of this state:
614          (i) during the calendar year that immediately precedes the January 1 described in
615     Section 59-2-103; and
616          (ii) from flight stages that originate or terminate in this state.
617          (2) For purposes of the assessment of an airline's mobile flight equipment by the
618     commission, a portion of the value of the airline's mobile flight equipment shall be allocated to
619     the state by calculating the product of:
620          (a) the total value of the mobile flight equipment; and
621          (b) the mobile flight equipment allocation factor.
622          Section 6. Section 59-2-1101 (Superseded 07/01/20) is amended to read:
623          59-2-1101 (Superseded 07/01/20). Definitions -- Exemption of certain property --
624     Proportional payments for certain property -- County legislative body authority to adopt
625     rules or ordinances.
626          (1) As used in this section:
627          (a) "Educational purposes" includes:
628          (i) the physical or mental teaching, training, or conditioning of competitive athletes by
629     a national governing body of sport recognized by the United States Olympic Committee that
630     qualifies as being tax exempt under Section 501(c)(3), Internal Revenue Code; and
631          (ii) an activity in support of or incidental to the teaching, training, or conditioning
632     described in Subsection (1)(a)(i).
633          (b) "Exclusive use exemption" means a property tax exemption under Subsection
634     (3)(a)(iv), for property owned by a nonprofit entity used exclusively for religious, charitable, or
635     educational purposes.
636          (c) (i) "Farm machinery and equipment" means tractors, milking equipment and storage
637     and cooling facilities, feed handling equipment, irrigation equipment, harvesters, choppers,
638     grain drills and planters, tillage tools, scales, combines, spreaders, sprayers, haying equipment,
639     including balers and cubers, and any other machinery or equipment used primarily for
640     agricultural purposes.
641          (ii) "Farm machinery and equipment" does include vehicles required to be registered
642     with the Motor Vehicle Division or vehicles or other equipment used for business purposes
643     other than farming.
644          [(c)] (d) "Government exemption" means a property tax exemption provided under
645     Subsection (3)(a)(i), (ii), or (iii).
646          [(d)] (e) "Nonprofit entity" includes an entity if the:
647          (i) entity is treated as a disregarded entity for federal income tax purposes;
648          (ii) entity is wholly owned by, and controlled under the direction of, a nonprofit entity;
649     and
650          (iii) net earnings and profits of the entity irrevocably inure to the benefit of a nonprofit
651     entity.
652          [(e)] (f) "Tax relief" means an exemption, deferral, or abatement that is authorized by
653     this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
654          (2) (a) Except as provided in Subsection (2)(b) or (c), tax relief may be allowed only if
655     the claimant is the owner of the property as of January 1 of the year the exemption is claimed.
656          (b) Notwithstanding Subsection (2)(a), a claimant shall collect and pay a proportional
657     tax based upon the length of time that the property was not owned by the claimant if:
658          (i) the claimant is a federal, state, or political subdivision entity described in
659     Subsection (3)(a)(i), (ii), or (iii); or
660          (ii) pursuant to Subsection (3)(a)(iv):
661          (A) the claimant is a nonprofit entity; and
662          (B) the property is used exclusively for religious, charitable, or educational purposes.
663          (c) Subsection (2)(a) does not apply to an exemption described in Part 19, Armed
664     Forces Exemptions .
665          (3) (a) The following property is exempt from taxation:
666          (i) property exempt under the laws of the United States;
667          (ii) property of:
668          (A) the state;
669          (B) school districts; and
670          (C) public libraries;
671          (iii) except as provided in Title 11, Chapter 13, Interlocal Cooperation Act, property of:
672          (A) counties;
673          (B) cities;
674          (C) towns;
675          (D) local districts;
676          (E) special service districts; and
677          (F) all other political subdivisions of the state;
678          (iv) property owned by a nonprofit entity used exclusively for religious, charitable, or
679     educational purposes;
680          (v) places of burial not held or used for private or corporate benefit;
681          (vi) farm machinery and equipment;
682          (vii) a high tunnel, as defined in Section 10-9a-525;
683          (viii) intangible property; and
684          (ix) the ownership interest of an out-of-state public agency, as defined in Section
685     11-13-103:
686          (A) if that ownership interest is in property providing additional project capacity, as
687     defined in Section 11-13-103; and
688          (B) on which a fee in lieu of ad valorem property tax is payable under Section
689     11-13-302.
690          (b) For purposes of a property tax exemption for property of school districts under
691     Subsection (3)(a)(ii)(B), a charter school under Title 53G, Chapter 5, Charter Schools, is
692     considered to be a school district.
693          (4) Subject to Subsection (5), if property that is allowed an exclusive use exemption or
694     a government exemption ceases to qualify for the exemption because of a change in the
695     ownership of the property:
696          (a) the new owner of the property shall pay a proportional tax based upon the period of
697     time:
698          (i) beginning on the day that the new owner acquired the property; and
699          (ii) ending on the last day of the calendar year during which the new owner acquired
700     the property; and
701          (b) the new owner of the property and the person from whom the new owner acquires
702     the property shall notify the county assessor, in writing, of the change in ownership of the
703     property within 30 days from the day that the new owner acquires the property.
704          (5) Notwithstanding Subsection (4)(a), the proportional tax described in Subsection
705     (4)(a):
706          (a) is subject to any exclusive use exemption or government exemption that the
707     property is entitled to under the new ownership of the property; and
708          (b) applies only to property that is acquired after December 31, 2005.
709          (6) A county legislative body may adopt rules or ordinances to:
710          (a) effectuate the exemptions, deferrals, abatements, or other relief from taxation
711     provided in this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces
712     Exemptions; and
713          (b) designate one or more persons to perform the functions given the county under this
714     part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
715          (7) If a person is dissatisfied with a tax relief decision made under designated
716     decision-making authority as described in Subsection (6)(b), that person may appeal the
717     decision to the commission under Section 59-2-1006.
718          Section 7. Section 59-2-1101 (Effective 07/01/20) is amended to read:
719          59-2-1101 (Effective 07/01/20). Definitions -- Exemption of certain property --
720     Proportional payments for certain property -- County legislative body authority to adopt
721     rules or ordinances.
722          (1) As used in this section:
723          (a) (i) "Educational purposes" means the same as that term is used in Section
724     501(c)(3), Internal Revenue Code, and interpreted according to federal law.
725          (ii) "Educational purposes" includes:
726          (A) the physical or mental teaching, training, or conditioning of competitive athletes by
727     a national governing body of sport recognized by the United States Olympic Committee that
728     qualifies as being tax exempt under Section 501(c)(3), Internal Revenue Code; and
729          (B) an activity in support of or incidental to the teaching, training, or conditioning
730     described in Subsection (1)(a)(i).
731          (b) "Exclusive use exemption" means a property tax exemption under Subsection
732     (3)(a)(iv), for property owned by a nonprofit entity used exclusively for religious, charitable, or
733     educational purposes.
734          (c) (i) "Farm machinery and equipment" means tractors, milking equipment and storage
735     and cooling facilities, feed handling equipment, irrigation equipment, harvesters, choppers,
736     grain drills and planters, tillage tools, scales, combines, spreaders, sprayers, haying equipment,
737     including balers and cubers, and any other machinery or equipment used primarily for
738     agricultural purposes.
739          (ii) "Farm machinery and equipment" does include vehicles required to be registered
740     with the Motor Vehicle Division or vehicles or other equipment used for business purposes
741     other than farming.
742          [(c)] (d) "Government exemption" means a property tax exemption provided under
743     Subsection (3)(a)(i), (ii), or (iii).
744          [(d)] (e) "Nonprofit entity" includes an entity if the:
745          (i) entity is treated as a disregarded entity for federal income tax purposes;
746          (ii) entity is wholly owned by, and controlled under the direction of, a nonprofit entity;
747     and
748          (iii) net earnings and profits of the entity irrevocably inure to the benefit of a nonprofit
749     entity.
750          [(e)] (f) "Tax relief" means an exemption, deferral, or abatement that is authorized by
751     this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
752          (2) (a) Except as provided in Subsection (2)(b) or (c), tax relief may be allowed only if
753     the claimant is the owner of the property as of January 1 of the year the exemption is claimed.
754          (b) Notwithstanding Subsection (2)(a), a claimant shall collect and pay a proportional
755     tax based upon the length of time that the property was not owned by the claimant if:
756          (i) the claimant is a federal, state, or political subdivision entity described in
757     Subsection (3)(a)(i), (ii), or (iii); or
758          (ii) pursuant to Subsection (3)(a)(iv):
759          (A) the claimant is a nonprofit entity; and
760          (B) the property is used exclusively for religious, charitable, or educational purposes.
761          (c) Subsection (2)(a) does not apply to an exemption described in Part 19, Armed
762     Forces Exemptions .
763          (3) (a) The following property is exempt from taxation:
764          (i) property exempt under the laws of the United States;
765          (ii) property of:
766          (A) the state;
767          (B) school districts; and
768          (C) public libraries;
769          (iii) except as provided in Title 11, Chapter 13, Interlocal Cooperation Act, property of:
770          (A) counties;
771          (B) cities;
772          (C) towns;
773          (D) local districts;
774          (E) special service districts; and
775          (F) all other political subdivisions of the state;
776          (iv) property owned by a nonprofit entity used exclusively for religious, charitable, or
777     educational purposes;
778          (v) places of burial not held or used for private or corporate benefit;
779          (vi) farm machinery and equipment;
780          (vii) a high tunnel, as defined in Section 10-9a-525;
781          (viii) intangible property; and
782          (ix) the ownership interest of an out-of-state public agency, as defined in Section
783     11-13-103:
784          (A) if that ownership interest is in property providing additional project capacity, as
785     defined in Section 11-13-103; and
786          (B) on which a fee in lieu of ad valorem property tax is payable under Section
787     11-13-302.
788          (b) For purposes of a property tax exemption for property of school districts under
789     Subsection (3)(a)(ii)(B), a charter school under Title 53G, Chapter 5, Charter Schools, is
790     considered to be a school district.
791          (4) Subject to Subsection (5), if property that is allowed an exclusive use exemption or
792     a government exemption ceases to qualify for the exemption because of a change in the
793     ownership of the property:
794          (a) the new owner of the property shall pay a proportional tax based upon the period of
795     time:
796          (i) beginning on the day that the new owner acquired the property; and
797          (ii) ending on the last day of the calendar year during which the new owner acquired
798     the property; and
799          (b) the new owner of the property and the person from whom the new owner acquires
800     the property shall notify the county assessor, in writing, of the change in ownership of the
801     property within 30 days from the day that the new owner acquires the property.
802          (5) Notwithstanding Subsection (4)(a), the proportional tax described in Subsection
803     (4)(a):
804          (a) is subject to any exclusive use exemption or government exemption that the
805     property is entitled to under the new ownership of the property; and
806          (b) applies only to property that is acquired after December 31, 2005.
807          (6) A county legislative body may adopt rules or ordinances to:
808          (a) effectuate the exemptions, deferrals, abatements, or other relief from taxation
809     provided in this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces
810     Exemptions; and
811          (b) designate one or more persons to perform the functions given the county under this
812     part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
813          (7) If a person is dissatisfied with a tax relief decision made under designated
814     decision-making authority as described in Subsection (6)(b), that person may appeal the
815     decision to the commission under Section 59-2-1006.
816          Section 8. Section 59-2-1115 is amended to read:
817          59-2-1115. Exemption of certain tangible personal property.
818          [(1) For purposes of this section:]
819          [(a) (i) "Acquisition cost" means all costs required to put an item of tangible personal
820     property into service; and]
821          [(ii) includes:]
822          [(A) the purchase price for a new or used item;]
823          [(B) the cost of freight and shipping;]
824          [(C) the cost of installation, engineering, erection, or assembly; and]
825          [(D) sales and use taxes.]
826          (1) As used in this section:
827          [(b)] (a) (i) "Item of taxable tangible personal property" does not include an
828     improvement to real property or a part that will become an improvement.
829          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
830     commission may make rules defining the term "item of taxable tangible personal property."
831          [(c)] (b) (i) "Taxable tangible personal property" means tangible personal property that
832     is subject to taxation under this chapter.
833          (ii) "Taxable tangible personal property" does not include:
834          (A) tangible personal property required by law to be registered with the state before it
835     is used[:] on a public highway, public waterway, or public land or in the air;
836          [(I) on a public highway;]
837          [(II) on a public waterway;]
838          [(III) on public land; or]
839          [(IV) in the air;]
840          (B) a mobile home as defined in Section 41-1a-102; or
841          (C) a manufactured home as defined in Section 41-1a-102.
842          (2) (a) The taxable tangible personal property of a taxpayer is exempt from taxation if
843     the taxable tangible personal property has a total aggregate taxable value per county of $15,000
844     or less.
845          (b) In addition to the exemption under Subsection (2)(a), an item of taxable tangible
846     personal property, except for an item of noncapitalized personal property as defined in Section
847     59-2-108, is exempt from taxation if the item of taxable tangible personal property:
848          (i) has an acquisition cost of $1,000 or less;
849          (ii) has reached a percent good of 15% or less according to a personal property
850     schedule published by the commission pursuant to Section 59-2-107; and
851          (iii) is in a personal property schedule with a residual value of 15% or less.
852          (c) For an item of taxable tangible personal property that is not exempt under
853     Subsection (2)(a) or (b), the item is exempt from taxation if:
854          (i) the item is owned by a business and is not critical to the actual business operation of
855     the business; and
856          (ii) the acquisition cost of the item is less than $150.
857          (3) (a) For a calendar [years] year beginning on or after January 1, 2015, the
858     commission shall increase the dollar amount described in Subsection (2)(a):
859          (i) by a percentage equal to the percentage difference between the consumer price
860     index for the preceding calendar year and the consumer price index for calendar year 2013; and
861          (ii) up to the nearest $100 increment.
862          (b) For purposes of this Subsection (3), the commission shall calculate the consumer
863     price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
864          (c) If the percentage difference under Subsection (3)(a)(i) is zero or a negative
865     percentage, the consumer price index increase for the year is zero.
866          (4) (a) For the first calendar year in which a taxpayer qualifies for an exemption
867     described in Subsection (2)(a), a county assessor may require the taxpayer to file a signed
868     statement described in Section 59-2-306.
869          (b) Notwithstanding Section 59-2-306 and subject to Subsection (5), for a calendar
870     year in which a taxpayer qualifies for an exemption described in Subsection (2)(a) after the
871     calendar year described in Subsection (4)(a), a signed statement described in Section 59-2-306
872     with respect to the taxable tangible personal property that is exempt under Subsection (2)(a)
873     may only require the taxpayer to certify, under penalty of perjury, that the taxpayer qualifies for
874     the exemption under Subsection (2)(a).
875          (c) If a taxpayer qualifies for an exemption described in Subsection (2)(a) for five
876     consecutive years and files a signed statement for each of those years in accordance with
877     Section 59-2-306 and Subsection (4)(b), a county assessor may not require the taxpayer to file a
878     signed statement for each continuing consecutive year for which the taxpayer qualifies for the
879     exemption.
880          (d) If a taxpayer qualifies for an exemption described in Subsection (2)(b) or (c) for an
881     item of tangible taxable personal property, a county assessor may not require the taxpayer to
882     include the item on a signed statement described in Section 59-2-306.
883          (5) A signed statement with respect to qualifying exempt primary residential rental
884     personal property is as provided in Section 59-2-103.5.
885          (6) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
886     commission may make rules to administer this section and provide for uniform
887     implementation.
888          Section 9. Section 59-7-302 is amended to read:
889          59-7-302. Definitions -- Determination of taxpayer status.
890          (1) As used in this part, unless the context otherwise requires:
891          (a) "Aircraft type" means a particular model of aircraft as designated by the
892     manufacturer of the aircraft.
893          (b) "Airline" means the same as that term is defined in Section 59-2-102.
894          (c) "Airline revenue ton miles" means, for an airline, the total revenue ton miles during
895     the airline's tax period.
896          (d) "Business income" means income arising from transactions and activity in the
897     regular course of the taxpayer's trade or business and includes income from tangible and
898     intangible property if the acquisition, management, and disposition of the property constitutes
899     integral parts of the taxpayer's regular trade or business operations.
900          (e) "Commercial domicile" means the principal place from which the trade or business
901     of the taxpayer is directed or managed.
902          (f) "Compensation" means wages, salaries, commissions, and any other form of
903     remuneration paid to employees for personal services.
904          (g) "Excluded NAICS code" means a NAICS code of the 2017 North American
905     Industry Classification System of the federal Executive Office of the President, Office of
906     Management and Budget, within:
907          (i) NAICS Code 211120, Crude Petroleum Extraction;
908          (ii) NAICS Industry Group 2121, Coal Mining;
909          (iii) NAICS Industry Group 2212, Natural Gas Distribution;
910          (iv) NAICS Subsector 311, Food Manufacturing;
911          (v) NAICS Industry Group 3121, Beverage Manufacturing;
912          (vi) NAICS Code 327310, Cement Manufacturing;
913          (vii) NAICS Subsector 482, Rail Transportation;
914          (viii) NAICS Code 512110, Motion Picture and Video Production;
915          (ix) NAICS Subsection 515, Broadcasting (except Internet); or
916          (x) NAICS Code 522110, Commercial Banking.
917          (h) (i) Except as provided in Subsection (1)(h)(ii), "mobile flight equipment" means the
918     same as that term is defined in Section 59-2-102.
919          (ii) "Mobile flight equipment" does not include:
920          (A) a spare engine; or
921          (B) tangible personal property described in Subsection 59-2-102[(27)](25) owned by
922     an air charter service or an air contract service.
923          (i) "Nonbusiness income" means all income other than business income.
924           (j) "Optional apportionment taxpayer" means a taxpayer described in Subsection (3).
925          (k) "Phased-in sales factor weighted taxpayer" means a taxpayer that:
926          (i) is not a sales factor weighted taxpayer;
927          (ii) does not meet the definition of an optional apportionment taxpayer; or
928          (iii) for a taxable year beginning on or after January 1, 2020:
929          (A) meets the definition of an optional apportionment taxpayer; and
930          (B) apportioned business income using the method described in Subsection
931     59-7-311(4) during the previous taxable year.
932          (l) "Revenue ton miles" is determined in accordance with 14 C.F.R. Part 241.
933          (m) "Sales" means all gross receipts of the taxpayer not allocated under Sections
934     59-7-306 through 59-7-310.
935          (n) "Sales factor weighted taxpayer" means a taxpayer described in Subsection (2).
936          (o) "State" means any state of the United States, the District of Columbia, the
937     Commonwealth of Puerto Rico, any territory or possession of the United States, and any
938     foreign country or political subdivision thereof.
939          (p) "Transportation revenue" means revenue an airline earns from:
940          (i) transporting a passenger or cargo; or
941          (ii) from miscellaneous sales of merchandise as part of providing transportation
942     services.
943          (q) "Utah revenue ton miles" means, for an airline, the total revenue ton miles within
944     the borders of this state:
945          (i) during the airline's tax period; and
946          (ii) from flight stages that originate or terminate in this state.
947          (2) (a) A taxpayer is a sales factor weighted taxpayer if the taxpayer apportioned
948     business income using the method described in Subsection 59-7-311(2) during the previous
949     taxable year or if, regardless of the number of economic activities the taxpayer performs, the
950     taxpayer generates greater than 50% of the taxpayer's total sales everywhere from economic
951     activities that are classified in a NAICS code of the 2002 or 2007 North American Industry
952     Classification System of the federal Executive Office of the President, Office of Management
953     and Budget, other than:
954          (i) a NAICS code within NAICS Sector 21, Mining;
955          (ii) a NAICS code within NAICS Industry Group 2212, Natural Gas Distribution;
956          (iii) a NAICS code within NAICS Sector 31-33, Manufacturing, except:
957          (A) NAICS Industry Group 3254, Pharmaceutical and Medicine Manufacturing;
958          (B) NAICS Industry Group 3333, Commercial and Service Industry Machinery
959     Manufacturing;
960          (C) NAICS Subsector 334, Computer and Electronic Product Manufacturing; and
961          (D) NAICS Code 336111, Automobile Manufacturing;
962          (iv) a NAICS code within NAICS Sector 48-49, Transportation and Warehousing;
963          (v) a NAICS code within NAICS Sector 51, Information, except NAICS Subsector
964     519, Other Information Services; or
965          (vi) a NAICS code within NAICS Sector 52, Finance and Insurance.
966          (b) A taxpayer shall determine if the taxpayer is a sales factor weighted taxpayer each
967     year before the due date for filing the taxpayer's return under this chapter for the taxable year,
968     including extensions.
969          (c) For purposes of making the determination required by Subsection (2)(a), total sales
970     everywhere include only the total sales everywhere:
971          (i) as determined in accordance with this part; and
972          (ii) made during the taxable year for which a taxpayer makes the determination
973     required by Subsection (2)(a).
974          (3) (a) A taxpayer is an optional apportionment taxpayer if the average calculated in
975     accordance with Subsection (3)(b) is greater than .50.
976          (b) To calculate the average described in Subsection (3)(a), a taxpayer shall:
977          (i) calculate the following two fractions:
978          (A) the property factor fraction as described in Subsection 59-7-312(3); and
979          (B) the payroll factor fraction as described in Subsection 59-7-315(3);
980          (ii) add together the fractions described in Subsection (3)(b)(i); and
981          (iii) divide the sum calculated in Subsection (3)(b)(ii):
982          (A) except as provided in Subsection (3)(b)(iii)(B), by two; or
983          (B) if either the property factor fraction or the payroll factor fraction has a denominator
984     of zero or is excluded in accordance with Subsection 59-7-312(3)(b) or 59-7-315(3)(b), by one.
985          (c) A taxpayer shall determine if the taxpayer is an optional apportionment taxpayer
986     before the due date for filing the taxpayer's return under this chapter for the taxable year,
987     including extensions.
988          (4) A taxpayer that files a return as a unitary group for a taxable year is considered to
989     be a unitary group for that taxable year.
990          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
991     commission may define the term "economic activity" consistent with the use of the term
992     "activity" in the 2007 North American Industry Classification System of the federal Executive
993     Office of the President, Office of Management and Budget.