Representative Steve Eliason proposes the following substitute bill:


1     
INCOME TAX REVISIONS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Curtis S. Bramble

5     
House Sponsor: Steve Eliason

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions of the Individual Income Tax Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     modifies the due date for an installment payment of the tax on deferred foreign
13     income;
14          ▸     defines terms;
15          ▸     modifies the date for a corporation or a pass-through entity to file an income tax
16     return;
17          ▸     modifies the State Tax Commission's authority to extend the time for paying an
18     income tax;
19          ▸     clarifies when an individual taxpayer may receive an income tax extension without
20     penalty;
21          ▸     creates a new subtraction from adjusted gross income for certain distributions from
22     a qualified retirement plan; and
23          ▸     makes technical changes.
24     Money Appropriated in this Bill:
25          None

26     Other Special Clauses:
27          This bill provides retrospective operation.
28     Utah Code Sections Affected:
29     AMENDS:
30          59-7-118, as last amended by Laws of Utah 2019, Chapter 11
31          59-7-505, as last amended by Laws of Utah 1997, Chapter 332
32          59-7-507, as last amended by Laws of Utah 2007, Chapter 269
33          59-10-103, as last amended by Laws of Utah 2019, Chapter 323
34          59-10-114, as last amended by Laws of Utah 2019, Chapter 412
35          59-10-507, as last amended by Laws of Utah 2016, Chapter 87
36          59-10-514, as last amended by Laws of Utah 2016, Chapter 87
37          59-10-516, as last amended by Laws of Utah 2010, Chapter 271
38          59-10-522, as renumbered and amended by Laws of Utah 1987, Chapter 2
39          59-10-1403, as last amended by Laws of Utah 2017, Chapter 270
40     

41     Be it enacted by the Legislature of the state of Utah:
42          Section 1. Section 59-7-118 is amended to read:
43          59-7-118. Section 965, Internal Revenue Code -- Installment payments.
44          (1) Subject to the other provisions of this section, a corporation may pay in
45     installments the tax owed under this chapter on deferred foreign income described in Section
46     965, Internal Revenue Code.
47          (2) Subsection (1) applies:
48          (a) to a corporation that:
49          (i) is authorized to make an election under Section 965(h), Internal Revenue Code; and
50          (ii) apportions deferred foreign income described in Section 965, Internal Revenue
51     Code, to this state; and
52          (b) for a tax year in which a corporation makes an election under Section 965(h),
53     Internal Revenue Code, for purposes of the corporation's federal income tax.
54          (3) (a) Except as provided in Subsection (3)(b), the same provisions that apply to an
55     election made under Section 965(h), Internal Revenue Code, for federal purposes apply to an
56     installment payment made under this section.

57          (b) A corporation shall make:
58          (i) the first installment under this section on or before the due date[, including any
59     extension,] of the tax return filed under this chapter for the first taxable year in which the
60     corporation reports deferred foreign income described in Section 965, Internal Revenue Code;
61     and
62          (ii) a subsequent installment on or before the due date[, including any extension,] of
63     the tax return filed under this chapter in each of the following seven years.
64          Section 2. Section 59-7-505 is amended to read:
65          59-7-505. Returns required -- When due -- Extension of time -- Exemption from
66     filing.
67          (1) Each corporation subject to taxation under this chapter shall make a return, except
68     that a group of corporations filing a combined report under Part 4, Combined Reporting, shall
69     file one combined report.
70          (a) The return shall be signed by a responsible officer of the corporation, the signature
71     of whom need not be notarized but when signed shall be considered as made under oath.
72          (b) (i) In cases where receivers, trustees in bankruptcy, or assignees are operating the
73     property or business of corporations, those receivers, trustees, or assignees shall make returns
74     for such corporations in the same manner and form as corporations are required to make
75     returns.
76          (ii) Any tax due on the basis of such returns made by receivers, trustees, or assignees
77     shall be collected in the same manner as if collected from the corporations of whose business
78     or property they have custody and control.
79          (2) Returns shall be made on or before the later of:
80          (a) the 15th day of the fourth month following the close of the taxable year[.]; or
81          (b) the day on which a corporation required to make a return under this chapter is
82     required to file a federal income tax return.
83          (3) (a) The commission shall allow a taxpayer an extension of time for filing returns.
84          (b) The extension under Subsection (3)(a) may not exceed six months.
85          (4) Each return shall be made to the commission.
86          (5) A corporation incorporated or qualified to do business in this state prior to January
87     1, 1973, is not liable for filing a return or paying tax measured by income for the taxable year

88     in which [it] the corporation legally terminates its existence.
89          (6) A corporation incorporated or qualified to do business or which had its authority to
90     do business reinstated on or after January 1, 1973, shall file a return and pay the tax measured
91     by income for each period during which it had the right to do business in this state, and the
92     return shall be filed and the tax paid within three months and 15 days after the close of this
93     period.
94          (7) If a corporation terminates its existence under Section 16-10a-1401, no returns are
95     required to be filed if a statement is furnished to the commission that no business has been
96     conducted during that period.
97          (8) (a) A corporation commencing to do business in Utah after qualification or
98     incorporation with the Division of Corporations and Commercial Code is not required to file a
99     return for the period commencing with the date of incorporation or qualification and ending on
100     the last day of the same month, if that corporation was not doing business in and received no
101     income from sources in the state during such period.
102          (b) In determining whether a corporation comes within the provisions of this chapter,
103     affidavits on behalf of the corporation that it did no business in and received no income from
104     sources in Utah during such period shall be filed with the commission.
105          Section 3. Section 59-7-507 is amended to read:
106          59-7-507. Payment of tax.
107          (1) (a) If quarterly estimated payments are not made as provided in Section 59-7-504,
108     the amount of tax imposed by this chapter shall be paid no later than the original due date of
109     the return.
110          (b) If an extension of time is necessary for filing a return, as provided in Subsection
111     59-7-505(3) or Section 59-7-803, payment must be made no later than the original due date of
112     the return in an amount equal to the lesser of:
113          (i) The greater of:
114          (A) 90% of the total tax reported on the return for the current taxable year; or
115          (B) 100% of the minimum tax described in Section 59-7-104; or
116          (ii) 100% of the total tax liability for the taxable year immediately preceding the
117     current taxable year.
118          (c) If payment is not made as provided in Subsection (1)(b), the commission shall add

119     an extension penalty as provided in Section 59-1-401, until the tax is paid during the period of
120     extension.
121          (2) (a) [At the request of the taxpayer, the] The commission may extend the time for
122     payment of the amount determined as the tax by the taxpayer, or any part of that amount, for a
123     period not to exceed six months from the date prescribed for the payment of the tax.
124          (b) For purposes of Subsection (2)(a), the amount [in respect of] for which the
125     extension is granted shall be paid on or before the date of the expiration of the period of the
126     extension.
127          Section 4. Section 59-10-103 is amended to read:
128          59-10-103. Definitions.
129          (1) As used in this chapter:
130          (a) "Adjusted gross income":
131          (i) for a resident or nonresident individual, is as defined in Section 62, Internal
132     Revenue Code; or
133          (ii) for a resident or nonresident estate or trust, is as calculated in Section 67(e),
134     Internal Revenue Code.
135          (b) "Corporation" includes:
136          (i) an association;
137          (ii) a joint stock company; and
138          (iii) an insurance company.
139          (c) "Distributable net income" is as defined in Section 643, Internal Revenue Code.
140          (d) "Employee" is as defined in Section 59-10-401.
141          (e) "Employer" is as defined in Section 59-10-401.
142          (f) "Federal taxable income":
143          (i) for a resident or nonresident individual, means taxable income as defined by Section
144     63, Internal Revenue Code; or
145          (ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and
146     (b), Internal Revenue Code.
147          (g) "Fiduciary" means:
148          (i) a guardian;
149          (ii) a trustee;

150          (iii) an executor;
151          (iv) an administrator;
152          (v) a receiver;
153          (vi) a conservator; or
154          (vii) any person acting in any fiduciary capacity for any individual.
155          (h) "Guaranteed annuity interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
156          (i) "Homesteaded land diminished from the Uintah and Ouray Reservation" means the
157     homesteaded land that was held to have been diminished from the Uintah and Ouray
158     Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
159          (j) "Individual" means a natural person and includes aliens and minors.
160          (k) "Irrevocable trust" means a trust in which the settlor may not revoke or terminate
161     all or part of the trust without the consent of a person who has a substantial beneficial interest
162     in the trust and the interest would be adversely affected by the exercise of the settlor's power to
163     revoke or terminate all or part of the trust.
164          (l) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.
165          (m) "Nonresident individual" means an individual who is not a resident of this state.
166          (n) "Nonresident trust" or "nonresident estate" means a trust or estate which is not a
167     resident estate or trust.
168          (o) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
169     unincorporated organization:
170          (A) through or by means of which any business, financial operation, or venture is
171     carried on; and
172          (B) which is not, within the meaning of this chapter:
173          (I) a trust;
174          (II) an estate; or
175          (III) a corporation.
176          (ii) "Partnership" does not include any organization not included under the definition of
177     "partnership" in Section 761, Internal Revenue Code.
178          (iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
179     organization described in Subsection (1)(o)(i).
180          (p) "Pass-through entity" means the same as that term is defined in Section

181     59-10-1402.
182          (q) "Pass-through entity taxpayer" means the same as that term is defined in Section
183     59-10-1402.
184          [(p)] (r) "Qualified nongrantor charitable lead trust" means a trust:
185          (i) that is irrevocable;
186          (ii) that has a trust term measured by:
187          (A) a fixed term of years; or
188          (B) the life of a person living on the day on which the trust is created;
189          (iii) under which:
190          (A) a portion of the value of the trust assets is distributed during the trust term:
191          (I) to an organization described in Section 170(c), Internal Revenue Code; and
192          (II) as a:
193          (Aa) guaranteed annuity interest; or
194          (Bb) unitrust interest; and
195          (B) assets remaining in the trust at the termination of the trust term are distributed to a
196     beneficiary:
197          (I) designated in the trust; and
198          (II) that is not an organization described in Section 170(c), Internal Revenue Code;
199          (iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue
200     Code; and
201          (v) under which the grantor of the trust is not treated as the owner of any portion of the
202     trust for federal income tax purposes.
203          [(q)] (s) "Resident individual" means an individual who is domiciled in this state for
204     any period of time during the taxable year, but only for the duration of the period during which
205     the individual is domiciled in this state.
206          [(r)] (t) "Resident estate" or "resident trust" is as defined in Section 75-7-103.
207          [(s)] (u) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.
208          [(t)] (v) "State income tax percentage for a nonresident estate or trust" means a
209     percentage equal to a nonresident estate's or trust's state taxable income for the taxable year
210     divided by the nonresident estate's or trust's total adjusted gross income for that taxable year
211     after making the adjustments required by:

212          (i) Section 59-10-202;
213          (ii) Section 59-10-207;
214          (iii) Section 59-10-209.1; or
215          (iv) Section 59-10-210.
216          [(u)] (w) "State income tax percentage for a nonresident individual" means a
217     percentage equal to a nonresident individual's state taxable income for the taxable year divided
218     by the difference between:
219          (i) subject to Section 59-10-1405, the nonresident individual's total adjusted gross
220     income for that taxable year, after making the:
221          (A) additions and subtractions required by Section 59-10-114; and
222          (B) adjustments required by Section 59-10-115; and
223          (ii) if the nonresident individual described in Subsection [(1)(u)(i)] (1)(w)(i) is a
224     servicemember, the compensation the servicemember receives for military service if the
225     servicemember is serving in compliance with military orders.
226          [(v)] (x) "State income tax percentage for a part-year resident individual" means, for a
227     taxable year, a fraction:
228          (i) the numerator of which is the sum of:
229          (A) subject to Section 59-10-1404.5, for the time period during the taxable year that the
230     part-year resident individual is a resident, the part-year resident individual's total adjusted gross
231     income for that time period, after making the:
232          (I) additions and subtractions required by Section 59-10-114; and
233          (II) adjustments required by Section 59-10-115; and
234          (B) for the time period during the taxable year that the part-year resident individual is a
235     nonresident, an amount calculated by:
236          (I) determining the part-year resident individual's adjusted gross income for that time
237     period, after making the:
238          (Aa) additions and subtractions required by Section 59-10-114; and
239          (Bb) adjustments required by Section 59-10-115; and
240          (II) calculating the portion of the amount determined under Subsection [(1)(v)(i)(B)(I)]
241     (1)(x)(i)(B)(I) that is derived from Utah sources in accordance with Section 59-10-117; and
242          (ii) the denominator of which is the difference between:

243          (A) the part-year resident individual's total adjusted gross income for that taxable year,
244     after making the:
245          (I) additions and subtractions required by Section 59-10-114; and
246          (II) adjustments required by Section 59-10-115; and
247          (B) if the part-year resident individual is a servicemember, any compensation the
248     servicemember receives for military service during the portion of the taxable year that the
249     servicemember is a nonresident if the servicemember is serving in compliance with military
250     orders.
251          [(w)] (y) "Taxable income" or "state taxable income":
252          (i) subject to Section 59-10-1404.5, for a resident individual, means the resident
253     individual's adjusted gross income after making the:
254          (A) additions and subtractions required by Section 59-10-114; and
255          (B) adjustments required by Section 59-10-115;
256          (ii) for a nonresident individual, is an amount calculated by:
257          (A) determining the nonresident individual's adjusted gross income for the taxable
258     year, after making the:
259          (I) additions and subtractions required by Section 59-10-114; and
260          (II) adjustments required by Section 59-10-115; and
261          (B) calculating the portion of the amount determined under Subsection [(1)(w)(ii)(A)]
262     (1)(y)(ii)(A) that is derived from Utah sources in accordance with Section 59-10-117;
263          (iii) for a resident estate or trust, is as calculated under Section 59-10-201.1; and
264          (iv) for a nonresident estate or trust, is as calculated under Section 59-10-204.
265          [(x)] (z) "Taxpayer" means any [individual, estate, trust, or beneficiary of an estate or
266     trust,] of the following that has income subject in whole or part to the tax imposed by this
267     chapter[.]:
268          (i) an individual;
269          (ii) an estate, a trust, or a beneficiary of an estate or trust, that is not a pass-through
270     entity or a pass-through entity taxpayer;
271          (iii) a pass-through entity; or
272          (iv) pass-through entity taxpayer.
273          [(y)] (aa) "Trust term" means a time period:

274          (i) beginning on the day on which a qualified nongrantor charitable lead trust is
275     created; and
276          (ii) ending on the day on which the qualified nongrantor charitable lead trust described
277     in Subsection [(1)(y)(i)] (1)(aa)(i) terminates.
278          [(z)] (bb) "Uintah and Ouray Reservation" means the lands recognized as being
279     included within the Uintah and Ouray Reservation in:
280          (i) Hagen v. Utah, 510 U.S. 399 (1994); and
281          (ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
282          [(aa)] (cc) "Unadjusted income" means an amount equal to the difference between:
283          (i) the total income required to be reported by a resident or nonresident estate or trust
284     on the resident or nonresident estate's or trust's federal income tax return for estates and trusts
285     for the taxable year; and
286          (ii) the sum of the following:
287          (A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust:
288          (I) for administering the resident or nonresident estate or trust; and
289          (II) that the resident or nonresident estate or trust deducts as allowed on the resident or
290     nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
291     year;
292          (B) the income distribution deduction that a resident or nonresident estate or trust
293     deducts under Section 651 or 661, Internal Revenue Code, as allowed on the resident or
294     nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
295     year;
296          (C) the amount that a resident or nonresident estate or trust deducts as a deduction for
297     estate tax or generation skipping transfer tax under Section 691(c), Internal Revenue Code, as
298     allowed on the resident or nonresident estate's or trust's federal income tax return for estates
299     and trusts for the taxable year; and
300          (D) the amount that a resident or nonresident estate or trust deducts as a personal
301     exemption under Section 642(b), Internal Revenue Code, as allowed on the resident or
302     nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
303     year.
304          [(bb)] (dd) "Unitrust interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).

305          [(cc)] (ee) "Ute tribal member" means a person who is enrolled as a member of the Ute
306     Indian Tribe of the Uintah and Ouray Reservation.
307          [(dd)] (ff) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
308          [(ee)] (gg) "Wages" is as defined in Section 59-10-401.
309          (2) (a) Any term used in this chapter has the same meaning as when used in
310     comparable context in the laws of the United States relating to federal income taxes unless a
311     different meaning is clearly required.
312          (b) Any reference to the Internal Revenue Code or to the laws of the United States shall
313     mean the Internal Revenue Code or other provisions of the laws of the United States relating to
314     federal income taxes that are in effect for the taxable year.
315          (c) Any reference to a specific section of the Internal Revenue Code or other provision
316     of the laws of the United States relating to federal income taxes shall include any
317     corresponding or comparable provisions of the Internal Revenue Code as amended,
318     redesignated, or reenacted.
319          Section 5. Section 59-10-114 is amended to read:
320          59-10-114. Additions to and subtractions from adjusted gross income of an
321     individual.
322          (1) There shall be added to adjusted gross income of a resident or nonresident
323     individual:
324          (a) a lump sum distribution that the taxpayer does not include in adjusted gross income
325     on the taxpayer's federal individual income tax return for the taxable year;
326          (b) the amount of a child's income calculated under Subsection (4) that:
327          (i) a parent elects to report on the parent's federal individual income tax return for the
328     taxable year; and
329          (ii) the parent does not include in adjusted gross income on the parent's federal
330     individual income tax return for the taxable year;
331          (c) (i) a withdrawal from a medical care savings account and any penalty imposed for
332     the taxable year if:
333          (A) the resident or nonresident individual does not deduct the amounts on the resident
334     or nonresident individual's federal individual income tax return under Section 220, Internal
335     Revenue Code;

336          (B) the withdrawal is subject to Subsections 31A-32a-105(1) and (2); and
337          (C) the withdrawal is subtracted on, or used as the basis for claiming a tax credit on, a
338     return the resident or nonresident individual files under this chapter;
339          (ii) a disbursement required to be added to adjusted gross income in accordance with
340     Subsection 31A-32a-105(3); or
341          (iii) an amount required to be added to adjusted gross income in accordance with
342     Subsection 31A-32a-105(5)(c);
343          (d) the amount withdrawn under Title 53B, Chapter 8a, Utah Educational Savings Plan,
344     from the account of a resident or nonresident individual who is an account owner as defined in
345     Section 53B-8a-102, for the taxable year for which the amount is withdrawn, if that amount
346     withdrawn from the account of the resident or nonresident individual who is the account
347     owner:
348          (i) is not expended for:
349          (A) higher education costs as defined in Section 53B-8a-102.5; or
350          (B) a payment or distribution that qualifies as an exception to the additional tax for
351     distributions not used for educational expenses provided in Sections 529(c) and 530(d),
352     Internal Revenue Code; and
353          (ii) is:
354          (A) subtracted by the resident or nonresident individual:
355          (I) who is the account owner; and
356          (II) on the resident or nonresident individual's return filed under this chapter for a
357     taxable year beginning on or before December 31, 2007; or
358          (B) used as the basis for the resident or nonresident individual who is the account
359     owner to claim a tax credit under Section 59-10-1017;
360          (e) except as provided in Subsection (5), for bonds, notes, and other evidences of
361     indebtedness acquired on or after January 1, 2003, the interest from bonds, notes, and other
362     evidences of indebtedness:
363          (i) issued by one or more of the following entities:
364          (A) a state other than this state;
365          (B) the District of Columbia;
366          (C) a political subdivision of a state other than this state; or

367          (D) an agency or instrumentality of an entity described in Subsections (1)(e)(i)(A)
368     through (C); and
369          (ii) to the extent the interest is not included in adjusted gross income on the taxpayer's
370     federal income tax return for the taxable year;
371          (f) subject to Subsection (2)(c), any distribution received by a resident beneficiary of a
372     resident trust of income that was taxed at the trust level for federal tax purposes, but was
373     subtracted from state taxable income of the trust pursuant to Subsection 59-10-202(2)(b);
374          (g) any distribution received by a resident beneficiary of a nonresident trust of
375     undistributed distributable net income realized by the trust on or after January 1, 2004, if that
376     undistributed distributable net income was taxed at the trust level for federal tax purposes, but
377     was not taxed at the trust level by any state, with undistributed distributable net income
378     considered to be distributed from the most recently accumulated undistributed distributable net
379     income; and
380          (h) any adoption expense:
381          (i) for which a resident or nonresident individual receives reimbursement from another
382     person; and
383          (ii) to the extent to which the resident or nonresident individual subtracts that adoption
384     expense:
385          (A) on a return filed under this chapter for a taxable year beginning on or before
386     December 31, 2007; or
387          (B) from federal taxable income on a federal individual income tax return.
388          (2) There shall be subtracted from adjusted gross income of a resident or nonresident
389     individual:
390          (a) the difference between:
391          (i) the interest or a dividend on an obligation or security of the United States or an
392     authority, commission, instrumentality, or possession of the United States, to the extent that
393     interest or dividend is:
394          (A) included in adjusted gross income for federal income tax purposes for the taxable
395     year; and
396          (B) exempt from state income taxes under the laws of the United States; and
397          (ii) any interest on indebtedness incurred or continued to purchase or carry the

398     obligation or security described in Subsection (2)(a)(i);
399          (b) for taxable years beginning on or after January 1, 2000, if the conditions of
400     Subsection (3)(a) are met, the amount of income derived by a Ute tribal member:
401          (i) during a time period that the Ute tribal member resides on homesteaded land
402     diminished from the Uintah and Ouray Reservation; and
403          (ii) from a source within the Uintah and Ouray Reservation;
404          (c) an amount received by a resident or nonresident individual or distribution received
405     by a resident or nonresident beneficiary of a resident trust:
406          (i) if that amount or distribution constitutes a refund of taxes imposed by:
407          (A) a state; or
408          (B) the District of Columbia; and
409          (ii) to the extent that amount or distribution is included in adjusted gross income for
410     that taxable year on the federal individual income tax return of the resident or nonresident
411     individual or resident or nonresident beneficiary of a resident trust;
412          (d) the amount of a railroad retirement benefit:
413          (i) paid:
414          (A) in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231 et
415     seq.;
416          (B) to a resident or nonresident individual; and
417          (C) for the taxable year; and
418          (ii) to the extent that railroad retirement benefit is included in adjusted gross income on
419     that resident or nonresident individual's federal individual income tax return for that taxable
420     year;
421          (e) an amount:
422          (i) received by an enrolled member of an American Indian tribe; and
423          (ii) to the extent that the state is not authorized or permitted to impose a tax under this
424     part on that amount in accordance with:
425          (A) federal law;
426          (B) a treaty; or
427          (C) a final decision issued by a court of competent jurisdiction;
428          (f) an amount received:

429          (i) for the interest on a bond, note, or other obligation issued by an entity for which
430     state statute provides an exemption of interest on its bonds from state individual income tax;
431          (ii) by a resident or nonresident individual;
432          (iii) for the taxable year; and
433          (iv) to the extent the amount is included in adjusted gross income on the taxpayer's
434     federal income tax return for the taxable year;
435          (g) the amount of all income, including income apportioned to another state, of a
436     nonmilitary spouse of an active duty military member if:
437          (i) both the nonmilitary spouse and the active duty military member are nonresident
438     individuals;
439          (ii) the active duty military member is stationed in Utah;
440          (iii) the nonmilitary spouse is subject to the residency provisions of 50 U.S.C. Sec.
441     4001(a)(2); and
442          (iv) the income is included in adjusted gross income for federal income tax purposes
443     for the taxable year;
444          (h) for a taxable year beginning on or after January 1, 2019, but beginning on or before
445     December 31, 2019, only:
446          (i) the amount of any FDIC premium paid or incurred by the taxpayer that is
447     disallowed as a deduction for federal income tax purposes under Section 162(r), Internal
448     Revenue Code, on the taxpayer's 2018 federal income tax return; plus
449          (ii) the amount of any FDIC premium paid or incurred by the taxpayer that is
450     disallowed as a deduction for federal income tax purposes under Section 162(r), Internal
451     Revenue Code, for the taxable year; [and]
452          (i) for a taxable year beginning on or after January 1, 2020, the amount of any FDIC
453     premium paid or incurred by the taxpayer that is disallowed as a deduction for federal income
454     tax purposes under Section 162(r), Internal Revenue Code, for the taxable year[.]; and
455          (j) an amount of a distribution from a qualified retirement plan under Section 401(a),
456     Internal Revenue Code, if:
457          (i) the amount of the distribution is included in adjusted gross income on the resident
458     or nonresident individual's federal individual income tax return for the taxable year; and
459          (ii) for the taxable year when the amount of the distribution was contributed to the

460     qualified retirement plan, the amount of the distribution:
461          (A) was not included in adjusted gross income on the resident or nonresident
462     individual's federal individual income tax return for the taxable year; and
463          (B) was taxed by another state of the United States, the District of Columbia, or a
464     possession of the United States.
465          (3) (a) A subtraction for an amount described in Subsection (2)(b) is allowed only if:
466          (i) the taxpayer is a Ute tribal member; and
467          (ii) the governor and the Ute tribe execute and maintain an agreement meeting the
468     requirements of this Subsection (3).
469          (b) The agreement described in Subsection (3)(a):
470          (i) may not:
471          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
472          (B) provide a subtraction under this section greater than or different from the
473     subtraction described in Subsection (2)(b); or
474          (C) affect the power of the state to establish rates of taxation; and
475          (ii) shall:
476          (A) provide for the implementation of the subtraction described in Subsection (2)(b);
477          (B) be in writing;
478          (C) be signed by:
479          (I) the governor; and
480          (II) the chair of the Business Committee of the Ute tribe;
481          (D) be conditioned on obtaining any approval required by federal law; and
482          (E) state the effective date of the agreement.
483          (c) (i) The governor shall report to the commission by no later than February 1 of each
484     year regarding whether or not an agreement meeting the requirements of this Subsection (3) is
485     in effect.
486          (ii) If an agreement meeting the requirements of this Subsection (3) is terminated, the
487     subtraction permitted under Subsection (2)(b) is not allowed for taxable years beginning on or
488     after the January 1 following the termination of the agreement.
489          (d) For purposes of Subsection (2)(b) and in accordance with Title 63G, Chapter 3,
490     Utah Administrative Rulemaking Act, the commission may make rules:

491          (i) for determining whether income is derived from a source within the Uintah and
492     Ouray Reservation; and
493          (ii) that are substantially similar to how adjusted gross income derived from Utah
494     sources is determined under Section 59-10-117.
495          (4) (a) For purposes of this Subsection (4), "Form 8814" means:
496          (i) the federal individual income tax Form 8814, Parents' Election To Report Child's
497     Interest and Dividends; or
498          (ii) (A) a form designated by the commission in accordance with Subsection
499     (4)(a)(ii)(B) as being substantially similar to 2000 Form 8814 if for purposes of federal
500     individual income taxes the information contained on 2000 Form 8814 is reported on a form
501     other than Form 8814; and
502          (B) for purposes of Subsection (4)(a)(ii)(A) and in accordance with Title 63G, Chapter
503     3, Utah Administrative Rulemaking Act, the commission may make rules designating a form as
504     being substantially similar to 2000 Form 8814 if for purposes of federal individual income
505     taxes the information contained on 2000 Form 8814 is reported on a form other than Form
506     8814.
507          (b) The amount of a child's income added to adjusted gross income under Subsection
508     (1)(b) is equal to the difference between:
509          (i) the lesser of:
510          (A) the base amount specified on Form 8814; and
511          (B) the sum of the following reported on Form 8814:
512          (I) the child's taxable interest;
513          (II) the child's ordinary dividends; and
514          (III) the child's capital gain distributions; and
515          (ii) the amount not taxed that is specified on Form 8814.
516          (5) Notwithstanding Subsection (1)(e), interest from bonds, notes, and other evidences
517     of indebtedness issued by an entity described in Subsections (1)(e)(i)(A) through (D) may not
518     be added to adjusted gross income of a resident or nonresident individual if, as annually
519     determined by the commission:
520          (a) for an entity described in Subsection (1)(e)(i)(A) or (B), the entity and all of the
521     political subdivisions, agencies, or instrumentalities of the entity do not impose a tax based on

522     income on any part of the bonds, notes, and other evidences of indebtedness of this state; or
523          (b) for an entity described in Subsection (1)(e)(i)(C) or (D), the following do not
524     impose a tax based on income on any part of the bonds, notes, and other evidences of
525     indebtedness of this state:
526          (i) the entity; or
527          (ii) (A) the state in which the entity is located; or
528          (B) the District of Columbia, if the entity is located within the District of Columbia.
529          Section 6. Section 59-10-507 is amended to read:
530          59-10-507. Return by a pass-through entity.
531          (1) As used in this section[: (a) "Pass-through entity" is as defined in Section
532     59-10-1402. (b) "Taxable], "taxable year" means a year or other time period that would be a
533     taxable year of a pass-through entity if the pass-through entity were subject to taxation under
534     this chapter.
535          (2) A pass-through entity having any income derived from or connected with Utah
536     sources shall make a return for the taxable year in accordance with Section 59-10-514.
537          Section 7. Section 59-10-514 is amended to read:
538          59-10-514. Return filing requirements -- Rulemaking authority.
539          (1) Subject to Subsection (3) and Section 59-10-518:
540          (a) an individual income tax return filed for a tax imposed in accordance with Part 1,
541     Determination and Reporting of Tax Liability and Information, shall be filed with the
542     commission on or before the day on which a federal individual income tax return is due [under
543     the Internal Revenue Code];
544          (b) a fiduciary income tax return filed for a tax imposed in accordance with Part 2,
545     Trusts and Estates, shall be filed with the commission on or before the day on which a federal
546     return for estates and trusts is due [under the Internal Revenue Code]; or
547          (c) a return filed in accordance with Section 59-10-507 shall be filed with the
548     commission on or before the later of:
549          (i) the 15th day of the fourth month following the last day of the taxpayer's taxable
550     year[.]; or
551          (ii) the day on which the taxpayer is required to file a federal income tax return.
552          (2) A person required to make and file a return under this chapter shall, without

553     assessment, notice, or demand, pay any tax due:
554          (a) to the commission; and
555          (b) before the due date for filing the return, without regard to any extension of time for
556     filing the return.
557          (3) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
558     commission may make rules prescribing what constitutes filing a return with the commission.
559          Section 8. Section 59-10-516 is amended to read:
560          59-10-516. Filing extension -- Payment of tax -- Penalty -- Foreign residency.
561          (1) (a) The commission shall allow a taxpayer an extension of time for filing a return.
562          (b) (i) For a return filed by a taxpayer except for a partnership, the extension under
563     Subsection (1)(a) may not exceed six months.
564          (ii) For a return filed by a partnership, the extension under Subsection (1)(a) may not
565     exceed five months.
566          (2) [(a)] Except as provided in Subsection [(2)(b)] (3), the commission may not impose
567     [on a taxpayer] a penalty under Section 59-1-401 on:
568          (a) a pass-through entity during the extension period described under Subsection (1) if
569     the pass-through entity, on or before the return due date, pays or withholds the tax on behalf of
570     a pass-through entity taxpayer; or
571          (b) a taxpayer other than a taxpayer described in Subsection (2)(a) during the extension
572     period prescribed under Subsection (1) [a penalty under Section 59-1-401] if the taxpayer pays,
573     on or before the [15th day of the fourth month following the close of the taxpayer's taxable
574     year] return due date, the lesser of:
575          (i) 90% of the total tax reported on the return for the current taxable year; or
576          (ii) 100% of the total tax liability for the taxable year immediately preceding the
577     current taxable year.
578          [(b)] (3) If a taxpayer fails to meet the requirements of Subsection (2)[(a)], the
579     commission may apply to the total balance due a penalty as provided in Section 59-1-401.
580          [(3)] (4) If a federal income tax return filing is lawfully delayed pending a
581     determination of qualification for a federal tax exemption due to residency outside of the
582     United States, a taxpayer shall file a return within 30 days after that determination is made.
583          Section 9. Section 59-10-522 is amended to read:

584          59-10-522. Extension of time for paying tax.
585          (1) The commission[, except as otherwise provided by this chapter,] may extend the
586     time for payment of the amount shown, or required to be shown, on any return required under
587     authority of this chapter (or any installment thereof), for a reasonable period not to exceed six
588     months from the date fixed for payment thereof. Such extension may exceed six months in the
589     cases of taxpayers who are outside the states of the union and the District of Columbia.
590          (2) Under rules prescribed by the commission, the time for payment of the amount
591     determined as a deficiency may be extended for a period not to exceed 18 months from the date
592     fixed for payment of the deficiency, and, in exceptional cases, for a further period not to exceed
593     12 months. An extension under this subsection may be granted only where it is shown to the
594     satisfaction of the commission that the payment of a deficiency upon the date fixed for the
595     payment thereof will result in undue hardship to the taxpayer. No extension may be granted if
596     the deficiency is due to negligence, to intentional disregard of rules, or to fraud with intent to
597     evade tax.
598          (3) Extensions of time for payment of any portion of a claim for tax under this chapter,
599     allowed in bankruptcy or receivership proceedings, which is unpaid, may be had in the same
600     manner and subject to the same provisions and limitations as provided in Subsection (2) in
601     respect of a deficiency in tax.
602          Section 10. Section 59-10-1403 is amended to read:
603          59-10-1403. Income tax treatment of a pass-through entity -- Returns --
604     Classification same as under Internal Revenue Code.
605          (1) Subject to Subsection (3), a pass-through entity is not subject to a tax imposed by
606     this chapter.
607          (2) Except as provided in Section 59-10-1403.3, the income, gain, loss, deduction, or
608     credit of a pass-through entity shall be passed through to one or more pass-through entity
609     taxpayers as provided in this part.
610          (3) A pass-through entity is subject to the return filing requirements of Sections
611     59-10-507 [and], 59-10-514, and 59-10-516.
612          (4) For purposes of taxation under this title, a pass-through entity that transacts
613     business in the state shall be classified in the same manner as the pass-through entity is
614     classified for federal income tax purposes.

615          Section 11. Retrospective operation.
616          (1) Except as provided in Subsections (2) and (3), this bill has retrospective operation
617     for a taxable year beginning on or after January 1, 2019.
618          (2) The changes to the following sections have retrospective operation for a taxable
619     year beginning on or after January 1, 2020:
620          (a) Section 59-10-103;
621          (b) Section 59-10-114;
622          (c) Section 59-10-507;
623          (d) Section 59-10-516; and
624          (e) Section 59-10-1403.
625          (3) The changes to Section 59-7-118 have retrospective operation for:
626          (a) the last taxable year of a taxpayer beginning on or before December 31, 2017; and
627          (b) a taxable year beginning on or after January 1, 2018.