Senator Lincoln Fillmore proposes the following substitute bill:


1     
PROPERTY TAX DEFERRAL MODIFICATIONS

2     
2021 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Lincoln Fillmore

5     
House Sponsor: Robert M. Spendlove

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the deferral provisions of the Property Tax Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     defines terms;
13          ▸     addresses property tax deferral for certain owners of a single-family residence who
14     meet specified age and income requirements;
15          ▸     modifies the interest rate that applies to deferred property taxes;
16          ▸     clarifies the required contents of an application for deferral; and
17          ▸     makes technical and conforming changes.
18     Money Appropriated in this Bill:
19          None
20     Other Special Clauses:
21          This bill provides retrospective operation.
22     Utah Code Sections Affected:
23     AMENDS:
24          59-2-1801, as enacted by Laws of Utah 2019, Chapter 453
25          59-2-1802, as enacted by Laws of Utah 2019, Chapter 453
26          59-2-1804, as enacted by Laws of Utah 2019, Chapter 453
27     

28     Be it enacted by the Legislature of the state of Utah:
29          Section 1. Section 59-2-1801 is amended to read:
30          59-2-1801. Definitions.
31          As used in this part:
32          (1) "Abatement" means a tax abatement described in Section 59-2-1803.
33          (2) "Deferral" means a tax deferral described in Section 59-2-1802.
34          (3) "Eligible owner" means an owner of an attached or a detached single-family
35     residence:
36          (a) who is 75 years old or older on or before December 31 of the year for which the
37     individual applies for a deferral under this part; and
38          (b) whose household income, as defined in Section 59-2-1202, does not exceed 200%
39     of the maximum household income certified to a homeowner's credit described in Section
40     59-2-1208.
41          [(3)] (4) "Indigent individual" is a poor individual as described in Utah Constitution,
42     Article XIII, Section 3, Subsection (4), who:
43          (a) (i) is at least 65 years old; or
44          (ii) is less than 65 years old and:
45          (A) the county finds that extreme hardship would prevail on the individual if the
46     county does not defer or abate the individual's taxes; or
47          (B) the individual has a disability;
48          (b) has a total household income, as defined in Section 59-2-1202, of less than the
49     maximum household income certified to a homeowner's credit described in [Subsection
50     59-2-1208(1)] Section 59-2-1208;
51          (c) resides for at least 10 months of the year in the residence that would be subject to
52     the requested abatement or deferral; and
53          (d) cannot pay the tax assessed on the individual's residence when the tax becomes due.
54          [(4)] (5) "Property taxes due" means the taxes due on an indigent individual's property:
55          (a) for which a county granted an abatement under Section 59-2-1803; and
56          (b) for the calendar year for which the county grants the abatement.
57          [(5)] (6) "Property taxes paid" means an amount equal to the sum of:
58          (a) the amount of property taxes the indigent individual paid for the taxable year for
59     which the indigent individual applied for the abatement; and
60          (b) the amount of the abatement the county grants under Section 59-2-1803.
61          [(6)] (7) "Relative" means a spouse, child, parent, grandparent, grandchild, brother,
62     sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle, first cousin, or a
63     spouse of any of these individuals.
64          [(7)] (8) "Residence" means real property where an individual resides, including:
65          (a) a mobile home, as defined in Section 41-1a-102; or
66          (b) a manufactured home, as defined in Section 41-1a-102.
67          Section 2. Section 59-2-1802 is amended to read:
68          59-2-1802. Tax deferral.
69          (1) (a) In accordance with this part and after giving notice to the taxpayer, a county
70     may defer a tax on residential property [after giving notice to the taxpayer], allowing the
71     taxpayer to pay the tax at a later date.
72          (b) In determining a deferral, a county shall consider an asset transferred to a relative
73     by an applicant for deferral, if the transfer took place during the three years prior to the day on
74     which the applicant applied for deferral.
75          (2) A county may grant a deferral described in Subsection (1) at any time:
76          (a) after the holder of each mortgage or trust deed outstanding on the property gives
77     written approval of the application; and
78          (b) if the applicant is not the owner of income-producing assets that could be liquidated
79     to pay the tax.
80          (3) In accordance with this part, if the conditions described in Subsection (4) are
81     satisfied, a county:
82          (a) on or after January 1, 2021, may defer a tax on an attached single-family residence
83     or a detached single-family residence; or
84          (b) on or after January 1, 2024, shall defer a tax on an attached single-family residence
85     or a detached single-family residence.
86          (4) The conditions described in Subsection (3) are as follows:
87          (a) the owner of the single-family residence is:
88          (i) an eligible owner; or
89          (ii) a trust described in Section 59-2-1805 for which the grantor is an eligible owner;
90          (b) the single family residence was the eligible owner's primary residence as of January
91     1 of the year for which the eligible owner applies for a deferral;
92          (c) (i) subject to Subsection (5), the value of the single-family residence for the year for
93     which the eligible owner applies for a deferral is no greater than 100% of the median property
94     value of attached and detached single-family residences within the county; or
95          (ii) the eligible owner has owned the single-family residence for a continuous 20-year
96     period as of January 1 of the year for which the eligible owner applies for a deferral; and
97          (d) the holder of each mortgage or trust deed outstanding on the single-family
98     residence gives written approval of the deferral.
99          (5) The values described in Subsection (4)(c) are based on the county assessment roll
100     for the county in which the single-family residence is located.
101          (6) For purposes of Subsection (4)(c)(ii), if a single-family residence is transferred
102     between an eligible owner and a trust described in Section 59-2-1805, ownership is considered
103     continuous if the eligible owner is the grantor of the trust.
104          [(3)] (7) Taxes deferred by the county accumulate with interest as a lien against the
105     residential property, as described in Subsection [(4)] (8), until the owner sells or otherwise
106     disposes of the residential property.
107          [(4)] (8) Deferred taxes under this section:
108          [(a) bear interest at an interest rate equal to the lesser of:]
109          [(i) 6%; or]
110          [(ii) the federal funds rate target:]
111          [(A) established by the Federal Open Markets Committee; and]
112          [(B) that exists on the January 1 immediately preceding the day on which the taxes are
113     deferred; and]
114          (a) bear interest at an interest rate equal to 50% of the rate described in Subsections
115     59-2-1331(2)(c) and (d); and
116          (b) have the same status as a lien as described in Sections 59-2-1301 and 59-2-1325.
117          [(5)] (9) If the owner of residential property that is granted deferral under this section is
118     an indigent individual, during the period of deferral the county may not subject the residential
119     property to a tax sale.
120          Section 3. Section 59-2-1804 is amended to read:
121          59-2-1804. Application for tax deferral or tax abatement.
122          (1) (a) Except as provided in Subsection (1)(b), an applicant for deferral or abatement
123     for the current tax year shall annually file an application on or before September 1 with the
124     county in which the applicant's property is located.
125          (b) If a county finds good cause exists, the county may extend until December 31 the
126     deadline described in Subsection (1)(a).
127          (c) An indigent individual may apply and potentially qualify for deferral, abatement, or
128     both.
129          (2) (a) An applicant shall include in an application a signed statement that describes the
130     eligibility of the applicant for deferral or abatement.
131          (b) For an application for a deferral under Subsection 59-2-1802(3), the requirements
132     described in Subsection (2)(a) include:
133          (i) proof that the applicant resides at the single-family residence for which the applicant
134     seeks the deferral;
135          (ii) proof of age; and
136          (iii) proof of household income.
137          (3) Both spouses shall sign an application if the application seeks a deferral or
138     abatement on a residence:
139          (a) in which both spouses reside; and
140          (b) that the spouses own as joint tenants.
141          (4) If an applicant is dissatisfied with a county's decision on the applicant's application
142     for deferral or abatement, the applicant may appeal the decision to the commission in
143     accordance with Section 59-2-1006.
144          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
145     commission may make rules to implement this section.
146          Section 4. Retrospective operation.
147          This bill has retrospective operation to January 1, 2021.