Representative Douglas R. Welton proposes the following substitute bill:


1     
PROPERTY TAX EXEMPTION AMENDMENTS

2     
2022 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Douglas R. Welton

5     
Senate Sponsor: Curtis S. Bramble

6     

7     LONG TITLE
8     General Description:
9          This bill modifies exemption provisions of the Property Tax Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     modifies the definition of nonprofit entity for purposes of the exclusive use
13     exemption;
14          ▸     provides that a county board of equalization may not waive the application or
15     annual statement requirements for an owner of certain tax exempt property;
16          ▸     provides that a county board of equalization may require a property owner making
17     an application for exemption or reduction to appear before the board of
18     equalization;
19          ▸     provides conditions under which a property owner may submit a late annual
20     statement for certain tax exempt property;
21          ▸     modifies the deadline for submitting an application to receive a property tax
22     exemption for certain property acquired after January 1; and
23          ▸     makes technical and conforming changes.
24     Money Appropriated in this Bill:
25          None

26     Other Special Clauses:
27          This bill provides a special effective date.
28     Utah Code Sections Affected:
29     AMENDS:
30          59-2-1101, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 4
31          59-2-1102, as last amended by Laws of Utah 2019, Chapter 453
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 59-2-1101 is amended to read:
35          59-2-1101. Definitions -- Exemption of certain property -- Proportional payments
36     for certain property -- Exception -- County legislative body authority to adopt rules or
37     ordinances.
38          (1) As used in this section:
39          (a) "Charitable purposes" means:
40          (i) for property used as a nonprofit hospital or a nursing home, the standards outlined in
41     Howell v. County Board of Cache County ex rel. IHC Hospitals, Inc., 881 P.2d 880 (Utah
42     1994); and
43          (ii) for property other than property described in Subsection (1)(a)(i), providing a gift
44     to the community.
45          (b) (i) "Educational purposes" means purposes carried on by an educational
46     organization that normally:
47          (A) maintains a regular faculty and curriculum; and
48          (B) has a regularly enrolled body of pupils and students.
49          (ii) "Educational purposes" includes:
50          (A) the physical or mental teaching, training, or conditioning of competitive athletes by
51     a national governing body of sport recognized by the United States Olympic Committee that
52     qualifies as being tax exempt under Section 501(c)(3), Internal Revenue Code; and
53          (B) an activity in support of or incidental to the teaching, training, or conditioning
54     described in this Subsection (1)(b)(ii).
55          (c) "Exclusive use exemption" means a property tax exemption under Subsection
56     (3)(a)(iv), for property owned by a nonprofit entity used exclusively for one or more of the

57     following purposes:
58          (i) religious purposes;
59          (ii) charitable purposes; or
60          (iii) educational purposes.
61          (d) (i) "Farm machinery and equipment" means tractors, milking equipment and
62     storage and cooling facilities, feed handling equipment, irrigation equipment, harvesters,
63     choppers, grain drills and planters, tillage tools, scales, combines, spreaders, sprayers, haying
64     equipment, including balers and cubers, and any other machinery or equipment used primarily
65     for agricultural purposes.
66          (ii) "Farm machinery and equipment" does not include vehicles required to be
67     registered with the Motor Vehicle Division or vehicles or other equipment used for business
68     purposes other than farming.
69          (e) "Gift to the community" means:
70          (i) the lessening of a government burden; or
71          (ii) (A) the provision of a significant service to others without immediate expectation
72     of material reward;
73          (B) the use of the property is supported to a material degree by donations and gifts
74     including volunteer service;
75          (C) the recipients of the charitable activities provided on the property are not required
76     to pay for the assistance received, in whole or in part, except that if in part, to a material
77     degree;
78          (D) the beneficiaries of the charitable activities provided on the property are
79     unrestricted or, if restricted, the restriction bears a reasonable relationship to the charitable
80     objectives of the nonprofit entity that owns the property; and
81          (E) any commercial activities provided on the property are subordinate or incidental to
82     charitable activities provided on the property.
83          (f) "Government exemption" means a property tax exemption provided under
84     Subsection (3)(a)(i), (ii), or (iii).
85          (g) (i) "Nonprofit entity" means an entity:
86          (A) that is organized on a nonprofit basis, that dedicates the entity's property to the
87     entity's nonprofit purpose, and that makes no dividend or other form of financial benefit

88     available to a private interest;
89          (B) for which, upon dissolution, the entity's assets are distributable only for exempt
90     purposes under state law or to the government for a public purpose; and
91          [(C) that does not receive income from any source, including gifts, donations, or
92     payments from recipients of products or services, that produces a profit to the entity in the
93     sense that the income exceeds operating and long-term maintenance expenses; and]
94          [(D)] (C) for which none of the net earnings or donations made to the entity inure to
95     the benefit of private shareholders or other individuals, as the private inurement standard has
96     been interpreted under Section 501(c)(3), Internal Revenue Code.
97          (ii) "Nonprofit entity" includes an entity:
98          (A) if the entity is treated as a disregarded entity for federal income tax purposes and
99     wholly owned by, and controlled under the direction of, a nonprofit entity; and
100          (B) for which none of the net earnings and profits of the entity inure to the benefit of
101     any person other than a nonprofit entity.
102          (h) "Tax relief" means an exemption, deferral, or abatement that is authorized by this
103     part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
104          (2) (a) Except as provided in Subsection (2)(b) or (c), tax relief may be allowed only if
105     the claimant is the owner of the property as of January 1 of the year the exemption is claimed.
106          (b) Notwithstanding Subsection (2)(a), a claimant shall collect and pay a proportional
107     tax based upon the length of time that the property was not owned by the claimant if:
108          (i) the claimant is a federal, state, or political subdivision entity described in
109     Subsection (3)(a)(i), (ii), or (iii); or
110          (ii) pursuant to Subsection (3)(a)(iv):
111          (A) the claimant is a nonprofit entity; and
112          (B) the property is used exclusively for religious, charitable, or educational purposes.
113          (c) Subsection (2)(a) does not apply to an exemption described in Part 19, Armed
114     Forces Exemptions .
115          (3) (a) The following property is exempt from taxation:
116          (i) property exempt under the laws of the United States;
117          (ii) property of:
118          (A) the state;

119          (B) school districts; and
120          (C) public libraries;
121          (iii) except as provided in Title 11, Chapter 13, Interlocal Cooperation Act, property of:
122          (A) counties;
123          (B) cities;
124          (C) towns;
125          (D) local districts;
126          (E) special service districts; and
127          (F) all other political subdivisions of the state;
128          (iv) except as provided in Subsection (6) or (7), property owned by a nonprofit entity
129     used exclusively for one or more of the following purposes:
130          (A) religious purposes;
131          (B) charitable purposes; or
132          (C) educational purposes;
133          (v) places of burial not held or used for private or corporate benefit;
134          (vi) farm machinery and equipment;
135          (vii) a high tunnel, as defined in Section 10-9a-525;
136          (viii) intangible property; and
137          (ix) the ownership interest of an out-of-state public agency, as defined in Section
138     11-13-103:
139          (A) if that ownership interest is in property providing additional project capacity, as
140     defined in Section 11-13-103; and
141          (B) on which a fee in lieu of ad valorem property tax is payable under Section
142     11-13-302.
143          (b) For purposes of a property tax exemption for property of school districts under
144     Subsection (3)(a)(ii)(B), a charter school under Title 53G, Chapter 5, Charter Schools, is
145     considered to be a school district.
146          (4) Subject to Subsection (5), if property that is allowed an exclusive use exemption or
147     a government exemption ceases to qualify for the exemption because of a change in the
148     ownership of the property:
149          (a) the new owner of the property shall pay a proportional tax based upon the period of

150     time:
151          (i) beginning on the day that the new owner acquired the property; and
152          (ii) ending on the last day of the calendar year during which the new owner acquired
153     the property; and
154          (b) the new owner of the property and the person from whom the new owner acquires
155     the property shall notify the county assessor, in writing, of the change in ownership of the
156     property within 30 days from the day that the new owner acquires the property.
157          (5) Notwithstanding Subsection (4)(a), the proportional tax described in Subsection
158     (4)(a):
159          (a) is subject to any exclusive use exemption or government exemption that the
160     property is entitled to under the new ownership of the property; and
161          (b) applies only to property that is acquired after December 31, 2005.
162          (6) (a) A property may not receive an exemption under Subsection (3)(a)(iv) if:
163          (i) the nonprofit entity that owns the property participates in or intervenes in any
164     political campaign on behalf of or in opposition to any candidate for public office, including
165     the publishing or distribution of statements; or
166          (ii) a substantial part of the activities of the nonprofit entity that owns the property
167     consists of carrying on propaganda or otherwise attempting to influence legislation, except as
168     provided under Subsection 501(h), Internal Revenue Code.
169          (b) Whether a nonprofit entity is engaged in an activity described in Subsection (6)(a)
170     shall be determined using the standards described in Section 501, Internal Revenue Code.
171          (7) A property may not receive an exemption under Subsection (3)(a)(iv) if:
172          (a) the property is used for a purpose that is not religious, charitable, or educational;
173     and
174          (b) the use for a purpose that is not religious, charitable, or educational is more than de
175     minimis.
176          (8) A county legislative body may adopt rules or ordinances to:
177          (a) effectuate the exemptions, deferrals, abatements, or other relief from taxation
178     provided in this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces
179     Exemptions; and
180          (b) designate one or more persons to perform the functions given the county under this

181     part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
182          (9) If a person is dissatisfied with a tax relief decision made under designated
183     decision-making authority as described in Subsection (8)(b), that person may appeal the
184     decision to the commission under Section 59-2-1006.
185          Section 2. Section 59-2-1102 is amended to read:
186          59-2-1102. Determination of exemptions by board of equalization -- Appeal --
187     Application for exemption -- Annual statement -- Exceptions.
188          (1) (a) For property assessed under Part 3, County Assessment, the county board of
189     equalization may, after giving notice in a manner prescribed by rule, determine whether certain
190     property within the county is exempt from taxation.
191          (b) The decision of the county board of equalization described in Subsection (1)(a)
192     shall:
193          (i) be in writing; and
194          (ii) include:
195          (A) a statement of facts; and
196          (B) the statutory basis for its decision.
197          (c) Except as provided in Subsection [(11)] (10)(a), a copy of the decision described in
198     Subsection (1)(a) shall be sent on or before May 15 to the person applying for the exemption.
199          [(2) The county board of equalization shall notify an owner of exempt property that has
200     previously received an exemption but failed to file an annual statement in accordance with
201     Subsection (9)(c), of the county board of equalization's intent to revoke the exemption on or
202     before April 1.]
203          [(3) (a)] (2) Except as provided in Subsection [(8)] (7) and subject to Subsection [(9)]
204     (8), a reduction in the value of property may not be made under this part or Part 18, Tax
205     Deferral and Tax Abatement, [in the value of property] and an exemption may not be granted
206     under this part or Part 19, Armed Forces Exemptions, unless the [party] person affected or the
207     [party's] person's agent:
208          [(i)] (a) [makes and files with the county board of equalization] submits a written
209     application [for the reduction or exemption,] to the county board of equalization; and
210          (b) [verified] verifies the application by signed statement[; and].
211          [(ii) appears before the county board of equalization and shows facts upon which it is

212     claimed the reduction should be made, or exemption granted.]
213          [(b) Notwithstanding Subsection (9), the county board of equalization may waive:]
214          [(i) the application or personal appearance requirements of Subsection (3)(a), (4)(b), or
215     (9)(a); or]
216          [(ii) the annual statement requirements of Subsection (9)(c).]
217          [(4)] (3) (a) [Before the county board of equalization grants any application for
218     exemption or reduction, the] The county board of equalization may [examine under oath the
219     person or agent making the application] require a person making an application for exemption
220     or reduction to appear before the county board of equalization and be examined under oath.
221          (b) [Except as provided in Subsection (3)(b)] If the county board of equalization
222     requires a person making an application for exemption or reduction to appear before the county
223     board of equalization, a reduction may not be made or exemption granted unless the person [or
224     the agent making the application attends] appears and answers all questions pertinent to the
225     inquiry.
226          [(5)] (4) For the hearing on the application, the county board of equalization may
227     subpoena any witnesses, and hear and take any evidence in relation to the pending application.
228          [(6)] (5) Except as provided in Subsection [(11)] (10)(b), the county board of
229     equalization shall hold hearings and render a written decision to determine any exemption on
230     or before May 1 in each year.
231          [(7)] (6) Any property owner dissatisfied with the decision of the county board of
232     equalization regarding any reduction or exemption may appeal to the commission under
233     Section 59-2-1006.
234          [(8)] (7) Notwithstanding Subsection [(3)(a)] (2), a county board of equalization may
235     not require an owner of property to file an application in accordance with this section in order
236     to claim an exemption for the property under the following:
237          (a) Subsections 59-2-1101(3)(a)(i) through (iii);
238          (b) Subsection 59-2-1101(3)(a)(vi) or (viii);
239          (c) Section 59-2-1110;
240          (d) Section 59-2-1111;
241          (e) Section 59-2-1112;
242          (f) Section 59-2-1113; or

243          (g) Section 59-2-1114.
244          [(9)] (8) (a) Except as provided in [Subsections (3)(b) and (9)(b),] Subsection (8)(b),
245     for property described in Subsection 59-2-1101(3)(a)(iv) or (v), a county board of equalization
246     shall, consistent with Subsection [(10)] (9), require an owner of that property to file an
247     application in accordance with this section in order to claim an exemption for that property.
248          (b) Notwithstanding Subsection [(9)] (8)(a), a county board of equalization may not
249     require an owner of property described in Subsection 59-2-1101(3)(a)(iv) or (v) to file an
250     application under Subsection [(9)] (8)(a) if:
251          (i) [(A)] the owner filed an application under Subsection [(9)(a); or] (8)(a);
252          [(B) the county board of equalization waived the application requirements in
253     accordance with Subsection (3)(b);]
254          (ii) the county board of equalization determines that the owner may claim an
255     exemption for that property; and
256          (iii) the exemption described in Subsection [(9)] (8)(b)(ii) is in effect.
257          (c) (i) [Except as provided in Subsection (3)(b), for] For the time period that an owner
258     is granted an exemption in accordance with this section for property described in Subsection
259     59-2-1101(3)(a)(iv) or (v), a county board of equalization shall require the owner to file an
260     annual statement on or before March 1 on a form prescribed by the commission establishing
261     that the property continues to be eligible for the exemption.
262          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
263     commission shall make rules providing:
264          (A) the form for the annual statement required by Subsection [(9)] (8)(c)(i);
265          (B) the contents of the form for the annual statement required by Subsection [(9)]
266     (8)(c)(i); and
267          (C) procedures and requirements for making the annual statement required by
268     Subsection [(9)] (8)(c)(i).
269          (iii) The commission shall make the form described in Subsection [(9)] (8)(c)(ii)(A)
270     available to counties.
271          (d) On or before April 1, a county board of equalization shall notify each property
272     owner who fails to timely file an annual statement in accordance with Subsection (8)(c) of the
273     county board of equalization's intent to revoke the exemption.

274          (e) An owner of exempt property described in Subsection 59-2-1101(3)(a)(iv) may file
275     the annual statement described in Subsection (8)(c) after March 1 if the property owner:
276          (i) files the annual statement on or before March 31; and
277          (ii) includes a statement of facts establishing that the property owner was unable to file
278     the annual statement on or before March 1 due to one of the following conditions and no other
279     responsible party was capable of filing the annual statement:
280          (A) a medical emergency of the property owner, an immediate family member of the
281     property owner, or the property owner's agent;
282          (B) the death of the property owner, an immediate family member of the property
283     owner, or the property owner's agent; or
284          (C) other extraordinary and unanticipated circumstances.
285          [(10)] (9) (a) For purposes of this Subsection [(10)] (9), "exclusive use exemption" is
286     as defined in Section 59-2-1101.
287          (b) [(i)] For purposes of Subsection (1)(a), [and except as provided in Subsections
288     (10)(b)(ii) and (iii),] when a person acquires property on or after January 1 that qualifies for an
289     exclusive use exemption, that person may apply for the exclusive use exemption on or before
290     the later of:
291          [(A)] (i) the day set by rule as the deadline for filing a property tax exemption
292     application; or
293          [(B)] (ii) [30] 120 days after the day on which the property is acquired.
294          [(ii) Notwithstanding Subsection (10)(b)(i), a person who acquires property on or after
295     January 1, 2004, and before January 1, 2005, that qualifies for an exclusive use exemption, may
296     apply for the exclusive use exemption for the 2004 calendar year on or before September 30,
297     2005.]
298          [(iii) Notwithstanding Subsection (10)(b)(i), a person who acquires property on or after
299     January 1, 2005, and before January 1, 2006, that qualifies for an exclusive use exemption, may
300     apply for the exclusive use exemption for the 2005 calendar year on or before the later of:]
301          [(A) September 30, 2005; or]
302          [(B) 30 days after the day on which the property is acquired.]
303          [(11)] (10) (a) Notwithstanding Subsection (1)(c), if an application for an exemption is
304     filed under Subsection [(10)] (9), a county board of equalization shall send a copy of the

305     decision described in Subsection (1)(c) to the person applying for the exemption on or before
306     the later of:
307          (i) May 15; or
308          (ii) 45 days after the day on which the application for the exemption is filed.
309          (b) Notwithstanding Subsection [(6)] (5), if an application for an exemption is filed
310     under Subsection [(10)] (9), a county board of equalization shall hold the hearing and render
311     the decision described in Subsection [(6)] (5) on or before the later of:
312          (i) May 1; or
313          (ii) 30 days after the day on which the application for the exemption is filed.
314          Section 3. Effective date.
315          This bill takes effect on January 1, 2023.