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7 LONG TITLE
8 Committee Note:
9 The Revenue and Taxation Interim Committee recommended this bill.
10 Legislative Vote: 15 voting for 0 voting against 3 absent
11 General Description:
12 This bill modifies provisions relating to tax assessments.
13 Highlighted Provisions:
14 This bill:
15 ▸ defines terms;
16 ▸ requires a county assessor to provide certain assessment data to the commission;
17 ▸ establishes a date by which the county assessor must provide the assessment data to
18 the commission;
19 ▸ permits the commission to review the county's assessment data and to provide
20 findings and make recommendations to the county;
21 ▸ permits the commission to subscribe to a market data service; and
22 ▸ establishes requirements for a pass-through entity when filing an amended return.
23 Money Appropriated in this Bill:
24 None
25 Other Special Clauses:
26 This bill provides retrospective operation.
27 Utah Code Sections Affected:
28 AMENDS:
29 59-10-1403, as last amended by Laws of Utah 2022, Chapter 238
30 59-10-1403.2, as last amended by Laws of Utah 2022, Chapter 238
31 ENACTS:
32 59-2-313.1, Utah Code Annotated 1953
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34 Be it enacted by the Legislature of the state of Utah:
35 Section 1. Section 59-2-313.1 is enacted to read:
36 59-2-313.1. County assessor duties to provide assessment data - Commission
37 review - Subscription to market data service.
38 (1) As used in this section, "assessment data" means:
39 (a) the information described in Subsection 59-2-303.1(6) contained in a county's
40 database used in mass appraisal; and
41 (b) any other assessment information the commission requires.
42 (2) A county assessor shall provide assessment data to the commission:
43 (a) (i) annually on or before March 31;
44 (ii) no later than 15 days after the date the county assessor provides the assessment
45 book to the county auditor under Section 59-2-311;
46 (iii) no later than 15 days after the date the county auditor provides the assessment roll
47 to the county treasurer under Section 59-2-326; and
48 (b) at any other time requested by the commission.
49 (3) The commission may:
50 (a) review a county's annual update of property values the county is required to perform
51 under Section 59-2-303.1;
52 (b) review a county's detailed review of property characteristics the county is required
53 to perform under Section 59-2-303.1; and
54 (c) provide findings and recommendations to the county.
55 (4) The commission may subscribe to a market data service to assist:
56 (a) the commission in performing a review described in Subsection (3); and
57 (b) counties in meeting the requirements of Section 59-2-303.1.
58 Section 2. Section 59-10-1403 is amended to read:
59 59-10-1403. Income tax treatment of a pass-through entity -- Returns --
60 Classification same as under Internal Revenue Code.
61 (1) Subject to Subsection (3) and except as provided in Subsection 59-10-1403.2(2), a
62 pass-through entity is not subject to a tax imposed by this chapter.
63 (2) Except as provided in Section 59-10-1403.3, the income, gain, loss, deduction, or
64 credit of a pass-through entity shall be passed through to one or more pass-through entity
65 taxpayers as provided in this part.
66 (3) A pass-through entity is subject to the return filing requirements of Sections
67 59-10-507, 59-10-514, and 59-10-516.
68 (4) For purposes of taxation under this title, a pass-through entity that transacts
69 business in the state shall be classified in the same manner as the pass-through entity is
70 classified for federal income tax purposes.
71 (5) (a) If a change is made in a pass-through entity's net income or loss on the
72 pass-through entity's federal income tax return because of an action of the federal government,
73 the pass-through entity shall file with the commission, within 90 days after the date of a final
74 determination of the action:
75 (i) a copy of the pass-through entity's amended federal income tax return or federal
76 adjustment; and
77 (ii) an amended state income tax return that conforms with the changes made in the
78 pass-through entity's amended federal income tax return.
79 (b) If a change is made in a pass-through entity's net income on the pass-through
80 entity's federal income tax return because the pass-through entity files an amended federal
81 income tax return, the pass-through entity shall file with the commission, within 90 days after
82 the date the taxpayer files the amended federal income tax return:
83 (i) a copy of the pass-through entity's amended federal income tax return; and
84 (ii) an amended state income tax return that conforms with the changes made in the
85 pass-through entity's amended federal income tax return.
86 Section 3. Section 59-10-1403.2 is amended to read:
87 59-10-1403.2. Pass-through entity payment or withholding of tax on behalf of a
88 pass-through entity taxpayer -- Exceptions to payment or withholding requirement --
89 Procedures and requirements -- Failure to pay or withhold a tax on behalf of a
90 pass-through entity taxpayer.
91 (1) (a) Except as provided in Subsections (1)(b) and (2), for a taxable year, a
92 pass-through entity shall pay or withhold a tax:
93 (i) on:
94 (A) the business income of the pass-through entity; and
95 (B) the nonbusiness income of the pass-through entity derived from or connected with
96 Utah sources; and
97 (ii) on behalf of a pass-through entity taxpayer.
98 (b) A pass-through entity is not required to pay or withhold a tax under Subsection
99 (1)(a):
100 (i) on behalf of a pass-through entity taxpayer who is a resident individual;
101 (ii) if the pass-through entity is an organization exempt from taxation under Subsection
102 59-7-102(1)(a);
103 (iii) if the pass-through entity:
104 (A) is a plan under Section 401, 408, or 457, Internal Revenue Code; and
105 (B) is not required to file a return under Chapter 7, Corporate Franchise and Income
106 Taxes, or this chapter;
107 (iv) if the pass-through entity is a publicly traded partnership:
108 (A) as defined in Section 7704(b), Internal Revenue Code;
109 (B) that is classified as a partnership for federal income tax purposes; and
110 (C) that files an annual information return reporting the following with respect to each
111 partner of the publicly traded partnership with income derived from or connected with Utah
112 sources that exceeds $500 in a taxable year:
113 (I) the partner's name;
114 (II) the partner's address;
115 (III) the partner's taxpayer identification number; and
116 (IV) other information required by the commission; or
117 (v) on behalf of a pass-through entity taxpayer that is a nonresident individual if the
118 pass-through entity pays the tax described in Subsection (2).
119 (2) (a) For each taxable year that begins on or after January 1, 2022, but begins on or
120 before December 31, 2025, a pass-through entity that is not a disregarded pass-through entity
121 may elect to pay a tax in an amount equal to:
122 (i) the percentage listed in Subsection 59-10-104(2); and
123 (ii) voluntary taxable income.
124 (b) A pass-through entity that elects to pay the tax in accordance with Subsection (2)(a)
125 shall notify any final pass-through entity taxpayer of that election.
126 (c) A pass-through entity that pays a tax described in Subsection (2)(a) shall provide to
127 each pass-through entity taxpayer a statement that states the amount of tax paid on the income
128 attributed to the pass-through entity taxpayer.
129 (d) A payment of the tax described in Subsection (2)(a) on or before the last day of the
130 taxable year is an irrevocable election to be subject to the tax for the taxable year.
131 (3) (a) Subject to Subsection (3)(b), the tax a pass-through entity shall pay or withhold
132 on behalf of a pass-through entity taxpayer for a taxable year is an amount:
133 (i) determined by the commission by rule made in accordance with Title 63G, Chapter
134 3, Utah Administrative Rulemaking Act; and
135 (ii) that the commission estimates will be sufficient to pay the tax liability of the
136 pass-through entity taxpayer under this chapter with respect to the income described in
137 Subsection (1)(a)(i) or (2)(a)(ii) of that pass-through entity for the taxable year.
138 (b) The rules the commission makes in accordance with Subsection (3)(a):
139 (i) except as provided in Subsection (3)(c):
140 (A) shall:
141 (I) for a pass-through entity except for a pass-through entity that is an S corporation,
142 take into account items of income, gain, loss, deduction, and credit as analyzed on the schedule
143 for reporting partners' distributive share items as part of the federal income tax return for the
144 pass-through entity; or
145 (II) for a pass-through entity that is an S corporation, take into account items of
146 income, gain, loss, deduction, and credit as reconciled on the schedule for reporting
147 shareholders' pro rata share items as part of the federal income tax return for the pass-through
148 entity; and
149 (B) notwithstanding Subsection (3)(b)(ii)(D), take into account the refundable tax
150 credit provided in Section 59-6-102; and
151 (ii) may not take into account the following items if taking those items into account
152 does not result in an accurate estimate of a pass-through entity taxpayer's tax liability under this
153 chapter for the taxable year:
154 (A) a capital loss;
155 (B) a passive loss;
156 (C) another item of deduction or loss if that item of deduction or loss is generally
157 subject to significant reduction or limitation in calculating:
158 (I) for a pass-through entity taxpayer that is classified as a C corporation for federal
159 income tax purposes, unadjusted income as defined in Section 59-7-101;
160 (II) for a pass-through entity that is classified as an individual, partnership, or S
161 corporation for federal income tax purposes, adjusted gross income; or
162 (III) for a pass-through entity that is classified as an estate or a trust for federal income
163 tax purposes, unadjusted income as defined in Section 59-10-103; or
164 (D) a tax credit allowed against a tax imposed under:
165 (I) Chapter 7, Corporate Franchise and Income Taxes; or
166 (II) this chapter.
167 (c) The rules the commission makes in accordance with Subsection (3)(a) may
168 establish a method for taking into account items of income, gain, loss, deduction, or credit of a
169 pass-through entity if:
170 (i) for a pass-through entity except for a pass-through entity that is an S corporation,
171 the pass-through entity does not analyze the items of income, gain, loss, deduction, or credit on
172 the schedule for reporting partners' distributive share items as part of the federal income tax
173 return for the pass-through entity; or
174 (ii) for a pass-through entity that is an S corporation, the pass-through entity does not
175 reconcile the items of income, gain, loss, deduction, or credit on the schedule for reporting
176 shareholders' pro rata share items as part of the federal income tax return for the pass-through
177 entity.
178 (4) (a) Except as provided in Subsection (4)(b), a pass-through entity shall remit to the
179 commission the tax the pass-through entity pays or withholds on behalf of a pass-through entity
180 taxpayer under this section:
181 (i) on or before the due date of the pass-through entity's return, not including
182 extensions; and
183 (ii) on a form provided by the commission.
184 (b) A pass-through entity shall remit the tax described in Subsection (2) on or before
185 the last day of the pass-through entity's taxable year.
186 (c) Except as provided in Subsection (1)(b), a pass-through entity that files an amended
187 return under this part shall pay or withhold tax on any increase in the income described in
188 Subsection (1)(a)(i) on behalf of the pass-through entity taxpayer and remit that tax to the
189 commission.
190 (5) A pass-through entity shall provide a statement to a pass-through entity taxpayer on
191 behalf of whom the pass-through entity pays or withholds a tax under this section showing the
192 amount of tax the pass-through entity pays or withholds under this section for the taxable year
193 on behalf of the pass-through entity taxpayer.
194 (6) Notwithstanding Section 59-1-401 or 59-1-402, the commission may not collect an
195 amount under this section for a taxable year from a pass-through entity and shall waive any
196 penalty and interest on that amount if:
197 (a) the pass-through entity fails to pay or withhold the tax on the amount as required by
198 this section on behalf of the pass-through entity taxpayer;
199 (b) the pass-through entity taxpayer:
200 (i) files a return on or before the due date for filing the pass-through entity's return,
201 including extensions; and
202 (ii) on or before the due date including extensions described in Subsection (6)(b)(i),
203 pays the tax on the amount for the taxable year:
204 (A) if the pass-through entity taxpayer is classified as a C corporation for federal
205 income tax purposes, under Chapter 7, Corporate Franchise and Income Taxes; or
206 (B) if the pass-through entity taxpayer is classified as an estate, individual, partnership,
207 S corporation, or a trust for federal income tax purposes, under this chapter; and
208 (c) the pass-through entity applies to the commission.
209 (7) Notwithstanding Section 59-1-401 or 59-1-402, the commission may not collect an
210 amount under this section for a taxable year from a pass-through entity that is a trust and shall
211 waive any penalty and interest on that amount if:
212 (a) the pass-through entity fails to pay or withhold the tax on the amount as required by
213 this section on behalf of a dependent beneficiary;
214 (b) the pass-through entity applies to the commission; and
215 (c) (i) the dependent beneficiary complies with the requirements of Subsection (6)(b);
216 or
217 (ii) (A) the dependent beneficiary's adjusted gross income for the taxable year does not
218 exceed the basic standard deduction for the dependent beneficiary, as calculated under Section
219 63, Internal Revenue Code, for that taxable year; and
220 (B) the trustee of the trust retains a statement of dependent beneficiary income on
221 behalf of the dependent beneficiary.
222 (8) If a pass-through entity would have otherwise qualified for a waiver of a penalty
223 and interest under Subsection (7), except that the trustee of a trust has not applied to the
224 commission as required by Subsection (7)(b) or retained the statement of dependent beneficiary
225 income required by Subsection (7)(c)(ii)(B), it is a rebuttable presumption in an audit that the
226 pass-through entity would have otherwise qualified for the waiver of the penalty and interest
227 under Subsection (7).
228 Section 4. Retrospective operation.
229 The following sections have retrospective operation for the taxable year that begins on
230 or after January 1, 2023:
231 (1) Section 59-10-1403; and
232 (2) Section 59-10-1403.2.