Senator Wayne A. Harper proposes the following substitute bill:


1     
AIRCRAFT PROPERTY TAX AMENDMENTS

2     
2024 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Wayne A. Harper

5     
House Sponsor: Walt Brooks

6     

7     LONG TITLE
8     General Description:
9          This bill modifies provisions related to property tax assessment for aircrafts.
10     Highlighted Provisions:
11          This bill:
12          ▸     subjects aircraft to state registration by the Department of Transportation based on
13     the number of days an aircraft operates in the state in a year;
14          ▸     limits the types of aircraft subject to central assessment by the State Tax
15     Commission;
16          ▸     requires the Department of Transportation to annually provide a list to the State Tax
17     Commission identifying each aircraft subject to state registration; and
18          ▸     makes technical and conforming changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          This bill provides a special effective date.
23     Utah Code Sections Affected:
24     AMENDS:
25          59-2-201, as last amended by Laws of Utah 2023, Chapter 471
26          72-10-109, as last amended by Laws of Utah 2023, Chapter 216
27     

28     Be it enacted by the Legislature of the state of Utah:
29          Section 1. Section 59-2-201 is amended to read:
30          59-2-201. Assessment by commission -- Determination of value of mining
31     property -- Determination of value of aircraft -- Notification of assessment -- Local
32     assessment of property assessed by the unitary method -- Commission may consult with
33     county.
34          (1) (a) By May 1 of each year, the following property, unless otherwise exempt under
35     the Utah Constitution or under Part 11, Exemptions, shall be assessed by the commission at
36     100% of fair market value, as valued on January 1, in accordance with this chapter:
37          (i) except as provided in Subsection (2), all property that operates as a unit across
38     county lines, if the values must be apportioned among more than one county or state;
39          (ii) all property of public utilities;
40          (iii) [all] subject to Subsection (1)(b), all operating property of an airline, air charter
41     service, and air contract service;
42          (iv) all geothermal fluids and geothermal resources;
43          (v) all mines and mining claims except in cases, as determined by the commission,
44     where the mining claims are used for other than mining purposes, in which case the value of
45     mining claims used for other than mining purposes shall be assessed by the assessor of the
46     county in which the mining claims are located; and
47          (vi) all machinery used in mining, all property or surface improvements upon or
48     appurtenant to mines or mining claims. For the purposes of assessment and taxation, all
49     processing plants, mills, reduction works, and smelters that are primarily used by the owner of
50     a mine or mining claim for processing, reducing, or smelting minerals taken from a mine or
51     mining claim shall be considered appurtenant to that mine or mining claim, regardless of actual
52     location.
53          (b) For purposes of Subsection (1)(a)(iii), if the operating property of an airline, air
54     charter service, or air contract service includes an aircraft, the commission shall assess the
55     aircraft only if the aircraft operates under 14 C.F.R. Part 121, with a maximum takeoff weight
56     exceeding 35,000 pounds.
57          [(b) (i) For purposes of Subsection (1)(a)(iii), operating property of an air charter
58     service does not include an aircraft that is:]
59          [(A) used by the air charter service for air charter; and]
60          [(B) owned by a person other than the air charter service.]
61          [(ii) For purposes of this Subsection (1)(b):]
62          [(A) "person" means a natural person, individual, corporation, organization, or other
63     legal entity; and]
64          [(B) a person does not qualify as a person other than the air charter service as described
65     in Subsection (1)(b)(i)(B) if the person is:]
66          [(I) a principal, owner, or member of the air charter service; or]
67          [(II) a legal entity that has a principal, owner, or member of the air charter service as a
68     principal, owner, or member of the legal entity.]
69          (2) (a) The commission may not assess property owned by a telecommunications
70     service provider.
71          (b) The commission shall assess and collect property tax on state-assessed commercial
72     vehicles at the time of original registration or annual renewal.
73          (i) The commission shall assess and collect property tax annually on state-assessed
74     commercial vehicles that are registered pursuant to Section 41-1a-222 or 41-1a-228.
75          (ii) State-assessed commercial vehicles brought into the state that are required to be
76     registered in Utah shall, as a condition of registration, be subject to ad valorem tax unless all
77     property taxes or fees imposed by the state of origin have been paid for the current calendar
78     year.
79          (iii) Real property, improvements, equipment, fixtures, or other personal property in
80     this state owned by the company shall be assessed separately by the local county assessor.
81          (iv) The commission shall adjust the value of state-assessed commercial vehicles as
82     necessary to comply with 49 U.S.C. Sec. 14502, and the commission shall direct the county
83     assessor to apply the same adjustment to any personal property, real property, or improvements
84     owned by the company and used directly and exclusively in their commercial vehicle activities.
85          (3) (a) The method for determining the fair market value of productive mining property
86     is the capitalized net revenue method or any other valuation method the commission believes,
87     or the taxpayer demonstrates to the commission's satisfaction, to be reasonably determinative
88     of the fair market value of the mining property.
89          (b) The commission shall determine the rate of capitalization applicable to mines,
90     consistent with a fair rate of return expected by an investor in light of that industry's current
91     market, financial, and economic conditions.
92          (c) In no event may the fair market value of the mining property be less than the fair
93     market value of the land, improvements, and tangible personal property upon or appurtenant to
94     the mining property.
95          (4) (a) As used in this Subsection (4), "aircraft pricing guide" means a nationally
96     recognized publication that assigns value estimates for individual commercial aircraft that are:
97          (i) identified by year, make, and model; and
98          (ii) in average condition typical for the aircraft's type and vintage.
99          (b) (i) Except as provided in Subsection (4)(d), the commission shall use an aircraft
100     pricing guide, adjusted as provided in Subsection (4)(c), to determine the fair market value of
101     aircraft assessed under this part.
102          (ii) The commission shall use the Airliner Price Guide as the aircraft pricing guide,
103     except that:
104          (A) if the Airliner Price Guide is no longer published or the commission determines
105     that another aircraft pricing guide more reasonably reflects the fair market value of aircraft, the
106     commission, after consulting with the airlines operating in the state, shall select an alternative
107     aircraft pricing guide;
108          (B) if an aircraft is not listed in the Airliner Price Guide, the commission shall use the
109     Aircraft Bluebook Price Digest as the aircraft pricing guide; and
110          (C) if the Aircraft Bluebook Price Digest is no longer published or the commission
111     determines that another aircraft pricing guide more reasonably reflects the fair market value of
112     aircraft, the commission, after consulting with the airlines operating in the state, shall select an
113     alternative aircraft pricing guide.
114          (c) (i) To reflect the value of an aircraft fleet that is used as part of the operating
115     property of an airline, air charter service, or air contract service, the fair market value of the
116     aircraft shall include a fleet adjustment as provided in this Subsection (4)(c).
117          (ii) If the aircraft pricing guide provides a method for making a fleet adjustment, the
118     commission shall use the method described in the aircraft pricing guide.
119          (iii) If the aircraft pricing guide does not provide a method for making a fleet
120     adjustment, the commission shall make a fleet adjustment by reducing the aircraft pricing guide
121     value of each aircraft in the fleet by .5% for each aircraft over three aircraft up to a maximum
122     20% reduction.
123          (d) The commission may use an alternative method for valuing aircraft of an airline, air
124     charter service, or air contract service if the commission:
125          (i) has clear and convincing evidence that the aircraft values reflected in the aircraft
126     pricing guide do not reasonably reflect fair market value of the aircraft; and
127          (ii) cannot identify an alternative aircraft pricing guide from which the commission
128     may determine aircraft value.
129          (5) Immediately following the assessment, the commission shall send, by certified
130     mail, notice of the assessment to the owner or operator of the assessed property and the
131     assessor of the county in which the property is located.
132          (6) The commission may consult with a county in valuing property in accordance with
133     this part.
134          (7) The local county assessor shall separately assess property that is assessed by the
135     unitary method if the commission determines that the property:
136          (a) is not necessary to the conduct of the business; and
137          (b) does not contribute to the income of the business.
138          Section 2. Section 72-10-109 is amended to read:
139          72-10-109. Certificate of registration of aircraft required -- Exceptions.
140          (1) [(a) A] Except as provided in Subsection (2), a person may not operate, pilot, or
141     navigate, or cause or authorize to be operated, piloted, or navigated within this state any civil
142     aircraft [domiciled] operating in this state for 181 or more days within any consecutive
143     12-month period unless the aircraft has a current certificate of registration issued by the
144     department.
145          [(b) The restriction described in Subsection (1)(a)]
146          (2) The state registration requirement under Subsection (1) does not apply to:
147          (a) aircraft licensed by a foreign country with which the United States has a reciprocal
148     agreement covering the operations of the registered aircraft [or to];
149          (b) a non-passenger-carrying flight solely for inspection or test purposes authorized by
150     the Federal Aviation Administration to be made without the certificate of registration[.]; or
151          (c) aircraft operating under 14 C.F.R. Part 121, with a maximum takeoff weight
152     exceeding 35,000 pounds.
153          [(2) Aircraft centrally assessed by the State Tax Commission are exempt from the state
154     registration requirement under Subsection (1).]
155          (3) Beginning on January 1, 2024, a person may not operate in this state an unmanned
156     aircraft system or an advanced air mobility aircraft for commercial operation for which
157     certification is required under 14 C.F.R. Part 107 or 135 unless the aircraft has a current
158     certificate of registration issued by the department.
159          (4) The department shall, or before December 31 of each calendar year, provide to the
160     State Tax Commission a list of each aircraft for which a current certificate of registration is
161     issued by the department under Subsection (1).
162          Section 3. Effective date.
163          This bill takes effect on January 1, 2025.