Utah House Bill HB0452

Utah 2022 Regular Session

• Introduced: 2/22/22
• Refer: 2/25/22
• Report Pass: 3/2/22
• Failed: 3/4/22

Caption

Corporation Reinstatement Amendments

Impact

With the introduction of this bill, the process of reinstatement for dissolved entities is clarified and structured, which, in turn, emphasizes the requirement for organizations to ensure they are in good standing with tax obligations before reinstatement can occur. This change is intended to enhance accountability among corporations and nonprofits by ensuring that they remain compliant with state regulations, thus potentially reducing the number of entities that operate out of compliance. Furthermore, this legislative measure reaffirms the importance of adhering to state taxation laws, thus reinforcing fiscal responsibility among corporate entities.

Summary

House Bill 452, titled the Corporation Reinstatement Amendments, seeks to make specific changes to the provisions governing the reinstatement of corporations and nonprofit entities post-dissolution in Utah. The bill outlines the application requirements for these entities wishing to regain their corporate status after being dissolved, whether administratively or voluntarily. Notably, it permits a corporation or nonprofit to request reinstatement within two years of dissolution, provided they can demonstrate compliance with certain conditions, such as paying outstanding taxes and fees to the State Tax Commission.

Contention

There may be concerns related to the administrative burden placed on nonprofits and corporations regarding the proof of 'good standing'. While proponents of the bill argue that ensuring compliance protects the integrity of corporate operations, critics may voice concerns regarding the accessibility of reinstatement for smaller organizations that may struggle to meet all the outlined requirements, particularly in financial terms. The requirement for tax compliance could disproportionately affect smaller or local nonprofits who may not have the resources to address tax liabilities promptly.

Notable_points

The bill also includes provisions for the State Tax Commission to notify the Division of Corporations regarding the status of an entity's standing. This communication loop is aimed at improving response times and ensuring that organizations are well informed about their standing with the state. Moreover, the bill makes technical updates to ensure that the language and provisions reflect current regulatory practices, making it easier for entities to navigate the reinstatement process.