Enrolled Copy H.B. 56
1 TAX ASSESSMENT AMENDMENTS
2 2023 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Steve Eliason
5 Senate Sponsor: Lincoln Fillmore
6
7LONG TITLE
8General Description:
9 This bill modifies provisions relating to tax assessments.
10Highlighted Provisions:
11 This bill:
12 <defines terms;
13 <requires a county assessor to provide certain assessment data to the commission;
14 <establishes a date by which the county assessor must provide the assessment data to
15the commission;
16 <permits the commission to review the county's assessment data and to provide
17findings and make recommendations to the county;
18 <permits the commission to subscribe to a market data service; and
19 <establishes requirements for a pass-through entity when filing an amended return.
20Money Appropriated in this Bill:
21 None
22Other Special Clauses:
23 This bill provides retrospective operation.
24Utah Code Sections Affected:
25AMENDS:
26 59-10-114, as last amended by Laws of Utah 2022, Chapter 238
27 59-10-406, as last amended by Laws of Utah 2022, Chapter 238
28 59-10-1045, as enacted by Laws of Utah 2022, Chapter 238
29 59-10-1402, as last amended by Laws of Utah 2022, Chapter 238 H.B. 56 Enrolled Copy
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30 59-10-1403, as last amended by Laws of Utah 2022, Chapter 238
31 59-10-1403.2, as last amended by Laws of Utah 2022, Chapter 238
32ENACTS:
33 59-2-313.1, Utah Code Annotated 1953
34
35Be it enacted by the Legislature of the state of Utah:
36 Section 1. Section 59-2-313.1 is enacted to read:
37 59-2-313.1. County assessor duties to provide assessment data -- Commission
38review -- Subscription to market data service.
39 (1) As used in this section, "assessment data" means:
40 (a) the information described in Subsection 59-2-303.1(6) contained in a county's
41database used in mass appraisal; and
42 (b) any other assessment information the commission requires.
43 (2) A county assessor shall provide assessment data to the commission:
44 (a) (i) annually on or before March 31;
45 (ii) no later than 15 days after the date the county assessor provides the assessment
46book to the county auditor under Section 59-2-311;
47 (iii) no later than 15 days after the date the county auditor provides the assessment roll
48to the county treasurer under Section 59-2-326; or
49 (b) at any other time requested by the commission.
50 (3) The commission may:
51 (a) review a county's annual update of property values the county is required to perform
52under Section 59-2-303.1;
53 (b) review a county's detailed review of property characteristics the county is required
54to perform under Section 59-2-303.1; and
55 (c) provide findings and recommendations to the county.
56 (4) The commission may subscribe to a market data service to assist:
57 (a) the commission in performing a review described in Subsection (3); and Enrolled Copy H.B. 56
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58 (b) counties in meeting the requirements of Section 59-2-303.1.
59 Section 2. Section 59-10-114 is amended to read:
60 59-10-114. Additions to and subtractions from adjusted gross income of an
61individual.
62 (1) There shall be added to adjusted gross income of a resident or nonresident
63individual:
64 (a) a lump sum distribution that the taxpayer does not include in adjusted gross income
65on the taxpayer's federal individual income tax return for the taxable year;
66 (b) the amount of a child's income calculated under Subsection (4) that:
67 (i) a parent elects to report on the parent's federal individual income tax return for the
68taxable year; and
69 (ii) the parent does not include in adjusted gross income on the parent's federal
70individual income tax return for the taxable year;
71 (c) (i) a withdrawal from a medical care savings account and any penalty imposed for
72the taxable year if:
73 (A) the resident or nonresident individual does not deduct the amounts on the resident
74or nonresident individual's federal individual income tax return under Section 220, Internal
75Revenue Code;
76 (B) the withdrawal is subject to Subsections 31A-32a-105(1) and (2); and
77 (C) the withdrawal is subtracted on, or used as the basis for claiming a tax credit on, a
78return the resident or nonresident individual files under this chapter;
79 (ii) a disbursement required to be added to adjusted gross income in accordance with
80Subsection 31A-32a-105(3); or
81 (iii) an amount required to be added to adjusted gross income in accordance with
82Subsection 31A-32a-105(5)(c);
83 (d) the amount withdrawn under Title 53B, Chapter 8a, Utah Educational Savings Plan,
84from the account of a resident or nonresident individual who is an account owner as defined in
85Section 53B-8a-102, for the taxable year for which the amount is withdrawn, if that amount H.B. 56 Enrolled Copy
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86withdrawn from the account of the resident or nonresident individual who is the account
87owner:
88 (i) is not expended for:
89 (A) higher education costs as defined in Section 53B-8a-102.5; or
90 (B) a payment or distribution that qualifies as an exception to the additional tax for
91distributions not used for educational expenses provided in Sections 529(c) and 530(d),
92Internal Revenue Code; and
93 (ii) is:
94 (A) subtracted by the resident or nonresident individual:
95 (I) who is the account owner; and
96 (II) on the resident or nonresident individual's return filed under this chapter for a
97taxable year beginning on or before December 31, 2007; or
98 (B) used as the basis for the resident or nonresident individual who is the account
99owner to claim a tax credit under Section 59-10-1017;
100 (e) except as provided in Subsection (5), for bonds, notes, and other evidences of
101indebtedness acquired on or after January 1, 2003, the interest from bonds, notes, and other
102evidences of indebtedness:
103 (i) issued by one or more of the following entities:
104 (A) a state other than this state;
105 (B) the District of Columbia;
106 (C) a political subdivision of a state other than this state; or
107 (D) an agency or instrumentality of an entity described in Subsections (1)(e)(i)(A)
108through (C); and
109 (ii) to the extent the interest is not included in adjusted gross income on the taxpayer's
110federal income tax return for the taxable year;
111 (f) subject to Subsection (2)(c), any distribution received by a resident beneficiary of a
112resident trust of income that was taxed at the trust level for federal tax purposes, but was
113subtracted from state taxable income of the trust pursuant to Subsection 59-10-202(2)(b); Enrolled Copy H.B. 56
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114 (g) any distribution received by a resident beneficiary of a nonresident trust of
115undistributed distributable net income realized by the trust on or after January 1, 2004, if that
116undistributed distributable net income was taxed at the trust level for federal tax purposes, but
117was not taxed at the trust level by any state, with undistributed distributable net income
118considered to be distributed from the most recently accumulated undistributed distributable net
119income;
120 (h) any adoption expense:
121 (i) for which a resident or nonresident individual receives reimbursement from another
122person; and
123 (ii) to the extent to which the resident or nonresident individual subtracts that adoption
124expense:
125 (A) on a return filed under this chapter for a taxable year beginning on or before
126December 31, 2007; or
127 (B) from federal taxable income on a federal individual income tax return;
128 (i) the amount of tax paid on income attributed to the individual in accordance with
129Subsection 59-10-1403.2(2) that is not included in adjusted gross income; and
130 (j) the amount of tax paid:
131 (i) on income attributed to the individual and taxable in this state, that is not included
132in adjusted gross income;
133 (ii) to another state; and
134 (iii) that the commission determines is substantially similar to the tax imposed under
135Subsection 59-10-1403.2(2).
136 (2) There shall be subtracted from adjusted gross income of a resident or nonresident
137individual:
138 (a) the difference between:
139 (i) the interest or a dividend on an obligation or security of the United States or an
140authority, commission, instrumentality, or possession of the United States, to the extent that
141interest or dividend is: H.B. 56 Enrolled Copy
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142 (A) included in adjusted gross income for federal income tax purposes for the taxable
143year; and
144 (B) exempt from state income taxes under the laws of the United States; and
145 (ii) any interest on indebtedness incurred or continued to purchase or carry the
146obligation or security described in Subsection (2)(a)(i);
147 (b) if the conditions of Subsection (3)(a) are met, the amount of income derived by a
148Ute tribal member:
149 (i) during a time period that the Ute tribal member resides on homesteaded land
150diminished from the Uintah and Ouray Reservation; and
151 (ii) from a source within the Uintah and Ouray Reservation;
152 (c) an amount received by a resident or nonresident individual or distribution received
153by a resident or nonresident beneficiary of a resident trust:
154 (i) if that amount or distribution constitutes a refund of taxes imposed by:
155 (A) a state; or
156 (B) the District of Columbia; and
157 (ii) to the extent that amount or distribution is included in adjusted gross income for
158that taxable year on the federal individual income tax return of the resident or nonresident
159individual or resident or nonresident beneficiary of a resident trust;
160 (d) the amount of a railroad retirement benefit:
161 (i) paid:
162 (A) in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231 et
163seq.;
164 (B) to a resident or nonresident individual; and
165 (C) for the taxable year; and
166 (ii) to the extent that railroad retirement benefit is included in adjusted gross income on
167that resident or nonresident individual's federal individual income tax return for that taxable
168year;
169 (e) an amount: Enrolled Copy H.B. 56
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170 (i) received by an enrolled member of an American Indian tribe; and
171 (ii) to the extent that the state is not authorized or permitted to impose a tax under this
172part on that amount in accordance with:
173 (A) federal law;
174 (B) a treaty; or
175 (C) a final decision issued by a court of competent jurisdiction;
176 (f) an amount received:
177 (i) for the interest on a bond, note, or other obligation issued by an entity for which
178state statute provides an exemption of interest on its bonds from state individual income tax;
179 (ii) by a resident or nonresident individual;
180 (iii) for the taxable year; and
181 (iv) to the extent the amount is included in adjusted gross income on the taxpayer's
182federal income tax return for the taxable year;
183 (g) the amount of all income, including income apportioned to another state, of a
184nonmilitary spouse of an active duty military member if:
185 (i) both the nonmilitary spouse and the active duty military member are nonresident
186individuals;
187 (ii) the active duty military member is stationed in Utah;
188 (iii) the nonmilitary spouse is subject to the residency provisions of 50 U.S.C. Sec.
1894001(a)(2); and
190 (iv) the income is included in adjusted gross income for federal income tax purposes
191for the taxable year;
192 (h) for a taxable year beginning on or after January 1, 2019, but beginning on or before
193December 31, 2019, only:
194 (i) the amount of any FDIC premium paid or incurred by the taxpayer that is
195disallowed as a deduction for federal income tax purposes under Section 162(r), Internal
196Revenue Code, on the taxpayer's 2018 federal income tax return; plus
197 (ii) the amount of any FDIC premium paid or incurred by the taxpayer that is H.B. 56 Enrolled Copy
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198disallowed as a deduction for federal income tax purposes under Section 162(r), Internal
199Revenue Code, for the taxable year;
200 (i) for a taxable year beginning on or after January 1, 2020, the amount of any FDIC
201premium paid or incurred by the taxpayer that is disallowed as a deduction for federal income
202tax purposes under Section 162(r), Internal Revenue Code, for the taxable year; and
203 (j) an amount of a distribution from a qualified retirement plan under Section 401(a),
204Internal Revenue Code, if:
205 (i) the amount of the distribution is included in adjusted gross income on the resident
206or nonresident individual's federal individual income tax return for the taxable year; and
207 (ii) for the taxable year when the amount of the distribution was contributed to the
208qualified retirement plan, the amount of the distribution:
209 (A) was not included in adjusted gross income on the resident or nonresident
210individual's federal individual income tax return for the taxable year; and
211 (B) was taxed by another state of the United States, the District of Columbia, or a
212possession of the United States.
213 (3) (a) A subtraction for an amount described in Subsection (2)(b) is allowed only if:
214 (i) the taxpayer is a Ute tribal member; and
215 (ii) the governor and the Ute tribe execute and maintain an agreement meeting the
216requirements of this Subsection (3).
217 (b) The agreement described in Subsection (3)(a):
218 (i) may not:
219 (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
220 (B) provide a subtraction under this section greater than or different from the
221subtraction described in Subsection (2)(b); or
222 (C) affect the power of the state to establish rates of taxation; and
223 (ii) shall:
224 (A) provide for the implementation of the subtraction described in Subsection (2)(b);
225 (B) be in writing; Enrolled Copy H.B. 56
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226 (C) be signed by:
227 (I) the governor; and
228 (II) the chair of the Business Committee of the Ute tribe;
229 (D) be conditioned on obtaining any approval required by federal law; and
230 (E) state the effective date of the agreement.
231 (c) (i) The governor shall report to the commission by no later than February 1 of each
232year regarding whether or not an agreement meeting the requirements of this Subsection (3) is
233in effect.
234 (ii) If an agreement meeting the requirements of this Subsection (3) is terminated, the
235subtraction permitted under Subsection (2)(b) is not allowed for taxable years beginning on or
236after the January 1 following the termination of the agreement.
237 (d) For purposes of Subsection (2)(b) and in accordance with Title 63G, Chapter 3,
238Utah Administrative Rulemaking Act, the commission may make rules:
239 (i) for determining whether income is derived from a source within the Uintah and
240Ouray Reservation; and
241 (ii) that are substantially similar to how adjusted gross income derived from Utah
242sources is determined under Section 59-10-117.
243 (4) (a) For purposes of this Subsection (4), "Form 8814" means:
244 (i) the federal individual income tax Form 8814, Parents' Election To Report Child's
245Interest and Dividends; or
246 (ii) (A) a form designated by the commission in accordance with Subsection
247(4)(a)(ii)(B) as being substantially similar to 2000 Form 8814 if for purposes of federal
248individual income taxes the information contained on 2000 Form 8814 is reported on a form
249other than Form 8814; and
250 (B) for purposes of Subsection (4)(a)(ii)(A) and in accordance with Title 63G, Chapter
2513, Utah Administrative Rulemaking Act, the commission may make rules designating a form as
252being substantially similar to 2000 Form 8814 if for purposes of federal individual income
253taxes the information contained on 2000 Form 8814 is reported on a form other than Form H.B. 56 Enrolled Copy
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2548814.
255 (b) The amount of a child's income added to adjusted gross income under Subsection
256(1)(b) is equal to the difference between:
257 (i) the lesser of:
258 (A) the base amount specified on Form 8814; and
259 (B) the sum of the following reported on Form 8814:
260 (I) the child's taxable interest;
261 (II) the child's ordinary dividends; and
262 (III) the child's capital gain distributions; and
263 (ii) the amount not taxed that is specified on Form 8814.
264 (5) Notwithstanding Subsection (1)(e), interest from bonds, notes, and other evidences
265of indebtedness issued by an entity described in Subsections (1)(e)(i)(A) through (D) may not
266be added to adjusted gross income of a resident or nonresident individual if, as annually
267determined by the commission:
268 (a) for an entity described in Subsection (1)(e)(i)(A) or (B), the entity and all of the
269political subdivisions, agencies, or instrumentalities of the entity do not impose a tax based on
270income on any part of the bonds, notes, and other evidences of indebtedness of this state; or
271 (b) for an entity described in Subsection (1)(e)(i)(C) or (D), the following do not
272impose a tax based on income on any part of the bonds, notes, and other evidences of
273indebtedness of this state:
274 (i) the entity; or
275 (ii) (A) the state in which the entity is located; or
276 (B) the District of Columbia, if the entity is located within the District of Columbia.
277 Section 3. Section 59-10-406 is amended to read:
278 59-10-406. Collection and payment of tax -- Forms filed electronically.
279 (1) (a) Each employer shall, on or before the last day of April, July, October, and
280January, pay to the commission the amount required to be deducted and withheld from wages
281paid to any employee during the preceding calendar quarter under this part. Enrolled Copy H.B. 56
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282 (b) The commission may change the time or period for making reports and payments
283if:
284 (i) in its opinion, the tax is in jeopardy; or
285 (ii) a different time or period will facilitate the collection and payment of the tax by the
286employer.
287 (2) (a) Each employer shall file a return, in a form the commission prescribes, with
288each payment of the amount deducted and withheld under this part showing:
289 (i) the total amount of wages paid to his employees;
290 (ii) the amount of federal income tax deducted and withheld;
291 (iii) the amount of tax under this part deducted and withheld; and
292 (iv) any other information the commission may require.
293 (b) The employer shall file the return described in Subsection (2)(a) in an electronic
294format approved by the commission.
295 (3) (a) Each employer shall file an annual return, in a form the commission prescribes,
296summarizing:
297 (i) the total compensation paid;
298 (ii) the federal income tax deducted and withheld; and
299 (iii) the state tax deducted and withheld for each employee during the calendar year.
300 (b) The return required by Subsection (3)(a) shall be filed with the commission:
301 (i) in an electronic format approved by the commission; and
302 (ii) on or before January 31 of the year following that for which the report is made.
303 (4) (a) Each employer shall also, in accordance with rules prescribed by the
304commission, provide each employee from whom state income tax has been withheld with a
305statement of the amounts of total compensation paid and the amounts deducted and withheld
306for that employee during the preceding calendar year in accordance with this part.
307 (b) The statement shall be made available to each employee described in Subsection
308(4)(a) on or before January 31 of the year following that for which the report is made.
309 (5) (a) The employer is liable to the commission for the payment of the tax required to H.B. 56 Enrolled Copy
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310be deducted and withheld under this part.
311 (b) If an employer pays the tax required to be deducted and withheld under this part:
312 (i) an employee of the employer is not liable for the amount of any payment described
313in Subsection (5)(a); and
314 (ii) the employer is not liable to any person or to any employee for the amount of any
315such payment described in Subsection (5)(a).
316 (c) For the purpose of making penal provisions of this title applicable, any amount
317deducted or required to be deducted and remitted to the commission under this part is
318considered to be the tax of the employer and with respect to such amounts the employer is
319considered to be the taxpayer.
320 (6) (a) Each employer that deducts and withholds any amount under this part shall hold
321the amount in trust for the state for the payment of the amount to the commission in the manner
322and at the time provided for in this part.
323 (b) So long as any delinquency continues, the state shall have a lien to secure the
324payment of any amounts withheld, and not remitted as provided under this section, upon all of
325the assets of the employer and all property owned or used by the employer in the conduct of the
326employer's business, including stock-in-trade, business fixtures, and equipment.
327 (c) The lien described in Subsection (6)(b) shall be prior to any lien of any kind,
328including existing liens for taxes.
329 (7) To the extent consistent with this section, the commission may use all the
330provisions of this chapter relating to records, penalties, interest, deficiencies, redetermination
331of deficiencies, overpayments, refunds, assessments, and venue to enforce this section.
332 (8) (a) Subject to Subsections (8)(b) and (c), the commission shall require an employer
333that issues the following forms for a taxable year to file the forms with the commission in an
334electronic format approved by the commission:
335 (i) a federal Form W-2;
336 (ii) a federal Form 1099 filed for purposes of withholding under Section 59-10-404; or
337 (iii) a federal form substantially similar to a form described in Subsection (8)(a)(i) or Enrolled Copy H.B. 56
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338(ii) if designated by the commission in accordance with Subsection (8)(d).
339 (b) An employer that is required to file a form with the commission in accordance with
340Subsection (8)(a) shall file the form on or before January 31.
341 (c) An employer that is required to file a form with the commission in accordance with
342Subsection (8)(a) shall provide:
343 (i) accurate information on the form; and
344 (ii) all of the information required by the Internal Revenue Service to be contained on
345the form.
346 (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for
347purposes of Subsection (8)(a), the commission may designate a federal form as being
348substantially similar to a form described in Subsection (8)(a)(i) or (ii) if:
349 (i) for purposes of federal individual income taxes a different federal form contains
350substantially similar information to a form described in Subsection (8)(a)(i) or (ii); or
351 (ii) the Internal Revenue Service replaces a form described in Subsection (8)(a)(i) or
352(ii) with a different federal form.
353 (9) (a) Subject to Subsection (9)(b), a pass-through entity shall file with the
354commission in an electronic format approved by the commission a [Utah Schedule K-1, or a
355substantially similar] form designated by the commission, providing information for each final
356pass-through entity taxpayer of a pass-through entity that elected to pay a tax in accordance
357with Subsection 59-10-1403.2(2).
358 (b) The pass-through entity shall file [a] the form described in Subsection (9)(a) [with
359the pass-through entity's return.] on or before the last day of the pass-through entity's taxable
360year.
361 Section 4. Section 59-10-1045 is amended to read:
362 59-10-1045. Nonrefundable tax credit for taxes paid by pass-through entity.
363 (1) As used in this section, "taxed pass-through entity taxpayer" means a resident or
364nonresident individual who:
365 (a) has income attributed to the individual by a pass-through entity; H.B. 56 Enrolled Copy
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366 (b) receives the income described in Subsection (1)(a) after the pass-through entity
367pays the tax described in Subsection 59-10-1403.2(2); and
368 (c) adds the amount of tax paid on the income described in Subsection (1)(a) to
369adjusted gross income in accordance with Subsection 59-10-114(1)(i).
370 (2) (a) A taxed pass-through entity taxpayer may claim a nonrefundable tax credit for
371the taxes imposed under Subsection 59-10-1403.2(2).
372 (b) The tax credit is equal to the amount of the tax paid under Subsection
37359-10-1403.2(2) by the pass-through entity on the income attributed to the taxed pass-through
374entity taxpayer.
375 (3) (a) A taxed pass-through entity taxpayer may carry forward the amount of the tax
376credit that exceeds the taxed pass-through [entity's] entity taxpayer's tax liability for a period
377that does not exceed the next five taxable years.
378 (b) A taxed pass-through entity taxpayer may not carry back the amount of the tax
379credit that exceeds the taxed pass-through [entity's] entity taxpayer's tax liability for the taxable
380year.
381 Section 5. Section 59-10-1402 is amended to read:
382 59-10-1402. Definitions.
383 As used in this part:
384 (1) "Addition, subtraction, or adjustment" means:
385 (a) for a pass-through entity taxpayer that is classified as a C corporation for federal
386income tax purposes, under Chapter 7, Corporate Franchise and Income Taxes:
387 (i) an addition to unadjusted income described in Section 59-7-105; or
388 (ii) a subtraction from unadjusted income described in Section 59-7-106;
389 (b) for a pass-through entity taxpayer that is classified as an individual, partnership, or
390S corporation for federal income tax purposes:
391 (i) an addition to or subtraction from adjusted gross income described in Section
39259-10-114; or
393 (ii) an adjustment to adjusted gross income described in Section 59-10-115; or Enrolled Copy H.B. 56
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394 (c) for a pass-through entity taxpayer that is classified as an estate or a trust for federal
395income tax purposes:
396 (i) an addition to or subtraction from unadjusted income described in Section
39759-10-202; or
398 (ii) an adjustment to unadjusted income described in Section 59-10-209.1.
399 (2) "Business income" means income arising from transactions and activity in the
400regular course of a pass-through entity's trade or business and includes income from tangible
401and intangible property if the acquisition, management, and disposition of the property
402constitutes integral parts of the pass-through entity's regular trade or business operations.
403 (3) "C corporation" means the same as that term is defined in Section 1361, Internal
404Revenue Code.
405 (4) "Commercial domicile" means the principal place from which the trade or business
406of a business entity is directed or managed.
407 (5) "Dependent beneficiary" means an individual who:
408 (a) is claimed as a dependent under Section 151, Internal Revenue Code, on another
409person's federal income tax return; and
410 (b) is a beneficiary of a trust that is a pass-through entity.
411 (6) "Derived from or connected with Utah sources" means:
412 (a) if a pass-through entity taxpayer is classified as a C corporation for federal income
413tax purposes, derived from or connected with Utah sources in accordance with Chapter 7, Part
4143, Allocation and Apportionment of Income - Utah UDITPA Provisions; or
415 (b) if a pass-through entity or pass-through entity taxpayer is classified as an estate,
416individual, partnership, S corporation, or a trust for federal income tax purposes, derived from
417or connected with Utah sources in accordance with Sections 59-10-117 and 59-10-118.
418 (7) (a) "Final pass-through entity taxpayer" means a pass-through entity taxpayer who
419is a resident or nonresident individual.
420 (b) "Final pass-through entity taxpayer" does not include:
421 (i) a resident or nonresident business entity; or H.B. 56 Enrolled Copy
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422 (ii) a resident or nonresident estate or trust.
423 (8) "Nonbusiness income" means all income of a pass-through entity other than
424business income.
425 (9) "Nonresident business entity" means a business entity that does not have its
426commercial domicile in this state.
427 (10) "Nonresident pass-through entity taxpayer" means a pass-through entity taxpayer
428that is a:
429 (a) nonresident individual; or
430 (b) nonresident business entity.
431 (11) "Pass-through entity" means a business entity that is:
432 (a) the following if classified as a partnership for federal income tax purposes:
433 (i) a general partnership;
434 (ii) a limited liability company;
435 (iii) a limited liability partnership; or
436 (iv) a limited partnership;
437 (b) an S corporation;
438 (c) an estate or trust with respect to which the estate's or trust's income, gain, loss,
439deduction, or credit is divided among and passed through to one or more pass-through entity
440taxpayers; or
441 (d) a business entity similar to Subsections (11)(a) through (c):
442 (i) with respect to which the business entity's income, gain, loss, deduction, or credit is
443divided among and passed through to one or more pass-through entity taxpayers; and
444 (ii) as defined by the commission by rule made in accordance with Title 63G, Chapter
4453, Utah Administrative Rulemaking Act.
446 (12) "Pass-through entity taxpayer" means a resident or nonresident individual, a
447resident or nonresident business entity, or a resident or nonresident estate or trust:
448 (a) that is:
449 (i) for a general partnership, a partner; Enrolled Copy H.B. 56
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450 (ii) for a limited liability company, a member;
451 (iii) for a limited liability partnership, a partner;
452 (iv) for a limited partnership, a partner;
453 (v) for an S corporation, a shareholder;
454 (vi) for an estate or trust described in Subsection(11)(c), a beneficiary; or
455 (vii) for a business entity described in Subsection(11)(d), a member, partner,
456shareholder, or other title designated by the commission by rule made in accordance with Title
45763G, Chapter 3, Utah Administrative Rulemaking Act; and
458 (b) to which the income, gain, loss, deduction, or credit of a pass-through entity is
459passed through.
460 (13) "Resident business entity" means a business entity that is not a nonresident
461business entity.
462 (14) "Resident pass-through entity taxpayer" means a pass-through entity taxpayer that
463is a:
464 (a) resident individual; or
465 (b) resident business entity.
466 (15) "Return" means a return that a pass-through entity taxpayer files:
467 (a) for a pass-through entity taxpayer that is classified as a C corporation for federal
468income tax purposes, under Chapter 7, Corporate Franchise and Income Taxes; or
469 (b) for a pass-through entity taxpayer that is classified as an estate, individual,
470partnership, S corporation, or a trust for federal income tax purposes, under this chapter.
471 (16) "S corporation" means the same as that term is defined in Section 1361, Internal
472Revenue Code.
473 (17) "Share of income, gain, loss, deduction, or credit of a pass-through entity" means:
474 (a) for a pass-through entity except for a pass-through entity that is an S corporation:
475 (i) for a resident pass-through entity taxpayer, the resident pass-through entity
476taxpayer's distributive share of income, gain, loss, deduction, or credit of the pass-through
477entity as determined under Section 704 et seq., Internal Revenue Code; and H.B. 56 Enrolled Copy
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478 (ii) for a nonresident pass-through entity taxpayer, the nonresident pass-through entity
479taxpayer's distributive share of income, gain, loss, deduction, or credit of the pass-through
480entity:
481 (A) as determined under Section 704 et seq., Internal Revenue Code; and
482 (B) derived from or connected with Utah sources; or
483 (b) for an S corporation:
484 (i) for a resident pass-through entity taxpayer, the resident pass-through entity
485taxpayer's pro rata share of income, gain, loss, deduction, or credit of the S corporation, as
486determined under Sec. 1366 et seq., Internal Revenue Code; or
487 (ii) for a nonresident pass-through entity taxpayer, the nonresident pass-through entity
488taxpayer's pro rata share of income, gain, loss, deduction, or credit of the S corporation:
489 (A) as determined under Section 1366 et seq., Internal Revenue Code; and
490 (B) derived from or connected with Utah sources.
491 (18) "Statement of dependent beneficiary income" means a statement:
492 (a) signed by the person who claims a dependent beneficiary as a dependent under
493Section 151, Internal Revenue Code, on the person's federal income tax return for the taxable
494year;
495 (b) attesting that the dependent is a dependent beneficiary; and
496 (c) indicating that the person expects that the dependent beneficiary's adjusted gross
497income for the taxable year will not exceed the basic standard deduction for the dependent
498beneficiary, as calculated under Section 63, Internal Revenue Code, for that taxable year.
499 (19) "Voluntary taxable income" means the sum of a pass-through entity's income that
500is:
501 (a) attributed to a final pass-through entity taxpayer who is a resident individual unless
502the income is taxed by another state of the United States, the District of Columbia, or
503possession of the United States; and
504 (b) (i) business income and nonbusiness income that is derived from or connected with
505Utah sources; and Enrolled Copy H.B. 56
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506 (ii) attributed to a final pass-through entity taxpayer who is a nonresident individual.
507 Section 6. Section 59-10-1403 is amended to read:
508 59-10-1403. Income tax treatment of a pass-through entity -- Returns --
509Classification same as under Internal Revenue Code.
510 (1) Subject to Subsection (3) and except as provided in Subsection 59-10-1403.2(2), a
511pass-through entity is not subject to a tax imposed by this chapter.
512 (2) Except as provided in Section 59-10-1403.3, the income, gain, loss, deduction, or
513credit of a pass-through entity shall be passed through to one or more pass-through entity
514taxpayers as provided in this part.
515 (3) A pass-through entity is subject to the return filing requirements of Sections
51659-10-507, 59-10-514, and 59-10-516.
517 (4) For purposes of taxation under this title, a pass-through entity that transacts
518business in the state shall be classified in the same manner as the pass-through entity is
519classified for federal income tax purposes.
520 (5) (a) If a change is made in a pass-through entity's net income or loss on the
521pass-through entity's federal income tax return because of an action of the federal government,
522the pass-through entity shall file with the commission within 90 days after the date of a final
523determination of the action:
524 (i) a copy of the pass-through entity's amended federal income tax return or federal
525adjustment; and
526 (ii) an amended state income tax return that conforms with the changes made in the
527pass-through entity's amended federal income tax return.
528 (b) If a change is made in a pass-through entity's net income on the pass-through
529entity's federal income tax return because the pass-through entity files an amended federal
530income tax return, the pass-through entity shall file with the commission, within 90 days after
531the date the taxpayer files the amended federal income tax return:
532 (i) a copy of the pass-through entity's amended federal income tax return; and
533 (ii) an amended state income tax return that conforms with the changes made in the H.B. 56 Enrolled Copy
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534pass-through entity's amended federal income tax return.
535 Section 7. Section 59-10-1403.2 is amended to read:
536 59-10-1403.2. Pass-through entity payment or withholding of tax on behalf of a
537pass-through entity taxpayer -- Exceptions to payment or withholding requirement --
538Procedures and requirements -- Failure to pay or withhold a tax on behalf of a
539pass-through entity taxpayer.
540 (1) (a) Except as provided in Subsections (1)(b) and (2), for a taxable year, a
541pass-through entity shall pay or withhold a tax:
542 (i) on:
543 (A) the business income of the pass-through entity; and
544 (B) the nonbusiness income of the pass-through entity derived from or connected with
545Utah sources; and
546 (ii) on behalf of a pass-through entity taxpayer.
547 (b) A pass-through entity is not required to pay or withhold a tax under Subsection
548(1)(a):
549 (i) on behalf of a final pass-through entity taxpayer who is a resident individual;
550 (ii) if the pass-through entity is an organization exempt from taxation under Subsection
55159-7-102(1)(a);
552 (iii) if the pass-through entity:
553 (A) is a plan under Section 401, 408, or 457, Internal Revenue Code; and
554 (B) is not required to file a return under Chapter 7, Corporate Franchise and Income
555Taxes, or this chapter;
556 (iv) if the pass-through entity is a publicly traded partnership:
557 (A) as defined in Section 7704(b), Internal Revenue Code;
558 (B) that is classified as a partnership for federal income tax purposes; and
559 (C) that files an annual information return reporting the following with respect to each
560partner of the publicly traded partnership with income derived from or connected with Utah
561sources that exceeds $500 in a taxable year: Enrolled Copy H.B. 56
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562 (I) the partner's name;
563 (II) the partner's address;
564 (III) the partner's taxpayer identification number; and
565 (IV) other information required by the commission; or
566 (v) on behalf of a final pass-through entity taxpayer that is a nonresident individual if
567the pass-through entity pays the tax described in Subsection (2).
568 (2) (a) For each taxable year that begins on or after January 1, 2022, but begins on or
569before December 31, 2025, a pass-through entity that is not a disregarded pass-through entity
570may elect to pay a tax in an amount equal to the product of:
571 (i) the percentage listed in Subsection 59-10-104(2); and
572 (ii) voluntary taxable income.
573 (b) A pass-through entity that elects to pay the tax in accordance with Subsection (2)(a)
574shall notify any final pass-through entity taxpayer of that election.
575 (c) A pass-through entity that pays a tax described in Subsection (2)(a) shall provide to
576each final pass-through entity taxpayer a statement that states:
577 (i) the amount of tax paid under Subsection (2)(a) on the income attributed to the final
578pass-through entity taxpayer[.]; and
579 (ii) the amount of tax paid to another state by the pass-through entity on income:
580 (A) attributed to the final pass-through entity taxpayer; and
581 (B) that the commission determines is substantially similar to the tax under Subsection
582(2)(a).
583 (d) A payment of the tax described in Subsection (2)(a) on or before the last day of the
584taxable year:
585 (i) is an irrevocable election to be subject to the tax for the taxable year; and [.]
586 (ii) may not be refunded.
587 (3) (a) Subject to Subsection (3)(b), the tax a pass-through entity shall pay or withhold
588on behalf of a pass-through entity taxpayer for a taxable year is an amount:
589 (i) determined by the commission by rule made in accordance with Title 63G, Chapter H.B. 56 Enrolled Copy
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5903, Utah Administrative Rulemaking Act; and
591 (ii) that the commission estimates will be sufficient to pay the tax liability of the
592pass-through entity taxpayer under this chapter with respect to the income described in
593Subsection (1)(a)(i) or (2)(a)(ii) of that pass-through entity for the taxable year.
594 (b) The rules the commission makes in accordance with Subsection (3)(a):
595 (i) except as provided in Subsection (3)(c):
596 (A) shall:
597 (I) for a pass-through entity except for a pass-through entity that is an S corporation,
598take into account items of income, gain, loss, deduction, and credit as analyzed on the schedule
599for reporting partners' distributive share items as part of the federal income tax return for the
600pass-through entity; or
601 (II) for a pass-through entity that is an S corporation, take into account items of
602income, gain, loss, deduction, and credit as reconciled on the schedule for reporting
603shareholders' pro rata share items as part of the federal income tax return for the pass-through
604entity; and
605 (B) notwithstanding Subsection (3)(b)(ii)(D), take into account the refundable tax
606credit provided in Section 59-6-102; and
607 (ii) may not take into account the following items if taking those items into account
608does not result in an accurate estimate of a pass-through entity taxpayer's tax liability under this
609chapter for the taxable year:
610 (A) a capital loss;
611 (B) a passive loss;
612 (C) another item of deduction or loss if that item of deduction or loss is generally
613subject to significant reduction or limitation in calculating:
614 (I) for a pass-through entity taxpayer that is classified as a C corporation for federal
615income tax purposes, unadjusted income as defined in Section 59-7-101;
616 (II) for a pass-through entity that is classified as an individual, partnership, or S
617corporation for federal income tax purposes, adjusted gross income; or Enrolled Copy H.B. 56
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618 (III) for a pass-through entity that is classified as an estate or a trust for federal income
619tax purposes, unadjusted income as defined in Section 59-10-103; or
620 (D) a tax credit allowed against a tax imposed under:
621 (I) Chapter 7, Corporate Franchise and Income Taxes; or
622 (II) this chapter.
623 (c) The rules the commission makes in accordance with Subsection (3)(a) may
624establish a method for taking into account items of income, gain, loss, deduction, or credit of a
625pass-through entity if:
626 (i) for a pass-through entity except for a pass-through entity that is an S corporation,
627the pass-through entity does not analyze the items of income, gain, loss, deduction, or credit on
628the schedule for reporting partners' distributive share items as part of the federal income tax
629return for the pass-through entity; or
630 (ii) for a pass-through entity that is an S corporation, the pass-through entity does not
631reconcile the items of income, gain, loss, deduction, or credit on the schedule for reporting
632shareholders' pro rata share items as part of the federal income tax return for the pass-through
633entity.
634 (4) (a) Except as provided in Subsection (4)(b), a pass-through entity shall remit to the
635commission the tax the pass-through entity pays or withholds on behalf of a pass-through entity
636taxpayer under this section:
637 (i) on or before the due date of the pass-through entity's return, not including
638extensions; and
639 (ii) on a form provided by the commission.
640 (b) A pass-through entity shall remit the tax described in Subsection (2) on or before
641the last day of the pass-through entity's taxable year.
642 (c) The commission shall consider only the amount of tax remitted as provided in
643Subsection (4)(b), on or before the last day of the pass-through entity's taxable year as a
644payment described in Subsection (2).
645 (d) Except as provided in Subsection (1)(b), a pass-through entity that files an amended H.B. 56 Enrolled Copy
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646return under this part shall pay or withhold tax on any increase in the income described in
647Subsection (1)(a)(i) on behalf of the pass-through entity taxpayer and remit that tax to the
648commission.
649 (5) A pass-through entity shall provide a statement to a pass-through entity taxpayer on
650behalf of whom the pass-through entity pays or withholds a tax under this section showing the
651amount of tax the pass-through entity pays or withholds under this section for the taxable year
652on behalf of the pass-through entity taxpayer.
653 (6) Notwithstanding Section 59-1-401 or 59-1-402, the commission may not collect an
654amount under this section for a taxable year from a pass-through entity and shall waive any
655penalty and interest on that amount if:
656 (a) the pass-through entity fails to pay or withhold the tax on the amount as required by
657this section on behalf of the pass-through entity taxpayer;
658 (b) the pass-through entity taxpayer:
659 (i) files a return on or before the due date for filing the pass-through entity's return,
660including extensions; and
661 (ii) on or before the due date including extensions described in Subsection (6)(b)(i),
662pays the tax on the amount for the taxable year:
663 (A) if the pass-through entity taxpayer is classified as a C corporation for federal
664income tax purposes, under Chapter 7, Corporate Franchise and Income Taxes; or
665 (B) if the pass-through entity taxpayer is classified as an estate, individual, partnership,
666S corporation, or a trust for federal income tax purposes, under this chapter; and
667 (c) the pass-through entity applies to the commission.
668 (7) Notwithstanding Section 59-1-401 or 59-1-402, the commission may not collect an
669amount under this section for a taxable year from a pass-through entity that is a trust and shall
670waive any penalty and interest on that amount if:
671 (a) the pass-through entity fails to pay or withhold the tax on the amount as required by
672this section on behalf of a dependent beneficiary;
673 (b) the pass-through entity applies to the commission; and Enrolled Copy H.B. 56
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674 (c) (i) the dependent beneficiary complies with the requirements of Subsection (6)(b);
675or
676 (ii) (A) the dependent beneficiary's adjusted gross income for the taxable year does not
677exceed the basic standard deduction for the dependent beneficiary, as calculated under Section
67863, Internal Revenue Code, for that taxable year; and
679 (B) the trustee of the trust retains a statement of dependent beneficiary income on
680behalf of the dependent beneficiary.
681 (8) If a pass-through entity would have otherwise qualified for a waiver of a penalty
682and interest under Subsection (7), except that the trustee of a trust has not applied to the
683commission as required by Subsection (7)(b) or retained the statement of dependent beneficiary
684income required by Subsection (7)(c)(ii)(B), it is a rebuttable presumption in an audit that the
685pass-through entity would have otherwise qualified for the waiver of the penalty and interest
686under Subsection (7).
687 Section 8. Retrospective operation.
688 (1) The following sections have retrospective operation for a taxable year beginning on
689or after January 1, 2022:
690 (a) Section 59-10-1403; and
691 (b) Section 59-10-1403.2.