Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 64 Second Substitute (2015GS)

Sponsor

Sen. Weiler, T.

Final action

Governor Signed 3/23/2015

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• modifies tax deduction and credit provisions related to Utah Educational Savings Plan accounts;
• modifies tax return contribution provisions related to Utah Educational Savings Plan accounts; and
• makes technical and conforming changes.

Every vote on this bill

Bill text

UTAH EDUCATIONAL SAVINGS PLAN AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Todd Weiler
House Sponsor: 
Eric K. Hutchings
LONG TITLE
General Description:
This bill amends tax deduction, contribution, and credit provisions related to Utah
Educational Savings Plan accounts.
Highlighted Provisions:
This bill:
▸ modifies tax deduction and credit provisions related to Utah Educational Savings
Plan accounts;
▸ modifies tax return contribution provisions related to Utah Educational Savings
Plan accounts; and
▸ makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
This bill provides for retrospective operation.
Utah Code Sections Affected:
AMENDS:
53B-8a-102
, as last amended by Laws of Utah 2011, Chapter 46
53B-8a-106
, as last amended by Laws of Utah 2010, Chapter 6
59-7-106
, as last amended by Laws of Utah 2014, Chapter 273
59-10-1017
, as last amended by Laws of Utah 2010, Chapter 6
59-10-1313
, as last amended by Laws of Utah 2011, Chapter 46
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
53B-8a-102
 is amended to read:
53B-8a-102.
Definitions.
As used in this chapter:
(1) "Account agreement" means an agreement between an account owner and the Utah
Educational Savings Plan entered into under this chapter.
(2) "Account owner" means a person, estate, or trust, if that person, estate, or trust has
entered into an account agreement under this chapter to save for the higher education costs on
behalf of a beneficiary.
(3) "Administrative fund" means the money used to administer the Utah Educational
Savings Plan.
(4) "Beneficiary" means the individual designated in an account agreement to benefit
from the amount saved for higher education costs.
(5) "Board" means the board of directors of the Utah Educational Savings Plan which
is the state Board of Regents acting in its capacity as the Utah Higher Education Assistance
Authority under Title 53B, Chapter 12, Higher Education Assistance Authority.
(6) "Endowment fund" means the endowment fund established under Section
53B-8a-107
 which is held as a separate fund within the Utah Educational Savings Plan.
(7) "Executive director" means the administrator appointed to administer and manage
the Utah Educational Savings Plan.
(8) "Federally insured depository institution" means an institution whose deposits and
accounts are to any extent insured by a federal deposit insurance agency, including the Federal
Deposit Insurance Corporation and the National Credit Union Administration.
(9) "Grantor trust" means a trust, the income of which is for the benefit of the grantor
under Section 677, Internal Revenue Code.
[
(9)
] 
(10)
 "Higher education costs" means qualified higher education expenses as
defined in Section 529(e)(3), Internal Revenue Code.
(11) "Owner of the grantor trust" means one or more individuals who are treated as an
owner of a trust under Section 677, Internal Revenue Code, if that trust is a grantor trust.
[
(10)
] 
(12)
 "Plan" means the Utah Educational Savings Plan created in Section
53B-8a-103
.
[
(11)
] 
(13)
 "Program fund" means the program fund created under Section 
53B-8a-107
,
which is held as a separate fund within the Utah Educational Savings Plan.
[
(12)
] 
(14)
 "Qualified investment" means an amount invested in accordance with an
account agreement established under this chapter.
[
(13)
] 
(15)
 "Tuition and fees" means the quarterly or semester charges imposed to
attend an institution of higher education and required as a condition of enrollment.
Section 2. Section 
53B-8a-106
 is amended to read:
53B-8a-106.
Account agreements.
The plan may enter into account agreements with account owners on behalf of
beneficiaries under the following terms and agreements:
(1) (a) An account agreement may require an account owner to agree to invest a
specific amount of money in the plan for a specific period of time for the benefit of a specific
beneficiary, not to exceed an amount determined by the executive director.
(b) Account agreements may be amended to provide for adjusted levels of payments
based upon changed circumstances or changes in educational plans.
(c) An account owner may make additional optional payments as long as the total
payments for a specific beneficiary do not exceed the total estimated higher education costs as
determined by the executive director.
(d) Subject to Subsections (1)(f) and (g), the maximum amount of a qualified
investment that a corporation that is an account owner may subtract from unadjusted income
for a taxable year in accordance with Title 59, Chapter 7, Corporate Franchise and Income
Taxes, is $1,710 for each individual beneficiary for the taxable year beginning on or after
January 1, 2010, but beginning on or before December 31, 2010.
(e) Subject to Subsections (1)(f) and (g), the maximum amount of a qualified
investment that may be used as the basis for claiming a tax credit in accordance with Section
59-10-1017
, is:
(i) 
subject to Subsection (1)(e)(iv),
 for a resident or nonresident estate or trust that is an
account owner, $1,710 for each individual beneficiary for the taxable year beginning on or after
January 1, 2010, but beginning on or before December 31, 2010;
(ii) 
subject to Subsection (1)(e)(iv),
 for a resident or nonresident individual that is an
account owner, other than a husband and wife who are account owners and file a single return
jointly under Title 59, Chapter 10, Individual Income Tax Act, $1,710 for each individual
beneficiary for the taxable year beginning on or after January 1, 2010, but beginning on or
before December 31, 2010; [
or
]
(iii) 
subject to Subsection (1)(e)(iv),
 for a husband and wife who are account owners
and file a single return jointly under Title 59, Chapter 10, Individual Income Tax Act, $3,420
for each individual beneficiary:
(A) for the taxable year beginning on or after January 1, 2010, but beginning on or
before December 31, 2010; and
(B) regardless of whether the plan has entered into:
(I) a separate account agreement with each spouse; or
(II) a single account agreement with both spouses jointly[
.
]
; or
(iv) for a grantor trust:
(A) if the owner of the grantor trust has a single filing status or head of household
filing status as defined in Section 
59-10-1018
, the amount described in Subsection (1)(e)(ii); or
(B) if the owner of the grantor trust has a joint filing status as defined in Section
59-10-1018
, the amount described in Subsection (1)(e)(iii).
(f) (i) For taxable years beginning on or after January 1, 2011, the executive director
shall annually increase the maximum amount of a qualified investment described in
Subsections (1)(d) and (1)(e)(i) and (ii), by a percentage equal to the increase in the consumer
price index for the preceding calendar year.
(ii) After making an increase required by Subsection (1)(f)(i), the executive director
shall:
(A) round the maximum amount of the qualified investments described in Subsections
(1)(d) and (1)(e)(i) and (ii) increased under Subsection (1)(f)(i) to the nearest 10 dollar
increment; and
(B) increase the maximum amount of the qualified investment described in Subsection
(1)(e)(iii) so that the maximum amount of the qualified investment described in Subsection
(1)(e)(iii) is equal to the product of:
(I) the maximum amount of the qualified investment described in Subsection (1)(e)(ii)
as rounded under Subsection (1)(f)(ii)(A); and
(II) two.
(iii) For purposes of Subsections (1)(f)(i) and (ii), the executive director shall calculate
the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
(g) For taxable years beginning on or after January 1, 2011, the executive director shall
keep the previous year's maximum amount of a qualified investment described in Subsections
(1)(d) and (1)(e)(i) and (ii) if the consumer price index for the preceding calendar year
decreases.
(2) (a) Beneficiaries designated in account agreements must be designated after birth
and before age 19 for an account owner to:
(i) subtract a qualified investment from income under Title 59, Chapter 7, Corporate
Franchise and Income Taxes; or
(ii) use a qualified investment as the basis for claiming a tax credit in accordance with
Section 
59-10-1017
.
(b) Account owners may designate a beneficiary age 19 or older, but investments for
that beneficiary are not eligible to be:
(i) subtracted from income under Title 59, Chapter 7, Corporate Franchise and Income
Taxes; or
(ii) used as the basis for claiming a tax credit in accordance with Section 
59-10-1017
.
(3) Each account agreement shall state clearly that there are no guarantees regarding
money in the plan as to the return of principal and that losses could occur.
(4) Each account agreement shall provide that:
(a) a contributor to, or designated beneficiary under, an account agreement may not
direct the investment of any contributions or earnings on contributions;
(b) any part of the money in any account may not be used as security for a loan; and
(c) an account owner may not borrow from the plan.
(5) The execution of an account agreement by the plan may not guarantee in any way
that higher education costs will be equal to projections and estimates provided by the plan or
that the beneficiary named in any account agreement will:
(a) be admitted to an institution of higher education;
(b) if admitted, be determined a resident for tuition purposes by the institution of
higher education;
(c) be allowed to continue attendance at the institution of higher education following
admission; or
(d) graduate from the institution of higher education.
(6) A beneficiary may be changed as permitted by the rules and regulations of the
board upon written request of the account owner prior to the date of admission of any
beneficiary under an account agreement by an institution of higher education so long as the
substitute beneficiary is eligible for participation.
(7) An account agreement may be freely amended throughout the term of the account
agreement in order to enable an account owner to increase or decrease the level of
participation, change the designation of beneficiaries, and carry out similar matters as
authorized by rule.
(8) Each account agreement shall provide that:
(a) the account agreement may be canceled upon the terms and conditions, and upon
payment of the fees and costs set forth and contained in the board's rules and regulations; and
(b) the executive director may amend the agreement unilaterally and retroactively, if
necessary, to maintain the plan as a qualified tuition program under Section 529, Internal
Revenue Code.
Section 3. Section 
59-7-106
 is amended to read:
59-7-106.
Subtractions from unadjusted income.
(1) In computing adjusted income the following amounts shall be subtracted from
unadjusted income:
(a) the foreign dividend gross-up included in gross income for federal income tax
purposes under Section 78, Internal Revenue Code;
(b) subject to Subsection (2), the net capital loss, as defined for federal purposes, if the
taxpayer elects to deduct the net capital loss on the return filed under this chapter for the
taxable year for which the net capital loss is incurred;
(c) the decrease in salary expense deduction for federal income tax purposes due to
claiming the federal work opportunity credit under Section 51, Internal Revenue Code;
(d) the decrease in qualified research and basic research expense deduction for federal
income tax purposes due to claiming the federal credit for increasing research activities under
Section 41, Internal Revenue Code;
(e) the decrease in qualified clinical testing expense deduction for federal income tax
purposes due to claiming the federal credit for clinical testing expenses for certain drugs for
rare diseases or conditions under Section 45C, Internal Revenue Code;
(f) any decrease in any expense deduction for federal income tax purposes due to
claiming any other federal credit;
(g) the safe harbor lease adjustment required under Subsections 
59-7-111
(1)(b) and
(2)(b);
(h) any income on the federal corporation income tax return that has been previously
taxed by Utah;
(i) an amount included in federal taxable income that is due to a refund of a tax,
including a franchise tax, an income tax, a corporate stock and business tax, or an occupation
tax:
(i) if that tax is imposed for the privilege of:
(A) doing business; or
(B) exercising a corporate franchise;
(ii) if that tax is paid by the corporation to:
(A) Utah;
(B) another state of the United States;
(C) a foreign country;
(D) a United States possession; or
(E) the Commonwealth of Puerto Rico; and
(iii) to the extent that tax was added to unadjusted income under Section 
59-7-105
;
(j) a charitable contribution, to the extent the charitable contribution is allowed as a
subtraction under Section 
59-7-109
;
(k) subject to Subsection (3), 50% of a dividend considered to be received or received
from a subsidiary that:
(i) is a member of the unitary group;
(ii) is organized or incorporated outside of the United States; and
(iii) is not included in a combined report under Section 
59-7-402
 or 
59-7-403
;
(l) subject to Subsection (4) and Section 
59-7-401
, 50% of the adjusted income of a
foreign operating company;
(m) the amount of gain or loss that is included in unadjusted income but not recognized
for federal purposes on stock sold or exchanged by a member of a selling consolidated group as
defined in Section 338, Internal Revenue Code, if an election has been made in accordance
with Section 338(h)(10), Internal Revenue Code;
(n) the amount of gain or loss that is included in unadjusted income but not recognized
for federal purposes on stock sold, exchanged, or distributed by a corporation in accordance
with Section 336(e), Internal Revenue Code, if an election under Section 336(e), Internal
Revenue Code, has been made for federal purposes;
(o) subject to Subsection (5), an adjustment to the following due to a difference
between basis for federal purposes and basis as computed under Section 
59-7-107
:
(i) an amortization expense;
(ii) a depreciation expense;
(iii) a gain;
(iv) a loss; or
(v) an item similar to Subsections (1)(o)(i) through (iv);
(p) an interest expense that is not deducted on a federal corporation income tax return
under Section 265(b) or 291(e), Internal Revenue Code;
(q) 100% of dividends received from a subsidiary that is an insurance company if that
subsidiary that is an insurance company is:
(i) exempt from this chapter under Subsection 
59-7-102
(1)(c); and
(ii) under common ownership;
(r) subject to Subsection 
59-7-105
(12), 
a corporation that is an account owner as
defined in Section 
53B-8a-102
 shall subtract
 the amount of a qualified investment as defined in
Section 
53B-8a-102
 [
that
]:
(i) [
a corporation that is an account owner as defined in Section 
53B-8a-102
] 
that the
corporation or a person other than the corporation
 makes 
into an account owned by the
corporation
 during the taxable year;
(ii) 
to the extent that neither
 the corporation 
nor the person other than the corporation
described in Subsection (1)(r)(i) [
does not deduct
] 
deducts the qualified investment
 on a federal
[
corporation
] income tax return; and
(iii) 
to the extent the qualified investment
 does not exceed the maximum amount of the
qualified investment that may be subtracted from unadjusted income for a taxable year in
accordance with Subsection 
53B-8a-106
(1);
(s) for purposes of income included in a combined report under Part 4, Combined
Reporting, the entire amount of the dividends a member of a unitary group receives or is
considered to receive from a captive real estate investment trust; and
(t) the increase in income for federal income tax purposes due to claiming a:
(i) qualified tax credit bond credit under Section 54A, Internal Revenue Code; or
(ii) qualified zone academy bond under Section 1397E, Internal Revenue Code.
(2) For purposes of Subsection (1)(b):
(a) the subtraction shall be made by claiming the subtraction on a return filed:
(i) under this chapter for the taxable year for which the net capital loss is incurred; and
(ii) by the due date of the return, including extensions; and
(b) a net capital loss for a taxable year shall be:
(i) subtracted for the taxable year for which the net capital loss is incurred; or
(ii) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
Code.
(3) (a) For purposes of calculating the subtraction provided for in Subsection (1)(k), a
taxpayer shall first subtract from a dividend considered to be received or received an expense
directly attributable to that dividend.
(b) For purposes of Subsection (3)(a), the amount of an interest expense that is
considered to be directly attributable to a dividend is calculated by multiplying the interest
expense by a fraction:
(i) the numerator of which is the taxpayer's average investment in the dividend paying
subsidiaries; and
(ii) the denominator of which is the taxpayer's average total investment in assets.
(c) (i) For purposes of calculating the subtraction allowed by Subsection (1)(k), in
determining income apportionable to this state, a portion of the factors of a foreign subsidiary
that has dividends that are partially subtracted under Subsection (1)(k) shall be included in the
combined report factors as provided in this Subsection (3)(c).
(ii) For purposes of Subsection (3)(c)(i), the portion of the factors of a foreign
subsidiary that has dividends that are partially subtracted under Subsection (1)(k) that shall be
included in the combined report factors is calculated by multiplying each factor of the foreign
subsidiary by a fraction:
(A) not to exceed 100%; and
(B) (I) the numerator of which is the amount of the dividend paid by the foreign
subsidiary that is included in adjusted income; and
(II) the denominator of which is the current year earnings and profits of the foreign
subsidiary as determined under the Internal Revenue Code.
(4) (a) For purposes of Subsection (1)(l), a taxpayer may not make a subtraction under
Subsection (1)(l):
(i) if the taxpayer elects to file a worldwide combined report as provided in Section
59-7-403
; or
(ii) for the following:
(A) income generated from intangible property; or
(B) a capital gain, dividend, interest, rent, royalty, or other similar item that is
generated from an asset held for investment and not from a regular business trading activity.
(b) In calculating the subtraction provided for in Subsection (1)(l), a foreign operating
company:
(i) may not subtract an amount provided for in Subsection (1)(k) or (l); and
(ii) prior to determining the subtraction under Subsection (1)(l), shall eliminate a
transaction that occurs between members of a unitary group.
(c) For purposes of the subtraction provided for in Subsection (1)(l), in determining
income apportionable to this state, the factors for a foreign operating company shall be
included in the combined report factors in the same percentages as the foreign operating
company's adjusted income is included in the combined adjusted income.
(d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
commission may by rule define what constitutes:
(i) income generated from intangible property; or
(ii) a capital gain, dividend, interest, rent, royalty, or other similar item that is
generated from an asset held for investment and not from a regular business trading activity.
(5) (a) For purposes of the subtraction provided for in Subsection (1)(o), the amount of
a reduction in basis shall be allowed as an expense for the taxable year in which a federal tax
credit is claimed if:
(i) there is a reduction in federal basis for a federal tax credit; and
(ii) there is no corresponding tax credit allowed in this state.
(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
commission may by rule define what constitutes an item similar to Subsections (1)(o)(i)
through (iv).
Section 4. Section 
59-10-1017
 is amended to read:
59-10-1017.
Utah Educational Savings Plan tax credit.
(1) As used in this section:
(a) "Account owner" [
is as
] 
means the same as that term is
 defined in Section
53B-8a-102
.
(b) "Grantor trust" means the same as that term is defined in Section 
53B-8a-102
.
[
(b)
] 
(c)
 "Higher education costs" [
is as
] 
means the same as that term is
 defined in
Section 
53B-8a-102
.
[
(c)
] 
(d)
 "Maximum amount of a qualified investment for the taxable year" means, for
a taxable year
, the product of 5% and
:
(i) 
subject to Subsection (1)(d)(iii),
 for a claimant, estate, or trust that is an account
owner, if that claimant, estate, or trust is other than husband and wife account owners who file
a single return jointly, the maximum amount of a qualified investment:
(A) listed in Subsection 
53B-8a-106
(1)(e)(ii); and
(B) increased or kept for that taxable year in accordance with Subsections
53B-8a-106
(1)(f) and (g); [
or
]
(ii) 
subject to Subsection (1)(d)(iii),
 for claimants who are husband and wife account
owners who file a single return jointly, the maximum amount of a qualified investment:
(A) listed in Subsection 
53B-8a-106
(1)(e)(iii); and
(B) increased or kept for that taxable year in accordance with Subsections
53B-8a-106
(1)(f) and (g)[
.
]
; or
(iii) for a grantor trust:
(A) if the owner of the grantor trust has a single filing status or head of household
filing status as defined in Section 
59-10-1018
, the amount described in Subsection (1)(d)(i); or
(B) if the owner of the grantor trust has a joint filing status as defined in Section
59-10-1018
, the amount described in Subsection (1)(d)(ii).
(e) "Owner of the grantor trust" means the same as that term is defined in Section
53B-8a-102
.
[
(d)
] 
(f)
 "Qualified investment" [
is as
] 
means the same as that term is
 defined in
Section 
53B-8a-102
.
(2) Except as provided in Section 
59-10-1002.2
and subject to the other provisions of
this section
, a claimant, estate, or trust that is an account owner may claim a nonrefundable tax
credit equal to the product of:
[
(a) the lesser of:
]
[
(i)
] 
(a)
 the amount of a qualified investment [
the
] 
made:
(i) during the taxable year; and
(ii) into an account owned by the
 claimant, estate, or trust[
:
]
; and
[
(A) makes during the taxable year; and
]
[
(B) does not deduct:
]
(b) 5%.
(3) A claimant, estate, or trust, or a person other than the claimant, estate, or trust, may
make a qualified investment described in Subsection (2).
[
(I) for a claimant, on the claimant's federal individual income tax return; or
]
[
(II) for an estate or trust, on the estate's or trust's federal income tax return for estates
and trusts; or
]
(4) A tax credit under this section may not be claimed with respect to any portion of a
qualified investment described in Subsection (2) that a claimant, estate, trust, or person
described in Subsection (3) deducts on a federal income tax return.
[
(ii)
] 
(5) A tax credit under this section may not exceed
 the maximum amount of a
qualified investment for the taxable year [
if the amount described in Subsection (2)(a)(i) is
greater than the maximum amount of a qualified investment for the taxable year; and
]
.
[
(b) 5%.
]
[
(3)
] 
(6)
 A tax credit under this section may not be carried forward or carried back.
Section 5. Section 
59-10-1313
 is amended to read:
59-10-1313.
Contribution to a Utah Educational Savings Plan account.
(1) (a) If a resident or nonresident individual is owed an individual income tax refund
for the taxable year, the individual may designate on the resident or nonresident individual's
income tax return a contribution to a Utah Educational Savings Plan account established under
Title 53B, Chapter 8a, Utah Educational Savings Plan, [
in the amount of the entire individual
income tax refund
] 
as provided in this part
.
(b) If a resident or nonresident individual is not owed an individual income tax refund
for the taxable year, the individual may not designate on the resident or nonresident's individual
income tax return a contribution to a Utah Educational Savings Plan account.
(2) (a) The commission shall send the contribution to the Utah Educational Savings
Plan along with the following information:
(i) the amount of the individual income tax refund; and
(ii) the taxpayer's:
(A) name;
(B) Social Security number or taxpayer identification number; and
(C) address.
(b) The commission shall provide the taxpayer's telephone number and number of
dependents claimed, as requested, to the Utah Educational Savings Plan.
(c) If a contribution to a Utah Educational Savings Plan account is designated in a
single individual income tax return filed jointly by a husband and wife, the commission shall
send the information described under Subsection (2)(a) or (b) for both the husband and wife to
the Utah Educational Savings Plan.
(3) (a) If the taxpayer owns a Utah Educational Savings Plan account, the Utah
Educational Savings Plan shall deposit the contribution into the account.
(b) If the taxpayer owns more than one Utah Educational Savings Plan account, the
Utah Educational Savings Plan shall allocate the contribution among the accounts in equal
amounts.
(c) (i) If the taxpayer does not own a Utah Educational Savings Plan account, the Utah
Educational Savings Plan shall send the taxpayer an account agreement.
(ii) If the taxpayer does not sign and return the account agreement by the date specified
by the Utah Educational Savings Plan, the Utah Educational Savings Plan shall return the
contribution to the taxpayer without any interest or earnings.
(4) For the purpose of determining interest on an overpayment or refund under Section
59-1-402
, no interest accrues after the commission sends the contribution to the Utah
Educational Savings Plan.
Section 6. 
Effective date -- Retrospective operation.
(1) The actions affecting Sections 
53B-8a-102
, 
53B-8a-106
, 
59-7-106
, and 
59-10-1017
have retrospective operation for a taxable year beginning on or after January 1, 2015.
(2) The actions affecting Section 
59-10-1313
 take effect for a taxable year beginning
on or after January 1, 2016.