Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 158 (2017GS)

Sponsor

Sen. Bramble, C.

Final action

Governor Signed 3/22/2017

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• defines terms;
• creates a process for a pass-through entity to obtain a refund of qualifying excess withholding, if the qualifying excess withholding exceeds tax liability by a certain threshold; and
• makes technical changes.

Every vote on this bill

Bill text

PASS-THROUGH ENTITY WITHHOLDING AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Curtis S. Bramble
House Sponsor: 
 John Knotwell
LONG TITLE
General Description:
This bill creates a process for a pass-through entity to obtain a refund of qualifying
excess withholding.
Highlighted Provisions:
This bill:
▸ defines terms;
▸ creates a process for a pass-through entity to obtain a refund of qualifying excess
withholding, if the qualifying excess withholding exceeds tax liability by a certain
threshold; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
59-10-529
, as last amended by Laws of Utah 2013, Chapter 74
59-10-1403
, as last amended by Laws of Utah 2016, Chapter 87
ENACTS:
59-10-1403.3
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
59-10-529
 is amended to read:
59-10-529.
Overpayment of tax -- Credits -- Refunds.
(1) If there has been an overpayment of any tax imposed by this chapter, the amount of
overpayment is credited as follows:
(a) against an income tax due from a taxpayer;
(b) against:
(i) the amount of a judgment against a taxpayer, including a final judgment or order
requiring payment of a fine or of restitution to a victim under Title 77, Chapter 38a, Crime
Victims Restitution Act, obtained through due process of law by an entity of state or local
government; or
(ii) subject to Subsection (4)(a)(i), a child support obligation that is due or past due, as
determined by the Office of Recovery Services in the Department of Human Services and after
notice and an opportunity for an adjudicative proceeding, as provided in Subsection [
(2)
]
(4)(a)(iii)
; or
(c) subject to [
Subsection
] 
Subsections
 (3), (5), (6), [
or
] 
and
 (7), as bail[
,
] to ensure the
appearance of a taxpayer before the appropriate authority to resolve an outstanding warrant
against the taxpayer for which bail is due, if a court of competent jurisdiction has not approved
an alternative form of payment.
(2) If a balance remains after an overpayment is credited in accordance with Subsection
(1), the balance shall be refunded to the taxpayer.
(3) Bail described in Subsection (1)(c) may be applied to any fine or forfeiture:
(a) that is due and related to a warrant that is outstanding on or after February 16, 1984;
and
(b) in accordance with Subsections (5) and (6).
(4) (a) The amount of an overpayment may be credited against an obligation described
in Subsection (1)(b)(ii) if the Office of Recovery Services has sent written notice to the
taxpayer's last-known address or the address on file under Section 
62A-11-304.4
, stating:
(i) the amount of child support that is due or past due as of the date of the notice or
other specified date;
(ii) that any overpayment shall be applied to reduce the amount of due or past-due child
support specified in the notice; and
(iii) that the taxpayer may contest the amount of past-due child support specified in the
notice by filing a written request for an adjudicative proceeding with the office within 15 days
of the notice being sent.
(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
Office of Recovery Services shall establish rules to implement this Subsection (4), including
procedures, in accordance with the other provisions of this section, to ensure:
(i) prompt reimbursement to a taxpayer of any amount of an overpayment that was
credited against a child support obligation in error; and
(ii) prompt distribution of properly credited funds to the obligee parent.
(5) The amount of an overpayment may be credited against bail described in
Subsection (1)(c) if:
(a) a court has issued a warrant for the arrest of the taxpayer for failure to post bail,
appear, or otherwise satisfy the terms of a citation, summons, or court order; and
(b) a notice of intent to apply the overpayment as bail on the issued warrant has been
sent to the taxpayer's current address on file with the commission.
(6) (a) (i) The commission shall deliver an overpayment applied as bail to the court that
issued the warrant of arrest.
(ii) The clerk of the court is authorized to endorse the check or commission warrant of
payment on behalf of the payees and deposit the money in the court treasury.
(b) (i) The court receiving an overpayment applied as bail shall order withdrawal of the
warrant for arrest of the taxpayer if:
(A) the case is a case for which a personal appearance of the taxpayer is not required;
and
(B) the dollar amount of the overpayment represents the full dollar amount of bail.
(ii) In a case except for a case described in Subsection (6)(b)(i):
(A) the court receiving the overpayment applied as bail is not required to order the
withdrawal of the warrant of arrest of the taxpayer during the 40-day period; and
(B) the taxpayer may be arrested on the warrant.
(c) (i) If a taxpayer fails to respond to the notice required by Subsection (5)(b), or to
resolve the warrant within 40 days after the notice is sent under Subsection (5)(b), the
overpayment applied as bail is forfeited.
(ii) A court may issue another warrant or allow the original warrant to remain in force
if:
(A) the taxpayer has not complied with an order of the court;
(B) the taxpayer has failed to appear and respond to a criminal charge for which a
personal appearance is required; or
(C) the taxpayer has paid partial but not full bail in a case for which a personal
appearance is not required.
(d) If the alleged violations named in a warrant are later resolved in favor of the
taxpayer, the bail amount shall be remitted to the taxpayer.
(7) The fine and bail forfeiture provisions of this section apply to all warrants, fines,
fees, and surcharges issued in cases charging a taxpayer with a felony, a misdemeanor, or an
infraction described in this section, which are outstanding on or after February 16, 1984.
(8) If the amount [
allowable
] 
allowed
 as a credit for tax withheld from a taxpayer
exceeds the tax to which the credit relates, the excess is considered an overpayment.
(9) (a) Subject to Subsection (9)(b), a 
taxpayer shall
 claim [
for
] 
a
 credit or refund of an
overpayment that is attributable to a net operating loss carry back or carry forward [
shall be
filed
] within three years [
from the due date of
] 
after the day on which
 the return for the taxable
year of the net operating loss 
is due
.
(b) The three-year period described in Subsection (9)(a) shall be extended by any
extension of time provided in statute for filing the return described in Subsection (9)(a).
(10) If there is no tax liability for a period in which an amount is paid under this
chapter, the amount is an overpayment.
(11) If a tax under this chapter is assessed or collected after the expiration of the
applicable period of limitation, that amount is an overpayment.
(12) (a) A taxpayer may file a claim for a credit or refund of an overpayment within
two years [
from the date
] 
after the day on which
 a notice of change, notice of correction, or
amended return is required to be filed with the commission if the taxpayer is required to:
(i) report a change or correction in income reported on the taxpayer's federal income
tax return;
(ii) report a change or correction that is treated in the same manner as if the change or
correction were an overpayment for federal income tax purposes; or
(iii) file an amended return with the commission.
(b) If a report or amended return is not filed within 90 days 
after the day on which the
report or amended return is due
, interest on any resulting refund or credit ceases to accrue after
the 90-day period.
(c) The amount of the credit or refund may not exceed the amount of the reduction in
tax attributable to the federal change, correction, or items amended on the taxpayer's amended
federal income tax return.
(d) Except as provided in Subsection (12)(a), this Subsection (12) does not affect the
amount or the time within which a claim for credit or refund may be filed.
(13) A credit or refund may not be allowed or made if an overpayment is less than $1.
(14) In the case of an overpayment of tax by an employer under Part 4, Withholding of
Tax, 
an employer shall receive
 a refund or credit [
shall be made to the employer
] only to the
extent that the amount of the overpayment is not deducted and withheld from wages under this
chapter.
(15) (a) If a taxpayer that is allowed a refund under this chapter dies, the commission
may make payment to the personal representative of the taxpayer's estate.
(b) If there is no personal representative of the taxpayer's estate, 
the commission may
make
 payment [
may be made
] to those persons [
who
] 
that
 establish entitlement to inherit the
property of the decedent in the proportions established in Title 75, Utah Uniform Probate Code.
(16) If an overpayment relates to a change in net income described in Subsection
59-10-536
(2)(a), a credit may be allowed or a refund paid any time before the expiration of the
period within which a deficiency may be assessed.
(17) An overpayment of a tax imposed by this chapter shall accrue interest at the rate
and in the manner prescribed in Section 
59-1-402
.
(18) A pass-through entity may claim a refund of qualifying excess withholding in
accordance with Section 
59-10-1403.3
 in lieu of a pass-though entity taxpayer claiming a tax
credit under Section 
59-7-614.4
 or Section 
59-10-1103
.
Section 2. Section 
59-10-1403
 is amended to read:
59-10-1403.
Income tax treatment of a pass-through entity -- Returns --
Classification same as under Internal Revenue Code.
(1) Subject to Subsection (3), a pass-through entity is not subject to a tax imposed by
this chapter.
(2) [
The
] 
Except as provided in Section 
59-10-1403.3
, the
 income, gain, loss,
deduction, or credit of a pass-through entity shall be passed through to one or more
pass-through entity taxpayers as provided in this part.
(3) A pass-through entity is subject to the return filing requirements of Sections
59-10-507
 and 
59-10-514
.
(4) [
A
] 
For purposes of taxation under this title, a
 pass-through entity that transacts
business in the state shall be classified [
for purposes of taxation under this title
] in the same
manner as the pass-through entity is classified for federal income tax purposes.
Section 3. Section 
59-10-1403.3
 is enacted to read:
 59-10-1403.3.
Refund of amounts paid or withheld for a pass-through entity.
(1) As used in this section:
(a) "Committee" means the Revenue and Taxation Interim Committee.
(b) "Qualifying excess withholding" means an amount that:
(i) is paid or withheld:
(A) by a pass-through entity that has a different taxable year than the pass-through
entity that requests a refund under this section; and
(B) on behalf of the pass-through entity that requests the refund, if the pass-through
entity that requests the refund also is a pass-through entity taxpayer; and
(ii) is equal to the difference between:
(A) the amount paid or withheld for the taxable year on behalf of the pass-through
entity that requests the refund; and
(B) the product of 5% and the income, described in Subsection 
59-10-1403.2
(1)(a)(i),
of the pass-through entity that requests the refund.
(2) For a taxable year ending on or after July 1, 2017, a pass-through entity may claim
a refund of qualifying excess withholding, if the amount of the qualifying excess withholding is
equal to or greater than $250,000.
(3) A pass-through entity that requests a refund of qualifying excess withholding under
this section shall:
(a) apply to the commission for a refund on or, subject to Subsection (4), after the day
on which the pass-through entity files the pass-through entity's income tax return; and
(b) provide any information that the commission may require to determine that the
pass-through entity is eligible to receive the refund.
(4) A pass-through entity shall claim a refund of qualifying excess withholding under
this section within 30 days after the earlier of the day on which:
(a) the pass-through entity files an income tax return; or
(b) the pass-through entity's income tax return is due, including any extension of due
date authorized in statute.
(5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
commission may make rules establishing the information that a pass-through entity shall
provide to the commission to obtain a refund of qualifying excess withholding under this
section.
(6) (a) On or before November 30, 2018, the committee shall review the $250,000
threshold described in Subsection (2) for the purpose of assessing whether the threshold
amount should be maintained, increased, or decreased.
(b) To assist the committee in conducting the review described in Subsection (6)(a),
the commission shall provide the committee with:
(i) the total number of refund requests made under this section;
(ii) the total costs of any refunds issued under this section;
(iii) the costs of any audits conducted on refund requests made under this section; and
(iv) an estimation of:
(A) the number of refund requests the commission expects to receive if the Legislature
increases the threshold;
(B) the number of refund requests the commission expects to receive if the Legislature
decreases the threshold; and
(C) the costs of any audits the commission would conduct if the Legislature increases
or decreases the threshold.
Legislative Review Note
Office of Legislative Research and General Counsel