Bill Summary – FastDemocracy

Enrolled Copy                                                                          S.B. 82
                                  SALES TAX AMENDMENTS
                                        2023 GENERAL SESSION
                                           STATE OF UTAH
                               Chief Sponsor: Wayne A. Harper
                                  House Sponsor: Steve Eliason
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 LONG TITLE
 General Description:
         This bill modifies provisions of the sale and use tax license requirements.
 Highlighted Provisions:
         This bill:
         < clarifies that the commission requires a seller to renew an exemption certificate
 when more than 12-months elapse between transactions between a seller or certified
 provider and a purchaser.
 Money Appropriated in this Bill:
         None
 Other Special Clauses:
         This bill provides retrospective operation.
 Utah Code Sections Affected:
 AMENDS:
         59-12-106, as last amended by Laws of Utah 2021, Chapter 16
22
 Be it enacted by the Legislature of the state of Utah:
         Section 1. Section 59-12-106 is amended to read:
         59-12-106. Definitions -- Sales and use tax license requirements -- Penalty --
 Application process and requirements -- No fee -- Bonds -- Presumption of taxability --
 Exemption certificates -- Exemption certificate license number to accompany contract
 bids.
         (1) As used in this section:
       S.B. 82                                                                         Enrolled Copy
        (a) "Applicant" means a person that:
        (i) is required by this section to obtain a license; and
        (ii) submits an application:
        (A) to the commission; and
        (B) for a license under this section.
        (b) "Application" means an application for a license under this section.
        (c) "Fiduciary of the applicant" means a person that:
        (i) is required to collect, truthfully account for, and pay over a tax under this chapter
 for an applicant; and
        (ii) (A) is a corporate officer of the applicant described in Subsection (1)(c)(i);
        (B) is a director of the applicant described in Subsection (1)(c)(i);
        (C) is an employee of the applicant described in Subsection (1)(c)(i);
        (D) is a partner of the applicant described in Subsection (1)(c)(i);
        (E) is a trustee of the applicant described in Subsection (1)(c)(i); or
        (F) has a relationship to the applicant described in Subsection (1)(c)(i) that is similar to
 a relationship described in Subsections (1)(c)(ii)(A) through (E) as determined by the
 commission by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
 Rulemaking Act.
        (d) "Fiduciary of the licensee" means a person that:
        (i) is required to collect, truthfully account for, and pay over a tax under this chapter
 for a licensee; and
        (ii) (A) is a corporate officer of the licensee described in Subsection (1)(d)(i);
        (B) is a director of the licensee described in Subsection (1)(d)(i);
        (C) is an employee of the licensee described in Subsection (1)(d)(i);
        (D) is a partner of the licensee described in Subsection (1)(d)(i);
        (E) is a trustee of the licensee described in Subsection (1)(d)(i); or
        (F) has a relationship to the licensee described in Subsection (1)(d)(i) that is similar to
 a relationship described in Subsections (1)(d)(ii)(A) through (E) as determined by the
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       Enrolled Copy                                                                                  S.B. 82
 commission by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
 Rulemaking Act.
          (e) "License" means a license under this section.
          (f) "Licensee" means a person that is licensed under this section by the commission.
          (g) "Special event" means an event that lasts six months or less where taxable sales
 occur.
          (2) (a) It is unlawful for any person required to collect a tax under this chapter to
 engage in business within the state without first having obtained a license to do so.
          (b) The license described in Subsection (2)(a):
          (i) shall be granted and issued by the commission;
          (ii) is not assignable;
          (iii) is valid only for the person in whose name the license is issued;
          (iv) is valid until:
          (A) the person described in Subsection (2)(b)(iii):
          (I) ceases to do business; or
          (II) changes that person's business address; or
          (B) the license is revoked by the commission; and
          (v) subject to Subsection (2)(d), shall be granted by the commission only upon an
 application that:
          (A) states the name and address of the applicant; and
          (B) provides other information the commission may require.
          (c) At the time an applicant makes an application under Subsection (2)(b)(v), the
 commission shall notify the applicant of the responsibilities and liability of a business owner
 successor under Section 59-12-112.
          (d) The commission shall review an application and determine whether the applicant:
          (i) meets the requirements of this section to be issued a license; and
          (ii) is required to post a bond with the commission in accordance with Subsections
 (2)(e) and (f) before the applicant may be issued a license.
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        S.B. 82                                                                         Enrolled Copy
        (e) (i) Except as provided in Subsection (2)(e)(iii), an applicant shall post a bond with
 the commission before the commission may issue the applicant a license if:
        (A) a license under this section was revoked for a delinquency under this chapter for:
        (I) the applicant;
        (II) a fiduciary of the applicant; or
        (III) a person for which the applicant or the fiduciary of the applicant is required to
 collect, truthfully account for, and pay over a tax under this chapter; or
        (B) there is a delinquency in paying a tax under this chapter for:
        (I) the applicant;
        (II) a fiduciary of the applicant; or
        (III) a person for which the applicant or the fiduciary of the applicant is required to
 collect, truthfully account for, and pay over a tax under this chapter.
        (ii) If the commission determines it is necessary to ensure compliance with this
 chapter, the commission may require a licensee to:
        (A) for a licensee that has not posted a bond under this section with the commission,
 post a bond with the commission in accordance with Subsection (2)(f); or
        (B) for a licensee that has posted a bond under this section with the commission,
 increase the amount of the bond posted with the commission.
        (iii) The commission may waive the bond requirement described in Subsection
 (2)(e)(i), if the applicant is in compliance with a payment agreement that:
        (A) relates to the delinquency; and
        (B) is approved by the commission.
        (f) (i) A bond required by Subsection (2)(e) shall be:
        (A) executed by:
        (I) for an applicant, the applicant as principal, with a corporate surety; or
        (II) for a licensee, the licensee as principal, with a corporate surety; and
        (B) payable to the commission conditioned upon the faithful performance of all of the
 requirements of this chapter including:
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        Enrolled Copy                                                                            S.B. 82
         (I) the payment of any tax under this chapter;
         (II) the payment of any:
         (Aa) penalty as provided in Section 59-1-401; or
         (Bb) interest as provided in Section 59-1-402; or
         (III) any other obligation of the:
         (Aa) applicant under this chapter; or
         (Bb) licensee under this chapter.
         (ii) Except as provided in Subsection (2)(f)(iv), the commission shall calculate the
 amount of a bond required by Subsection (2)(e) on the basis of:
         (A) commission estimates of:
         (I) an applicant's tax liability under this chapter; or
         (II) a licensee's tax liability under this chapter; and
         (B) any amount of a delinquency described in Subsection (2)(f)(iii).
         (iii) Except as provided in Subsection (2)(f)(iv), for purposes of Subsection
 (2)(f)(ii)(B):
         (A) for an applicant, the amount of the delinquency is the sum of:
         (I) the amount of any delinquency that served as a basis for revoking the license under
 this section of:
         (Aa) the applicant;
         (Bb) a fiduciary of the applicant; or
         (Cc) a person for which the applicant or the fiduciary of the applicant is required to
 collect, truthfully account for, and pay over a tax under this chapter; or
         (II) the amount of tax that any of the following owe under this chapter:
         (Aa) the applicant;
         (Bb) a fiduciary of the applicant; and
         (Cc) a person for which the applicant or the fiduciary of the applicant is required to
 collect, truthfully account for, and pay over a tax under this chapter; or
         (B) for a licensee, the amount of the delinquency is the sum of:
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        S.B. 82                                                                          Enrolled Copy
         (I) the amount of any delinquency that served as a basis for revoking the license under
 this section of:
         (Aa) the licensee;
         (Bb) a fiduciary of the licensee; or
         (Cc) a person for which the licensee or the fiduciary of the licensee is required to
 collect, truthfully account for, and pay over a tax under this chapter; or
         (II) the amount of tax that any of the following owe under this chapter:
         (Aa) the licensee;
         (Bb) a fiduciary of the licensee; and
         (Cc) a person for which the licensee or the fiduciary of the licensee is required to
 collect, truthfully account for, and pay over a tax under this chapter.
         (iv) Notwithstanding Subsection (2)(f)(ii) or (2)(f)(iii), a bond required by Subsection
 (2)(e) may not:
         (A) be less than $25,000; or
         (B) exceed $500,000.
         (g) Subject to Subsection (2)(h), if business is transacted at two or more separate places
 by one person, a separate license for each place of business is required.
         (h) A license is not required for any person that is:
         (i) engaged exclusively in the business of selling commodities that are exempt from
 taxation under this chapter; or
         (ii) exempt from collecting sales and use tax under Section 59-12-104 and the place of
 business is a special event.
         (i) (i) The commission shall, on a reasonable notice and after a hearing, revoke the
 license of any licensee violating any provisions of this chapter.
         (ii) A license may not be issued to a licensee described in Subsection (2)(i)(i) until the
 licensee has complied with the requirements of this chapter, including:
         (A) paying any:
         (I) tax due under this chapter;
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        Enrolled Copy                                                                                  S.B. 82
         (II) penalty as provided in Section 59-1-401; or
         (III) interest as provided in Section 59-1-402; and
         (B) posting a bond in accordance with Subsections (2)(e) and (f).
         (j) Any person required to collect a tax under this chapter within this state without
 having secured a license to do so is guilty of a criminal violation as provided in Section
 59-1-401.
         (k) A license shall be issued to the person by the commission without a license fee.
         (l) (i) The commission shall include on an application for a temporary sales tax license
 and special event sales tax return the following statement:
         "You are not required to complete or return this form or to collect sales and use tax if
 you are not regularly engaged in the business of selling the items you are offering at this event
 or all of the items that you are selling at this event are exempt from sales and use tax under
 Section 59-12-104."
         (ii) The notice described in Subsection (2)(l)(i) shall be in bold font no smaller than the
 font of the main content and shall appear at the top of the application form.
         (3) (a) For the purpose of the proper administration of this chapter and to prevent
 evasion of the tax and the duty to collect the tax, it shall be presumed that tangible personal
 property or any other taxable transaction under Subsection 59-12-103(1) sold by any person for
 delivery in this state is sold for storage, use, or other consumption in this state unless the
 person selling the property, item, or service has taken from the purchaser an exemption
 certificate:
         (i) bearing the name and address of the purchaser; and
         (ii) providing that the property, item, or service was exempted under Section
 59-12-104.
         (b) An exemption certificate described in Subsection (3)(a):
         (i) shall contain information as prescribed by the commission; and
         (ii) if a paper exemption certificate is used, shall be signed by the purchaser.
         (c) (i) Subject to Subsection (3)(c)(ii), a seller or certified service provider is not liable
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        S.B. 82                                                                           Enrolled Copy
 to collect a tax under this chapter if the seller or certified service provider obtains within 90
 days after a transaction is complete:
         (A) an exemption certificate containing the information required by Subsections (3)(a)
 and (b); or
         (B) the information required by Subsections (3)(a) and (b).
         (ii) A seller or certified service provider that does not obtain the exemption certificate
 or information described in Subsection (3)(c)(i) with respect to a transaction is allowed 120
 days after the commission requests the seller or certified service provider to substantiate the
 exemption to:
         (A) establish that the transaction is not subject to taxation under this chapter by a
 means other than providing an exemption certificate containing the information required by
 Subsections (3)(a) and (b); or
         (B) subject to Subsection (3)(c)(iii), obtain an exemption certificate containing the
 information required by Subsections (3)(a) and (b), taken in good faith.
         (iii) For purposes of Subsection (3)(c)(ii)(B), an exemption certificate is taken in good
 faith if the exemption certificate claims an exemption that:
         (A) was allowed by statute on the date of the transaction in the jurisdiction of the
 location of the transaction;
         (B) could be applicable to that transaction; and
         (C) is reasonable for the purchaser's type of business.
         (d) Except as provided in Subsection (3)(e), a seller or certified service provider that
 takes an exemption certificate from a purchaser in accordance with this Subsection (3) with
 respect to a transaction is not liable to collect a tax under this chapter on that transaction.
         (e) Subsection (3)(d) does not apply to a seller or certified service provider if the
 commission establishes through an audit that the seller or certified service provider:
         (i) knew or had reason to know at the time the purchaser provided the seller or certified
 service provider the information described in Subsection (3)(a) or (b) that the information
 related to the exemption claimed was materially false; or
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        Enrolled Copy                                                                                 S.B. 82
        (ii) otherwise knowingly participated in activity intended to purposefully evade the tax
 due on the transaction.
        (f) (i) Subject to Subsection (3)(f)(ii) and except as provided in Subsections (3)(f)(iii)
 and (iv), if there is a recurring business relationship between a seller or certified service
 provider and a purchaser, the commission may not require the seller or certified service
 provider to:
        (A) renew an exemption certificate;
        (B) update an exemption certificate; or
        (C) update a data element of an exemption certificate.
        (ii) For purposes of Subsection (3)(f)(i), a recurring business relationship exists if no
 more than a 12-month period elapses between transactions between a seller or certified service
 provider and a purchaser.
        (iii) Notwithstanding any other provision of this Subsection, the commission shall
 require a seller to renew an exemption certificate if more than 12-months have elapsed between
 transactions between a seller or certified service provider and a purchaser.
        [(iii)] (iv) If there is a recurring business relationship between a seller or certified
 service provider and a purchaser, the commission sh