Bill Summary – FastDemocracy

LEGISLATIVE GENERAL COUNSEL                                             H.B. 18
Approved for Filing: A.V. Arthur 6                                 st
                                                                        1 Sub. (Buff)
          6 01-31-24 5:13 PM 6
                         Senator Curtis S. Bramble proposes the following substitute bill:
                             TAX WITHHOLDING AMENDMENTS
                                       2024 GENERAL SESSION
                                            STATE OF UTAH
                                 Chief Sponsor: Bridger Bolinder
                                 Senate Sponsor: Curtis S. Bramble
 6
 LONG TITLE
 General Description:
        This bill modifies requirements for tax withholding.
 Highlighted Provisions:
        This bill:
        < provides penalty provisions that apply if a producer fails to file a form 1099 for
 mineral production tax withholding or fails to file the form 1099 on time;
        < aligns the time periods for incurring penalties for failure to file or timely file an
 income tax withholding form with the time periods for incurring penalties for
 failure to file or timely file a mineral production tax withholding form;
        < amends the percentage of the mineral production tax a producer withholds to align
 with the income tax rate;
        < amends the information a producer is required to provide on a withholding return;
        < provides the requirements for a producer to file a form 1099 with the State Tax         1 stSub. H.B. 18
 Commission; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
     *HB0018S01*
       1st Sub. (Buff) H.B. 18                                                   01-31-24 5:13 PM
        This bill provides a special effective date.
 Utah Code Sections Affected:
 AMENDS:
        59-1-401, as last amended by Laws of Utah 2023, Chapter 471
        59-6-102, as last amended by Laws of Utah 2008, Chapter 255
        59-6-103, as last amended by Laws of Utah 2017, Chapter 226
32
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 59-1-401 is amended to read:
        59-1-401. Definitions -- Offenses and penalties -- Rulemaking authority -- Statute
 of limitations -- Commission authority to waive, reduce, or compromise penalty or
 interest.
        (1) As used in this section:
        (a) "Tax, fee, or charge" means:
        (i) a tax, fee, or charge the commission administers under:
        (A) this title;
        (B) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
        (C) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
        (D) Section 19-6-410.5;
        (E) Section 19-6-714;
        (F) Section 19-6-805;
        (G) Section 34A-2-202;
        (H) Section 40-6-14; or
        (I) Title 69, Chapter 2, Part 4, Prepaid Wireless Telecommunications Service Charges;
 or
        (ii) another amount that by statute is subject to a penalty imposed under this section.
        (b) "Tax, fee, or charge" does not include a tax, fee, or charge imposed under:
        (i) Title 41, Chapter 1a, Motor Vehicle Act, except for Section 41-1a-301;
        (ii) Title 41, Chapter 3, Motor Vehicle Business Regulation Act;
        (iii) Chapter 2, Property Tax Act, except for Section 59-2-1309;
        (iv) Chapter 3, Tax Equivalent Property Act; or
                                                     -2-
       01-31-24 5:13 PM                                                        1st Sub. (Buff) H.B. 18
         (v) Chapter 4, Privilege Tax.
         (2) (a) The due date for filing a return is:
         (i) if the person filing the return is not allowed by law an extension of time for filing
 the return, the day on which the return is due as provided by law; or
         (ii) if the person filing the return is allowed by law an extension of time for filing the
 return, the earlier of:
         (A) the date the person files the return; or
         (B) the last day of that extension of time as allowed by law.
         (b) A penalty in the amount described in Subsection (2)(c) is imposed if a person files a
 return after the due date described in Subsection (2)(a).
         (c) For purposes of Subsection (2)(b), the penalty is an amount equal to the greater of:
         (i) $20; or
         (ii) (A) 2% of the unpaid tax, fee, or charge due on the return if the return is filed no
 later than five days after the due date described in Subsection (2)(a);
         (B) 5% of the unpaid tax, fee, or charge due on the return if the return is filed more
 than five days after the due date but no later than 15 days after the due date described in
 Subsection (2)(a); or
         (C) 10% of the unpaid tax, fee, or charge due on the return if the return is filed more
 than 15 days after the due date described in Subsection (2)(a).
         (d) This Subsection (2) does not apply to:
         (i) an amended return; or
         (ii) a return with no tax due.
         (3) (a) Except as provided in Subsection (15), a person is subject to a penalty for
 failure to pay a tax, fee, or charge if:
         (i) the person files a return on or before the due date for filing a return described in
 Subsection (2)(a), but fails to pay the tax, fee, or charge due on the return on or before that due
 date;
         (ii) the person:
         (A) is subject to a penalty under Subsection (2)(b); and
         (B) fails to pay the tax, fee, or charge due on a return within a 90-day period after the
 due date for filing a return described in Subsection (2)(a);
                                                      -3-
        1st Sub. (Buff) H.B. 18                                                       01-31-24 5:13 PM
        (iii) (A) the person is subject to a penalty under Subsection (2)(b); and
        (B) the commission estimates an amount of tax due for that person in accordance with
 Subsection 59-1-1406(2);
        (iv) the person:
        (A) is mailed a notice of deficiency; and
        (B) within a 30-day period after the day on which the notice of deficiency described in
 Subsection (3)(a)(iv)(A) is mailed:
        (I) does not file a petition for redetermination or a request for agency action; and
        (II) fails to pay the tax, fee, or charge due on a return;
        (v) (A) the commission:
        (I) issues an order constituting final agency action resulting from a timely filed petition
 for redetermination or a timely filed request for agency action; or
        (II) is considered to have denied a request for reconsideration under Subsection
 63G-4-302(3)(b) resulting from a timely filed petition for redetermination or a timely filed
 request for agency action; and
        (B) the person fails to pay the tax, fee, or charge due on a return within a 30-day period
 after the date the commission:
        (I) issues the order constituting final agency action described in Subsection
 (3)(a)(v)(A)(I); or
        (II) is considered to have denied the request for reconsideration described in
 Subsection (3)(a)(v)(A)(II); or
        (vi) the person fails to pay the tax, fee, or charge within a 30-day period after the date
 of a final judicial decision resulting from a timely filed petition for judicial review.
        (b) For purposes of Subsection (3)(a), the penalty is an amount equal to the greater of:
        (i) $20; or
        (ii) (A) 2% of the unpaid tax, fee, or charge due on the return if the activated tax, fee,
 or charge due on the return is paid no later than five days after the due date for filing a return
 described in Subsection (2)(a);
        (B) 5% of the unpaid tax, fee, or charge due on the return if the activated tax, fee, or
 charge due on the return is paid more than five days after the due date for filing a return
 described in Subsection (2)(a) but no later than 15 days after that due date; or
                                                       -4-
        01-31-24 5:13 PM                                                       1st Sub. (Buff) H.B. 18
         (C) 10% of the unpaid tax, fee, or charge due on the return if the activated tax, fee, or
 charge due on the return is paid more than 15 days after the due date for filing a return
 described in Subsection (2)(a).
         (4) (a) In the case of any underpayment of estimated tax or quarterly installments
 required by Sections 59-5-107, 59-5-207, 59-7-504, and 59-9-104, there shall be added a
 penalty in an amount determined by applying the interest rate provided under Section 59-1-402
 plus four percentage points to the amount of the underpayment for the period of the
 underpayment.
         (b) (i) For purposes of Subsection (4)(a), the amount of the underpayment shall be the
 excess of the required installment over the amount, if any, of the installment paid on or before
 the due date for the installment.
         (ii) The period of the underpayment shall run from the due date for the installment to
 whichever of the following dates is the earlier:
         (A) the original due date of the tax return, without extensions, for the taxable year; or
         (B) with respect to any portion of the underpayment, the date on which that portion is
 paid.
         (iii) For purposes of this Subsection (4), a payment of estimated tax shall be credited
 against unpaid required installments in the order in which the installments are required to be
 paid.
         (5) (a) Notwithstanding Subsection (2) and except as provided in Subsection (6), a
 person allowed by law an extension of time for filing a corporate franchise or income tax return
 under Chapter 7, Corporate Franchise and Income Taxes, or an individual income tax return
 under Chapter 10, Individual Income Tax Act, is subject to a penalty in the amount described in
 Subsection (5)(b) if, on or before the day on which the return is due as provided by law, not
 including the extension of time, the person fails to pay:
         (i) for a person filing a corporate franchise or income tax return under Chapter 7,
 Corporate Franchise and Income Taxes, the payment required by Subsection 59-7-507(1)(b); or
         (ii) for a person filing an individual income tax return under Chapter 10, Individual
 Income Tax Act, the payment required by Subsection 59-10-516(2).
         (b) For purposes of Subsection (5)(a), the penalty per month during the period of the
 extension of time for filing the return is an amount equal to 2% of the tax due on the return,
                                                         -5-
        1st Sub. (Buff) H.B. 18                                                      01-31-24 5:13 PM
 unpaid as of the day on which the return is due as provided by law.
        (6) If a person does not file a return within an extension of time allowed by Section
 59-7-505 or 59-10-516, the person:
        (a) is not subject to a penalty in the amount described in Subsection (5)(b); and
        (b) is subject to a penalty in an amount equal to the sum of:
        (i) a late file penalty in an amount equal to the greater of:
        (A) $20; or
        (B) 10% of the tax due on the return, unpaid as of the day on which the return is due as
 provided by law, not including the extension of time; and
        (ii) a late pay penalty in an amount equal to the greater of:
        (A) $20; or
        (B) 10% of the unpaid tax due on the return, unpaid as of the day on which the return is
 due as provided by law, not including the extension of time.
        (7) (a) Additional penalties for an underpayment of a tax, fee, or charge are as provided
 in this Subsection (7)(a).
        (i) Except as provided in Subsection (7)(c), if any portion of an underpayment of a tax,
 fee, or charge is due to negligence, the penalty is 10% of the portion of the underpayment that
 is due to negligence.
        (ii) Except as provided in Subsection (7)(d), if any portion of an underpayment of a
 tax, fee, or charge is due to intentional disregard of law or rule, the penalty is 15% of the entire
 underpayment.
        (iii) If any portion of an underpayment is due to an intent to evade a tax, fee, or charge,
 the penalty is the greater of $500 per period or 50% of the entire underpayment.
        (iv) If any portion of an underpayment is due to fraud with intent to evade a tax, fee, or
 charge, the penalty is the greater of $500 per period or 100% of the entire underpayment.
        (b) If the commission determines that a person is liable for a penalty imposed under
 Subsection (7)(a)(ii), (iii), or (iv), the commission shall notify the person of the proposed
 penalty.
        (i) The notice of proposed penalty shall:
        (A) set forth the basis of the assessment; and
        (B) be mailed by certified mail, postage prepaid, to the person's last-known address.
                                                       -6-
        01-31-24 5:13 PM                                                       1st Sub. (Buff) H.B. 18
        (ii) Upon receipt of the notice of proposed penalty, the person against whom the
 penalty is proposed may:
        (A) pay the amount of the proposed penalty at the place and time stated in the notice;
 or
        (B) proceed in accordance with the review procedures of Subsection (7)(b)(iii).
        (iii) A person against whom a penalty is proposed in accordance with this Subsection
 (7) may contest the proposed penalty by filing a petition for an adjudicative proceeding with
 the commission.
        (iv) (A) If the commission determines that a person is liable for a penalty under this
 Subsection (7), the commission shall assess the penalty and give notice and demand for
 payment.
        (B) The commission shall mail the notice and demand for payment described in
 Subsection (7)(b)(iv)(A):
        (I) to the person's last-known address; and
        (II) in accordance with Section 59-1-1404.
        (c) A seller that voluntarily collects a tax under Subsection 59-12-107(2)(d) is not
 subject to the penalty under Subsection (7)(a)(i) if on or after July 1, 2001:
        (i) a court of competent jurisdiction issues a final unappealable judgment or order
 determining that:
        (A) the seller meets one or more of the criteria described in Subsection 59-12-107(2)(a)
 or is a seller required to pay or collect and remit sales and use taxes under Subsection
 59-12-107(2)(b) or (2)(c); and
        (B) the commission or a county, city, or town may require the seller to collect a tax
 under Subsections 59-12-103(2)(a) through (e); or
        (ii) the commission issues a final unappealable administrative order determining that:
        (A) the seller meets one or more of the criteria described in Subsection 59-12-107(2)(a)
 or is a seller required to pay or collect and remit sales and use taxes under Subsection
 59-12-107(2)(b) or (2)(c); and
        (B) the commission or a county, city, or town may require the seller to collect a tax
 under Subsections 59-12-103(2)(a) through (e).
        (d) A seller that voluntarily collects a tax under Subsection 59-12-107(2)(d) is not
                                                      -7-
        1st Sub. (Buff) H.B. 18                                                       01-31-24 5:13 PM
 subject to the penalty under Subsection (7)(a)(ii) if:
        (i) (A) a court of competent jurisdiction issues a final unappealable judgment or order
 determining that:
        (I) the seller meets one or more of the criteria described in Subsection 59-12-107(2)(a)
 or is a seller required to pay or collect and remit sales and use taxes under Subsection
 59-12-107(2)(b) or (2)(c); and
        (II) the commission or a county, city, or town may require the seller to collect a tax
 under Subsections 59-12-103(2)(a) through (e); or
        (B) the commission issues a final unappealable administrative order determining that:
        (I) the seller meets one or more of the criteria described in Subsection 59-12-107(2)(a)
 or is a seller required to pay or collect and remit sales and use taxes under Subsection
 59-12-107(2)(b) or (2)(c); and
        (II) the commission or a county, city, or town may require the seller to collect a tax
 under Subsections 59-12-103(2)(a) through (e); and
        (ii) the seller's intentional disregard of law or rule is warranted by existing law or by a
 nonfrivolous argument for the extension, modification, or reversal of existing law or the
 establishment of new law.
        (8) (a) Subject to Subsections (8)(b) and (c), the penalty for failure to file an
 information return, information report, or a complete supporting schedule is $50 for each
 information return, information report, or supporting schedule up to a maximum of $1,000.
        (b) If an employer is subject to a penalty under Subsection (13), the employer may not
 be subject to a penalty under Subsection (8)(a).
        (c) If an employer is subject to a penalty under this Subsection (8) for failure to file a
 return in accordance with Subsection 59-10-406(3) on or before the due date described in
 Subsection 59-10-406(3)(b)(ii), the commission may not impose a penalty under this
 Subsection (8) unless the return is filed more than 14 days after the due date desc