SB 16

Enrolled Copy  S.B. 16
1Tax Credit Review Process Amendments
  2026 GENERAL SESSION
  STATE OF UTAH
  Chief Sponsor: Daniel McCay
  House Sponsor: Steve Eliason
2
3  LONG TITLE
4  General Description:
5This bill modifies the tax credit review cycle for income tax credits.
6  Highlighted Provisions:
7This bill:
8▸ exempts the income tax credit for taxes paid to another state from periodic review by the
9  Revenue and Taxation Interim Committee (the committee);
10▸ repeals an expired review requirement;
11▸ aligns the timing of the committee's review of the income tax credit allowed for purchases
12  of motor fuel used in agriculture with the timing for reviewing other income tax credits;
13  and
14▸ makes technical changes.
15  Money Appropriated in this Bill:
16None
17  Other Special Clauses:
18None
19  Utah Code Sections Affected:
20  AMENDS:
2159-10-137, as last amended by Laws of Utah 2025, Chapter 292
2259-10-1403.3, as last amended by Laws of Utah 2021, Chapter 367
2359-13-202, as last amended by Laws of Utah 2022, Chapter 456
2463I-2-259, as last amended by Laws of Utah 2025, Chapters 157, 182, 277, and 366
25
26  Be it enacted by the Legislature of the state of Utah:
27Section 1. Section 59-10-137 is amended to read:
S.B. 16  Enrolled Copy
2859-10-137 . Review of credits allowed under this chapter.
29   (1) As used in this section, "committee" means the Revenue and Taxation Interim
30Committee.
31   (2)(a) [The] Except as provided in Subsection (3), the committee shall review each tax
32credit described in this chapter once every five years to determine whether to
33continue, modify, or repeal the tax credit.
34(b) In conducting the review required under Subsection (2)(a), the committee shall:
35(i) schedule time on a committee agenda to conduct the review as needed;
36(ii) invite state agencies, individuals, and organizations concerned with a tax credit
37under review to provide oral or written testimony;
38(iii)(A) invite the Governor's Office of Economic Opportunity to present a
39summary and analysis of the information for each tax credit regarding which
40the Governor's Office of Economic Opportunity is required to make a report
41under this chapter; and
42(B) invite the Office of the Legislative Fiscal Analyst to present a summary and
43analysis of the information for each tax credit regarding which the Office of the
44Legislative Fiscal Analyst is required to make a report under this chapter;
45(iv) evaluate:
46(A) the cost of the tax credit to the state;
47(B) the purpose and effectiveness of the tax credit; and
48(C) the extent to which the state benefits from the tax credit; and
49(v) undertake other review efforts as determined by the committee chairs or as
50otherwise required by law.
51   (3) The review requirements of this section do not apply to the tax credit described in
52Section 59-10-1003.
53Section 2. Section 59-10-1403.3 is amended to read:
5459-10-1403.3 . Refund of amounts paid or withheld for a pass-through entity.
55   (1) As used in this section[:] ,
56[(a) "Committee" means the Revenue and Taxation Interim Committee.]
57[(b) "Qualifying] "qualifying excess withholding" means an amount that:
58[(i)] (a) is paid or withheld:
59[(A)] (i) by a pass-through entity that has a different taxable year than the
60pass-through entity that requests a refund under this section; and
61[(B)] (ii) on behalf of the pass-through entity that requests the refund, if the
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62pass-through entity that requests the refund also is a pass-through entity taxpayer;
63and
64[(ii)] (b) is equal to the difference between:
65[(A)] (i) the amount paid or withheld for the taxable year on behalf of the
66pass-through entity that requests the refund; and
67[(B)] (ii) the product of the percentage listed in Subsection 59-10-104(2) and the
68income, described in Subsection 59-10-1403.2(1)(a)(i), of the pass-through entity
69that requests the refund.
70  (2) [For a taxable year ending on or after July 1, 2017, a] A pass-through entity may claim a
71      refund of qualifying excess withholding, if the amount of the qualifying excess
72      withholding is equal to or greater than $250,000.
73  (3) A pass-through entity that requests a refund of qualifying excess withholding under this
74      section shall:
75      (a) apply to the commission for a refund on or, subject to Subsection (4), after the day
76on which the pass-through entity files the pass-through entity's income tax return; and
77      (b) provide any information that the commission may require to determine that the
78pass-through entity is eligible to receive the refund.
79  (4) A pass-through entity shall claim a refund of qualifying excess withholding under this
80      section within 30 days after the earlier of the day on which:
81      (a) the pass-through entity files an income tax return; or
82      (b) the pass-through entity's income tax return is due, including any extension of due
83date authorized in statute.
84  (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
85      commission may make rules establishing the information that a pass-through entity shall
86      provide to the commission to obtain a refund of qualifying excess withholding under this
87      section.
88  [(6)(a) On or before November 30, 2018, the committee shall review the $250,000
89      threshold described in Subsection (2) for the purpose of assessing whether the
90      threshold amount should be maintained, increased, or decreased.]
91      [(b) To assist the committee in conducting the review described in Subsection (6)(a), the
92commission shall provide the committee with:]
93[(i) the total number of refund requests made under this section;]
94[(ii) the total costs of any refunds issued under this section;]
95[(iii) the costs of any audits conducted on refund requests made under this section;
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96and]
97[(iv) an estimation of:]
98[(A) the number of refund requests the commission expects to receive if the
99Legislature increases the threshold;]
100[(B) the number of refund requests the commission expects to receive if the
101Legislature decreases the threshold; and]
102[(C) the costs of any audits the commission would conduct if the Legislature
103increases or decreases the threshold.]
104Section 3. Section 59-13-202 is amended to read:
10559-13-202 . Refund of tax for agricultural uses on individual income and
106   corporate franchise and income tax returns -- Application for permit for refund --
107   Division of Finance to pay claims -- Rules permitted to enforce part -- Penalties --
108   Revenue and Taxation Interim Committee study.
109   (1) As used in this section:
110(a)(i) [Except at provided in Subsection (1)(a)(ii), "claimant"] "Claimant" means a
111resident or nonresident person.
112(ii) "Claimant" does not include an estate or trust.
113(b) "Committee" means the Revenue and Taxation Interim Committee.
114[(b)] (c) "Estate" means a nonresident estate or a resident estate.
115[(c)] (d) "Refundable tax credit" or "tax credit" means a tax credit that a claimant, estate,
116or trust may claim:
117(i) as provided by statute; and
118(ii) regardless of whether, for the taxable year for which the claimant, estate, or trust
119claims the tax credit, the claimant, estate, or trust has a tax liability under:
120(A) Chapter 7, Corporate Franchise and Income Taxes; or
121(B) Chapter 10, Individual Income Tax Act.
122[(d)] (e) "Trust" means a nonresident trust or a resident trust.
123   (2) Any claimant, estate, or trust that purchases and uses any motor fuel within the state for
124the purpose of operating or propelling stationary farm engines and self-propelled farm
125machinery used for nonhighway agricultural uses, and that has paid the tax on the motor
126fuel as provided by this part, is entitled to a refund of the tax subject to the conditions
127and limitations provided under this part.
128   (3)(a) A claimant, estate, or trust desiring a nonhighway agricultural use refund under
129this part shall claim the refund as a refundable tax credit on the tax return the
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130      claimant, estate, or trust files under:
131(i) Chapter 7, Corporate Franchise and Income Taxes; or
132(ii) Chapter 10, Individual Income Tax Act.
133      (b) A claimant, estate, or trust not subject to filing a tax return described in Subsection
134(3)(a) shall obtain a permit and file claims on a calendar year basis.
135      (c) Any claimant, estate, or trust claiming a refundable tax credit under this section is
136required to [furnish any or all of] provide the information outlined in this section upon
137request of the commission.
138      (d) [A ] The commission shall allow a refundable tax credit under this section [is allowed ]
139only on purchases on which tax is paid during the taxable year covered by the tax
140return.
141  (4) [In order to]
142      (a) To obtain a permit for a refund of motor fuel tax paid, a claimant, estate, or trust
143shall file an application[ shall be filed ] containing:
144[(a)] (i) the name of the claimant, estate, or trust;
145[(b)] (ii) the claimant's, estate's, or trust's address;
146[(c)] (iii) location and number of acres owned and operated[,] ;
147(iv) location and number of acres rented and operated, [the latter of which shall be
148verified by a signed statement from the legal owner] which the legal owner shall
149verify by signed statement;
150[(d)] (v) number of acres planted to each crop, type of soil, and whether irrigated or
151dry; and
152[(e)] (vi) make, size, and type of fuel used and power rating of each piece of
153equipment using fuel.
154      (b) If the claimant, estate, or trust is an operator of self-propelled or tractor-pulled farm
155machinery with which the claimant, estate, or trust works for hire doing custom jobs
156for other farmers, the application shall include information the commission requires
157and shall all be contained in, and be considered part of, the original application.
158      (c) The claimant, estate, or trust shall also file with the application a certificate from the
159county assessor showing each piece of equipment using fuel.
160      (d) This original application and all information contained in it constitutes a permanent
161file with the commission in the name of the claimant, estate, or trust.
162  (5)(a) A claimant, estate, or trust claiming the right to a refund of motor fuel tax paid
163      shall file a claim with the commission by April 15 of each year for the refund for the
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164previous calendar year.
165(b) The claim shall state the name and address of the claimant, estate, or trust, the
166number of gallons of motor fuel purchased for nonhighway agricultural uses, and the
167amount paid for the motor fuel.
168(c) The claimant, estate, or trust shall retain the original invoice to support the claim.
169(d) [No] A claimant, estate, or trust may claim no more than one claim for a tax refund [
170may be filed annually by each user of motor fuel purchased for nonhighway
171agricultural uses] annually.
172   (6)(a) Upon commission approval of the claim for a refund, the Division of Finance
173shall pay the amount [found ]due to the claimant, estate, or trust. [The total amount
174of claims for refunds shall be paid from motor fuel taxes.]
175(b) The Division of Finance shall pay the refunds from motor fuel taxes.
176   (7)(a) The commission may refuse to accept as evidence of purchase or payment any
177instruments that show alteration or that fail to indicate the quantity of the purchase,
178the price of the motor fuel, a statement that the motor fuel is purchased for purposes
179other than transportation, and the date of purchase and delivery.
180(b) If the commission is not satisfied with the evidence submitted in connection with the
181claim, the commission may reject the claim or require additional evidence.
182   (8) A claimant, estate, or trust aggrieved by the decision of the commission with respect to
183a refundable tax credit or refund may file a request for agency action, requesting a
184hearing before the commission.
185   (9)(a) A claimant, estate, or trust that makes any false claim, report, or statement, as
186claimant, estate, trust, agent, or creditor, with intent to defraud or secure a refund to
187which the claimant, estate, or trust is not entitled, is subject to the criminal penalties
188provided under Section 59-1-401, and the commission shall initiate the filing of a
189complaint for alleged violations of this part.
190(b) In addition to these penalties, the claimant, estate, or trust may not receive any
191refund as a claimant, estate, or trust or as a creditor of a claimant, estate, or trust for
192refund for a period of five years.
193   (10)(a) In accordance with any rules [prescribed] made by the commission under
194Subsection (10)(b), the Division of Finance shall transfer at least annually from the
195Transportation Fund into the Income Tax Fund an amount equal to the amount of the
196refund claimed under this section.
197(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
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198commission may make rules providing procedures for:
199(i) making a refund to a claimant, estate, or trust as required by Subsection [(3)(a)(i)]
200(3)(a);
201(ii) making a transfer from the Transportation Fund into the Income Tax Fund as
202required by Subsection (10)(a); or
203(iii) enforcing this part.
204  (11)(a) On or before November 30, [2017] 2028, and every [three years after 2017, the
205      Revenue and Taxation Interim Committee ] five years after 2028, the committee shall
206      review the tax credit provided by this section and make recommendations concerning
207      whether the tax credit should be continued, modified, or repealed.
208      (b) In conducting the review required by Subsection (11)(a), the [Revenue and Taxation
209Interim Committee] committee shall:
210(i) schedule time on [at least one] a committee agenda to conduct the review as needed;
211(ii) invite state agencies, individuals, and organizations concerned with the credit
212under review to provide oral or written testimony;
213(iii) [ensure that the recommendations described in this section include an evaluation
214of] evaluate:
215(A) the cost of the tax credit to the state;
216(B) the purpose and effectiveness of the tax credit; and
217(C) the extent to which the state benefits from the tax credit; and
218(iv) undertake other review efforts as determined by the chairs of the [Revenue and
219Taxation Interim Committee] committee.
220Section 4. Section 63I-2-259 is amended to read:
22163I-2-259 . Repeal dates: Title 59.
222  [(1) Subsection 59-7-159(3)(b)(iii), referencing Section 59-7-614.10, is repealed December
223      31, 2026.]
224  [(2)] (1) Section 59-7-614.10, Nonrefundable enterprise zone tax credit, is repealed
225      December 31, 2026.
226  [(3) Subsection 59-10-137(3)(b)(viii), referencing Section 59-10-1037, is repealed
227      December 31, 2026.]
228  [(4)] (2) Section 59-10-1037, Nonrefundable enterprise zone tax credit, is repealed
229      December 31, 2026.
230  [(5)] (3) Subsection 59-14-807(3)(a)(iii), regarding the Youth Electronic Cigarette,
231      Marijuana, and Other Drug Prevention Committee, is repealed July 1, 2030.
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232   [(6)] (4) Subsection 59-14-807(4)(b), regarding the Youth Electronic Cigarette, Marijuana,
233and Other Drug Prevention Committee, is repealed July 1, 2030.
234   [(7)] (5) Section 59-24-103.8, Radioactive waste facility expansion tax -- Payment --
235Deposit of tax revenue, is repealed July 1, 2026.
236Section 5. Effective Date.
237   This bill takes effect on May 6, 2026.
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