59-10-1403.2 - Pass-through entity payment or withholding of tax on behalf of a pass-through entity taxpayer -- Exceptions to payment or withholding requirement -- Procedures and requirements -- Failu
59-10-1403.2. Pass-through entity payment or withholding of tax on behalf of apass-through entity taxpayer -- Exceptions to payment or withholding requirement --Procedures and requirements -- Failure to pay or withhold a tax on behalf of a pass-throughentity taxpayer.
(1) (a) Except as provided in Subsection (1)(b), for a taxable year, a pass-through entity shallpay or withhold a tax:
(i) on:
(A) the business income of the pass-through entity; and
(B) the nonbusiness income of the pass-through entity derived from or connected with Utahsources; and
(ii) on behalf of a pass-through entity taxpayer.
(b) A pass-through entity is not required to pay or withhold a tax under Subsection (1)(a):
(i) on behalf of a pass-through entity taxpayer who is a resident individual;
(ii) if the pass-through entity is an organization exempt from taxation under Subsection59-7-102(1)(a); or
(iii) if the pass-through entity is a publicly traded partnership:
(A) as defined in Section 7704(b), Internal Revenue Code;
(B) that is classified as a partnership for federal income tax purposes; and
(C) that files an annual information return reporting the following with respect to each partnerof the publicly traded partnership with income derived from or connected with Utah sources thatexceeds $500 in a taxable year:
(I) the partner's name;
(II) the partner's address;
(III) the partner's taxpayer identification number; and
(IV) other information required by the commission.
(2) (a) Subject to Subsection (2)(b), the tax a pass-through entity shall pay or withhold onbehalf of a pass-through entity taxpayer for a taxable year is an amount:
(i) determined by the commission by rule made in accordance with Title 63G, Chapter 3, UtahAdministrative Rulemaking Act; and
(ii) that the commission estimates will be sufficient to pay the tax liability of the pass-throughentity taxpayer under this chapter with respect to the income described in Subsection (1)(a)(i) of thatpass-through entity for the taxable year.
(b) The rules the commission makes in accordance with Subsection (2)(a):
(i) except as provided in Subsection (2)(c):
(A) shall:
(I) for a pass-through entity except for a pass-through entity that is an S corporation, take intoaccount items of income, gain, loss, deduction, and credit as analyzed on the schedule for reportingpartners' distributive share items as part of the federal income tax return for the pass-through entity; or
(II) for a pass-through entity that is an S corporation, take into account items of income, gain,loss, deduction, and credit as reconciled on the schedule for reporting shareholders' pro rata shareitems as part of the federal income tax return for the pass-through entity; and
(B) notwithstanding Subsection (2)(b)(ii)(D), take into account the refundable tax creditprovided in Section 59-6-102; and
(ii) may not take into account the following items if taking those items into account does notresult in an accurate estimate of a pass-through entity taxpayer's tax liability under this chapter for thetaxable year:
(A) a capital loss;
(B) a passive loss;
(C) another item of deduction or loss if that item of deduction or loss is generally subject tosignificant reduction or limitation in calculating:
(I) for a pass-through entity taxpayer that is classified as a C corporation for federal incometax purposes, unadjusted income as defined in Section 59-7-101;
(II) for a pass-through entity that is classified as an individual, partnership, or S corporation forfederal income tax purposes, adjusted gross income; or
(III) for a pass-through entity that is classified as an estate or a trust for federal income taxpurposes, unadjusted income as defined in Section 59-10-103; or
(D) a tax credit allowed against a tax imposed under:
(I) Chapter 7, Corporate Franchise and Income Taxes; or
(II) this chapter.
(c) The rules the commission makes in accordance with Subsection (2)(a) may establish amethod for taking into account items of income, gain, loss, deduction, or credit of a pass-through entityif:
(i) for a pass-through entity except for a pass-through entity that is an S corporation, thepass-through entity does not analyze the items of income, gain, loss, deduction, or credit on theschedule for reporting partners' distributive share items as part of the federal income tax return for thepass-through entity; or
(ii) for a pass-through entity that is an S corporation, the pass-through entity does not reconcilethe items of income, gain, loss, deduction, or credit on the schedule for reporting shareholders' pro ratashare items as part of the federal income tax return for the pass-through entity.
(3) A pass-through entity shall remit to the commission the tax the pass-through entity pays orwithholds on behalf of a pass-through entity taxpayer under this section:
(a) on or before the due date of the pass-through entity's return, not including extensions; and
(b) on a form provided by the commission.
(4) A pass-through entity shall provide a statement to a pass-through entity taxpayer on behalfof whom the pass-through entity pays or withholds a tax under this section showing the amount of taxthe pass-through entity pays or withholds under this section for the taxable year on behalf of thepass-through entity taxpayer.
(5) Notwithstanding Section 59-1-401 or 59-1-402, the commission may not collect anamount under this section for a taxable year from a pass-through entity and shall waive a penalty orinterest on that amount if:
(a) the pass-through entity fails to pay or withhold the tax on the amount as required by thissection on behalf of the pass-through entity taxpayer;
(b) the pass-through entity taxpayer:
(i) files a return on or before the due date for filing the pass-through entity's return, includingextensions; and
(ii) on or before the due date including extensions described in Subsection (5)(b)(i), pays the
tax on the amount for the taxable year:
(A) if the pass-through entity taxpayer is classified as a C corporation for federal income taxpurposes, under Chapter 7, Corporate Franchise and Income Taxes; or
(B) if the pass-through entity taxpayer is classified as an estate, individual, partnership, Scorporation, or a trust for federal income tax purposes, under this chapter; and
(c) the pass-through entity applies to the commission.
Enacted by Chapter 312, 2009 General Session