DAR File No. 32793

Tax Commission, Auditing

R865-9I-13

Non-Resident's Share of Partnership or Limited Liability Company Income Pursuant to Utah Code Ann. Sections 59-10-116, 59-10-117, 59-10-118, and 59-10-1405

NOTICE OF PROPOSED RULE

DAR File No.: 32793
Filed: 07/06/2009, 02:52
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

S.B. 23 (2009 General Session) requires a rule to indicate how a pass-through entity that is not an S Corporation will determine the tax it must withhold on its non-resident pass-through entity taxpayers. (DAR NOTE: S.B. 23 (2009) is found at Chapter 312, Laws of Utah 2009, and was effective 03/25/2009.)

Summary of the rule or change:

The amended rule indicates how a pass-through entity that is not an S Corporation will determine the tax to withhold on its nonresident pass-through entity taxpayers.

State statutory or constitutional authorization for this rule:

Sections 59-10-116, 59-10-117, 59-10-118, 59-10-1403.2, and 59-10-1405

Anticipated cost or savings to:

the state budget:

None--Any impact was considered in S.B. 23 (2009).

local governments:

None--Any impact was considered in S.B. 23 (2009).

small businesses and persons other than businesses:

None--Any impact was considered in S.B. 23 (2009).

Compliance costs for affected persons:

None--Pass-through entities are required to withhold tax on their non-resident pass-through entity taxpayers.

Comments by the department head on the fiscal impact the rule may have on businesses:

None--Pass-Through entities are required to withhold tax on their non-resident pass-through entity taxpayers. D'Arcy Dixon, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY UT 84134

Direct questions regarding this rule to:

Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/31/2009

This rule may become effective on:

09/07/2009

Authorized by:

D'Arcy Dixon, Commissioner

R865. Tax Commission, Auditing.

R865-9I. Income Tax.

R865-9I-13. Nonresident's Share of [Partnership or Limited Liability Company]Pass-Through Entity Income Pursuant to Utah Code Ann. Sections 59-10-116, 59-10-117, 59-10-118, 59-10-1403.2, and 59-10-1405.

[(1) Nonresident partners and nonresident members shall keep adequate records to substantiate their determination or to permit a determination by the commission of the part of their adjusted gross income that was derived from or connected with sources in this state.

(2) Partnerships and limited liability companies may file form TC-65, Utah Partnership/Limited Liability Company Return of Income, as a composite return on behalf of nonresident partners or nonresident members that meet all of the following conditions:

(a) Nonresident partners or nonresident members included on the return may not have other income from Utah sources. Resident partners and resident members may not be included on the composite return.](1) The provisions of this rule apply to a pass-through entity that is not an S corporation. For provisions that apply to a pass-through entity that is an S corporation, see rule R865-9I-54.

[(b)](2) A schedule shall be included with the return listing [all nonresident partners or nonresident members included in the composite filing. The schedule shall list ]all of the following information for each nonresident [partner or nonresident member]pass-through entity taxpayer:

[(i)](a) name;

[(ii)](b) address;

[(iii)](c) social security number;

[(iv)](d) percentage of [partnership or limited liability company] ownership in pass-through entity[ income];

[(v)](e) Utah income attributable to that [partner or member ]pass-through entity taxpayer.

[(c) Nonresident partners or nonresident members that are entitled to mineral production tax withholding credits, agricultural off-highway gas tax credits, or other Utah credits, may not be included in a composite filing, but must file form TC-40NR, Nonresident or Part-year Resident Form Individual Income Tax Return.

](3) [The tax shall be computed using]A pass-through entity shall calculate the tax it withholds on behalf of its nonresident pass-through entity taxpayers by:

(a) multiplying the income of the pass-through entity attributable to nonresident pass-through entity taxpayers by the tax rate [imposed in accordance with]in effect under Section 59-10-104; and

(b) subtracting from the amount calculated in Subsection (4)(a) any amounts withheld from the pass-through entity under Section 59-6-102 attributable to nonresident pass-through entity taxpayers.

(4) The [partnership's or limited liability company's]pass-through entity's federal identification number shall be used on the form TC-65 in place of a social security number.

 

KEY: historic preservation, income tax, tax returns, enterprise zones

Date of Enactment or Last Substantive Amendment: [August 18, 2008]2009

Notice of Continuation: March 20, 2007

Authorizing, and Implemented or Interpreted Law: 103; 59-10-108 through 59-10-122; 59-10-1403.2; 59-10-1405