DAR File No. 37934

School and Institutional Trust Lands, Administration

Section R850-5-200

Payments

Notice of Proposed Rule

(Amendment)

DAR File No.: 37934
Filed: 08/21/2013 03:24:16 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The current rule requires a processing fee of $30 be applied when a check is returned by the bank for insufficient funds and a 6% penalty on the amount of the payment. Current rule also requires a late penalty of 6% or $30, whichever is greater, to be charged upon failure to pay any financial obligation within the time limit under which such payment is due. Potentially, a lessee or permittee could be charged two 6% penalties if their check was returned by the bank and the replacement payment was not made by the due date of the obligation. Agency staff believes this double penalty is excessive.

Summary of the rule or change:

Subsection R850-5-200(4) currently requires a 6% penalty and $30 return check charge be assessed on all checks returned by the bank. The rule is being amended so that only the $30 return check charge or amount charged by the bank for a returned check, whichever is greater, will be assessed on returned checks and the 6% penalty will only be assessed as a late charge if the replacement payment is made after the due date of the obligation.

State statutory or constitutional authorization for this rule:

• Subsection 53C-1-302(1)(a)(ii)

Anticipated cost or savings to:

the state budget:

There is a potential that the agency could forfeit a small amount of revenue as a result of this amendment, but it would be very minimal since the agency has needed to apply the existing rule only once since the agency's inception in 1994. Agency staff believes the 6% penalty, in addition to the return check charge, for replacement payments made by the obligation's due date is excessive. However, if the replacement payment is not submitted in a timely manner, the 6% penalty will then be applied as a late charge.

local governments:

It is not anticipated that this rule amendment will have any effect on local government as a local government entity would need to be a lessee or permittee of the agency and the likelihood of its check being returned by the bank for insufficient funds is almost nonexistent.

small businesses:

There is potential for a savings of 6% of the payment amount for small businesses if their check were to be returned by the bank for insufficient funds and the replacement payment was received by the agency by the due date of the obligation. The 6% penalty would still be assessed if the replacement payment was received after the due date of the obligation.

persons other than small businesses, businesses, or local governmental entities:

There is potential for a savings of 6% of the payment amount for persons other than small businesses, businesses, or local government entities if their check were to be returned by the bank for insufficient funds and the replacement payment was received by the agency by the due date of the obligation. The 6% penalty would still be assessed if the replacement payment was received after the due date of the obligation.

Compliance costs for affected persons:

There are no compliance costs associated with this rule amendment as it simply removes an excessive penalty.

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

There will be no fiscal impact on businesses as the situation has only arisen once where a payor replaced their check prior to the cancellation date and was subject to the $30 and 6% penalty. The penalty was waived in that instance.

Kevin S. Carter, Director

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

School and Institutional Trust Lands
AdministrationRoom 500
675 E 500 S
SALT LAKE CITY, UT 84102-2818

Direct questions regarding this rule to:

• Lisa Schneider at the above address, by phone at 801-538-5120, by FAX at 801-355-0922, or by Internet E-mail at lisaschneider@utah.gov

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:

10/15/2013

This rule may become effective on:

10/22/2013

Authorized by:

Kevin Carter, Director

R850. School and Institutional Trust Lands, Administration.

R850-5. Payments, Royalties, Audits, and Reinstatements.

R850-5-200. Payments.

Payments include rentals, royalties or any other financial obligation owed under the terms of a lease, permit or any other agreement.

1. As a matter of convenience, the agency allows parties other than the obligee to remit payments on the obligee's behalf; however, this practice in no way relieves the obligee of any statutory or contractual obligations concerning the proper and timely payments or the proper and timely filing of reports. For practical reasons, the agency often makes direct requests for reports and other records from parties other than the obligees. Payors should be aware that their actions subject leases to cancellation or subject delinquent royalties to interest charges. It is, therefore, in the best interest of all parties to cooperate in responsibly discharging their obligations to each other and to the Trust Lands Administration.

2. The obligee bears final responsibility for payments. Payments must be for the full amount owed. Partial payments will only be accepted if approved in writing by the agency before submission. In order to fulfill payment obligations of a lease, permit, or other financial contract with the agency, payments must be received as defined in subsection 3 of this rule by the appropriate due dates and must be accompanied by the appropriate report. If the obligee submits payment by electronic fund transfer then appropriate supporting documentation must be submitted by electronic data transfer on the same day.

3. Payments will be considered received if sent by electronic fund transfer, delivered to the agency, or if the postmark stamped on the envelope is dated on or before the due date. If the post office cancellation mark is illegible, erroneous, or omitted, the payment will be considered timely if the sender can establish by competent evidence that the payment was deposited in the United States mail on or before the date for filing or paying. If the due date or cancellation date falls upon a Saturday, Sunday, or legal holiday, the payment shall be considered timely if received as defined herein by the next business day.

4. A [6% penalty and ]$30 return check charge or the actual charge levied by the bank, whichever is greater, will be assessed on all checks returned by the bank. The check must be replaced by cash, certified funds, or immediately available funds. The Director may require future payments with certified funds when notified in writing.  If replacement funds are received after the required due date, R850-5-200(6) will be applied.

5. Any financial obligation not received by its contractual due date will initiate a written cancellation notice by certified mail, return receipt requested. The cancellation date for any lease/permit or other contractual agreement unless otherwise specified by the contract, is defined as 30 days after the postmark date stamped on the U.S. Postal Service Receipt for Certified Mail of the cancellation notice. In the event payment is not received by the agency on or before the cancellation date, the lease, permit or other contractual agreement will be subject to cancellation, forfeiture or termination without further notice.

A default in the payment of any installment of principal or interest due under the terms of any land purchase agreement not received by the agency more than 30 days after the due date shall initiate a certified billing, return receipt requested. If all sums then due and payable are not received within 30 days after the mailing of the U.S. Postal Service certified notice, the agency may elect any of the remedies as outlined in R850-80-700(8). If the cancellation date falls on a weekend or holiday, payment will be accepted the next business day until 5 p.m.

6. A late penalty of 6% or $30, whichever is greater, shall be charged after failure to pay any financial obligation, excluding royalties as provided in R850-5-300(2), within the time limit under which such payment is due.

7. Subject to R850-4-300, rental payments received after the due date which do not include a late fee may be returned to the lessee by certified mail, return receipt requested. Payment may only be accepted for the full amount due.

 

KEY: administrative procedures

Date of Enactment or Last Substantive Amendment: [June 21, 2007]October 22, 2013

Notice of Continuation: June 27, 2012

Authorizing, and Implemented or Interpreted Law: 53C-1-302(1)(a)(ii)