1. Impacts of state and federal tax reform Chairman john l
Impacts of state and federal tax reform Chairman john l. Valentine UTAH STATE TAX COMMISSION May 22, 2018

2. Federal Tax Reform

3. Individual Income Tax Name: Average Joe
Filing Status: Married Filing Joint
Dependents : 3 Children
FAGI: $70,000
2017
2018 BEFORE Utah Changes
$70,000 income
$15,190 personal exemptions
$0 personal exemptions
$12,700 Standard Deduction
$24,000 Standard Deduction
$1,126 Utah Taxpayer Tax Credit
$893 Utah Taxpayer Tax Credit
5% Utah Tax Rate
$2,374 Utah Income Tax
$2,607 Utah Income Tax
DIFFERENCE
$233 (about 10% increase)

4. Individual Income Tax Name: Average Joe
Filing Status: Married Filing Joint
Dependents : 3 Children
FAGI: $70,000
2017
2018 AFTER Utah Changes
$70,000 income
$15,190 personal exemptions
$0 personal exemptions
$12,700 Standard Deduction
$24,000 Standard Deduction
$1,126 Utah Taxpayer Tax Credit
$893 Utah Taxpayer Tax Credit
5% Utah Tax Rate
4.95% Utah Tax Rate
$2,374 Utah Income Tax
$2,572 Utah Income Tax
DIFFERENCE
$198 (about 8% increase)

5. “Dependent”
Definition of “Dependent” is tied to the suspended Federal Personal Exemption.
This impacts certain Utah tax credits:
Taxpayer Tax Credit
Health Benefit Plan Tax Credit
Live Organ Donation Tax Credit
At-home Parent Tax Credit

6. Net Operating Losses Individuals and Pass-through Entities:
Federal – No Carry-back &
80% FTI carry-forward (indefinite)
Utah – Matches Federal

7. Net Operating Losses Corporations: Federal – No carry-back &
80% of income carry-forward(indefinite)
*(Same as Individuals and PTEs)
Utah – 3 year carry-back ($1 mill. limit) & 100% carry-forward (15 yrs)

8. Worldwide System of Taxation
Previous System
Worldwide
System of Taxation

9. Territorial System of Taxation
New System
Territorial
System of Taxation

10. Tax Impacts of Shift
Potential Narrowing of the Federal Corporate Tax Base
Potential Reduced Federal Collections

11. Revenue Offset
IRC §965 Repatriation Transition Tax

12. Global Intangible Low Taxed Income Tax
Revenue Offset
IRC §951 (GILTI)
Global Intangible Low Taxed Income Tax

13. Installment Payments - IRC §965(h)
Deferred Payment
Utah Code §
Installment Payments - IRC §965(h)
Tax Year(s)
Installment Payment of Utah Portion of IRC §965 income
8% annually of net tax liability
2022
15% of net tax liability
2023
20% of net tax liability
2024
25% of net tax liability

14. What to do? Special Session Tax Issues:
Clarify the definition of “unadjusted income” to account for repatriation and GILTI income.
Clarify that the 8 year deferred repayment applies to corporate repatriation income reported for 2017 tax year.

15. What to do? Special Session Tax Issues:
Match Utah corporate NOL treatment to Utah individual and partnership NOL treatment.
Clarify the definition of “dependent” and “dependent beneficiary” under Utah code.

16. QUESTIONS?