Two dueling bills, each attempting to undo a recent Utah Supreme Court decision, are making their way through the Utah Legislature. One would benefit the state’s largest home builder, while the other would not.
The Ivory Homes Ltd. v. the Utah State Tax Commission decision, handed down last September, ruled that transactions cannot be restructured months or years after the fact to give businesses or taxpayers a better tax outcome. The 3-2 ruling also made a significant policy change, making refunds possible only in cases of tax commission error.
HB427, sponsored by Rep. Ryan Wilcox, R-Ogden, received a unanimous recommendation from members of the House Revenue and Taxation Committee on Monday.
While the Wilcox bill would not allow taxpayers and businesses to renegotiate past transactions and therefore would not benefit Ivory Homes, HB427 would reverse the portion of the high court’s ruling that limits tax refunds to cases of an error on the part of the commission. Several refund requests, stalled before the commission since last fall, could be granted if this legislation passes.
At stake for Ivory Homes is $377,000, the amount of sales tax the company could have saved if tax-exempt delivery charges had been broken out separately on three years’ worth of invoices for wet concrete purchases.
SB27, a similar bill introduced weeks earlier by Sen. Howard Stephenson, R-Draper, would give Ivory Homes the $377,000 and would also allow others to restructure their deals after the fact. The statute of limitations is three years.
Bruce Johnson, chairman of the Tax Commission, previously expressed concerns about SB27 but voiced full support for HB427 on Monday.
“You can’t go back and repaper the transaction and pretend you negotiated for something you didn’t,” Johnson said.
What each bill would cost
SB27 • $2 million in one-time funds, including $377,000 to Ivory Homes and amounts due other entities who filed refund requests since September. The state would also forego an additional $6.7 million per year in budget revenue.
HB427 • The fiscal note had not been publicly released by the time the committee discussed the bill Monday. Wilcox received it earlier that day but said it was in error.