Corporate income and franchise taxes

Taxable income

How is taxable income determined in your state? To what extent is the state income tax base aligned with the federal income tax base?

Utah imposes its corporate income tax on ‘net Utah taxable income’ as defined in Utah Code Ann. (UCA) §§ 59-7-101 https://le.utah.gov/xcode/Title59/Chapter7/59-7-S101.html?v=C59-7-S101_2021050520210505 and 59-7-201 https://le.utah.gov/xcode/Title59/Chapter7/59-7-S201.html?v=C59-7-S201_2018050820180508. The state corporate income tax base generally follows the federal income tax base, with certain exceptions, adjustments and subtractions. The first line of Utah TC-20 Schedule A requires a taxpayer to report ‘unadjusted income (loss) before NOL and special deductions from Federal Form 1120, Line 28.’

How is in-state income apportioned for multi-state businesses? Does your state regulate transfer pricing?

Utah has adopted a single sales factor formula to apportion in-state income for certain multi-state businesses. There are also specific apportionment formulas that apply to certain other businesses. https://le.utah.gov/xcode/Title59/Chapter7/59-7-P3.html?v=C59-7-P3_1800010118000101. Utah regulates transfer pricing. The most important development in this area is the Utah Supreme Court decision in Utah State Tax Commission v. See’s Candies, Inc., 2018 UT 57 https://law.justia.com/cases/utah/supreme-court/2018/20160910.html.

Nexus

How is nexus determined for corporate income tax purposes?

Utah applies general nexus standards and follows Public Law 86-272 (P.L. 86-272) https://www.govinfo.gov/content/pkg/STATUTE-73/pdf/STATUTE-73-Pg555.pdf#page=1, but is currently considering Multistate Tax Commission recommendations to modify how P.L. 86-272 should be applied. The Tax Commission has issued Publication 37, Revised September 2019, explaining Utah corporate nexus requirements https://tax.utah.gov/forms/pubs/pub-37.pdf.

Is affiliate nexus recognized in your state? If so, to what extent? Has there been any notable case law in this area?

Utah recognizes affiliate nexus https://tax.utah.gov/forms/pubs/pub-37.pdf.

Rates

What are the applicable corporate income tax rates?

Utah currently imposes a 4.95 per cent income tax rate on net corporate Utah taxable income. A $100 minimum tax is imposed on corporations not generating taxable income.

Exemptions, deductions and credits

What exemptions, deductions, and credits are available?

Utah allows exemptions, deductions and credits as provided in UCA § 59-7-102 https://le.utah.gov/xcode/Title59/Chapter7/59-7-S102.html?v=C59-7-S102_2017050920170509 and adjustments provided in UCA § 59-7-105 https://le.utah.gov/xcode/Title59/Chapter7/59-7-S105.html?v=C59-7-S105_2020051220200512 and in UCA § 59-7-106 https://le.utah.gov/xcode/Title59/Chapter7/59-7-S106.html?v=C59-7-S106_2021050520210505. Credits are provided in UCA Title 59, Chapter 7, Part 6 https://le.utah.gov/xcode/Title59/Chapter7/59-7-P6.html?v=C59-7-P6_1800010118000101.

Filing requirements

What filing requirements and procedures apply? Are there special filing requirements for groups of company?

Utah generally follows the federal corporate income tax system, with certain exceptions. Returns are generally due at the same time as federal income tax returns. UCA § 59-7-505 https://le.utah.gov/xcode/Title59/Chapter7/59-7-S505.html. Corporate taxpayers with a Utah tax liability of $3,000 or more pay quarterly estimated taxes on the 15th day of the 4th, 6th, 9th and 12th months of the year. Utah also uses combined reporting for unitary companies. Any corporation owned by another corporation, or owning more than 50 per cent of another corporation, and engaged in unitary business activity, must file a combined report showing the combined income of all such corporations.

Corporate franchise tax

Does your state impose a corporate franchise tax? If so, is it imposed in lieu of or in addition to corporate income tax?

Utah’s corporate franchise tax is imposed in lieu of the corporate income tax in appropriate situations. UCA § 59-8-101, et seq https://le.utah.gov/xcode/Title59/Chapter8/59-8.html?v=C59-8_1800010118000101.