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On January 28, 2020, Utah Governor Gary Herbert signed HB 185, which effectively repeals a tax reform bill that was enacted last month.

The now repealed tax reform bill, SB 2001, would have cut corporate and individual income tax rates, expanded Utah's sales and use tax to a variety of previously untaxed services, repealed certain sales and use tax exemptions, and increased the sales and use tax on food, among other changes. (See Tax Alert 2020-0044)

Because SB 2001 was not approved by a two-thirds majority of both houses of the Utah Legislature, it was subject to a possible public referendum under the Utah State Constitution¹ and state law.² A referendum petition seeking voter approval of the tax law changes in SB 2001 was filed, and seemed to have garnered enough signatures to place the referendum on the November 2020 ballot (collected signatures are in process of being verified). With the increasing likelihood that this referendum would be on the November ballot, Utah lawmakers announced their intent to repeal SB 2001 themselves.

With enactment of HB 185, and approval of HB 185 by a two-thirds majority in both the Utah House and the Utah Senate, the repeal took effect January 28, 2020.Therefore, none of the provisions of SB 2001 ever went into effect.

Implications

It remains to be seen if the Governor and Legislature will attempt to re-enact a tax reform measure in the 2020 legislative session.

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ENDNOTES

¹ Utah Const. Art. VI, §1, cl. 2(a)(i)(B) ("The legal voters of the State of Utah, in the numbers, under the conditions, in the manner, and within the time provided by statute, may: … (B) require any law passed by the Legislature, except those laws passed by a two-thirds vote of the members elected to each house of the Legislature, to be submitted to the voters of the State, as provided by statute, before the law may take effect.").

² See Utah Code §20A-7-102(2) ("By following the procedures and requirements of this chapter [Utah Code tit. 20A, ch. 7 (codified at §§20A-7-101 to -801), Utah voters may, subject to the restrictions of Article VI, Sec. 1, Utah Constitution and this chapter: … require any law passed by the Legislature, except those laws passed by a two-thirds vote of the members elected to each house of the Legislature, to be referred to the voters for their approval or rejection before the law takes effect."). The detailed requirements and conditions for a statewide referendum (defined at Utah Code §20A-7-101(20)) are set forth in Utah Code §§20A-7-301 to -312.