HB 2324

House Bill (HB) 2324: municipal tax code; leases

Sponsor: Representative Farnsworth

Overview: HB 2324 prohibits the levying of a transaction privilege tax (TPT) or other similar tax on a commercial lease between two businesses of any kind with at least 80% common ownership.

League Position: NEUTRAL - This change will mean a revenue loss for some cities, but the Legislature has made it clear through the number of bills that have passed in recent years on this same issue that they do not want commercial lease sales tax collected on income derived from leases between entities with at least 80% common ownership.

Summary: HB 2324 prevents cities from collecting commercial lease sales tax on lease arrangements between businesses that are owned by at least 80% of the same shareholders. This type of activity is already exempted from commercial lease sales tax for several other corporate structures leasing property under the same conditions.

Updates

01/28/13: HB 2324 passed out of the House Committee on Ways & Means on a unanimous vote. The bill now proceeds to the Rules Committee.

02/11/13: HB 2324 passed out of the House with 59 aye votes and 1 not voting. The bill is assigned to the Senate Finance Committee.

03/06/13: HB 2324 passed out of the Senate Committee on Finance with an amendment addressing our concerns. It incorporates language making it clear that all common ownership entities, regardless of how they are organized, are exempt from commercial lease transaction privilege tax when leasing property to themselves. The bill maintains the tax for unrelated entities and for entities that are in the business of commercial leasing. The bill now proceeds to the Rules committee.

03/20/13: HB 2324 passed amended through Senate Committee of the Whole.

03/21/13: HB 2324 passed Senate 3rd Read with 29 ayes and 1 not voting. 

03/28/13: HB 2324 had its final reading in the House and passed with a vote of 58-0. It will now be sent to the governor for final action.