House approves requirement for pass‑through entities to withhold Utah tax for nonresident owners

The House voted to pass first substitute Senate Bill 23 on March 10 after extended floor debate over fiscal impacts and enforcement. Representative Dougal (sponsor after uncircling) described the measure as placing pass‑through entities on a level playing field by requiring them to withhold Utah tax for nonresident partners and members.

Representative Cosgrove and others questioned line items in the fiscal note, specifically an $80,000 appropriation for the Tax Commission to enforce the new withholding requirement. Representative Dougal said the appropriation supports audit and enforcement activity and characterized the fiscal note as a net positive: "It generates more revenue than the cost of the audit," he said. Other members raised concerns about a projected Education Fund loss (mentioned in the fiscal note as approximately $2.2 million beginning in 2012), and sponsors responded that forecasting for the repeal of built‑in gains tax complicates the projection.

Supporters argued the bill improves tax uniformity and collection, while opponents flagged short‑term audit costs and uncertainty in long‑range revenue projections. The House recorded the final vote: "First substitute SB23 passes this body with 60 yes, 15 noes," and the bill will be returned to the Senate for its consideration.