HOUSE BILL NO. 13

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Bill Status



H0013...............................................by REVENUE AND TAXATION
INCOME TAX - DEDUCTIONS - Adds to existing law relating to income tax to
provide that a deduction for taxpayers who restore to income substantial
amounts held under claim of right not deductible on the taxpayer's federal
income tax return.
                                                                        
01/19    House intro - 1st rdg - to printing
01/20    Rpt prt - to Rev/Tax
01/26    Rpt out - rec d/p - to 2nd rdg
01/27    2nd rdg - to 3rd rdg
01/31    3rd rdg - PASSED - 65-0-5
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
      Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon,
      Chadderdon, Clark, Collins, Crow, Deal, Denney, Ellsworth, Field(18),
      Field(23), Garrett, Hart, Harwood, Henbest, Henderson, Jaquet, Kemp,
      Lake, LeFavour, Loertscher, Martinez, Mathews, McGeachin, McKague,
      Miller, Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence,
      Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sayler, Schaefer,
      Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24),
      Snodgrass, Stevenson, Trail, Wills, Wood, Mr. Speaker
      NAYS -- None
      Absent and excused -- Edmunson, Eskridge, Jones, Sali, Smylie
    Floor Sponsor - Schaefer
    Title apvd - to Senate
02/01    Senate intro - 1st rdg - to Loc Gov
02/04    Rpt out - rec d/p - to 2nd rdg
02/07    2nd rdg - to 3rd rdg
02/08    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
      Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
      Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst,
      Little, Lodge, Malepeai, Marley, McGee, McKenzie, Noble, Pearce,
      Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Corder
    Title apvd - to House
02/09    To enrol
02/10    Rpt enrol - Sp signed
02/11    Pres signed
02/14    To Governor
02/18    Governor signed
         Session Law Chapter 16
         Effective: 01/01/05

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   First Regular Session - 2005
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 13
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO INCOME TAXES; AMENDING CHAPTER 30, TITLE 63, IDAHO  CODE,  BY  THE
  3        ADDITION OF A NEW SECTION 63-3022F, IDAHO CODE, TO PROVIDE A DEDUCTION FOR
  4        TAXPAYERS  WHO  RESTORE  TO INCOME SUBSTANTIAL AMOUNTS HELD UNDER CLAIM OF
  5        RIGHT NOT DEDUCTIBLE ON THE TAXPAYER'S FEDERAL RETURN; DECLARING AN  EMER-
  6        GENCY AND PROVIDING A RETROACTIVE EFFECTIVE DATE.
                                                                        
  7    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  8        SECTION  1.  That  Chapter  30,  Title 63, Idaho Code, be, and the same is
  9    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 10    ignated as Section 63-3022F, Idaho Code, and to read as follows:
                                                                        
 11        63-3022F.  COMPUTATION  OF  TAX WHERE TAXPAYER RESTORES SUBSTANTIAL AMOUNT
 12    HELD UNDER THE CLAIM OF RIGHT. In the case of a taxpayer who is entitled to  a
 13    reduction  in  federal  tax  due to the restoration of an item of gross income
 14    under section 1341 of the Internal Revenue Code (relating to  the  computation
 15    of  tax  where  the taxpayer restores a substantial amount held under claim of
 16    right), there shall be allowed a deduction in determining Idaho taxable income
 17    as provided in section 1341(a)(4) of the Internal Revenue Code, if not  other-
 18    wise  deducted by the taxpayer for Idaho income tax purposes. In computing the
 19    deduction allowable under this section, no deduction shall be allowed  if  the
 20    item  of  gross income for a prior taxable year was not included in Idaho tax-
 21    able income.
                                                                        
 22        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 23    declared  to  exist,  this  act shall be in full force and effect on and after
 24    passage and approval, and retroactively to January 1, 2005.

Statement of Purpose / Fiscal Impact


                     STATEMENT  OF  PURPOSE
                            RS 14437

This bill grants relief to businesses that report taxable income
that they later have to repay and are not entitled to an Idaho
deduction for the repayment.

It involves the federal "Claim of Right" doctrine, which allows
taxpayers to recalculate taxes paid on income that is reported in
one year but is later found to be over-reported.  In that case,
taxpayers can deduct the amount in the year it is repaid.  If the
deduction is more than $3,000, taxpayers can opt instead for a
credit against federal but not Idaho taxes when the credit benefits
them more than the deduction.

Under current Idaho law, taxpayers do not receive a credit or a
deduction for Idaho income taxes when they elect the federal
credit.  This bill would allow an Idaho deduction in the amount of
the federal deduction taxpayers could take if they opt for the
federal credit instead of the deduction.  If the original income
was not taxed in Idaho, a deduction would not be allowed. 


                         FISCAL  IMPACT

Reduces General Fund revenue by $50,000.

CONTACT   
Name:     Dan John
Agency:   State Tax Commission
Phone:    334-7530

STATEMENT OF PURPOSE/FISCAL NOTE                     H 13