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H0443aaS............................................by REVENUE AND TAXATION INCOME TAX - Amends existing law relating to the Idaho income tax to provide that subsequent changes to the consumer price index shall not affect income tax brackets; to require reporting of recapture of property tax on qualified investments; to conform the due date of electronically filed withholding reports by employers to the federal due date; to delete references to the assessment of tax; to provide provisions relating to the assessment of tax and the record of assessment; and to provide code references. 01/23 House intro - 1st rdg - to printing 01/24 Rpt prt - to Rev/Tax 02/14 Rpt out - rec d/p - to 2nd rdg 02/15 2nd rdg - to 3rd rdg 02/21 3rd rdg - PASSED - 68-0-2 AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge, 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, Sali(Sali), Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie, Stevenson, Trail, Wills, Wood NAYS -- None Absent and excused -- Snodgrass, Mr. Speaker Floor Sponsor - McGeachin Title apvd - to Senate 02/22 Senate intro - 1st rdg - to Loc Gov 03/02 Rpt out - to 14th Ord 03/08 Rpt out amen - to 1st rdg as amen 03/09 1st rdg - to 2nd rdg as amen 03/10 2nd rdg - to 3rd rdg as amen 03/13 3rd rdg as amen - PASSED - 35-0-0 AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett, Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams NAYS -- None Absent and excused -- None Floor Sponsor - Hill Title apvd - to House 03/14 House concurred in Senate amens - to engros 03/15 Rpt engros - 1st rdg - to 2nd rdg as amen 03/16 2nd rdg - to 3rd rdg as amen 03/21 3rd rdg as amen - PASSED - 64-0-6 AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bell, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge, 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, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Smith(30), Smith(24), Smylie, Stevenson, Trail, Wills, Wood NAYS -- None Absent and excused -- Bedke, Bilbao, Roberts, Skippen, Snodgrass, Mr. Speaker Floor Sponsor - McGeachin Title apvd - to enrol 03/22 Rpt enrol - Sp signed 03/23 Pres signed - To Governor 03/24 Governor signed Session Law Chapter 195 Effective: 01/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 443 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO THE INCOME TAX; AMENDING SECTION 63-3024, IDAHO CODE, TO PROVIDE 3 THAT SUBSEQUENT CHANGES TO THE CONSUMER PRICE INDEX SHALL NOT AFFECT 4 INCOME TAX BRACKETS; AMENDING SECTION 63-3029B, IDAHO CODE, TO REQUIRE 5 REPORTING OF RECAPTURE OF PROPERTY TAX ON QUALIFIED INVESTMENTS; AMENDING 6 SECTION 63-3035, IDAHO CODE, TO CONFORM THE DUE DATE OF ELECTRONICALLY 7 FILED WITHHOLDING REPORTS BY EMPLOYERS TO THE FEDERAL DUE DATE; AMENDING 8 SECTION 63-3044, IDAHO CODE, TO DELETE REFERENCES TO THE ASSESSMENT OF 9 TAX; AMENDING SECTION 63-3045A, IDAHO CODE, TO PROVIDE PROVISIONS RELATING 10 TO THE ASSESSMENT OF TAX, THE RECORD OF ASSESSMENT AND PENALTIES AND ADDI- 11 TIONS TO TAX; AMENDING SECTION 63-2906, IDAHO CODE, TO PROVIDE A CROSS- 12 REFERENCE TO THE IDAHO SMALL EMPLOYER INCENTIVE ACT; AMENDING SECTION 13 63-4406, IDAHO CODE, TO PROVIDE A CROSS-REFERENCE TO THE CORPORATE HEAD- 14 QUARTERS INCENTIVE ACT; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE 15 APPLICATION. 16 Be It Enacted by the Legislature of the State of Idaho: 17 SECTION 1. That Section 63-3024, Idaho Code, be, and the same is hereby 18 amended to read as follows: 19 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For taxable year 20 2001, and each taxable year thereafter, a tax measured by Idaho taxable income 21 as defined in this chapter is hereby imposed upon every individual, trust, or 22 estate required by this chapter to file a return. 23 (a) The tax imposed upon individuals, trusts and estates shall be com- 24 puted at the following rates: 25 When Idaho taxable income is: The rate is: 26 Less than $1,000 One and six-tenths percent (1.6%) 27 $1,000 but less than $2,000 $16, plus three and six-tenths 28 percent (3.6%) of the amount over $1,000 29 $2,000 but less than $3,000 $52, plus four and one-tenth 30 percent (4.1%) of the amount over $2,000 31 $3,000 but less than $4,000 $93, plus five and one-tenth 32 percent (5.1%) of the amount over $3,000 33 $4,000 but less than $5,000 $144, plus six and one-tenth 34 percent (6.1%) of the amount over $4,000 35 $5,000 but less than $7,500 $205, plus seven and one-tenth 36 percent (7.1%) of the amount over $5,000 37 $7,500 but less than $20,000 $383, plus seven and four-tenths 38 percent (7.4%) of the amount over $7,500 39 Over $20,000 $1,308, plus seven 40 and eight-tenths percent 41 (7.8%) of the amount over $20,000 42 For taxable year 2000 and each year thereafter, the state tax commission 43 shall prescribe a factor which shall be used to compute the Idaho income tax 2 1 brackets provided in subsection (a) of this section. The factor shall provide 2 an adjustment to the Idaho tax brackets so that inflation will not result in a 3 tax increase. The Idaho tax brackets shall be adjusted as follows: multiply 4 the bracket amounts by the percentage (the consumer price index for the calen- 5 dar year immediately preceding the calendar year to which the adjusted brack- 6 ets will apply divided by the consumer price index for calendar year 1998). 7 For the purpose of this computation, the consumer price index for any calendar 8 year is the average of the consumer price index as of the close of the twelve 9 (12) month period for the immediately preceding calendar year, without regard 10 to any subsequent adjustments, as adopted by the state tax commission. This 11 adoption shall be exempt from the provisions of chapter 52, title 67, Idaho 12 Code. The consumer price index shall mean the consumer price index for all 13 U.S. urban consumers published by the United States department of labor. The 14 state tax commission shall annually include the factor as provided in this 15 subsection to multiply against Idaho taxable income in the brackets above to 16 arrive at that year's Idaho taxable income for tax bracket purposes. 17 (b) In case a joint return is filed by husband and wife pursuant to the 18 provisions of section 63-3031, Idaho Code, the tax imposed by this section 19 shall be twice the tax which would be imposed on one-half (1/2) of the aggre- 20 gate Idaho taxable income. For the purposes of this section, a return of a 21 surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and 22 a head of household, as defined in section 2(b) of the Internal Revenue Code, 23 shall be treated as a joint return and the tax imposed shall be twice the tax 24 which would be imposed on one-half (1/2) of the Idaho taxable income. 25 (c) In the case of a trust that is an electing small business trust as 26 defined in section 1361 of the Internal Revenue Code, the special rules for 27 taxation of such trusts contained in section 641 of the Internal Revenue Code 28 shall apply except that the maximum individual rate provided in this section 29 shall apply in computing tax due under this chapter. 30 (d) The state tax commission shall compute and publish Idaho income tax 31 liability for taxpayers at the midpoint of each bracket of Idaho taxable 32 income in fifty dollar ($50.00) steps to fifty thousand dollars ($50,000), 33 rounding such calculations to the nearest dollar. Taxpayers having income 34 within such brackets shall file returns based upon and pay taxes according to 35 the schedule thus established. The state tax commission shall promulgate rules 36 defining the conditions upon which such returns shall be filed. 37 SECTION 2. That Section 63-3029B, Idaho Code, be, and the same is hereby 38 amended to read as follows: 39 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election 40 of the taxpayer there shall be allowed, subject to the applicable limitations 41 provided herein as a credit against the income tax imposed by chapter 30, 42 title 63, Idaho Code, an amount equal to the sum of: 43 (a) The tax credit carryovers; and 44 (b) The tax credit for the taxable year. 45 (2) The maximum allowable amount of the credit for the current taxable 46 year shall be three percent (3%) of the amount of qualified investments made 47 during the taxable year. 48 (3) As used in this section "qualified investment" means certain property 49 which: 50 (a) (i) Is eligible for the federal investment tax credit, as defined 51 in sections 46(c) and 48 of the Internal Revenue Code subject to the 52 limitations provided for certain regulated companies in section 46(f) 53 of the Internal Revenue Code and is not a motor vehicle under eight 3 1 thousand (8,000) pounds gross weight; or 2 (ii) Is qualified broadband equipment as defined in section 3 63-3029I, Idaho Code; and 4 (b) Is acquired, constructed, reconstructed, erected or placed into ser- 5 vice after December 31, 1981; and 6 (c) Has a situs in Idaho. 7 (4) (a) For qualified investments placed in service in 2003 and thereaf- 8 ter, a taxpayer, other than a person whose rate of charge or rate of 9 return, or both, is regulated or limited according to federal or state 10 law, may elect, in lieu of the credit provided by this section, a two (2) 11 year exemption from all taxes on personal property on the qualified 12 investment. The exemption from personal property tax shall apply to the 13 year the election is filed as provided in this section and the immediately 14 following year. The election provided by this paragraph is available only 15 to a taxpayer whose Idaho taxable income, before application of net oper- 16 ating losses carried back or forward, in the second preceding taxable year 17 in which the investment is placed in service is negative. 18 (b) The election shall be made in the form prescribed by the state tax 19 commission and shall include a specific description and location of all 20 qualified investments placed into service and located in the jurisdiction 21 of the assessing authority, a designation of the specific assets for which 22 the exemption is claimed, and such other information as the state tax com- 23 mission may require. The election must be made by including the election 24 form with the listing of personal property required by section 63-302, 25 Idaho Code, or, in the case of operating property assessed under chapter 26 4, title 63, Idaho Code, with the operator's statement required by section 27 63-404, Idaho Code. Once made the election is irrevocable. If no election 28 is made, the election is not otherwise available. A copy of the election 29 form must also be attached to the original income tax return due for the 30 taxable year in which the claim was made. 31 (c) The state tax commission and the various county assessors are autho- 32 rized to exchange information as necessary to properly coordinate the 33 exemption provided in this subsection. Information disclosed to county 34 officials under this subsection may be used only to determine the validity 35 or amount of a taxpayer's entitlement to the exemption provided in this 36 section, and is not otherwise subject to public disclosure as provided in 37 section 9-340D, Idaho Code. 38 (d) In the event that an investment in regard to which the election under 39 this subsection was made is determined by the state tax commission: 40 (i) To not be a qualified investment, or 41 (ii) To have ceased to qualify during the recapture period, or 42 (iii) To be otherwise not qualified for the election, 43 the taxpayer shall be subject to recapture of the property tax benefit. 44 (e) The benefit to be recaptured in subsection (4)(d) of this section 45 shall be computed in the manner required in subsection (7) of this section 46 and such recapture amount shall be subject to assessment in the same man- 47 ner as a deficiency in tax under this chapter. For purposes of calculating 48 the recapture, the property tax benefit shall be: 49 (i) In the case of locally assessed property located in a single 50 county or nonapportioned centrally assessed property, the market 51 value of exempted property times the average property tax levy for 52 that county in the year or years for which the exemption was claimed. 53 (ii) In the case of other centrally assessed property and property 54 located in more than one (1) county, the market value of exempted 55 property times the average urban property tax levy of the state as 4 1 determined by the state tax commission in each of the years for which 2 the exemption was claimed. 3 (f) In the event that a recapture of the exemption is required under this 4 subsection (4), the person claiming the exemption shall report the event 5 to the state tax commission in the manner the state tax commission may by 6 rule require. The report shall be due no later than the due date of that 7 person's income tax return under this chapter for the taxable year in 8 which the event occurs. The recapture amount is due and payable with the 9 report. Any amount of recapture not paid on the due tax, is a deficiency 10 within the meaning of section 63-3044, Idaho Code. 11 (g) All moneys collected by the state tax commission pursuant to this 12 subsection, which amounts are continuously appropriated for this purpose, 13 shall be deposited with the state treasurer and placed in the state refund 14 account, as provided by section 63-3067, Idaho Code, to be remitted to the 15 county within which the property was located that was not a qualified 16 investment or ceased to qualify during the recapture period. The county 17 shall distribute this remittance to all appropriate taxing districts based 18 on the proportion each appropriate taxing district's levy is to the total 19 of all the levies of the taxing districts for the tax code area where the 20 property was located for each year the exemption was granted. If any tax- 21 ing district is dissolved or disincorporated, the proportionate share of 22 the remittance to be distributed to that taxing district shall be depos- 23 ited in the county current expense fund. 24 (gh) For purposes of the limitation provided by section 63-802, Idaho 25 Code, moneys received pursuant to this subsection shall be treated as 26 property tax revenue by taxing districts. 27 (5) Notwithstanding the provisions of subsections (1) and (2) of this 28 section, the amount of the credit allowed shall not exceed fifty percent (50%) 29 of the tax liability of the taxpayer. The tax liability of the taxpayer shall 30 be the tax after deducting the credit allowed by section 63-3029, Idaho Code. 31 (6) If the sum of credit carryovers from the credit allowed by subsection 32 (2) of this section and the amount of credit for the taxable year from the 33 credit allowed by subsection (2) of this section exceed the limitation imposed 34 by subsection (5) of this section for the current taxable year, the excess 35 attributable to the current taxable year's credit shall be an investment 36 credit carryover to the fourteen (14) succeeding taxable years. In the case of 37 a group of corporations filing a combined report under section 63-3027, Idaho 38 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one 39 (1) member of the group but not used by that member may be used by another 40 member of the group, subject to the provisions of subsection (5) of this sec- 41 tion, instead of carried over. The entire amount of unused credit shall be 42 carried forward to the earliest of the succeeding years, wherein the oldest 43 available unused credit shall be used first, so long as the qualified invest- 44 ment property for which the unused credit was granted still maintains Idaho 45 situs. For a combined group of corporations, credit carried forward may be 46 claimed by any member of the group unless the member who earned the credit is 47 no longer included in the combined group. 48 (7) Any recapture of the credit allowed by subsection (2) of this section 49 on property disposed of or ceasing to qualify, prior to the close of the 50 recapture period, shall be determined according to the applicable recapture 51 provisions of the Internal Revenue Code. In the case of a unitary group of 52 corporations, the increase in tax due to the recapture of investment tax 53 credit must be reported by the member of the group who earned the credit 54 regardless of which member claimed the credit against tax. 55 (8) For the purpose of determining whether property placed in service is 5 1 a "qualified investment" as defined in subsection (3) of this section, the 2 provisions of section 49 of the Internal Revenue Code shall be disregarded. 3 "Qualified investment" shall not include any amount for which a deduction is 4 allowed under section 179 of the Internal Revenue Code in computing taxable 5 income. 6 (9) For purposes of this section, property has a situs in Idaho during a 7 taxable year if it is used in Idaho at any time during the taxable year. Prop- 8 erty not used in Idaho during a taxable year does not have a situs in Idaho in 9 the taxable year during which the property is not used in Idaho or in any sub- 10 sequent taxable year. No credit or carryover of credit is permitted under this 11 section if the credit or carryover relates to property that does not have a 12 situs in Idaho during the taxable year for which the credit or carryover is 13 claimed. The Idaho situs of property must be established by records maintained 14 by the taxpayer which are created reasonably contemporaneously with the use of 15 the property. 16 (10) In the case of property used both in and outside Idaho, the taxpayer, 17 electing to claim the credit provided in this section, must elect to compute 18 the qualified investment in property with a situs in Idaho for all such 19 investments first qualifying during that year in one (1), but only one (1), of 20 the following ways: 21 (a) The amount of each qualified investment in a specific asset shall be 22 separately computed based on the percentage of the actual use of the prop- 23 erty in Idaho by using a measure of the use, such as total miles or total 24 machine hours, that most accurately reflects the beneficial use during the 25 taxable year in which it is first acquired, constructed, reconstructed, 26 erected or placed into service; provided, that the asset is placed in ser- 27 vice more than ninety (90) days before the end of the taxable year. In the 28 case of assets acquired, constructed, reconstructed, erected or placed 29 into service within ninety (90) days prior to the end of the taxable year 30 in which the investment first qualifies, the measure of the use of that 31 asset within Idaho for that year shall be based upon the percentage of use 32 in Idaho during the first ninety (90) days of use of the asset; 33 (b) The investment in qualified property used both inside and outside 34 Idaho during the taxable year in which it is first acquired, constructed, 35 reconstructed, erected or placed into service shall be multiplied by the 36 percent of the investment that would be included in the numerator of the 37 Idaho property factor determined pursuant to section 63-3027, Idaho Code, 38 for the same year. 39 (11) Only for the purposes of subsections (3)(a) and (8) of this section, 40 references to sections of the "Internal Revenue Code" mean the sections 41 referred to as they existed in the Internal Revenue Code of 1986 prior to 42 November 5, 1990. 43 SECTION 3. That Section 63-3035, Idaho Code, be, and the same is hereby 44 amended to read as follows: 45 63-3035. STATE WITHHOLDING TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL- 46 LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the pro- 47 visions of the Internal Revenue Code to withhold, collect and pay income tax 48 on wages or salaries paid by such employer to any employee (other than employ- 49 ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the time 50 of such payment of wages, salary, bonus or other emolument to such employee, 51 deduct and retain therefrom an amount substantially equivalent to the tax rea- 52 sonably calculated by the state tax commission to be due from the employee 53 under this chapter. The state tax commission shall prepare tables showing 6 1 amounts to be withheld, and shall supply same to each employer subject to this 2 section. In the event that an employer can demonstrate administrative inconve- 3 nience in complying with the exact requirements set forth in these tables, he 4 may, with the consent of the state tax commission and upon application to it, 5 use a different method which will produce substantially the same amount of 6 taxes withheld. Every employer making payments of wages or salaries earned in 7 Idaho, regardless of the place where such payment is made: 8 (1) shall be liable to the state of Idaho for the payment of the tax 9 required to be deducted and withheld under this section and shall not be 10 liable to any individual for the amount deducted from his wages and paid 11 over in compliance or intended compliance with this section; 12 (2) must pay to the state tax commission monthly on or before the 20th 13 day of the succeeding month, or at such other times as the state tax com- 14 mission may allow, an amount of tax which, under the provisions of this 15 chapter, he is required to deduct and withhold; 16 (3) shall register with the state tax commission, in the manner pre- 17 scribed by it, to establish an employer's withholding account number. The 18 account number will be used to report all amounts withheld, for the annual 19 reconciliation required in this section, and for such other purposes 20 relating to withholding as the state tax commission may require; and 21 (4) must, notwithstanding the provisions of paragraphs (1) and (2) of 22 this subsection, if the amount of withholding of such employer for the 23 preceding twelve (12) month period equals or exceeds two hundred forty 24 thousand dollars ($240,000) per annum or an average of twenty thousand 25 dollars ($20,000) per month per annum, pay to the state tax commission on 26 the basis of withholding periods which begin on the 16th day of the month 27 and end on the 15th day of the following month, and payment shall be made 28 not later than five (5) days after the end of the withholding period. 29 (5) If a payment required pursuant to subsection (a)(2) or (a)(4) of this 30 section is not made or is made delinquently or if made is not equal to the 31 withholding required under this section the state tax commission may treat 32 the failure as a failure to file a return and may take administrative and 33 judicial actions as authorized by this chapter in the case of a failure to 34 file a return. Interest, at the rate provided by section 63-3045, Idaho 35 Code, shall apply to any such underpayment. 36 (6) Commencing in 2006, the state tax commission shall determine whether 37 the threshold amounts established by subsection (a)(4) of this section 38 must be adjusted to reflect fluctuations in the cost of living. The com- 39 mission shall base its determination on the cumulative effect of the 40 annual cost-of-living percentage modifications determined by the United 41 States secretary of health and human services pursuant to 42 USC 415(i). 42 When the cumulative percentage applied to the monthly threshold amount 43 equals or exceeds five thousand dollars ($5,000), the commission shall 44 promulgate a rule adjusting the monthly threshold amount by five thousand 45 dollars ($5,000) and making the necessary proportional adjustment to the 46 annual threshold amount. The rule shall be effective for the next succeed- 47 ing calendar year and each year thereafter until again adjusted by the 48 commission. The tax commission shall determine subsequent adjustments in 49 the same manner, in each case using the year of the last adjustment as the 50 base year. 51 (b) (1) In addition to the payments required pursuant to subsections 52 (a)(2) and (a)(4) of this section, every employer shall file a return upon 53 such form as shall be prescribed by the state tax commission, but not more 54 frequently than annually, or as required pursuant to any agreement between 55 the state tax commission and the department of labor under section 7 1 63-3035B, Idaho Code, unless a shorter filing period and due date is pre- 2 scribed by the state tax commission. The return shall be due on the last 3 day of the month following the end of the period to which the return 4 relates. The return shall show, for the period to which it relates, the 5 total amount of wages, salary, bonus or other emolument paid to his 6 employees, the amount deducted therefrom in accordance with the provisions 7 of the Internal Revenue Code, the amount deducted therefrom in accordance 8 with the provisions of this section, the amount of any previous payments 9 made pursuant to this section, and such pertinent and necessary informa- 10 tion as the state tax commission may require. 11 (2) Every employer making a declaration of withholding as provided herein 12 shall furnish to the employees annually, but not later than thirty (30) 13 days after the end of the calendar year, a record of the amount of tax 14 withheld from such employee on forms to be prescribed, prepared and fur- 15 nished by the state tax commission and on or before the last day of Febru- 16 ary every employer shall file a copy thereof with the state tax commis- 17 sion. Every employer who is required, under Internal Revenue Code section 18 6011, to file returns on magnetic media,or in othermachine readable form 19 or electronic means, as defined in the Idaho uniform electronic transac- 20 tion act, may be required by rules of the state tax commission to file 21 corresponding state returns on similar magnetic media,or othermachine 22 readable form or electronic means. Such rules may provide a different due 23 date for such returns which shall be no later than the date employers are 24 required to file such returns with the internal revenue service or the 25 social security administration. 26 (c) All moneys deducted and withheld by every employer shall immediately 27 upon such deduction be state money and every employer who deducts and retains 28 any amount of money under the provisions of this chapter shall hold the same 29 in trust for the state of Idaho and for the payment thereof to the state tax 30 commission in the manner and at the times in this chapter provided. Any 31 employer who does not possess real property situated within the state of 32 Idaho, which, in the opinion of the state tax commission, is of sufficient 33 value to cover his probable tax liability, may be required to post a surety 34 bond in such sum as the state tax commission shall deem adequate to protect 35 the state. 36 (d) The provisions of this chapter relating to additions to tax in case 37 of delinquency, and penalties, shall apply to employers subject to the provi- 38 sions of this section and for these purposes any amount deducted, or required 39 to be deducted and remitted to the state tax commission under this section, 40 shall be considered to be the tax of the employer and with respect to such 41 amount he shall be considered the taxpayer. 42 (e) Amounts deducted from wages of an employee during any calendar year 43 in accordance with the provisions of this section shall be considered to be in 44 part payment of the tax imposed on such employee for his tax year which begins 45 within such calendar year and the return made by the employer under this sub- 46 section (e) shall be accepted by the state tax commission as evidence in favor 47 of the employee of the amount so deducted from his wages. Where the total 48 amount so deducted exceeds the amount of tax on the employee, based on his 49 Idaho taxable income, or where his income is not taxable under this chapter, 50 the state tax commission shall, after examining the annual return filed by the 51 employee in accordance with this chapter, but not later than sixty (60) days 52 after the filing of each return, refund the amount of the excess deducted. 53 (f) This section shall in no way relieve any taxpayer from his obligation 54 of filing a return at the time required under this chapter, and, should the 55 amount withheld under the provisions of this section be insufficient to pay 8 1 the total tax of such taxpayer, such unpaid tax shall be paid at the time pre- 2 scribed by section 63-3034, Idaho Code. 3 (g) An employee receiving wages shall on any day be entitled to not more 4 than, but may claim fewer than, the number of withholding exemptions to which 5 he is entitled under the Internal Revenue Code for federal income tax with- 6 holding purposes. 7 (h) An employer shall use the exemption certificate filed by the employee 8 with the employer under the withholding exemption provisions of the Internal 9 Revenue Code in determining the amount of tax to be withheld from the 10 employee's wages or salary under this chapter. The tax commission may redeter- 11 mine the number of withholding exemptions to which an employee is entitled 12 under subsection (g) of this section, and the state tax commission may require 13 such exemption certificate to be filed on a form prescribed by the commission 14 in any circumstance where the commission finds that the exemption certificate 15 filed for Internal Revenue Code purposes does not properly reflect the number 16 of withholding exemptions to which the employee is entitled under this chap- 17 ter. In no event shall any employee give an exemption certificate which claims 18 a higher number of withholding exemptions than the number to which the 19 employee is entitled by subsection (g) of this section. 20 SECTION 4. That Section 63-3044, Idaho Code, be, and the same is hereby 21 amended to read as follows: 22 63-3044. DEFICIENCY IN TAX.(1)As used in this act in respect of a tax 23 imposed by this act the term "deficiency" means: 24 (a1) The amount by which the tax imposed by this act exceeds the amount 25 shown as the tax by the taxpayer upon his return; but the amount so shown on 26 the return shall first be increased by the amounts previously assessed (or 27 collected without assessment) as a deficiency, and decreased by the amounts 28 previously abated, credited, refunded, or otherwise repaid in respect of such 29 tax; or, 30 (b2) If no amount is shown as the tax by the taxpayer upon his return, or 31 if no return is made by the taxpayer, then the amount by which the tax exceeds 32 the amounts previously assessed (or collected without assessment) as a defi- 33 ciency; but such amounts previously assessed, or collected without assessment, 34 shall first be decreased by the amounts previously abated, credited, refunded, 35 or otherwise repaid in respect of such tax; or, 36 (c3) Any amount of tax which is due and unpaid. 37(2) A tax assessment shall be made by recording the liability of the tax-38payer along with an identification of the taxpayer, the character of the lia-39bility assessed, the taxable period, if applicable, and the amount of the40assessment. The assessment shall be kept and maintained in a record in the41office of the state tax commission in accordance with rules prescribed by the42tax commission. Upon request of the taxpayer, the tax commission shall furnish43the taxpayer a copy of the record of assessment. No tax commission activities44to enforce collection of tax may be conducted, nor may a proceeding to collect45a tax be instituted, until assessment of the tax has been made in accordance46with the provisions of this section. Taxes and related interest may be47assessed immediately upon receipt of a tax return, amended return or other48consent signed by the taxpayer or the taxpayer's authorized representative49showing the taxes due. The tax commission may presume that the signature is50the signature of the taxpayer or the taxpayer's authorized representative51until the contrary is established by a preponderance of the evidence.52(3) The making of an assessment is not required before the tax commission53may conduct audits and investigations or make inquiries of taxpayers or other9 1persons relating to matters within the tax commission's jurisdiction. The mak-2ing of an assessment is not required before the tax commission may file a3judicial action under section 63-3030A or 63-3064, Idaho Code, or actions for4injunctive or declaratory relief.5 SECTION 5. That Section 63-3045A, Idaho Code, be, and the same is hereby 6 amended to read as follows: 7 63-3045A.MATHEMATICAL ERROR --ASSESSMENT OF TAX. (1) Except as provided 8 in subsection (2) of this section, no tax commission activities to enforce 9 collection of tax may be conducted, nor may a proceeding to collect a tax be 10 instituted, until taxes are assessed in accordance with the provisions of this 11 section. 12 (a) Taxes and related interest, including revisions for mathematical 13 errors, are assessed immediately upon receipt of a tax return, amended 14 return or other consent signed by the taxpayer or the taxpayer's autho- 15 rized representative showing the taxes due. The tax commission may pre- 16 sume that the signature is the signature of the taxpayer or the taxpayer's 17 authorized representative until the contrary is established by a prepon- 18 derance of the evidence. 19 (ab) In the event that the amount of tax is understated on the taxpayer's 20 return due to a mathematical error, the state tax commission shall notify 21 the taxpayer that an amount of tax in excess of that shown on the return 22 is due and has been asserted. Such a notice of additional tax due shall 23 not be considered a notice of a deficiency nor shall the taxpayer have any 24 right of protest or appeal as in the case of a deficiency based on such 25 notice, and the assessment and collection of the amount of tax erroneously 26 omitted in the return is not prohibited by any provision of this chapter. 27 (bc)The amount of tax which is shown to be due on the return (including28revisions for mathematical errors) shall be deemed to be assessed on the29date of filing of the return including any amended returns showing an30increase of tax. In the case of a return properly filed without the compu-31tation of the tax, the tax computed by the state tax commission shall be32deemed to be assessed on the date when payment is due.Any amount paid as 33 a tax or in respect of a tax, other than amounts withheld at the source or 34 paid as estimated income tax, shall be deemed to be assessed upon the date 35 of receipt of payment, notwithstanding any other provisions of this chap- 36 ter. 37 (cd) For all other purposes of this chapter, a tax is deemed assessed 38 when: 39 (i) Aataxpayer fails to file a protest with the state tax commis- 40 sion within the time prescribed in section 63-3045, Idaho Code, or an 41 action in district court or the board of tax appeals within the time 42 prescribed in subsection (a) of section 63-3049, Idaho Code; or 43 (ii) Upon conclusion of any such proceeding for any amount upheld at 44 that conclusion of such proceeding. 45 (2) An assessment is not required before the tax commission may conduct 46 audits and investigations or make inquiries of taxpayers or other persons 47 relating to matters within the tax commission's jurisdiction. The making of an 48 assessment is not required before the tax commission may file a judicial 49 action under section 63-3030A or 63-3064, Idaho Code, or actions for injunc- 50 tive or declaratory relief. 51 (3) When taxes and related interest have been assessed, the state tax 52 commission shall create a record of assessment by recording the liability of 53 the taxpayer along with an identification of the taxpayer, the character of 10 1 the liability assessed, the taxable period, if applicable, and the amount of 2 the assessment. The record of an assessment shall be kept and maintained in a 3 record in the office of the state tax commission in accordance with rules pre- 4 scribed by the state tax commission. Upon request of the taxpayer, the state 5 tax commission shall furnish the taxpayer a copy of the record of assessment. 6 (4) Penalties and additions to tax in the case of a deficiency shall be 7 assessed in the same manner as the taxes and related interest. 8 SECTION 6. That Section 63-2906, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 63-2906. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME 11 TAXES. (1) In addition to other needed rules, the state tax commission may 12 promulgate rules prescribing: 13 (a) In the case of S corporations, partnerships, trusts or estates, a 14 method of attributing a credit under this chapter to the shareholders, 15 partners or beneficiaries in proportion to their share of the income from 16 the S corporation, partnership, trust or estate; and 17 (b) The method by which the carryover of credits and the duty to recap- 18 ture credits shall survive and be transferred in the event of reorganiza- 19 tions, mergers or liquidations. 20 (2) In the case of a unitary group of corporations filing a combined 21 report under subsection (t) of section 63-3027, Idaho Code, credits against 22 income tax provided by sections 63-2903, 63-2904 and 63-2905, Idaho Code, 23 earned by one (1) member of the group but not used by that member may be used 24 by another member of the group, subject to the limitation in subsection (3) of 25 this section, instead of carried over. For a combined group of corporations, 26 credit carried forward may be claimed by any member of the group unless the 27 member or members who earned the credit are no longer included in the combined 28 group. 29 (3) The total of all credits allowed by sections 63-2903, 63-2904 and 30 63-2905, Idaho Code, together with any credits carried forward under subsec- 31 tion (4) of this section shall not exceed the amount of tax due under sections 32 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre- 33 dits permitted by this chapter, chapter 44, title 63, Idaho Code, and the 34 Idaho income tax act. 35 (4) If the credits exceed the limitation under subsection (3) of this 36 section, the excess amount may be carried forward for a period that does not 37 exceed: 38 (a) The next fourteen (14) taxable years in the case of credits allowed 39 by sections 63-2903 and 63-2904, Idaho Code; or 40 (b) The next ten (10) taxable years in the case of credits allowed by 41 section 63-2905, Idaho Code. 42 SECTION 7. That Section 63-4406, Idaho Code, be, and the same is hereby 43 amended to read as follows: 44 63-4406. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME 45 TAXES. (1) In addition to other needed rules, the state tax commission may 46 promulgate rules prescribing: 47 (a) In the case of S corporations, partnerships, trusts or estates, a 48 method of attributing a credit under this chapter to the shareholders, 49 partners or beneficiaries in proportion to their share of the income from 50 the S corporation, partnership, trust or estate; and 51 (b) The method by which the carryover of credits and the duty to recap- 11 1 ture credits shall survive and be transferred in the event of reorganiza- 2 tions, mergers or liquidations. 3 (2) In the case of a unitary group of corporations filing a combined 4 report under subsection (t) of section 63-3027, Idaho Code, credits against 5 income tax provided by sections 63-4403, 63-4404 and 63-4405, Idaho Code, 6 earned by one (1) member of the group but not used by that member may be used 7 by another member of the group, subject to the limitation in subsection (3) of 8 this section, instead of carried over. For a combined group of corporations, 9 credit carried forward may be claimed by any member of the group unless the 10 member or members who earned the credit are no longer included in the combined 11 group. 12 (3) The total of all credits allowed by sections 63-4403, 63-4404 and 13 63-4405, Idaho Code, together with any credits carried forward under subsec- 14 tion (4) of this section shall not exceed the amount of tax due under sections 15 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre- 16 dits permitted by this chapter, chapter 29, title 63, Idaho Code, and the 17 Idaho income tax act. 18 (4) If the credits exceed the limitation under subsection (3) of this 19 section, the excess amount may be carried forward for a period that does not 20 exceed: 21 (a) The next fourteen (14) taxable years in the case of credits allowed 22 by sections 63-4403 and 63-4404, Idaho Code; or 23 (b) The next ten (10) taxable years in the case of credits allowed by 24 section 63-4405, Idaho Code. 25 SECTION 8. An emergency existing therefor, which emergency is hereby 26 declared to exist, this act shall be in full force and effect on and after its 27 passage and approval, and retroactively to January 1, 2006.
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006Moved by Hill Seconded by Corder IN THE SENATE SENATE AMENDMENT TO H.B. NO. 443 1 AMENDMENT TO SECTION 2 2 On page 4 of the printed bill, in line 9, delete "on the due tax,".
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 443, As Amended in the Senate BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO THE INCOME TAX; AMENDING SECTION 63-3024, IDAHO CODE, TO PROVIDE 3 THAT SUBSEQUENT CHANGES TO THE CONSUMER PRICE INDEX SHALL NOT AFFECT 4 INCOME TAX BRACKETS; AMENDING SECTION 63-3029B, IDAHO CODE, TO REQUIRE 5 REPORTING OF RECAPTURE OF PROPERTY TAX ON QUALIFIED INVESTMENTS; AMENDING 6 SECTION 63-3035, IDAHO CODE, TO CONFORM THE DUE DATE OF ELECTRONICALLY 7 FILED WITHHOLDING REPORTS BY EMPLOYERS TO THE FEDERAL DUE DATE; AMENDING 8 SECTION 63-3044, IDAHO CODE, TO DELETE REFERENCES TO THE ASSESSMENT OF 9 TAX; AMENDING SECTION 63-3045A, IDAHO CODE, TO PROVIDE PROVISIONS RELATING 10 TO THE ASSESSMENT OF TAX, THE RECORD OF ASSESSMENT AND PENALTIES AND ADDI- 11 TIONS TO TAX; AMENDING SECTION 63-2906, IDAHO CODE, TO PROVIDE A CROSS- 12 REFERENCE TO THE IDAHO SMALL EMPLOYER INCENTIVE ACT; AMENDING SECTION 13 63-4406, IDAHO CODE, TO PROVIDE A CROSS-REFERENCE TO THE CORPORATE HEAD- 14 QUARTERS INCENTIVE ACT; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE 15 APPLICATION. 16 Be It Enacted by the Legislature of the State of Idaho: 17 SECTION 1. That Section 63-3024, Idaho Code, be, and the same is hereby 18 amended to read as follows: 19 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For taxable year 20 2001, and each taxable year thereafter, a tax measured by Idaho taxable income 21 as defined in this chapter is hereby imposed upon every individual, trust, or 22 estate required by this chapter to file a return. 23 (a) The tax imposed upon individuals, trusts and estates shall be com- 24 puted at the following rates: 25 When Idaho taxable income is: The rate is: 26 Less than $1,000 One and six-tenths percent (1.6%) 27 $1,000 but less than $2,000 $16, plus three and six-tenths 28 percent (3.6%) of the amount over $1,000 29 $2,000 but less than $3,000 $52, plus four and one-tenth 30 percent (4.1%) of the amount over $2,000 31 $3,000 but less than $4,000 $93, plus five and one-tenth 32 percent (5.1%) of the amount over $3,000 33 $4,000 but less than $5,000 $144, plus six and one-tenth 34 percent (6.1%) of the amount over $4,000 35 $5,000 but less than $7,500 $205, plus seven and one-tenth 36 percent (7.1%) of the amount over $5,000 37 $7,500 but less than $20,000 $383, plus seven and four-tenths 38 percent (7.4%) of the amount over $7,500 39 Over $20,000 $1,308, plus seven 40 and eight-tenths percent 41 (7.8%) of the amount over $20,000 42 For taxable year 2000 and each year thereafter, the state tax commission 43 shall prescribe a factor which shall be used to compute the Idaho income tax 2 1 brackets provided in subsection (a) of this section. The factor shall provide 2 an adjustment to the Idaho tax brackets so that inflation will not result in a 3 tax increase. The Idaho tax brackets shall be adjusted as follows: multiply 4 the bracket amounts by the percentage (the consumer price index for the calen- 5 dar year immediately preceding the calendar year to which the adjusted brack- 6 ets will apply divided by the consumer price index for calendar year 1998). 7 For the purpose of this computation, the consumer price index for any calendar 8 year is the average of the consumer price index as of the close of the twelve 9 (12) month period for the immediately preceding calendar year, without regard 10 to any subsequent adjustments, as adopted by the state tax commission. This 11 adoption shall be exempt from the provisions of chapter 52, title 67, Idaho 12 Code. The consumer price index shall mean the consumer price index for all 13 U.S. urban consumers published by the United States department of labor. The 14 state tax commission shall annually include the factor as provided in this 15 subsection to multiply against Idaho taxable income in the brackets above to 16 arrive at that year's Idaho taxable income for tax bracket purposes. 17 (b) In case a joint return is filed by husband and wife pursuant to the 18 provisions of section 63-3031, Idaho Code, the tax imposed by this section 19 shall be twice the tax which would be imposed on one-half (1/2) of the aggre- 20 gate Idaho taxable income. For the purposes of this section, a return of a 21 surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and 22 a head of household, as defined in section 2(b) of the Internal Revenue Code, 23 shall be treated as a joint return and the tax imposed shall be twice the tax 24 which would be imposed on one-half (1/2) of the Idaho taxable income. 25 (c) In the case of a trust that is an electing small business trust as 26 defined in section 1361 of the Internal Revenue Code, the special rules for 27 taxation of such trusts contained in section 641 of the Internal Revenue Code 28 shall apply except that the maximum individual rate provided in this section 29 shall apply in computing tax due under this chapter. 30 (d) The state tax commission shall compute and publish Idaho income tax 31 liability for taxpayers at the midpoint of each bracket of Idaho taxable 32 income in fifty dollar ($50.00) steps to fifty thousand dollars ($50,000), 33 rounding such calculations to the nearest dollar. Taxpayers having income 34 within such brackets shall file returns based upon and pay taxes according to 35 the schedule thus established. The state tax commission shall promulgate rules 36 defining the conditions upon which such returns shall be filed. 37 SECTION 2. That Section 63-3029B, Idaho Code, be, and the same is hereby 38 amended to read as follows: 39 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election 40 of the taxpayer there shall be allowed, subject to the applicable limitations 41 provided herein as a credit against the income tax imposed by chapter 30, 42 title 63, Idaho Code, an amount equal to the sum of: 43 (a) The tax credit carryovers; and 44 (b) The tax credit for the taxable year. 45 (2) The maximum allowable amount of the credit for the current taxable 46 year shall be three percent (3%) of the amount of qualified investments made 47 during the taxable year. 48 (3) As used in this section "qualified investment" means certain property 49 which: 50 (a) (i) Is eligible for the federal investment tax credit, as defined 51 in sections 46(c) and 48 of the Internal Revenue Code subject to the 52 limitations provided for certain regulated companies in section 46(f) 53 of the Internal Revenue Code and is not a motor vehicle under eight 3 1 thousand (8,000) pounds gross weight; or 2 (ii) Is qualified broadband equipment as defined in section 3 63-3029I, Idaho Code; and 4 (b) Is acquired, constructed, reconstructed, erected or placed into ser- 5 vice after December 31, 1981; and 6 (c) Has a situs in Idaho. 7 (4) (a) For qualified investments placed in service in 2003 and thereaf- 8 ter, a taxpayer, other than a person whose rate of charge or rate of 9 return, or both, is regulated or limited according to federal or state 10 law, may elect, in lieu of the credit provided by this section, a two (2) 11 year exemption from all taxes on personal property on the qualified 12 investment. The exemption from personal property tax shall apply to the 13 year the election is filed as provided in this section and the immediately 14 following year. The election provided by this paragraph is available only 15 to a taxpayer whose Idaho taxable income, before application of net oper- 16 ating losses carried back or forward, in the second preceding taxable year 17 in which the investment is placed in service is negative. 18 (b) The election shall be made in the form prescribed by the state tax 19 commission and shall include a specific description and location of all 20 qualified investments placed into service and located in the jurisdiction 21 of the assessing authority, a designation of the specific assets for which 22 the exemption is claimed, and such other information as the state tax com- 23 mission may require. The election must be made by including the election 24 form with the listing of personal property required by section 63-302, 25 Idaho Code, or, in the case of operating property assessed under chapter 26 4, title 63, Idaho Code, with the operator's statement required by section 27 63-404, Idaho Code. Once made the election is irrevocable. If no election 28 is made, the election is not otherwise available. A copy of the election 29 form must also be attached to the original income tax return due for the 30 taxable year in which the claim was made. 31 (c) The state tax commission and the various county assessors are autho- 32 rized to exchange information as necessary to properly coordinate the 33 exemption provided in this subsection. Information disclosed to county 34 officials under this subsection may be used only to determine the validity 35 or amount of a taxpayer's entitlement to the exemption provided in this 36 section, and is not otherwise subject to public disclosure as provided in 37 section 9-340D, Idaho Code. 38 (d) In the event that an investment in regard to which the election under 39 this subsection was made is determined by the state tax commission: 40 (i) To not be a qualified investment, or 41 (ii) To have ceased to qualify during the recapture period, or 42 (iii) To be otherwise not qualified for the election, 43 the taxpayer shall be subject to recapture of the property tax benefit. 44 (e) The benefit to be recaptured in subsection (4)(d) of this section 45 shall be computed in the manner required in subsection (7) of this section 46 and such recapture amount shall be subject to assessment in the same man- 47 ner as a deficiency in tax under this chapter. For purposes of calculating 48 the recapture, the property tax benefit shall be: 49 (i) In the case of locally assessed property located in a single 50 county or nonapportioned centrally assessed property, the market 51 value of exempted property times the average property tax levy for 52 that county in the year or years for which the exemption was claimed. 53 (ii) In the case of other centrally assessed property and property 54 located in more than one (1) county, the market value of exempted 55 property times the average urban property tax levy of the state as 4 1 determined by the state tax commission in each of the years for which 2 the exemption was claimed. 3 (f) In the event that a recapture of the exemption is required under this 4 subsection (4), the person claiming the exemption shall report the event 5 to the state tax commission in the manner the state tax commission may by 6 rule require. The report shall be due no later than the due date of that 7 person's income tax return under this chapter for the taxable year in 8 which the event occurs. The recapture amount is due and payable with the 9 report. Any amount of recapture not paid is a deficiency within the mean- 10 ing of section 63-3044, Idaho Code. 11 (g) All moneys collected by the state tax commission pursuant to this 12 subsection, which amounts are continuously appropriated for this purpose, 13 shall be deposited with the state treasurer and placed in the state refund 14 account, as provided by section 63-3067, Idaho Code, to be remitted to the 15 county within which the property was located that was not a qualified 16 investment or ceased to qualify during the recapture period. The county 17 shall distribute this remittance to all appropriate taxing districts based 18 on the proportion each appropriate taxing district's levy is to the total 19 of all the levies of the taxing districts for the tax code area where the 20 property was located for each year the exemption was granted. If any tax- 21 ing district is dissolved or disincorporated, the proportionate share of 22 the remittance to be distributed to that taxing district shall be depos- 23 ited in the county current expense fund. 24 (gh) For purposes of the limitation provided by section 63-802, Idaho 25 Code, moneys received pursuant to this subsection shall be treated as 26 property tax revenue by taxing districts. 27 (5) Notwithstanding the provisions of subsections (1) and (2) of this 28 section, the amount of the credit allowed shall not exceed fifty percent (50%) 29 of the tax liability of the taxpayer. The tax liability of the taxpayer shall 30 be the tax after deducting the credit allowed by section 63-3029, Idaho Code. 31 (6) If the sum of credit carryovers from the credit allowed by subsection 32 (2) of this section and the amount of credit for the taxable year from the 33 credit allowed by subsection (2) of this section exceed the limitation imposed 34 by subsection (5) of this section for the current taxable year, the excess 35 attributable to the current taxable year's credit shall be an investment 36 credit carryover to the fourteen (14) succeeding taxable years. In the case of 37 a group of corporations filing a combined report under section 63-3027, Idaho 38 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one 39 (1) member of the group but not used by that member may be used by another 40 member of the group, subject to the provisions of subsection (5) of this sec- 41 tion, instead of carried over. The entire amount of unused credit shall be 42 carried forward to the earliest of the succeeding years, wherein the oldest 43 available unused credit shall be used first, so long as the qualified invest- 44 ment property for which the unused credit was granted still maintains Idaho 45 situs. For a combined group of corporations, credit carried forward may be 46 claimed by any member of the group unless the member who earned the credit is 47 no longer included in the combined group. 48 (7) Any recapture of the credit allowed by subsection (2) of this section 49 on property disposed of or ceasing to qualify, prior to the close of the 50 recapture period, shall be determined according to the applicable recapture 51 provisions of the Internal Revenue Code. In the case of a unitary group of 52 corporations, the increase in tax due to the recapture of investment tax 53 credit must be reported by the member of the group who earned the credit 54 regardless of which member claimed the credit against tax. 55 (8) For the purpose of determining whether property placed in service is 5 1 a "qualified investment" as defined in subsection (3) of this section, the 2 provisions of section 49 of the Internal Revenue Code shall be disregarded. 3 "Qualified investment" shall not include any amount for which a deduction is 4 allowed under section 179 of the Internal Revenue Code in computing taxable 5 income. 6 (9) For purposes of this section, property has a situs in Idaho during a 7 taxable year if it is used in Idaho at any time during the taxable year. Prop- 8 erty not used in Idaho during a taxable year does not have a situs in Idaho in 9 the taxable year during which the property is not used in Idaho or in any sub- 10 sequent taxable year. No credit or carryover of credit is permitted under this 11 section if the credit or carryover relates to property that does not have a 12 situs in Idaho during the taxable year for which the credit or carryover is 13 claimed. The Idaho situs of property must be established by records maintained 14 by the taxpayer which are created reasonably contemporaneously with the use of 15 the property. 16 (10) In the case of property used both in and outside Idaho, the taxpayer, 17 electing to claim the credit provided in this section, must elect to compute 18 the qualified investment in property with a situs in Idaho for all such 19 investments first qualifying during that year in one (1), but only one (1), of 20 the following ways: 21 (a) The amount of each qualified investment in a specific asset shall be 22 separately computed based on the percentage of the actual use of the prop- 23 erty in Idaho by using a measure of the use, such as total miles or total 24 machine hours, that most accurately reflects the beneficial use during the 25 taxable year in which it is first acquired, constructed, reconstructed, 26 erected or placed into service; provided, that the asset is placed in ser- 27 vice more than ninety (90) days before the end of the taxable year. In the 28 case of assets acquired, constructed, reconstructed, erected or placed 29 into service within ninety (90) days prior to the end of the taxable year 30 in which the investment first qualifies, the measure of the use of that 31 asset within Idaho for that year shall be based upon the percentage of use 32 in Idaho during the first ninety (90) days of use of the asset; 33 (b) The investment in qualified property used both inside and outside 34 Idaho during the taxable year in which it is first acquired, constructed, 35 reconstructed, erected or placed into service shall be multiplied by the 36 percent of the investment that would be included in the numerator of the 37 Idaho property factor determined pursuant to section 63-3027, Idaho Code, 38 for the same year. 39 (11) Only for the purposes of subsections (3)(a) and (8) of this section, 40 references to sections of the "Internal Revenue Code" mean the sections 41 referred to as they existed in the Internal Revenue Code of 1986 prior to 42 November 5, 1990. 43 SECTION 3. That Section 63-3035, Idaho Code, be, and the same is hereby 44 amended to read as follows: 45 63-3035. STATE WITHHOLDING TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL- 46 LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the pro- 47 visions of the Internal Revenue Code to withhold, collect and pay income tax 48 on wages or salaries paid by such employer to any employee (other than employ- 49 ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the time 50 of such payment of wages, salary, bonus or other emolument to such employee, 51 deduct and retain therefrom an amount substantially equivalent to the tax rea- 52 sonably calculated by the state tax commission to be due from the employee 53 under this chapter. The state tax commission shall prepare tables showing 6 1 amounts to be withheld, and shall supply same to each employer subject to this 2 section. In the event that an employer can demonstrate administrative inconve- 3 nience in complying with the exact requirements set forth in these tables, he 4 may, with the consent of the state tax commission and upon application to it, 5 use a different method which will produce substantially the same amount of 6 taxes withheld. Every employer making payments of wages or salaries earned in 7 Idaho, regardless of the place where such payment is made: 8 (1) shall be liable to the state of Idaho for the payment of the tax 9 required to be deducted and withheld under this section and shall not be 10 liable to any individual for the amount deducted from his wages and paid 11 over in compliance or intended compliance with this section; 12 (2) must pay to the state tax commission monthly on or before the 20th 13 day of the succeeding month, or at such other times as the state tax com- 14 mission may allow, an amount of tax which, under the provisions of this 15 chapter, he is required to deduct and withhold; 16 (3) shall register with the state tax commission, in the manner pre- 17 scribed by it, to establish an employer's withholding account number. The 18 account number will be used to report all amounts withheld, for the annual 19 reconciliation required in this section, and for such other purposes 20 relating to withholding as the state tax commission may require; and 21 (4) must, notwithstanding the provisions of paragraphs (1) and (2) of 22 this subsection, if the amount of withholding of such employer for the 23 preceding twelve (12) month period equals or exceeds two hundred forty 24 thousand dollars ($240,000) per annum or an average of twenty thousand 25 dollars ($20,000) per month per annum, pay to the state tax commission on 26 the basis of withholding periods which begin on the 16th day of the month 27 and end on the 15th day of the following month, and payment shall be made 28 not later than five (5) days after the end of the withholding period. 29 (5) If a payment required pursuant to subsection (a)(2) or (a)(4) of this 30 section is not made or is made delinquently or if made is not equal to the 31 withholding required under this section the state tax commission may treat 32 the failure as a failure to file a return and may take administrative and 33 judicial actions as authorized by this chapter in the case of a failure to 34 file a return. Interest, at the rate provided by section 63-3045, Idaho 35 Code, shall apply to any such underpayment. 36 (6) Commencing in 2006, the state tax commission shall determine whether 37 the threshold amounts established by subsection (a)(4) of this section 38 must be adjusted to reflect fluctuations in the cost of living. The com- 39 mission shall base its determination on the cumulative effect of the 40 annual cost-of-living percentage modifications determined by the United 41 States secretary of health and human services pursuant to 42 USC 415(i). 42 When the cumulative percentage applied to the monthly threshold amount 43 equals or exceeds five thousand dollars ($5,000), the commission shall 44 promulgate a rule adjusting the monthly threshold amount by five thousand 45 dollars ($5,000) and making the necessary proportional adjustment to the 46 annual threshold amount. The rule shall be effective for the next succeed- 47 ing calendar year and each year thereafter until again adjusted by the 48 commission. The tax commission shall determine subsequent adjustments in 49 the same manner, in each case using the year of the last adjustment as the 50 base year. 51 (b) (1) In addition to the payments required pursuant to subsections 52 (a)(2) and (a)(4) of this section, every employer shall file a return upon 53 such form as shall be prescribed by the state tax commission, but not more 54 frequently than annually, or as required pursuant to any agreement between 55 the state tax commission and the department of labor under section 7 1 63-3035B, Idaho Code, unless a shorter filing period and due date is pre- 2 scribed by the state tax commission. The return shall be due on the last 3 day of the month following the end of the period to which the return 4 relates. The return shall show, for the period to which it relates, the 5 total amount of wages, salary, bonus or other emolument paid to his 6 employees, the amount deducted therefrom in accordance with the provisions 7 of the Internal Revenue Code, the amount deducted therefrom in accordance 8 with the provisions of this section, the amount of any previous payments 9 made pursuant to this section, and such pertinent and necessary informa- 10 tion as the state tax commission may require. 11 (2) Every employer making a declaration of withholding as provided herein 12 shall furnish to the employees annually, but not later than thirty (30) 13 days after the end of the calendar year, a record of the amount of tax 14 withheld from such employee on forms to be prescribed, prepared and fur- 15 nished by the state tax commission and on or before the last day of Febru- 16 ary every employer shall file a copy thereof with the state tax commis- 17 sion. Every employer who is required, under Internal Revenue Code section 18 6011, to file returns on magnetic media,or in othermachine readable form 19 or electronic means, as defined in the Idaho uniform electronic transac- 20 tion act, may be required by rules of the state tax commission to file 21 corresponding state returns on similar magnetic media,or othermachine 22 readable form or electronic means. Such rules may provide a different due 23 date for such returns which shall be no later than the date employers are 24 required to file such returns with the internal revenue service or the 25 social security administration. 26 (c) All moneys deducted and withheld by every employer shall immediately 27 upon such deduction be state money and every employer who deducts and retains 28 any amount of money under the provisions of this chapter shall hold the same 29 in trust for the state of Idaho and for the payment thereof to the state tax 30 commission in the manner and at the times in this chapter provided. Any 31 employer who does not possess real property situated within the state of 32 Idaho, which, in the opinion of the state tax commission, is of sufficient 33 value to cover his probable tax liability, may be required to post a surety 34 bond in such sum as the state tax commission shall deem adequate to protect 35 the state. 36 (d) The provisions of this chapter relating to additions to tax in case 37 of delinquency, and penalties, shall apply to employers subject to the provi- 38 sions of this section and for these purposes any amount deducted, or required 39 to be deducted and remitted to the state tax commission under this section, 40 shall be considered to be the tax of the employer and with respect to such 41 amount he shall be considered the taxpayer. 42 (e) Amounts deducted from wages of an employee during any calendar year 43 in accordance with the provisions of this section shall be considered to be in 44 part payment of the tax imposed on such employee for his tax year which begins 45 within such calendar year and the return made by the employer under this sub- 46 section (e) shall be accepted by the state tax commission as evidence in favor 47 of the employee of the amount so deducted from his wages. Where the total 48 amount so deducted exceeds the amount of tax on the employee, based on his 49 Idaho taxable income, or where his income is not taxable under this chapter, 50 the state tax commission shall, after examining the annual return filed by the 51 employee in accordance with this chapter, but not later than sixty (60) days 52 after the filing of each return, refund the amount of the excess deducted. 53 (f) This section shall in no way relieve any taxpayer from his obligation 54 of filing a return at the time required under this chapter, and, should the 55 amount withheld under the provisions of this section be insufficient to pay 8 1 the total tax of such taxpayer, such unpaid tax shall be paid at the time pre- 2 scribed by section 63-3034, Idaho Code. 3 (g) An employee receiving wages shall on any day be entitled to not more 4 than, but may claim fewer than, the number of withholding exemptions to which 5 he is entitled under the Internal Revenue Code for federal income tax with- 6 holding purposes. 7 (h) An employer shall use the exemption certificate filed by the employee 8 with the employer under the withholding exemption provisions of the Internal 9 Revenue Code in determining the amount of tax to be withheld from the 10 employee's wages or salary under this chapter. The tax commission may redeter- 11 mine the number of withholding exemptions to which an employee is entitled 12 under subsection (g) of this section, and the state tax commission may require 13 such exemption certificate to be filed on a form prescribed by the commission 14 in any circumstance where the commission finds that the exemption certificate 15 filed for Internal Revenue Code purposes does not properly reflect the number 16 of withholding exemptions to which the employee is entitled under this chap- 17 ter. In no event shall any employee give an exemption certificate which claims 18 a higher number of withholding exemptions than the number to which the 19 employee is entitled by subsection (g) of this section. 20 SECTION 4. That Section 63-3044, Idaho Code, be, and the same is hereby 21 amended to read as follows: 22 63-3044. DEFICIENCY IN TAX.(1)As used in this act in respect of a tax 23 imposed by this act the term "deficiency" means: 24 (a1) The amount by which the tax imposed by this act exceeds the amount 25 shown as the tax by the taxpayer upon his return; but the amount so shown on 26 the return shall first be increased by the amounts previously assessed (or 27 collected without assessment) as a deficiency, and decreased by the amounts 28 previously abated, credited, refunded, or otherwise repaid in respect of such 29 tax; or, 30 (b2) If no amount is shown as the tax by the taxpayer upon his return, or 31 if no return is made by the taxpayer, then the amount by which the tax exceeds 32 the amounts previously assessed (or collected without assessment) as a defi- 33 ciency; but such amounts previously assessed, or collected without assessment, 34 shall first be decreased by the amounts previously abated, credited, refunded, 35 or otherwise repaid in respect of such tax; or, 36 (c3) Any amount of tax which is due and unpaid. 37(2) A tax assessment shall be made by recording the liability of the tax-38payer along with an identification of the taxpayer, the character of the lia-39bility assessed, the taxable period, if applicable, and the amount of the40assessment. The assessment shall be kept and maintained in a record in the41office of the state tax commission in accordance with rules prescribed by the42tax commission. Upon request of the taxpayer, the tax commission shall furnish43the taxpayer a copy of the record of assessment. No tax commission activities44to enforce collection of tax may be conducted, nor may a proceeding to collect45a tax be instituted, until assessment of the tax has been made in accordance46with the provisions of this section. Taxes and related interest may be47assessed immediately upon receipt of a tax return, amended return or other48consent signed by the taxpayer or the taxpayer's authorized representative49showing the taxes due. The tax commission may presume that the signature is50the signature of the taxpayer or the taxpayer's authorized representative51until the contrary is established by a preponderance of the evidence.52(3) The making of an assessment is not required before the tax commission53may conduct audits and investigations or make inquiries of taxpayers or other9 1persons relating to matters within the tax commission's jurisdiction. The mak-2ing of an assessment is not required before the tax commission may file a3judicial action under section 63-3030A or 63-3064, Idaho Code, or actions for4injunctive or declaratory relief.5 SECTION 5. That Section 63-3045A, Idaho Code, be, and the same is hereby 6 amended to read as follows: 7 63-3045A.MATHEMATICAL ERROR --ASSESSMENT OF TAX. (1) Except as provided 8 in subsection (2) of this section, no tax commission activities to enforce 9 collection of tax may be conducted, nor may a proceeding to collect a tax be 10 instituted, until taxes are assessed in accordance with the provisions of this 11 section. 12 (a) Taxes and related interest, including revisions for mathematical 13 errors, are assessed immediately upon receipt of a tax return, amended 14 return or other consent signed by the taxpayer or the taxpayer's autho- 15 rized representative showing the taxes due. The tax commission may pre- 16 sume that the signature is the signature of the taxpayer or the taxpayer's 17 authorized representative until the contrary is established by a prepon- 18 derance of the evidence. 19 (ab) In the event that the amount of tax is understated on the taxpayer's 20 return due to a mathematical error, the state tax commission shall notify 21 the taxpayer that an amount of tax in excess of that shown on the return 22 is due and has been asserted. Such a notice of additional tax due shall 23 not be considered a notice of a deficiency nor shall the taxpayer have any 24 right of protest or appeal as in the case of a deficiency based on such 25 notice, and the assessment and collection of the amount of tax erroneously 26 omitted in the return is not prohibited by any provision of this chapter. 27 (bc)The amount of tax which is shown to be due on the return (including28revisions for mathematical errors) shall be deemed to be assessed on the29date of filing of the return including any amended returns showing an30increase of tax. In the case of a return properly filed without the compu-31tation of the tax, the tax computed by the state tax commission shall be32deemed to be assessed on the date when payment is due.Any amount paid as 33 a tax or in respect of a tax, other than amounts withheld at the source or 34 paid as estimated income tax, shall be deemed to be assessed upon the date 35 of receipt of payment, notwithstanding any other provisions of this chap- 36 ter. 37 (cd) For all other purposes of this chapter, a tax is deemed assessed 38 when: 39 (i) Aataxpayer fails to file a protest with the state tax commis- 40 sion within the time prescribed in section 63-3045, Idaho Code, or an 41 action in district court or the board of tax appeals within the time 42 prescribed in subsection (a) of section 63-3049, Idaho Code; or 43 (ii) Upon conclusion of any such proceeding for any amount upheld at 44 that conclusion of such proceeding. 45 (2) An assessment is not required before the tax commission may conduct 46 audits and investigations or make inquiries of taxpayers or other persons 47 relating to matters within the tax commission's jurisdiction. The making of an 48 assessment is not required before the tax commission may file a judicial 49 action under section 63-3030A or 63-3064, Idaho Code, or actions for injunc- 50 tive or declaratory relief. 51 (3) When taxes and related interest have been assessed, the state tax 52 commission shall create a record of assessment by recording the liability of 53 the taxpayer along with an identification of the taxpayer, the character of 10 1 the liability assessed, the taxable period, if applicable, and the amount of 2 the assessment. The record of an assessment shall be kept and maintained in a 3 record in the office of the state tax commission in accordance with rules pre- 4 scribed by the state tax commission. Upon request of the taxpayer, the state 5 tax commission shall furnish the taxpayer a copy of the record of assessment. 6 (4) Penalties and additions to tax in the case of a deficiency shall be 7 assessed in the same manner as the taxes and related interest. 8 SECTION 6. That Section 63-2906, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 63-2906. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME 11 TAXES. (1) In addition to other needed rules, the state tax commission may 12 promulgate rules prescribing: 13 (a) In the case of S corporations, partnerships, trusts or estates, a 14 method of attributing a credit under this chapter to the shareholders, 15 partners or beneficiaries in proportion to their share of the income from 16 the S corporation, partnership, trust or estate; and 17 (b) The method by which the carryover of credits and the duty to recap- 18 ture credits shall survive and be transferred in the event of reorganiza- 19 tions, mergers or liquidations. 20 (2) In the case of a unitary group of corporations filing a combined 21 report under subsection (t) of section 63-3027, Idaho Code, credits against 22 income tax provided by sections 63-2903, 63-2904 and 63-2905, Idaho Code, 23 earned by one (1) member of the group but not used by that member may be used 24 by another member of the group, subject to the limitation in subsection (3) of 25 this section, instead of carried over. For a combined group of corporations, 26 credit carried forward may be claimed by any member of the group unless the 27 member or members who earned the credit are no longer included in the combined 28 group. 29 (3) The total of all credits allowed by sections 63-2903, 63-2904 and 30 63-2905, Idaho Code, together with any credits carried forward under subsec- 31 tion (4) of this section shall not exceed the amount of tax due under sections 32 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre- 33 dits permitted by this chapter, chapter 44, title 63, Idaho Code, and the 34 Idaho income tax act. 35 (4) If the credits exceed the limitation under subsection (3) of this 36 section, the excess amount may be carried forward for a period that does not 37 exceed: 38 (a) The next fourteen (14) taxable years in the case of credits allowed 39 by sections 63-2903 and 63-2904, Idaho Code; or 40 (b) The next ten (10) taxable years in the case of credits allowed by 41 section 63-2905, Idaho Code. 42 SECTION 7. That Section 63-4406, Idaho Code, be, and the same is hereby 43 amended to read as follows: 44 63-4406. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME 45 TAXES. (1) In addition to other needed rules, the state tax commission may 46 promulgate rules prescribing: 47 (a) In the case of S corporations, partnerships, trusts or estates, a 48 method of attributing a credit under this chapter to the shareholders, 49 partners or beneficiaries in proportion to their share of the income from 50 the S corporation, partnership, trust or estate; and 51 (b) The method by which the carryover of credits and the duty to recap- 11 1 ture credits shall survive and be transferred in the event of reorganiza- 2 tions, mergers or liquidations. 3 (2) In the case of a unitary group of corporations filing a combined 4 report under subsection (t) of section 63-3027, Idaho Code, credits against 5 income tax provided by sections 63-4403, 63-4404 and 63-4405, Idaho Code, 6 earned by one (1) member of the group but not used by that member may be used 7 by another member of the group, subject to the limitation in subsection (3) of 8 this section, instead of carried over. For a combined group of corporations, 9 credit carried forward may be claimed by any member of the group unless the 10 member or members who earned the credit are no longer included in the combined 11 group. 12 (3) The total of all credits allowed by sections 63-4403, 63-4404 and 13 63-4405, Idaho Code, together with any credits carried forward under subsec- 14 tion (4) of this section shall not exceed the amount of tax due under sections 15 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre- 16 dits permitted by this chapter, chapter 29, title 63, Idaho Code, and the 17 Idaho income tax act. 18 (4) If the credits exceed the limitation under subsection (3) of this 19 section, the excess amount may be carried forward for a period that does not 20 exceed: 21 (a) The next fourteen (14) taxable years in the case of credits allowed 22 by sections 63-4403 and 63-4404, Idaho Code; or 23 (b) The next ten (10) taxable years in the case of credits allowed by 24 section 63-4405, Idaho Code. 25 SECTION 8. An emergency existing therefor, which emergency is hereby 26 declared to exist, this act shall be in full force and effect on and after its 27 passage and approval, and retroactively to January 1, 2006.
STATEMENT OF PURPOSE RS 15387 This bill makes several technical corrections and updates to the Idaho Income Tax Act: Section 1 provides that once the income tax brackets are adjusted for the Consumer Price Index, no subsequent adjustment to the CPI will affect the brackets. Section 2 provides a date by which a taxpayer who is required to recapture the two-year property tax exemption is required to report the recapture. Section 3 extends the due date for filing employer electronic copies of W-2's from the last day of February to March 31. This conforms to the federal due date. Sections 4 & 5 harmonize inconsistencies between sections 63-3044(2) & (3) and 63-3045A(b), Idaho Code, as to the method by which tax is "assessed." The amended sections provide a definite date of assessment and a consistent method for recording the assessment. Sections 6 & 7. Amend 2005 legislation (the "Idaho Headquarters Incentive Act" and the "Idaho Small Business Incentive Act") to coordinate the maximum credit allowed to a taxpayer claiming both credits. FISCAL NOTE None. CONTACT Name: Dan John Agency: State Tax Commission Phone: 334-7530 STATEMENT OF PURPOSE/FISCAL NOTE H 443