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H0506...............................................by REVENUE AND TAXATION PROPERTY TAX - Amends existing law relating to property tax relief to expand the definition of "claimant"; and to provide that recovery procedures apply to persons falsely claiming the federal earned income credit. 01/30 House intro - 1st rdg - to printing 01/31 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 506 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO THE CIRCUIT BREAKER PROPERTY TAX RELIEF; AMENDING SECTION 63-701, 3 IDAHO CODE, TO EXPAND THE DEFINITION OF "CLAIMANT"; AMENDING SECTION 4 63-708, IDAHO CODE, TO CLARIFY THAT RECOVERY PROCEDURES APPLY TO PERSONS 5 FALSELY CLAIMING THE FEDERAL EARNED INCOME CREDIT; DECLARING AN EMERGENCY 6 AND PROVIDING RETROACTIVE APPLICATION. 7 Be It Enacted by the Legislature of the State of Idaho: 8 SECTION 1. That Section 63-701, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 63-701. DEFINITIONS. As used in this chapter: 11 (1) "Claimant" means a person who has filed a claim under the provisions 12 of sections 63-701 through 63-710, Idaho Code. Except as provided in section 13 63-702(2), Idaho Code, on January 1, or before April 15, of the year in which 14 the claimant first filed a claim on the homestead in question, a claimant must 15 be an owner of the homestead and on January 1 of said year a claimant must be: 16 (a) Not less than sixty-five (65) years old; or 17 (b) A child under the age of eighteen (18) years who is fatherless or 18 motherless or who has been abandoned by any surviving parent or parents; 19 or 20 (c) A widow or widower; or 21 (d) A disabled person who is recognized as disabled by the social secu- 22 rity administration pursuant to title 42 of the United States Code, or by 23 the railroad retirement board pursuant to title 45 of the United States 24 Code, or by the office of management and budget pursuant to title 5 of the 25 United States Code; or 26 (e) A disabled veteran of any war engaged in by the United States, whose 27 disability is recognized as a service-connected disability of a degree of 28 ten percent (10%) or more, or who has a pension for nonservice-connected 29 disabilities, in accordance with laws and regulations administered by the 30 United States department of veterans affairs; or 31 (f) A person, as specified in 42 U.S.C. 1701, who was or is entitled to 32 receive benefits because he is known to have been taken by a hostile force 33 as a prisoner, hostage or otherwise; or 34 (g) Blind; or 35 (h) Eligible for the federal earned income credit under section 32 of the 36 Internal Revenue Code and earned while a resident of Idaho and for whom 37 the total property tax due for the previous year will meet or exceed ten 38 percent (10%) of the claimant's annual adjusted gross income for that tax 39 year. 40 (2) "Homestead" means the dwelling, owner-occupied by the claimant as 41 described in this chapter and used as the primary dwelling place of the claim- 42 ant and may be occupied by any members of the household as their home, and so 43 much of the land surrounding it, not exceeding one (1) acre, as is reasonably 2 1 necessary for the use of the dwelling as a home. It may consist of a part of a 2 multidwelling or multipurpose building and part of the land upon which it is 3 built. "Homestead" does not include personal property such as furniture, fur- 4 nishings or appliances, but a manufactured home may be a homestead. 5 (3) "Household" means the claimant and the claimant's spouse. The term 6 does not include bona fide lessees, tenants, or roomers and boarders on con- 7 tract. "Household" includes persons described in subsection (8)(b) of this 8 section. 9 (4) "Household income" means all income received by the claimant and, if 10 married, all income received by the claimant's spouse, in a calendar year. 11 (5) "Income" means the sum of federal adjusted gross income as defined in 12 the Internal Revenue Code, as defined in section 63-3004, Idaho Code, and to 13 the extent not already included in federal adjusted gross income: 14 (a) Alimony; 15 (b) Support money; 16 (c) Nontaxable strike benefits; 17 (d) The nontaxable amount of any individual retirement account, pension 18 or annuity, (including railroad retirement benefits, all payments received 19 under the federal social security act except the social security death 20 benefit as specified in this subsection, state unemployment insurance 21 laws, and veterans disability pensions and compensation, excluding 22 rollovers as provided in section 402 or 403 of the Internal Revenue Code); 23 (e) Nontaxable interest received from the federal government or any of 24 its instrumentalities or a state government or any of its instrumentali- 25 ties; 26 (f) Worker's compensation; and 27 (g) The gross amount of loss of earnings insurance. 28 It does not include capital gains, gifts from nongovernmental sources or 29 inheritances. To the extent not reimbursed, the cost of medical care as 30 defined in section 213(d) of the Internal Revenue Code, incurred or paid by 31 the claimant and, if married, the claimant's spouse, may be deducted from 32 income. To the extent not reimbursed, personal funeral expenses, including 33 prepaid funeral expenses and premiums on funeral insurance, of the claimant 34 and claimant's spouse only, may be deducted from income up to an annual maxi- 35 mum of five thousand dollars ($5,000) per claim. "Income" does not include 36 veterans disability pensions received by a person described in subsection 37 (1)(e) who is a claimant or a claimant's spouse if the disability pension is 38 received pursuant to a service-connected disability of a degree of forty per- 39 cent (40%) or more. "Income" does not include dependency and indemnity compen- 40 sation or death benefits paid to a person described in subsection (1) of this 41 section by the United States department of veterans affairs and arising from a 42 service-connected death or disability. "Income" does not include lump sum 43 death benefits made by the social security administration pursuant to 42 44 U.S.C. section 402(i). Documentation of medical expenses may be required by 45 the county assessor, board of equalization and state tax commission in such 46 form as the county assessor, board of equalization or state tax commission 47 shall determine. "Income" shall be that received in the calendar year immedi- 48 ately preceding the year in which a claim is filed. Where a claimant and/or 49 the claimant's spouse does not file a federal tax return, the claimant's 50 and/or the claimant's spouse's federal adjusted gross income, for purposes of 51 this section, shall be an income equivalent to federal adjusted gross income 52 had the claimant and/or the claimant's spouse filed a federal tax return, as 53 determined by the county assessor. The county assessor, board of equalization 54 or state tax commission may require documentation of income in such form as 55 each shall determine, including, but not limited to: copies of federal or 3 1 state tax returns and any attachments thereto; and income reporting forms such 2 as the W-2 and 1099. 3 (6) "Occupied" means actual use and possession. 4 (7) "Owner" means a person holding title in fee simple or holding a cer- 5 tificate of motor vehicle title (either of which may be subject to mortgage, 6 deed of trust or other lien) or who has retained or been granted a life estate 7 or who is a person entitled to file a claim under section 63-702, Idaho Code. 8 "Owner" shall also include any person who: 9 (a) Is the beneficiary of a revocable or irrevocable trust which is the 10 owner of such homestead and under which the claimant or the claimant's 11 spouse has the primary right of occupancy of the homestead; or 12 (b) Is a partner of a limited partnership, member of a limited liability 13 company or shareholder of a corporation if such entity holds title in fee 14 simple or holds a certificate of motor vehicle title and if the person 15 holds at least a five percent (5%) ownership in such entity, as determined 16 by the county assessor; or 17 (c) Has retained or been granted a life estate. 18 "Owner" includes a vendee in possession under a land sale contract. Any par- 19 tial ownership shall be considered as ownership for determining initial quali- 20 fication for property tax reduction benefits; however, the amount of property 21 tax reduction under section 63-704, Idaho Code, and rules promulgated pursuant 22 to section 63-705, Idaho Code, shall be computed on the value of the 23 claimant's partial ownership. "Partial ownership," for the purposes of this 24 section, means any one (1) person's ownership when property is owned by more 25 than one (1) person or where the homestead is held by an entity, as set forth 26 in this subsection, but more than one (1) person has the right of occupancy of 27 such homestead. A person holding either partial title in fee simple or holding 28 a certificate of motor vehicle title together with another person but who does 29 not occupy the dwelling as his primary dwelling place, shall not be considered 30 an owner for purposes of this section, if such person is a cosignatory of a 31 note secured by the dwelling in question and at least one (1) of the other 32 cosignatories of the note occupies the dwelling as his primary dwelling place. 33 The combined community property interests of both spouses shall not be consid- 34 ered partial ownership so long as the combined community property interests 35 constitute the entire ownership of the homestead, including where the spouses 36 are occupying a homestead owned by an entity, as set forth in this subsection, 37 and the spouses have the primary right of occupancy of the homestead. The pro- 38 portional reduction required under this subsection shall not apply to commu- 39 nity property interests. Where title to property was held by a person who has 40 died without timely filing a claim for property tax reduction, the estate of 41 the deceased person shall be the "owner," provided that the time periods dur- 42 ing which the deceased person held such title shall be attributed to the 43 estate for the computation of any time periods under subsection (8)(a) or 44 (8)(b) of this section. 45 (8) (a) "Primary dwelling place" means the claimant's dwelling place on 46 January 1 or before April 15 of the year for which the claim is made. The 47 primary dwelling place is the single place where a claimant has his true, 48 fixed and permanent home and principal establishment, and to which when- 49 ever the individual is absent he has the intention of returning. A claim- 50 ant must establish the dwelling to which the claim relates to be his pri- 51 mary dwelling place by clear and convincing evidence or by establishing 52 that the dwelling is where the claimant resided on January 1 or before 53 April 15 and: 54 (i) At least six (6) months during the prior year; or 55 (ii) The majority of the time the claimant owned the dwelling if 4 1 owned by the claimant less than one (1) year; or 2 (iii) The majority of the time after the claimant first occupied the 3 dwelling if occupied by the claimant for less than one (1) year. The 4 county assessor may require written or other proof of the foregoing 5 in such form as the county assessor may determine. 6 (b) Notwithstanding the provisions of paragraph (a) of this subsection, 7 the property upon which the claimant makes application shall be deemed to 8 be the claimant's primary dwelling place if the claimant is otherwise 9 qualified and resides in a care facility and does not allow the property 10 upon which the claimant has made application to be occupied by persons 11 paying a consideration to occupy the dwelling. Payment of utilities shall 12 not be payment of a consideration to occupy the dwelling. A claimant's 13 spouse who resides in a care facility shall be deemed to reside at the 14 claimant's primary dwelling place and to be a part of the claimant's 15 household. A care facility is a hospital, nursing facility or intermediate 16 care facility for the mentally retarded as defined in section 39-1301, 17 Idaho Code, or a facility as defined in section 39-3302(14), Idaho Code, 18 or a dwelling other than the one upon which the applicant makes applica- 19 tion where a claimant who is unable to reside in the dwelling upon which 20 the application is made lives and receives help in daily living, protec- 21 tion and security. 22 SECTION 2. That Section 63-708, Idaho Code, be, and the same is hereby 23 amended to read as follows: 24 63-708. RECOVERY OF ERRONEOUS CLAIMS. Within three (3) years of payment, 25 the state tax commission may recover any erroneous or incorrect payment made 26 under sections 63-701 through 63-710, Idaho Code, from any "claimant" as 27 defined in section 63-701(1), Idaho Code. The deficiency determination, col- 28 lection, and enforcement procedures provided by the Idaho income tax act, sec- 29 tions 63-3039, 63-3042, 63-3043 through 63-3064, Idaho Code, shall apply and 30 be available to the commission for enforcement and collection under sections 31 63-701 through 63-710, Idaho Code, and such sections shall, for this purpose, 32 be considered part of sections 63-701 through 63-710, Idaho Code. Wherever 33 liens or any other proceedings are defined as income tax liens or proceedings, 34 they shall, when applied in enforcement or collection under sections 63-701 35 through 63-710, Idaho Code, be described as tax relief liens and proceedings. 36 In connection with such sections, a deficiency shall consist of any amount 37 erroneously claimed by or paid to a claimant under sections 63-701 through 38 63-710, Idaho Code. If a claimant is eligible solely or in part because he or 39 she is eligible for the federal earned income credit under section 32 of the 40 Internal Revenue Code and earned while a resident of Idaho and the person is 41 ineligible for the federal earned income credit under section 32 of the Inter- 42 nal Revenue Code for the tax year property tax relief is claimed, the recovery 43 procedures shall apply to such person. 44 SECTION 3. An emergency existing therefor, which emergency is hereby 45 declared to exist, this act shall be in full force and effect on and after its 46 passage and approval, and retroactively to January 1, 2006.
STATEMENT OF PURPOSE RS 15788C1 The intent of this legislation is to add to the Idaho Circuit Breaker property tax relief program a class of non-elderly, working people whose total property tax meets or exceeds 10% of their annual adjusted gross income from all sources. Qualification for this program is intended to use the same income brackets and ceiling as the existing Circuit Breaker but also requiring qualification based on the Federal Earned Income Tax Credit which provides income tax relief to 97,765 working families in Idaho. By targeting this segment of the circuit breaker at those whose property tax meets or exceeds 10% of their income, this program will focus relief on households in those areas where property tax is highest, particularly compared to wages and earned income. FISCAL NOTE With 97,765 people qualifying for the Federal EITC in 2005, weighting heavily toward those living in areas with high property values, impact to the State general fund will be $16 million, essentially doubling the size of the Circuit Breaker program. Contact Name: Rep. Nicole LeFavour Phone: 724-0468 STATEMENT OF PURPOSE/FISCAL NOTE H 506