2006 Legislation
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HOUSE BILL NO. 754 – Income tax credit/new plant facilty

HOUSE BILL NO. 754

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Bill Status



H0754...............................................by REVENUE AND TAXATION
INCOME TAX CREDIT - NEW PLANT FACILITIES - Amends existing law to provide
that the jobs credit, additional investment tax credit and a sales tax
rebate shall apply to new plant and building facilities instead of
headquarters or administrative facilities.
                                                                        
03/01    House intro - 1st rdg - to printing
03/02    Rpt prt - to Rev/Tax
03/08    Rpt out - rec d/p - to 2nd rdg
03/09    2nd rdg - to 3rd rdg
03/10    3rd rdg - PASSED - 63-3-4
      AYES -- Anderson, Andrus, Barraclough, Bastian, Bayer, Bedke, Bell,
      Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon,
      Chadderdon, Clark, Collins, Denney, Edmunson, Ellsworth, Eskridge,
      Field(18), Field(23), Garrett, Hart, Henbest, Henderson, Jaquet,
      Kemp, Lake, Loertscher, Martinez, Mathews, McGeachin, McKague,
      Miller, Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence,
      Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sali, Sayler,
      Schaefer, Shepherd(2), Shirley, Skippen, Smith(30), Smith(24),
      Smylie, Snodgrass, Stevenson, Trail, Wills, Mr. Speaker
      NAYS -- Barrett, Harwood, LeFavour
      Absent and excused -- Crow, Deal, Shepherd(8), Wood
    Floor Sponsor - Moyle
    Title apvd - to Senate
03/13    Senate intro - 1st rdg - to Loc Gov
03/22    Rpt out - rec d/p - to 2nd rdg
03/23    2nd rdg - to 3rd rdg
03/28    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett(Clark),
      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
03/29    To enrol
03/30    Rpt enrol - Sp signed
03/31    Pres signed - To Governor
03/31    Governor signed
         Session Law Chapter 314
         Effective: 01/01/06

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 754
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO STATE INCOME TAX CREDITS; AMENDING SECTION 63-4402, IDAHO CODE, TO
  3        PROVIDE A DEFINITION OF "NEW PLANT AND BUILDING FACILITIES," TO REVISE THE
  4        DEFINITION OF "INVESTMENT IN NEW  PLANT,"  TO  REVISE  THE  DEFINITION  OF
  5        "PROJECT  PERIOD,"  TO  REVISE  THE  DEFINITION  OF "PROJECT SITE," AND TO
  6        REVISE THE  DEFINITION  OF  "TAX  INCENTIVE  CRITERIA";  AMENDING  SECTION
  7        63-4403, IDAHO CODE, TO REVISE DATES AND TO DECREASE THE MAXIMUM ALLOWABLE
  8        CREDIT  FOR ANY ONE TAXABLE YEAR; AMENDING SECTION 63-4404, IDAHO CODE, TO
  9        REVISE DATES, TO PROVIDE THAT THE CREDIT ALLOWED SHALL BE RELATED  TO  NEW
 10        PLANT AND BUILDING FACILITIES AND TO MAKE A TECHNICAL CORRECTION; AMENDING
 11        SECTION 63-4405, IDAHO CODE, TO REVISE DATES FOR THE ADDITIONAL INCOME TAX
 12        CREDIT FOR NEW JOBS; AMENDING SECTION 63-4408, IDAHO CODE, TO REVISE DATES
 13        FOR THE SALES TAX REBATE FOR NEW JOBS AND TO PROVIDE THAT THE REBATE SHALL
 14        BE  RELATED  TO  NEW PLANT AND BUILDING FACILITIES; DECLARING AN EMERGENCY
 15        AND PROVIDING RETROACTIVE APPLICATION.
                                                                        
 16    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 17        SECTION 1.  That Section 63-4402, Idaho Code, be, and the same  is  hereby
 18    amended to read as follows:
                                                                        
 19        63-4402.  DEFINITIONS.  (1)  The definitions contained in the Idaho income
 20    tax act, shall apply to this chapter unless modified in this chapter or unless
 21    the context clearly requires another definition.
 22        (2)  As used in this chapter:
 23        (a)  "Commission" means the Idaho state tax commission.
 24        (b)  "Headquarters or administrativeNew  plant  and  building  facilities"
 25        means  facility or facilities, including related parking facilities, where
 26        corporate staff employees are physically employed, and where the  majority
 27        of  the  company's  services  are  handled.  Company services may include:
 28        accounts receivable and payable, accounting, data processing, distribution
 29        management, employee benefit plan, financial  and  securities  accounting,
 30        information  technology, insurance, legal, merchandising, payroll, person-
 31        nel, purchasing/procurement,  planning,  reporting  and  compliance,  tax,
 32        treasury, or other headquarters-related services.
 33        (c)  "Idaho income tax act" means chapter 30, title 63, Idaho Code.
 34        (d)  "Investment  in new plant" means investment in headquarters or admin-
 35        istrative new plant and building facilities that are:
 36             (i)   Qualified investments; or
 37             (ii)  Buildings or structural components of buildings.
 38        (e)  "New employee":
 39             (i)   Means an individual, employed primarily within the project site
 40             by the taxpayer, subject to Idaho income tax withholding  whether  or
 41             not any amounts are required to be withheld, covered for unemployment
 42             insurance  purposes  under  chapter 13, title 72, Idaho Code, and who
 43             was eligible to receive employer provided  coverage  under  a  health
                                                                        
                                           2
                                                                        
  1             benefit  plan as described in section 41-4703, Idaho Code, during the
  2             taxable year. A person shall be deemed to be so employed if such per-
  3             son performs duties on a regular full-time basis.
  4             (ii)  The number of employees employed primarily within  the  project
  5             site  by   the taxpayer, during any taxable year for a taxpayer shall
  6             be the mathematical average of the number of such employees  reported
  7             to the Idaho department of commerce and labor for employment security
  8             purposes  during  the  twelve  (12)  months of the taxable year which
  9             qualified under paragraph (e)(i) of this subsection (2). In the event
 10             the business is in operation for less than the entire  taxable  year,
 11             the  number  of  employees  of the taxpayer for the year shall be the
 12             average number actually employed during the months of operation, pro-
 13             vided that the qualifications of paragraph (e)(i) of this  subsection
 14             (2) are met.
 15             (iii) Existing  employees  of  the taxpayer who obtain new qualifying
 16             positions within the project site and employees  transferred  from  a
 17             related taxpayer or acquired as part of the acquisition of a trade or
 18             business  from  another  taxpayer within the prior twelve (12) months
 19             are not included in this definition unless the new position or trans-
 20             fer creates a net new job in Idaho.
 21        (f)  "Project period" means the period of time beginning at the earlier of
 22        a physical change to the project site  or  the  first  employment  of  new
 23        employees  located in Idaho who are related to the activities at the proj-
 24        ect site, but no earlier than January 1, 20056, and ending when the facil-
 25        ities constituting the project are placed in service, but  no  later  than
 26        December 31, 200910.
 27        (g)  "Project site" means an area or areas at which headquarters and head-
 28        quarters  new  plant  and building facilities are located and at which the
 29        tax incentive criteria have been or will be met and which are either:
 30             (i)   A single geographic area located in this  state  at  which  the
 31             headquarters  or  administrative  new  plant  and building facilities
 32             owned or leased by the taxpayer are located; or
 33             (ii)  One (1) or more geographic  areas  located  in  this  state  if
 34             eighty percent (80%) or more of the investment required by subsection
 35             (2)(j)(i) of this section is made at one (1) of the areas.
 36             (iii) The  project  site must be identified and described to the com-
 37             mission by a taxpayer subject to tax under the Idaho income tax  act,
 38             in the form and manner prescribed by the commission.
 39        (h)  "Qualified investment" shall be defined as in section 63-3029B, Idaho
 40        Code.
 41        (i)  "Recapture period" means:
 42             (i)   In  the  case  of  credits  described  in  sections 63-4403 and
 43             63-4404, Idaho Code, the same period for which a recapture of invest-
 44             ment tax credit under section 63-3029B, Idaho Code, is required; or
 45             (ii)  In the case of credits  described  in  section  63-4405,  Idaho
 46             Code, five (5) years from the date the project period ends.
 47        (j)  "Tax  incentive  criteria" means a taxpayer meeting at a project site
 48        the requirements of subparagraphs (i), and (ii) and (iii)  of  this  para-
 49        graph (j).
 50             (i)   During  the  project  period, making capital investments in new
 51             plant of at least five hundred thousand  dollars  ($500,000)  at  the
 52             project site.
 53             (ii)  During a period of time beginning on January 1, 20056, and end-
 54             ing at the conclusion of the project period:
 55                  1.  Increasing  employment  at  the project site by at least ten
                                                                        
                                           3
                                                                        
  1                  (10) new employees each of whom must earn at least nineteen dol-
  2                  lars and twenty-three cents ($19.23) per hour worked during  the
  3                  taxpayer's taxable year.
  4                       (A)  Earnings  calculated  pursuant to subparagraph (ii) of
  5                       this paragraph  (j) shall include income upon  which  Idaho
  6                       income  tax  withholding is required under section 63-3035,
  7                       Idaho Code, but shall not  include  income  such  as  stock
  8                       options or restricted stock grants.
  9                       (B)  For  purposes  of  determining  whether  the increased
 10                       employment threshold has been met, employment at the  proj-
 11                       ect site shall be determined by calculating the increase of
 12                       such new employees reported to the Idaho department of com-
 13                       merce  and  labor for employment security purposes over the
 14                       employees so reported as of the beginning  of  the  project
 15                       period  or  no  earlier  than January 1, 2005, whichever is
 16                       larger; and
 17                  2.  Employment  increases  above  the  ten  (10)  new  employees
 18                  described in subparagraph (ii)1. of this paragraph  (j)  at  the
 19                  project  site shall on average earn at least fifteen dollars and
 20                  fifty cents ($15.50) per hour worked during the taxpayer's  tax-
 21                  able  year.  Calculation of the group average earnings shall not
 22                  include amounts paid to any employee earning  more  than  forty-
 23                  eight  dollars  and  eight  cents ($48.08) per hour or less than
 24                  twelve dollars ($12.00) per hour worked  during  the  taxpayer's
 25                  taxable  year.  The denominator of this calculation shall be the
 26                  number of new job positions filled that  pay  less  than  forty-
 27                  eight  dollars  and  eight cents ($48.08) per hour worked during
 28                  the taxpayer's taxable year.
 29                  3.  Earnings calculated pursuant to subparagraph  (ii)  of  this
 30                  paragraph  (j)  shall include income upon which Idaho income tax
 31                  withholding is required under section 63-3035, Idaho  Code,  but
 32                  shall  not  include  income  such as stock options or restricted
 33                  stock grants.
 34                  4.  For purposes of determining whether the increased employment
 35                  threshold has been met, employment at the project site shall  be
 36                  determined  by  calculating  the  increase of such new employees
 37                  reported to the Idaho  department  of  commerce  and  labor  for
 38                  employment  security  purposes over the employees so reported as
 39                  of the beginning of the project period or no earlier than  Janu-
 40                  ary 1, 2006, whichever is larger; and
 41                  5.  Maintaining  net  increased  employment in Idaho required by
 42                  subparagraph (ii)1. of this paragraph (j) during  the  remainder
 43                  of the project period.
 44             (iii) No  person meets the tax incentive criteria unless the ratio of
 45             new employees qualified under subparagraph (ii) of  this  section  to
 46             investment  in  new  plant  under  subparagraph  (i)  of this section
 47             exceeds one (1) employee for each fifty thousand dollars ($50,000) of
 48             investment in new plant.
 49        (k)  "Taxpayer," for purposes of paragraphs (j) and (e) of this subsection
 50        (2), means either:
 51             (i)   A single taxpayer; or
 52             (ii)  In the context of a unitary  group  filing  a  combined  report
 53             under  section 63-3027(t), Idaho Code, all members of a unitary group
 54             includable in a combined report for the tax years in which the credit
 55             provided for by this chapter may be claimed. For all other  purposes,
                                                                        
                                           4
                                                                        
  1             the  terms of section 63-3009, Idaho Code, and section 63-3027(t)(1),
  2             Idaho Code, apply to the meaning of "taxpayer."
                                                                        
  3        SECTION 2.  That Section 63-4403, Idaho Code, be, and the same  is  hereby
  4    amended to read as follows:
                                                                        
  5        63-4403.  ADDITIONAL  INCOME  TAX  CREDIT  FOR CAPITAL INVESTMENT. (1) For
  6    taxable years beginning on or after January 1, 20056, and before December  31,
  7    200910,  and  subject  to  the limitations of this chapter, a taxpayer who has
  8    certified that the tax incentive criteria will be met within  a  project  site
  9    during  a  project period shall, in regard to qualified investments made after
 10    the beginning of the project period and before December 31, 200910, in lieu of
 11    the investment tax credit provided in section 63-3029B, Idaho Code, be allowed
 12    a nonrefundable credit against taxes imposed by sections 63-3024, 63-3025  and
 13    63-3025A,  Idaho  Code, in the amount of three and seventy-five one hundredths
 14    percent (3.75%) of the amount of qualified investment made  during  a  taxable
 15    year, wherever located within this state.
 16        (2)  The  credit  allowed  by  this section shall not exceed sixty-two and
 17    five-tenths percent (62.5%) of the tax liability of the taxpayer.
 18        (3)  The credit allowed by this section shall not exceed  one million  two
 19    seven  hundred  fifty  thousand  dollars  ($1,2750,000) in any one (1) taxable
 20    year.
                                                                        
 21        SECTION 3.  That Section 63-4404, Idaho Code, be, and the same  is  hereby
 22    amended to read as follows:
                                                                        
 23        63-4404.  REAL  PROPERTY  IMPROVEMENT  TAX  CREDIT.  (1) For taxable years
 24    beginning on or after January 1, 20056, and before December 31,  200910,  sub-
 25    ject to the limitations of this chapter, a taxpayer who has certified that the
 26    tax  incentive  criteria  will  be  met within a project site during a project
 27    period shall be allowed a nonrefundable credit against taxes imposed  by  sec-
 28    tions  63-3024,  63-3025  and  63-3025A, Idaho Code, in the amount of  two and
 29    five-tenths percent (2.5%) of the investment in new plant  which  is  incurred
 30    during  the project period applicable to the project site in which the invest-
 31    ment is made.
 32        (2)  The credit allowed by this section shall not exceed  one hundred  and
 33    twenty-five thousand dollars ($125,000) in any one (1) taxable year.
 34        (3)  No  credit is allowable under this section for a qualified investment
 35    in regard to which a credit under section 63-4403, Idaho Code, is available.
 36        (4)  The credit allowed by this section is limited to buildings and struc-
 37    tural components of buildings related to headquarters  or  administrative  new
 38    plant and building facilities.
                                                                        
 39        SECTION  4.  That  Section 63-4405, Idaho Code, be, and the same is hereby
 40    amended to read as follows:
                                                                        
 41        63-4405.  ADDITIONAL INCOME TAX CREDIT FOR NEW JOBS. (1)  Subject  to  the
 42    limitations  of  this chapter, for taxable years beginning on or after January
 43    1, 20056, and before December 31, 200910, a taxpayer who  has  certified  that
 44    the  tax incentive criteria will be met within a project site during a project
 45    period shall, for the number of new employees earning  more  than  a  rate  of
 46    twenty-four  dollars  and  four cents ($24.04) per hour worked, in lieu of the
 47    credit amount in subsection (2)(a) of section 63-3029F, Idaho Code, be allowed
 48    the credit provided by this section.  The  number  of  new  employees  is  the
 49    increase  in  the  number  of  employees for the current taxable year over the
                                                                        
                                           5
                                                                        
  1    greater of the following:
  2        (a)  The number of employees for the prior taxable year; or
  3        (b)  The average of the number of employees for the three (3)  prior  tax-
  4        able years.
  5        (2)  The credit provided by this section shall be:
  6        (a)  One  thousand  five  hundred  dollars  ($1,500) for each new employee
  7        whose annual salary during the taxable year for which the credit is earned
  8        is greater than twenty-four dollars  and  four  cents  ($24.04)  per  hour
  9        worked  but equal to or less than an  average rate of twenty-eight dollars
 10        and eighty-five cents ($28.85) per hour worked;
 11        (b)  Two thousand dollars ($2,000) for each new employee whose annual sal-
 12        ary during the taxable year for which the credit is earned is greater than
 13        an average rate of twenty-eight dollars and eighty-five cents ($28.85) per
 14        hour worked but equal to or less than an average rate of  thirty-six  dol-
 15        lars and six cents ($36.06) per hour worked;
 16        (c)  Two  thousand  five  hundred  dollars  ($2,500) for each new employee
 17        whose annual salary during the taxable year for which the credit is earned
 18        is greater than an average  rate  of  thirty-six  dollars  and  six  cents
 19        ($36.06) per hour worked but equal to or less than an average rate of for-
 20        ty-three dollars and twenty-seven cents ($43.27) per hour worked;
 21        (d)  Three  thousand  dollars  ($3,000) for each new employee whose annual
 22        salary during the taxable year for which the credit is earned  is  greater
 23        than  an  average  rate  of  forty-three  dollars  and  twenty-seven cents
 24        ($43.27) per hour worked.
 25        (3)  The credit allowed by subsection (1) of this section shall apply only
 26    to employment primarily within the project site. No  credit  shall  be  earned
 27    unless  such  employee shall have performed such duties for the taxpayer for a
 28    minimum of nine (9) months during the taxable year for  which  the  credit  is
 29    claimed.
 30        (4)  The  credit  allowed  by  this section shall not exceed sixty-two and
 31    five-tenths percent (62.5%) of the tax liability of the taxpayer.
 32        (5)  Employees transferred  from  a  related  taxpayer  or  acquired  from
 33    another  taxpayer within the prior twelve (12) months shall not be included in
 34    the computation of the credit unless the transfer creates a  net  new  job  in
 35    Idaho.
                                                                        
 36        SECTION  5.  That  Section 63-4408, Idaho Code, be, and the same is hereby
 37    amended to read as follows:
                                                                        
 38        63-4408.  SALES AND USE TAX INCENTIVES -- REBATES --  RECAPTURE.  (1)  For
 39    calendar  years  beginning  on  January  1,  20056, and ending on December 31,
 40    200910, subject to the limitations of this chapter, a taxpayer who has  certi-
 41    fied that the tax incentive criteria will be met within the project site shall
 42    be  entitled to receive a rebate of twenty-five percent (25%) of all sales and
 43    use taxes imposed by chapter 36, title 63, Idaho Code, and that  the  taxpayer
 44    or  its  contractors  actually  paid  in  regard  to any property constructed,
 45    located or installed within the project site during  the  project  period  for
 46    that site.
 47        (2)  Upon filing of a written refund claim by the taxpayer entitled to the
 48    rebate,  and  subject to such reasonable documentation and verification as the
 49    commission may require, the rebate shall be paid by the commission as a refund
 50    allowable under section 63-3626, Idaho Code. A claim  for  rebate  under  this
 51    section  must  be  filed  on or before the last day of the third calendar year
 52    following the year in which the taxes sought to be rebated were  paid  or  the
 53    right to the rebate is lost.
                                                                        
                                           6
                                                                        
  1        (3)  Any rebate paid shall be subject to recapture by the commission:
  2        (a)  At  one  hundred  percent  (100%) in the event that the tax incentive
  3        criteria are not met at the project site during the project period, or
  4        (b)  In the event that the property is not used, stored or otherwise  con-
  5        sumed  within the project site for a period of sixty (60) consecutive full
  6        months after the property was placed in service, or
  7        (c)  In the event that the employment required in  section  63-4402(2)(j),
  8        Idaho  Code, is not maintained for sixty (60) consecutive full months from
  9        the date the project period ends.
 10        (d)  Any recapture required by subsection (3)(b) or (3)(c) of this section
 11        shall  be  in  the  same  proportion as an amount of credit required to be
 12        recaptured under section 63-3029B, Idaho Code.
 13        (4)  Any recapture amount due under this section shall be a deficiency  in
 14    tax  for the period in which the disqualification first occurs for purposes of
 15    section 63-3629, Idaho Code, and may be enforced and collected in  the  manner
 16    provided  by  the  Idaho  sales tax act, provided however, that in lieu of the
 17    provisions of section 63-3633, Idaho Code, the period of time within which the
 18    commission may issue a notice under section 63-3629, Idaho Code, in regard  to
 19    an amount subject to recapture, shall be the later of five (5) years after the
 20    end  of the taxable year, for income tax purposes, in which the project period
 21    ends.
 22        (5)  The rebate allowed by this section is limited to sales and use  taxes
 23    actually  paid by the taxpayer or its contractors for taxable property related
 24    to headquarters or administrative new plant and building facilities.
                                                                        
 25        SECTION 6.  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 / Fiscal Impact



                       STATEMENT OF PURPOSE

                            RS 16112C1

This legislation revises the Idaho Small Employer Incentive Act
by expanding eligible projects and replacing the existing
employee-capital expenditure ratio for investment over $500,000.
It also requires that all additional employees average $15.50 an
hour plus benefits using only wages ranging from $12.00 an hour
to $48.08 an hour to determine the average.



                           FISCAL NOTE


                                             Impact on General Fund  
                                              New       New      New     Net   
For Fiscal Year 2007-              New Rev.  Local     State    Costs   Impact   
If 10 new employees @$40,000      $87,561  $15,776  $71,785  $17,188   $54,597   

                                             Impact on General Fund
                                             New       New     New      New    
For Life of Tax Credits-          New Rev.  Local     State   Costs    Impact   
If 10 new employees @$40,000     $827,060  $289,726 $537,334 $91,250  $446,084   
     





Contact
Name:  Rep. Mike Moyle 
Phone: (208) 332-1000
       Roger Madsen, Idaho Commerce & Labor
       Bob Fick, Idaho Commerce & Labor
Phone: (208) 332-3570


STATEMENT OF PURPOSE/FISCAL NOTE                                           H 754