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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
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006IN 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 26corporate staffemployees are physically employed, and where the majority27of the company's services are handled. Company services may include:28accounts receivable and payable, accounting, data processing, distribution29management, employee benefit plan, financial and securities accounting,30information technology, insurance, legal, merchandising, payroll, person-31nel, purchasing/procurement, planning, reporting and compliance, tax,32treasury, 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 inheadquarters or admin-35istrativenew 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 whichheadquarters and head-28quartersnew 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 31headquarters or administrativenew 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) of5this paragraph (j) shall include income upon which Idaho6income tax withholding is required under section 63-3035,7Idaho Code, but shall not include income such as stock8options or restricted stock grants.9(B) For purposes of determining whether the increased10employment threshold has been met, employment at the proj-11ect site shall be determined by calculating the increase of12such new employees reported to the Idaho department of com-13merce and labor for employment security purposes over the14employees so reported as of the beginning of the project15period or no earlier than January 1, 2005, whichever is16larger; and17 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 of45new employees qualified under subparagraph (ii) of this section to46investment in new plant under subparagraph (i) of this section47exceeds one (1) employee for each fifty thousand dollars ($50,000) of48investment 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 exceedone million two19 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 hundredand33 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 toheadquarters or administrativenew 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 toheadquarters or administrativenew 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 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