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H0442aa........................................................by JONES (9)
Requested by: Idaho Society of
Certified Public Accountants
INCOME TAX - Amends existing law to clarify circumstances in which an Idaho
taxpayer is entitled to an Idaho income tax credit for income taxes paid to
other states.
01/12 House intro - 1st rdg - to printing
01/12 Rpt prt - to Rev/Tax
01/15 Rpt out - to Gen Ord
01/21 Rpt out amen - to engros
01/22 Rpt engros - 1st rdg - to 2nd rdg as amen
01/23 2nd rdg - to 3rd rdg as amen
01/26 3rd rdg as amen - PASSED - 69-0-1
AYES -- Alexander, Alltus, Barraclough, Barrett, Bell, Bieter,
Bivens, Black(15), Black(23), Boe, Bruneel, Callister, Campbell,
Chase, Clark, Crane, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13),
Field(20), Gagner, Geddes, Gould, Hadley, Hansen, Henbest, Hornbeck,
Jaquet, Jones(22), Jones(20), Judd, Kellogg, Kempton, Kendell,
Kjellander, Kunz, Lake, Linford, Loertscher, Mader, McKague, Meyer,
Miller, Mortensen, Newcomb, Pischner, Pomeroy, Reynolds, Richman,
Ridinger, Robison, Sali, Schaefer, Stevenson, Stoicheff, Stone,
Stubbs, Taylor, Tilman, Tippets, Trail, Watson, Wheeler, Wood,
Zimmermann, Mr Speaker
NAYS -- None
Absent and excused -- Jones(9)
Floor Sponsor - Crow
Title apvd - to Senate
01/27 Senate intro - 1st rdg as amen - to Loc Gov
02/03 Rpt out - rec d/p - to 2nd rdg as amen
02/04 2nd rdg - to 3rd rdg as amen
02/05 3rd rdg as amen - PASSED - 32-0-3
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hansen,
Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry, Richardson,
Riggs, Risch, Sandy, Schroeder, Sorensen, Thorne, Twiggs, Wheeler,
Whitworth
NAYS--None
Absent and excused--Hawkins, Stennett, Sweeney
Floor Sponsor - Ipsen
Title apvd - to House
02/06 To enrol
02/09 Rpt enrol - Sp signed
02/10 Pres signed
02/11 To Governor
02/11 Governor signed
Session Law Chapter 10
Effective: 01/01/98
H0442|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 442, As Amended BY JONES (9) Requested by: Idaho Society of Certified Public Accountants 1 AN ACT 2 RELATING TO INCOME TAX CREDITS FOR INCOME TAXES PAID ANOTHER STATE; AMENDING 3 SECTION 63-3029, IDAHO CODE, TO CLARIFY CIRCUMSTANCES IN WHICH AN IDAHO 4 TAXPAYER IS ENTITLED TO AN IDAHO INCOME TAX CREDIT FOR INCOME TAXES PAID 5 TO OTHER STATES; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICA- 6 TION. 7 Be It Enacted by the Legislature of the State of Idaho: 8 SECTION 1. That Section 63-3029, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 63-3029. CREDIT FOR INCOME TAXES PAID ANOTHER STATEOR TERRITORY11.(a) Whenever a resident individual has become liable for income12tax to another state upon his taxable income, or any part thereof, earned13while domiciled in this state, which income is derived from sources without14this state and subject to taxation under this chapter, the amount of income15tax payable by him under this chapter shall be credited with the income tax so16payable by him to such other state or territory, and shall also be credited17with the income tax, or any franchise or excise tax measured by income, pay-18able to such other state or territory by a subchapter S corporation of which19the individual is a shareholder (to the extent of the individual's pro rata20share of the ownership of the subchapter S corporation, as allocated in the21case of partial year ownership on the same basis as allocated pursuant to the22Internal Revenue Code). "Income tax to another state" includes only a tax23imposed by one of the United States, a possession of the United States, a24political subdivision of any of the foregoing, or by the District of Columbia.25The credit granted shall be limited to the proportion of the tax computed26under this chapter, but before the allowance of this credit, which the27adjusted gross income from such other state or territory bears to total28adjusted gross income; provided, however, that such credit shall not be in29excess of the actual tax payable to such other state or territory and that30such adjusted gross income shall reflect additions and subtractions required31by this act.(1) A resident individual shall be allowed a credit 32 against the tax otherwise due under this chapter for the amount of any income 33 tax imposed on the individual, an S corporation, partnership, limited liabil- 34 ity company, or trust of which the individual is a shareholder, partner, mem- 35 ber, or beneficiary (to the extent attributable to the individual as a result 36 of the individual's share of the S corporation's, partnership's, limited lia- 37 bility company's or trust's taxable income in another state), for the taxable 38 year by another state on income derived from sources therein while domiciled 39 in Idaho and that is also subject to tax under this chapter. 40 (2) For purposes of this section, "state" shall include any state of the 41 United States, the District of Columbia, or any possession or territory of the 42 United States. 43 (3) The credit provided under this section shall not exceed the propor- 2 1 tion of the tax otherwise due under this chapter that the amount of the 2 adjusted gross income of the taxpayer derived from sources in the other state 3 as modified by this chapter bears to the adjusted gross income of the taxpayer 4 as modified by this chapter. This limitation applies to all individuals 5 whether the tax paid to the other state is paid by the individual or by an S 6 corporation, partnership, limited liability company, or trust. Further, the 7 credit shall not exceed the tax paid to the other state. 8 (4) To substantiate the credit allowed under this section, the state tax 9 commission may require a copy of any receipt showing payment of income taxes 10 to the other state or a copy of any return or returns filed with such other 11 state, or both. 12 (5) No credit allowed under this section shall be applied in calculating 13 tax due under this chapter if the tax upon which the credit is based has been 14 claimed as a deduction, unless the tax is restored to income on the Idaho 15 return. 16 (b6 ) The credit shall not be allowed if such 17 other state allows a credit against taxes imposed by such state for taxes paid 18 or payable under this act. 19(c) To substantiate the credit allowed under this section, the20state tax commission may require a copy of any receipt showing payment of21income taxes to another state or a copy of any return or returns filed with22such other state or territory, or both.23 (7) For purposes of this section an income tax imposed on an S cor- 24 poration, partnership, limited liability company, or trust includes: 25 (a) A direct tax imposed upon the income for the taxable year of the S 26 corporation, partnership, limited liability company or trust; and 27 (b) An excise or franchise tax that is measured by the income for the 28 taxable year of the S corporation, partnership, limited liability company, 29 or trust. 30 (8) For purposes of subsection (7) of this section, an excise or fran- 31 chise tax is "measured by income" only if the statute imposing the excise or 32 franchise tax provides that the base for the tax: 33 (a) Includes: 34 (i) Revenue from sales; 35 (ii) Revenue from services rendered; and 36 (iii) Income from investments; and 37 (b) Permits a deduction for the cost of goods sold and the cost of ser- 38 vices rendered. 39 (d9 ) A part-year resident is entitled to a 40 credit, determined in the manner prescribed by the state tax commission, for 41 income taxes paid to another state, as defined in subsection (a) of this42section,in regard to income which is: 43 (1a ) Earned while the taxpayer is domiciled in 44 this state; and 45 (2b ) Subject to tax in such other state. 46 (10) If the interest in an S corporation, partnership, or limited 47 liability company was held for less than the entire taxable year, the share 48 attributable to the individual shall be allocated in the same manner as for 49 federal purposes. 50 SECTION 2. An emergency existing therefor, which emergency is hereby 51 declared to exist, this act shall be in full force and effect on and after its 52 passage and approval, and retroactively to January 1, 1998.
STATEMENT OF PURPOSE
RS 07408
This legislation clarifies the circumstances in which an Idaho taxpayer is entitled to an Idaho income tax
credit for income taxes paid to other states. Currently such credits are afforded to individuals and
Subchapter S corporations. This legislation provides the identical tax treatment to partnerships, limited
liability companies and trusts which, to be consistent, ought to be treated the same as individuals and
Subchapter S corporations. This legislation makes no other substantive changes but merely clarifies
existing law.
FISCAL NOTE
Idaho income tax receipts will be reduced by approximately $25,O00 due primarily to the inclusion of
limited liability companies. LLC's are relatively new and are being used increasingly instead of
Subchapter S corporations. In most respects LLC's and Subchapter S corporations are treated the same
for tax purposes. Correcting this inconsistency will afford the credit to taxpayers who
do not now receive it.
CONTACT:
Name:Melissa Nelson, Executive Director
Idaho Society of Certified Public Accountants
Phone: 208-344-6261
Name: Ken McClure
Givens Pursley & Huntley
Phone: 208-388-1200
STATEMENT OF PURPOSE/FISCAL NOTE
H 442