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H0317aaS............................................by REVENUE AND TAXATION
INCOME TAX CREDIT - CAPITAL INVESTMENT - Amends existing law to provide
that for qualified investments placed into service in taxable years
beginning in 2003 and thereafter, the taxpayer may elect, in lieu of the
credit provided by this section, a two year exemption from all taxes on
personal property on the qualified investment; to provide procedures; to
provide for cooperation between the State Tax Commission and the county
assessors; and to provide penalties.
03/03 House intro - 1st rdg - to printing
03/04 Rpt prt - to Rev/Tax
03/13 Rpt out - rec d/p - to 2nd rdg
03/14 2nd rdg - to 3rd rdg
03/17 3rd rdg - PASSED - 54-16-0
AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Black,
Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow,
Cuddy, Deal, Eberle, Edmunson, Ellsworth, Eskridge, Field(18),
Field(23), Gagner, Garrett, Harwood, Jaquet, Jones, Kellogg, Lake,
Langford, McKague, Meyer, Miller, Moyle, Nielsen, Raybould, Ring,
Rydalch, Sali, Schaefer, Shepherd, Shirley, Skippen, Smylie,
Snodgrass, Stevenson, Tilman, Trail, Wills, Wood, Mr. Speaker
NAYS -- Bieter, Douglas, Henbest, Kulczyk, Langhorst, Martinez,
McGeachin, Mitchell, Naccarato, Ridinger, Ringo, Roberts, Robison,
Sayler, Smith(30), Smith(24)
Absent and excused -- None
Floor Sponsor - Mr. Speaker
Title apvd - to Senate
03/19 Senate intro - 1st rdg - to Loc Gov
03/25 Rpt out - rec d/p - to 2nd rdg
03/26 2nd rdg - to 3rd rdg
04/22 To 14th Ord
04/25 Rpt out amen - to 1st rdg as amen
1st rdg - to 2nd rdg as amen
Rls susp - PASSED - 23-11-1
AYES -- Andreason, Bailey, Brandt, Bunderson, Cameron, Compton,
Darrington, Davis, Gannon, Geddes, Goedde, Hill, Ingram, Little,
Lodge, McKenzie, Noh, Pearce, Richardson, Sorensen, Stegner, Sweet,
Williams
NAYS -- Burkett, Calabretta, Kennedy, Keough, Malepeai, Marley,
McWilliams, Noble, Schroeder, Stennett, Werk
Absent and excused -- Burtenshaw
Floor Sponsor - McKenzie
Title apvd - to House
04/28 House did not concur in Senate amens
Filed w/Office of the Chief Clerk
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 317
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO THE INCOME TAX CREDIT FOR CAPITAL INVESTMENT; AMENDING SECTION
3 63-3029B, IDAHO CODE, TO PROVIDE THAT FOR QUALIFIED INVESTMENTS PLACED IN
4 SERVICE IN TAXABLE YEARS BEGINNING IN 2003 AND THEREAFTER, THE TAXPAYER
5 MAY ELECT, IN LIEU OF THE INCOME TAX CREDIT PROVIDED FOR CAPITAL INVEST-
6 MENT, A TWO YEAR EXEMPTION FROM ALL TAXES ON PERSONAL PROPERTY ON THE
7 QUALIFIED INVESTMENT, TO PROVIDE PROCEDURES, TO PROVIDE FOR COOPERATION
8 BETWEEN THE STATE TAX COMMISSION AND COUNTY ASSESSORS AND TO PROVIDE PEN-
9 ALTIES; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Section 63-3029B, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
14 of the taxpayer there shall be allowed, subject to the applicable limitations
15 provided herein as a credit against the income tax imposed by chapter 30,
16 title 63, Idaho Code, an amount equal to the sum of:
17 (a) The tax credit carryovers; and
18 (b) The tax credit for the taxable year.
19 (2) The maximum allowable amount of the credit for the current taxable
20 year shall be three percent (3%) of the amount of qualified investments made
21 during the taxable year.
22 (3) As used in this section "qualified investment" means certain depre-
23 ciable property which:
24 (a) (i) Is eligible for the federal investment tax credit, as defined in
25 sections 46(c) and 48 of the Internal Revenue Code subject to the
26 limitations provided for certain regulated companies in section 46(f)
27 of the Internal Revenue Code and is not a motor vehicle under eight
28 thousand (8,000) pounds gross weight; or
29 (ii) Is qualified broadband equipment as defined in section 63-3029I,
30 Idaho Code; and
31 (b) Is acquired, constructed, reconstructed, erected or placed into ser-
32 vice after December 31, 1981; and
33 (c) Has a situs in Idaho.
34 (4) (a) For qualified investments placed in service in taxable years
35 beginning in 2003 and thereafter, the taxpayer may elect, in lieu of the
36 credit provided by this section, a two (2) year exemption from all taxes
37 on personal property on the qualified investment. The exemption from per-
38 sonal property tax shall apply to the year the election is filed as pro-
39 vided in this section and the immediately following year. The election
40 provided by this paragraph is available only to a taxpayer whose Idaho
41 taxable income in the second preceding taxable year in which the invest-
42 ment is placed in service is negative.
43 (b) The election shall be made in the form prescribed by the state tax
2
1 commission and shall include a specific description and location of all
2 qualified investments placed into service and located in the jurisdiction
3 of the assessing authority, a designation of the specific assets for which
4 the exemption is claimed, and such other information as the state tax com-
5 mission may require. The election must be made by including the election
6 form with the listing of personal property required by section 63-302,
7 Idaho Code, or, in the case of operating property assessed under chapter
8 4, title 63, Idaho Code, with the operator's statement required by section
9 63-404, Idaho Code, for the calendar year immediately following the tax-
10 able year in which the property was placed in service. Once made the
11 election is irrevocable. If no election is made, the election is not
12 otherwise available. A copy of the election form must also be attached to
13 the original income tax return due for the taxable year in which the claim
14 was made.
15 (c) The state tax commission and the various county assessors are autho-
16 rized to exchange information as necessary to properly coordinate the
17 exemption provided in this subsection.
18 (d) In the event that an investment in regard to which the election under
19 this section was made is determined by the state tax commission to not be
20 a qualified investment or ceases to qualify during the recapture period,
21 the taxpayer shall be subject to a penalty equal to the amount of the
22 claimed investment times the average urban property tax levy of the state
23 as determined by the state tax commission times two (2).
24 (5) Notwithstanding the provisions of subsections (1) and (2) of this
25 section, the amount of the credit allowed shall not exceed fifty percent (50%)
26 of the tax liability of the taxpayer. The tax liability of the taxpayer shall
27 be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
28 (56) If the sum of credit carryovers from the credit allowed by subsec-
29 tion (2) of this section and the amount of credit for the taxable year from
30 the credit allowed by subsection (2) of this section exceed the limitation
31 imposed by subsection (45) of this section for the current taxable year, the
32 excess attributable to the current taxable year's credit shall be an invest-
33 ment credit carryover to the fourteen (14) succeeding taxable years. In the
34 case of a group of corporations filing a combined report under section
35 63-3027, Idaho Code, or sections 63-3027B through 63-3027E, Idaho Code, credit
36 earned by one (1) member of the group but not used by that member may be used
37 by another member of the group, subject to the provisions of subsection (45)
38 of this section, instead of carried over. The entire amount of unused credit
39 shall be carried forward to the earliest of the succeeding years, wherein the
40 oldest available unused credit shall be used first, so long as the qualified
41 investment property for which the unused credit was granted still maintains
42 Idaho situs. For a combined group of corporations, credit carried forward may
43 be claimed by any member of the group unless the member who earned the credit
44 is no longer included in the combined group.
45 (67) Any recapture of the credit allowed by subsection (2) of this sec-
46 tion on property disposed of or ceasing to qualify, prior to the close of the
47 recapture period, shall be determined according to the applicable recapture
48 provisions of the Internal Revenue Code. In the case of a unitary group of
49 corporations, the increase in tax due to the recapture of investment tax
50 credit must be reported by the member of the group who earned the credit
51 regardless of which member claimed the credit against tax.
52 (78) For the purpose of determining whether property placed in service is
53 a "qualified investment" as defined in subsection (3) of this section, the
54 provisions of section 49 of the Internal Revenue Code shall be disregarded.
55 (89) For purposes of this section, property has a situs in Idaho during a
3
1 taxable year if it is used in Idaho at any time during the taxable year. Prop-
2 erty not used in Idaho during a taxable year does not have a situs in Idaho in
3 the taxable year during which the property is not used in Idaho or in any sub-
4 sequent taxable year. No credit or carryover of credit is permitted under this
5 section if the credit or carryover relates to property that does not have a
6 situs in Idaho during the taxable year for which the credit or carryover is
7 claimed. The Idaho situs of property must be established by records maintained
8 by the taxpayer which are created reasonably contemporaneously with the use of
9 the property.
10 (910) In the case of property used both in and outside Idaho, the tax-
11 payer, electing to claim the credit provided in this section, must elect to
12 compute the qualified investment in property with a situs in Idaho for all
13 such investments first qualifying during that year in one (1), but only one
14 (1), of the following ways:
15 (a) The amount of each qualified investment in a specific asset shall be
16 separately computed based on the percentage of the actual use of the prop-
17 erty in Idaho by using a measure of the use, such as total miles or total
18 machine hours, that most accurately reflects the beneficial use during the
19 taxable year in which it is first acquired, constructed, reconstructed,
20 erected or placed into service; provided, that the asset is placed in ser-
21 vice more than ninety (90) days before the end of the taxable year. In the
22 case of assets acquired, constructed, reconstructed, erected or placed
23 into service within ninety (90) days prior to the end of the taxable year
24 in which the investment first qualifies, the measure of the use of that
25 asset within Idaho for that year shall be based upon the percentage of use
26 in Idaho during the first ninety (90) days of use of the asset;
27 (b) The investment in qualified property used both inside and outside
28 Idaho during the taxable year in which it is first acquired, constructed,
29 reconstructed, erected or placed into service shall be multiplied by the
30 percent of the investment that would be included in the numerator of the
31 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
32 for the same year.
33 (101) Only for the purposes of subsections (3)(a) and (78) of this sec-
34 tion, references to sections of the "Internal Revenue Code" mean the sections
35 referred to as they existed in the Internal Revenue Code of 1986 prior to
36 November 5, 1990.
37 SECTION 2. An emergency existing therefor, which emergency is hereby
38 declared to exist, this act shall be in full force and effect on and after its
39 passage and approval, and retroactively to January 1, 2003.
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
Moved by Bunderson
Seconded by Davis
IN THE SENATE
SENATE AMENDMENT TO H.B. NO. 317
1 AMENDMENT TO THE BILL
2 On page 3 of the printed bill, delete lines 37 through 39 and insert:
3 "SECTION 2. That Section 63-2501, Idaho Code, be, and the same is hereby
4 amended to read as follows:
5 63-2501. PURPOSE. It is the intent and purpose of this act chapter to
6 levy a tax on all cigarettes sold, used, or consumed, handled or distributed
7 within this state, other than certain cigarettes sold on Indian reservations
8 for consumption by tribal members, and to precollect the tax from the person
9 who first sells, uses, consumes receives, handles, or distributes the ciga-
10 rettes. It is also the intent of this chapter to eliminate unfair competitive
11 business advantages now enjoyed by Indian tobacco retailers in direct competi-
12 tion with non-Indian businesses. This advantage arises because the legislature
13 of the state of Idaho in the past has not exercised its full constitutional
14 authority to require that Indian enterprises collect and remit state cigarette
15 taxes in regard to sales made to non-Indian customers. The legislature hereby
16 intends to exercise the full extent of the state's constitutional power to
17 require that cigarettes sold to non-Indian purchasers on an Indian reservation
18 must have an Idaho cigarette tax stamp affixed, even if sold by an Indian or
19 an Indian enterprise.
20 SECTION 3. That Section 63-2506, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 63-2506. IMPOSITION OF TAX. (1) A tax upon the purchase, storage, ciga-
23 rettes purchased at retail for use, or consumption, handling, distribution or
24 wholesale sale of cigarettes is hereby imposed at the rate of one and four-
25 tenths cent (1.4) for each cigarette or twenty-eight cents (28) per package
26 of twenty (20) cigarettes, which tax shall be precollected and paid by the
27 wholesaler, and collected by remitted to the state tax commission. Five cents
28 (5) of the tax collected per package of twenty (20) cigarettes shall be sub-
29 ject to appropriation to the public school income fund to be utilized to
30 facilitate and provide substance abuse programs in the public school system.
31 Five cents (5) of the tax collected per package of twenty (20) cigarettes
32 shall be subject to appropriation to the department of juvenile corrections
33 for distribution to the counties to be utilized for county juvenile probation
34 services. Appropriated funds shall be distributed quarterly to the counties
35 based upon the percentage the population of the county bears to the population
36 of the state as a whole. The remaining moneys collected and those moneys not
37 appropriated under the provisions of this section shall be distributed as
38 specified in section 63-2520, Idaho Code.
39 (2) The tax imposed by this section shall not apply to cigarettes sold by
40 a wholesaler pursuant to an authorization by the commission as provided by
2
1 this section to an Indian retailer solely for resale within the boundaries of
2 an Indian reservation located in Idaho to members of the reservation's govern-
3 ing tribe. Any cigarettes that are nontaxable under this subsection are
4 required to have affixed the cigarette stamps required by this chapter.
5 (3) Wholesalers making sales of cigarettes to Indian retailers located on
6 an Indian reservation located in Idaho may apply to the commission for an
7 authorization to deduct on its cigarette tax return cigarettes sold by the
8 Indian retailers to members of the reservation's governing tribe. The claim
9 for any such deduction must be made by the wholesaler and approved by the com-
10 mission before the wholesaler sells the cigarettes to a retailer. If not so
11 claimed, the deduction shall be lost.
12 (4) The total number of deductible cigarettes allowed by the commission
13 to wholesalers claiming a deduction under subsection (3) of this section for
14 any reporting period shall not exceed the allocated number of cigarettes for
15 the federally recognized Indian reservation in Idaho to which the cigarettes
16 are destined. The allocated number of cigarettes for each federally recognized
17 Indian reservation in Idaho shall be determined by the commission by multiply-
18 ing the tribal service area population as determined by the bureau of Indian
19 affairs of the United States department of interior by the greater of:
20 (a) The national cigarette consumption per capita average, as compiled
21 for the most recently completed calendar or fiscal year by the U.S.
22 department of health and human services or other reliable source of data
23 as determined by the state tax commission; or
24 (b) The cigarette consumption per capita average for that tribe as com-
25 piled for the most recently completed calendar year.
26 (5) A wholesaler may seek, and the commission may allow, a larger number
27 of deductible cigarettes upon documentary proof satisfactory to the commission
28 that actual sales to members of a reservation's governing tribe exceeded the
29 amounts computed in accordance with subsection (4) of this section, provided
30 that the deduction may not exceed the amount of the documented actual sales.
31 (6) No deduction shall be allowed to a wholesaler, unless the wholesaler
32 certifies to the commission that the economic benefit of the deduction has
33 been passed on to the retailers to whom the sales were made. The economic ben-
34 efit of the deduction shall be presumed to have been passed on to the Indian
35 retailer when the average price of cigarettes sold by the wholesaler to all
36 retailers other than Indian retailers during the reporting period exceeds, by
37 an amount equal to the tax imposed in this chapter, the average price of ciga-
38 rettes sold to Indian retailers during the same reporting period.
39 (7) The following definitions apply to terms used in this section:
40 (a) "Indian reservation" means lands in the state of Idaho lawfully
41 reserved, as of the date of the cigarette sale, for a federally recognized
42 Indian tribe by treaty with the United States, by federal statute, execu-
43 tive order or regulation.
44 (b) "Indian retailer" means only a business or enterprise which is wholly
45 owned and operated by an Idaho Indian tribe identified in section 67-4001,
46 Idaho Code, or a business or enterprise which is wholly owned and operated
47 by one (1) or more members of that tribe.
48 (c) "Reporting period" means the period for which a cigarette tax return
49 is due under section 63-2510, Idaho Code.
50 SECTION 4. SEVERABILITY. The provisions of this act are hereby declared
51 to be severable and if any provision of this act or the application of such
52 provision to any person or circumstance is declared invalid for any reason,
53 such declaration shall not affect the validity of the remaining portions of
54 this act.
3
1 SECTION 5. An emergency existing therefor, which emergency is hereby
2 declared to exist, Sections 1 and 4 of this act shall be in full force and
3 effect on and after passage and approval, and retroactively to January 1,
4 2003; Sections 2 and 3 of this act shall be in full force and effect on and
5 after July 1, 2003.".
6 CORRECTIONS TO TITLE
7 On page 1, delete line 2, and insert: "RELATING TO TAXATION; AMENDING SEC-
8 TION"; and delete line 9 and insert: "ALTIES; AMENDING SECTION 63-2501, IDAHO
9 CODE, TO APPLY THE CIGARETTE TAX TO USE OR CONSUMPTION OTHER THAN CIGARETTES
10 SOLD ON INDIAN RESERVATIONS FOR CONSUMPTION BY TRIBAL MEMBERS; AMENDING SEC-
11 TION 63-2506, IDAHO CODE, TO APPLY THE CIGARETTE TAX TO ALL SALES EXCEPT TO
12 MEMBERS OF THE RESERVATION'S GOVERNING TRIBE ON AN INDIAN RESERVATION, TO
13 ESTABLISH A DEDUCTION METHOD AGAINST CIGARETTE TAXES FOR THE EXEMPTION AND TO
14 MAKE A TECHNICAL CORRECTION; PROVIDING FOR SEVERABILITY; DECLARING AN EMER-
15 GENCY, PROVIDING RETROACTIVE APPLICATION AND PROVIDING AN EFFECTIVE DATE.".
REPRINT REPRINT REPRINT REPRINT
STATEMENT OF PURPOSE
RS 13084
This bill allows taxpayers who make new personal property
investments in Idaho, on and after January 1, 2003, the
opportunity to forego the income tax investment tax credit (ITC)
by electing an exemption from personal tax on the property for
two years.
Taxpayers who are in a loss situation are not able to claim the
ITC because they have no tax liability to offset. This bill will
allow taxpayers who have suffered losses to elect to be exempt
from property tax on personal property on new personal property
acquisitions/investments for two years in lieu of the ITC.
The average rural property tax rate is 1.2%. The average urban
property tax rate is 1.7%. Two years of property tax exemption
closely approximates the amount of ITC that would have been
earned.
FISCAL IMPACT
No fiscal cost to the General Fund. The cost to the counties in
Idaho is zero, as a tax shift occurs. It is estimated that the
tax shift will be in the $6 - $8 million range in the first year,
which equates to about 5% of total property tax on personal
property paid last year. The cost to schools is also zero in the
first year and about $1.8 million in year two.
Contact:
Name: Speaker Bruce Newcomb
Rep. Lawerence Denney
Rep. Mike Moyle
Rep. Julie Ellsworth
Phone: (208) 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE Bill No. 317