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H0496...............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law to clarify provisions of the Income Tax
Act relating to computation of interest due on deficiencies and refunds and
the setting of such annual interest rates, to delete reference to income
earned abroad or from sale of residence, to require corporations and
partnerships to pay the Permanent Building Fund tax when such entities pay
taxes on behalf of their nonresident officers, directors, shareholders,
partners or members, and to clarify that the exclusion from Idaho taxes on
the first $600 of lottery prizes is limited to prizes awarded by the Idaho
State Lottery.
01/22 House intro - 1st rdg - to printing
01/23 Rpt prt - to Rev/Tax
02/04 Rpt out - rec d/p - to 2nd rdg
02/05 2nd rdg - to 3rd rdg
02/06 3rd rdg - PASSED - 64-0-6
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Bivens,
Black(15), Boe, Bruneel, Callister, Campbell, Chase, Clark, Crane,
Crow, Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Geddes,
Gould, Hadley, Henbest, Hornbeck, Jaquet, Jones(9), Jones(22),
Jones(20), Judd, Kellogg, Kempton, Kendell, Kjellander, Kunz, Lake,
Loertscher, Mader, Marley, McKague, Meyer, Miller, Mortensen,
Newcomb, Pischner, Pomeroy, Reynolds, Richman, Ridinger, Robison,
Schaefer, Stevenson, Stoicheff, Stone, Stubbs, Tilman, Tippets,
Trail, Watson, Wheeler, Wood, Zimmermann, Mr Speaker
NAYS -- None
Absent and excused -- Black(23), Gagner, Hansen, Linford, Sali,
Taylor
Floor Sponsor - Barrett
Title apvd - to Senate
02/09 Senate intro - 1st rdg - to Loc Gov
02/12 Rpt out - rec d/p - to 2nd rdg
02/13 2nd rdg - to 3rd rdg
03/10 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hansen,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Stennett, Sweeney,
Thorne, Twiggs, Wheeler, Whitworth
NAYS--None
Absent and excused--Sorensen
Floor Sponsor - McLaughlin
Title apvd - to House
03/11 To enrol
03/12 Rpt enrol - Sp signed
03/13 Pres signed
03/16 To Governor
03/17 Governor signed
Session Law Chapter 51
Effective: 01/01/98
H0496|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 496 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO INCOME TAXES; AMENDING SECTION 63-3030, IDAHO CODE, TO DELETE 3 OBSOLETE REFERENCES TO INCOME EARNED ABROAD AND FROM SALE OF RESIDENCE; 4 AMENDING SECTION 63-3045, IDAHO CODE, TO PROVIDE FOR COMPUTATION OF INTER- 5 EST DUE ON DEFICIENCIES AND REFUNDS, TO REMOVE THE REQUIREMENT THAT THE 6 STATE TAX COMMISSION SET ANNUAL INTEREST RATES FOR DEFICIENCIES, OVERPAY- 7 MENTS AND REFUNDS, AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 8 63-3073, IDAHO CODE, TO MAKE A TECHNICAL CORRECTION RELATING TO INTEREST 9 ON REFUNDS AND CREDITS BY ADDING REFERENCE TO CAPITAL LOSSES; AMENDING 10 SECTION 63-3082, IDAHO CODE, TO IMPOSE THE PERMANENT BUILDING FUND TAX ON 11 CORPORATIONS AND PARTNERSHIPS THAT PAY TAXES ON BEHALF OF THEIR NONRESI- 12 DENT OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS OR MEMBERS; AMENDING SEC- 13 TION 67-7439, IDAHO CODE, TO CLARIFY THAT THE EXCLUSION FROM IDAHO TAXES 14 OF CERTAIN LOTTERY PRIZES IS LIMITED TO PRIZES AWARDED BY THE IDAHO STATE 15 LOTTERY; DECLARING AN EMERGENCY AND PROVIDING A RETROACTIVE EFFECTIVE 16 DATE. 17 Be It Enacted by the Legislature of the State of Idaho: 18 SECTION 1. That Section 63-3030, Idaho Code, be, and the same is hereby 19 amended to read as follows: 20 63-3030. PERSONS REQUIRED TO MAKE RETURNS OF INCOME. (a) Returns with 21 respect to taxes measured by income in this chapter shall be made by the fol- 22 lowing: 23 (1) Every resident individual required to file a federal return under 24 section 6012(a)(1) of the Internal Revenue Code. 25 (2) Any nonresident individual having for the current taxable year a 26 gross income from Idaho sources in excess of two thousand five hundred 27 dollars ($2,500), or any part-year resident individual having for the cur- 28 rent taxable year a gross income from all sources while domiciled in or 29 residing in Idaho, and from Idaho sources while not domiciled in and not 30 residing in Idaho, which in total are in excess of two thousand five hun- 31 dred dollars ($2,500); 32 (3) Every corporation which is transacting business in this state, autho- 33 rized to transact business in this state or having income attributable to 34 this state, unless exempt from the tax imposed in this chapter; 35 (4) Every corporation reporting as an S corporation pursuant to Internal 36 Revenue Code sections 1361 through 1379 to the federal government, which 37 is transacting business in this state, authorized to transact business in 38 this state or which has one (1) or more shareholder who is a resident of 39 this state. A corporation which is reporting as an S corporation to the 40 federal government must report to the state of Idaho as an S corporation 41 for and during the same period or periods in which its election to report 42 as such a corporation is effective for federal tax purposes and must iden- 43 tify itself as an S corporation on its income tax return filed with this 2 1 state; 2 (5) Every estate, the residence of which estate is in Idaho, having a 3 gross income of six hundred dollars ($600) or more for the current taxable 4 year; 5 (6) Every estate, the residence of which is in a state other than Idaho, 6 having a gross income from Idaho sources in excess of six hundred dollars 7 ($600); 8 (7) Every trust, the residence of which trust is in Idaho, having gross 9 income of one hundred dollars ($100) or more for the current taxable 10 year; 11 (8) Every trust, the residence of which is in a state other than Idaho, 12 having a gross income from Idaho sources in excess of one hundred dollars 13 ($100); 14 (9) Every partnership which transacts business or which has one (1) or 15 more partner which is a resident of this state. Such return shall be a 16 supplemental information return and shall include the names and addresses 17 of the persons who would be entitled to share in the net income of the 18 partnership if distributed and the amount of the distributive share of 19 each person. Such return shall be signed by one (1) of the partners. 20 (b) Returns of fiduciaries and receivers: 21 (1) Fiduciaries and receivers shall file returns with the state tax com- 22 mission in accordance with the provisions of section 6012(b) of the Inter- 23 nal Revenue Code. 24(c) Certain income earned abroad or from sale of residence: For25purposes of this section, gross income shall be computed without regard to the26exclusion provided for in section 121 of the Internal Revenue Code (relating27to one-time exclusion of gain from sale of principal residence by an individ-28ual who has attained age fifty-five (55)) and without regard to the exclusion29provided for in section 911 of the Internal Revenue Code (relating to income30earned abroad).31 SECTION 2. That Section 63-3045, Idaho Code, be, and the same is hereby 32 amended to read as follows: 33 63-3045. NOTICE OF REDETERMINATION OR DEFICIENCY -- INTEREST. 34 (1) (a) If, in the case of any taxpayer, the state tax commission deter- 35 mines that there is a deficiency in respect of the tax imposed by this 36 title, the state tax commission shall, immediately upon discovery thereof, 37 send notice of such deficiency to the taxpayer by registered or certified 38 mail or by other commercial delivery service providing proof of delivery, 39 whichever is the most cost efficient. The notice shall be sent to the 40 taxpayer's last address known to the state tax commission. The notice of 41 deficiency shall be accompanied by an explanation of the specific reason 42 for the determination and an explanation of the taxpayer's right to 43 appeal. Within sixty-three (63) days after such notice is mailed, the tax- 44 payer may, at his option, file a protest in writing with the state tax 45 commission and obtain redetermination of the deficiency. 46 (b) If the taxpayer files a protest with the tax commission within the 47 period set forth in subsection (1)(a) of this section, and such protest 48 does not comply with the rules of the tax commission and is therefore 49 inadequate to perfect the taxpayer's right to a redetermination of the 50 deficiency determination, then, the tax commission shall notify the tax- 51 payer, in the same manner as set forth in subsection (1)(a) of this sec- 52 tion, of such inadequacies, setting forth in said notice the corrective 53 action to be taken by the taxpayer to perfect his protest. The taxpayer 3 1 shall thereafter have twenty-eight (28) days from the date of said notice 2 to perfect his protest. 3 (c) No assessment of a deficiency in respectofto 4 the tax imposed by this chapter, and no distraint or proceedings in 5 court for its collection shall be made, begun, or prosecuted until such 6 notice has been mailed to the taxpayer, nor until all appeal rights relat- 7 ing to the deficiency have become final. 8 (2) Following a protest, the taxpayer has the right to a hearing. The 9 purpose of the hearing is to discuss the deficiency determination and the 10 taxpayer's protest with a commissioner or duly authorized representative of 11 the commission. The meeting shall be held informally and evidence shall be 12 freely admitted regardless of the rules of evidence. 13 (3) Any hearing conducted under the provisions of this section may be 14 conducted, in whole or in part, by telephone, television, or other electronic 15 means, if each participant in the hearing has an opportunity to participate in 16 the entire proceeding while it is taking place. 17 (4) A taxpayer has the right to be represented by, or be accompanied by, 18 any person of his choice in any proceeding before the tax commission. If the 19 taxpayer is not present at a proceeding, the representative of that taxpayer 20 must be designated in writing by the taxpayer as shall be prescribed in 21 administrative rules or in any manner acceptable to the tax commission. 22 (5) If the taxpayer does not file a protest with the state tax commission 23 within the time prescribed in subsection (1)(a) of this section, the defi- 24 ciency shall be assessed and shall become due and payable upon notice and 25 demand from the state tax commission. 26 (6) (a) Interest shall apply to deficiencies in tax and refunds of tax. 27 Interest shall not apply to any penalty or to unpaid accrued interest. 28 Interest relating to deficiencies or refunds accruing after the 29 original due date of the return, but not including extensions of the due 30 date, shall be computed on the net of any underpayments and overpayments 31 of a tax liability required to be shown as due on the same return. 32 (b) Interest upon any deficiency shall be assessed at the same time as 33 the deficiency, shall be due and payable upon notice and demand from the 34 state tax commission and shall be collected as a part of the tax at the 35 rate per annum determined under the provisions of subsection (6)(c) of 36 this section from the date prescribed for the payment of the tax. In the 37 event any of the deficiency is reduced by reason of a carryback of a net 38 operating loss or a capital loss carryback, such reduction in deficiency 39 shall not affect the computation of interest under this subsection for the 40 period ending with the last day of the taxable year in which the net oper- 41 ating loss or capital loss arises. 42 (c)By November 1 of each year, the tax commission shall fix t43T he rate of interestdue for the succeeding44accruing during any calendar year, or portion thereof, 45 upon any deficiency, or payable upon an overpayment or refund. The46rate of interest, rounded to the nearest whole number,shall be two 47 percent (2%) plus the rate determined under section 1274(d), Internal Rev- 48 enue Code, by the secretary of the treasury of the United States as the 49 midterm federal rate as it applies on October 15 ofthat50 the immediately preceding calendar year rounded to the 51 nearest whole number . 52 (7) When the time provisions contained in this section conflict with the 53 provisions of section 63-4208, Idaho Code, relating to the assessment of taxes 54 on illegal possession of controlled substances, the provisions of section 55 63-4208, Idaho Code, shall prevail. 4 1 SECTION 3. That Section 63-3073, Idaho Code, be, and the same is hereby 2 amended to read as follows: 3 63-3073. INTEREST ON REFUNDS AND CREDITS. Upon the allowance of a credit 4 or refund of any tax erroneously or illegally assessed or collected, or of any 5 penalty collected without authority, or of any sum which was excessive or in 6 any manner wrongfully collected, interest shall be allowed and paid on the 7 amount of such credit or refund at the rate provided in section 63-3045, Idaho 8 Code, from the date such tax, penalty, or sum was paid or from the date the 9 return was required to be filed, whichever date is the later, to the date of 10 the allowance of the refund, or in the case of a credit, to the due date of 11 the amount against which the credit is taken; provided, however, that in case 12 of a voluntary and unrequested payment in excess of actual tax liability, no 13 interest shall be allowed when such excess is refunded or credited. 14 Interest on refunds resulting from net operating loss carryback claims or 15 from capital loss carryback claims shall be computed from the last day of the 16 taxable year in which the net operating loss or capital loss 17 arises. 18 SECTION 4. That Section 63-3082, Idaho Code, be, and the same is hereby 19 amended to read as follows: 20 63-3082. ADDITIONAL TAX REQUIRED WHEN FILING INCOME TAX RETURN. (1) 21 Every person required to file an income tax return shall pay a tax of 22 ten dollars ($10.00). For this purpose, a husband and wife filing a joint 23 return shall be deemed a single person. This tax shall be in the nature of an 24 excise tax upon the receipt of the income which requires the filing of such 25 return. 26 (2) When, pursuant to section 63-3022L, Idaho Code, the income of a 27 nonresident officer, director, shareholder, partner or member of a corporation 28 or partnership is taxed as Idaho taxable income of the corporation or partner- 29 ship, the corporation or partnership shall also pay the tax imposed in subsec- 30 tion (1) of this section for each nonresident individual. For purposes of this 31 section, a husband and wife filing a joint federal return may be deemed a sin- 32 gle individual. 33 SECTION 5. That Section 67-7439, Idaho Code, be, and the same is hereby 34 amended to read as follows: 35 67-7439. TAXES. Income taxes shall only be imposed on lottery prizes 36 received from lottery tickets purchased after the effective date of this act. 37 Lottery prizes awarded by the Idaho state lottery under six hun- 38 dred dollars ($600) shall not be subject to the state income tax. No taxes of 39 any kind whatsoever shall be imposed upon the sale, purchase, storage, use or 40 other consumption of Idaho lottery tickets or shares, or upon equipment, 41 devices or systems directly used in the production, operation, sales, distri- 42 bution, tracking, drawing, accounting, communication of or computation of lot- 43 tery games. 44 The state lottery shall pay to a city, county, the state or any political 45 subdivision or municipality thereof in which the state lottery occupies a 46 premises owned by the state a grant not to exceed the amount that would be 47 payable as taxes on the property in that year, if the property were not exempt 48 from taxation. 49 SECTION 6. An emergency existing therefor, which emergency is hereby 5 1 declared to exist, this act shall be in full force and effect on and after its 2 passage and approval, and retroactively to January 1, 1998.
STATEMENT OF PURPOSE
RS 07356C1
This bill changes the annual carry over balance in the
state refund account. The State Tax Commission pays refunds
to taxpayers from this account. The bill increases the
balance of the state refund account carried from one fiscal
year to the next from four hundred thousand dollars to one
million five hundred thousand dollars. The change first
applies to the balance carried from FY 1998 to FY 1999.
FISCAL NOTE
No actual revenue loss. $1,100,000 of general fund
money will shift from FY 1998 to FY 1999.
Contact
Name: Dan John / Ted Spangler
Agency: State Tax Commission
Phone: 334-7530
STATEMENT OF PURPOSE/FISCAL
NOTE
H 496