1998 Legislation
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HOUSE BILL NO. 685 – Tax Comm/Labor Dept, share info

HOUSE BILL NO. 685

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H0685...............................................by REVENUE AND TAXATION
TAX COMMISSION - LABOR DEPARTMENT - INFORMATION - Amends, adds to and
repeals existing law to provide for sharing of information between the
Department of Labor and the State Tax Commission, to change the filing date
of withholding returns for state income tax purposes and to authorize the
joint filing of employment related tax returns with the Department of
Labor.

02/13    House intro - 1st rdg - to printing
02/16    Rpt prt - to Rev/Tax

Bill Text


H0685


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                             IN THE HOUSE OF REPRESENTATIVES

                                    HOUSE BILL NO. 685

                            BY REVENUE AND TAXATION COMMITTEE

 1                                        AN ACT
 2    RELATING TO JOINT ADMINISTRATION OF  EMPLOYMENT  RELATED  TAXES;  PROVIDING  A
 3        STATEMENT  OF LEGISLATIVE INTENT; AMENDING SECTION 63-3035, IDAHO CODE, TO
 4        CHANGE THE FILING DATE OF WITHHOLDING RETURNS  WITH  A  RECONCILIATION  TO
 5        MONTHLY  PAYMENTS  AND TO AUTHORIZE JOINT FILING OF EMPLOYMENT RELATED TAX
 6        RETURNS WITH THE DEPARTMENT OF LABOR AND TO MAKE A  TECHNICAL  CORRECTION;
 7        REPEALING  SECTION  63-3036,  IDAHO  CODE;  AMENDING CHAPTER 30, TITLE 63,
 8        IDAHO CODE, BY THE ADDITION OF A  NEW  SECTION  63-3036,  IDAHO  CODE,  TO
 9        AUTHORIZE  JOINT FILING OF EMPLOYMENT RELATED TAX RETURNS WITH THE DEPART-
10        MENT OF LABOR; AMENDING SECTION 63-3037, IDAHO CODE, TO DELETE A CITATION;
11        AMENDING SECTIONS 63-3077A AND 72-1605, IDAHO CODE, TO AUTHORIZE EXCHANGES
12        OF INFORMATION BETWEEN THE STATE TAX COMMISSION AND THE  IDAHO  DEPARTMENT
13        OF  LABOR  FOR  THE  PURPOSE  OF  ADMINISTERING JOINT FILING OF EMPLOYMENT
14        RELATED RETURNS WITH THE DEPARTMENT OF LABOR; AND PROVIDING  AN  EFFECTIVE
15        DATE.

16    Be It Enacted by the Legislature of the State of Idaho:

17        SECTION 1.  STATEMENT OF LEGISLATIVE INTENT. It is the purpose of this act
18    to  reduce tax compliance burdens of employers and to permit the Department of
19    Labor and the State Tax Commission to make the most  efficient  use  of  their
20    powers  and resources by enabling the department and the commission to cooper-
21    ate in matters relating to employment security taxes and income tax  withhold-
22    ing through common registration of employers, common tax reporting forms, cen-
23    tralized  filing  of  returns  and  receipting  of  revenue  and the effective
24    exchange of information.

25        SECTION 2.  That Section 63-3035, Idaho Code, be, and the same  is  hereby
26    amended to read as follows:

27        63-3035.  STATE  WITHHOLDING  TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL-
28    LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the  pro-
29    visions  of  the Internal Revenue Code to withhold, collect and pay income tax
30    on wages or salaries paid by such employer to any employee (other than employ-
31    ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the  time
32    of  such  payment of wages, salary, bonus or other emolument to such employee,
33    deduct and retain therefrom an amount substantially equivalent to the tax rea-
34    sonably calculated by the state tax commission to be  due  from  the  employee
35    under  this    act    chapter . The state tax commission
36    shall prepare tables showing amounts to be withheld, and shall supply same  to
37    each  employer  subject  to  this  section.  In the event that an employer can
38    demonstrate administrative inconvenience in complying with the exact  require-
39    ments  set  forth  in  these tables, he may, with the consent of the state tax
40    commission and upon application to it, use a different method which will  pro-
41    duce  substantially  the  same amount of taxes withheld. Every employer making
42    payments of wages or salaries earned in Idaho, regardless of the  place  where


                                      2

 1    such payment is made:
 2        (1)  shall  be  liable  to  the  state of Idaho for the payment of the tax
 3        required to be deducted and withheld under this section and shall  not  be
 4        liable  to  any individual for the amount deducted from his wages and paid
 5        over in compliance or intended compliance with this section;
 6        (2)  must  make return of and  pay to the state tax  commission
 7        monthly  on  or  before  the  20th day of the succeeding month, or at such
 8        other times as the state tax commission may allow, an amount of tax which,
 9        under the provisions of this  act   chapter , he  is
10        required to deduct and withhold;
11        (3)  shall  register  with  the  state  tax commission, in the manner pre-
12        scribed by it, to establish an employer's withholding account number.  The
13        account number will be used to report all amounts withheld, for the annual
14        reconciliation  required  in  this  section,  and  for such other purposes
15        relating to withholding as the state tax commission may require; and
16        (4)  must, notwithstanding the provisions of paragraphs  (1)  and  (2)  of
17        this  subsection,  if  the  amount of withholding of such employer for the
18        preceding twelve (12) month period equals or exceeds sixty  thousand  dol-
19        lars  ($60,000)  per annum or an average of five thousand dollars ($5,000)
20        per month per annum,  make return of and  pay to the state  tax
21        commission on the basis of withholding periods which begin on the 16th day
22        of  the  month  and  end on the 15th day of the following month, and 
23        return and  payment shall be made not later than five (5) days after
24        the end of the withholding period.
25        (5)   If the payments made pursuant to subsection (a)(2)  and  (a)(4)
26        are  equal  to  the withholding under this section shown or required to be
27        shown on the return required by subsection (b)(1) of this section, no pen-
28        alty shall apply to the underpayment for the period between the  due  date
29        of  the payment and the due date of the return. Interest, at the rate pro-
30        vided by section 63-3045, Idaho Code, shall apply to  any  such  underpay-
31        ment.
32        (6)    Commencing  in 1994, the state tax commission shall determine
33        whether the threshold amounts established by  subsection  (a)(4)  of  this
34        section  must  be  adjusted to reflect fluctuations in the cost of living.
35        The commission shall base its determination on the  cumulative  effect  of
36        the  annual  cost  of  living  percentage  modifications determined by the
37        United States secretary of health and human services pursuant  to  42  USC
38        415(i).  When  the  cumulative percentage applied to the monthly threshold
39        amount equals or exceeds one thousand  dollars  ($1,000),  the  commission
40        shall  promulgate  a  rule  adjusting  the monthly threshold amount by one
41        thousand dollars ($1,000) and making the necessary proportional adjustment
42        to the annual threshold amount. The rule shall be effective for  the  next
43        succeeding  calendar year and each year thereafter until again adjusted by
44        the commission. The tax commission shall determine subsequent  adjustments
45        in  the same manner, in each case using the year of the last adjustment as
46        the base year.
47        (b)  (1) Every employer shall,  at the time of each payment  made  by
48        him  to  the  state  tax  commission,  deliver to the state tax commission
49          file  a return upon such form as shall be prescribed by
50         said   the   state  tax  commission    showing
51            or  as required pursuant to any agreement between the state
52        tax commission and the department of labor under  section  63-3036,  Idaho
53        Code. The return shall show, for the period to which it relates  the
54        total  amount  of  wages,  salary,  bonus  or other emoluments paid to his
55        employees, the amount deducted therefrom in accordance with the provisions


                                      3

 1        of the Internal Revenue Code, the amount deducted therefrom in  accordance
 2        with the provisions of this section,  the amount of any previous pay-
 3        ments  made pursuant to this section,  and such pertinent and neces-
 4        sary information as the state tax commission may require.
 5         (2)  In the case of farmers, as defined in  section  63-3020,  Idaho
 6        Code,  neither  payment  under subsection (a) nor returns under subsection
 7        (b) of this section shall be required for periods of less than a  calendar
 8        quarter.
 9        (3)   Every employer making a declaration of withholding as provided
10        herein  shall furnish to the employees annually, but not later than thirty
11        (30) days after the end of the calendar year, a record of  the  amount  of
12        tax  withheld  from  such employee on forms to be prescribed, prepared and
13        furnished by the state tax commission and on or before  the  last  day  of
14        February  every employer shall file a copy thereof with the state tax com-
15        mission. Every employer who is required, under Internal Revenue Code  sec-
16        tion  6011, to file returns on magnetic media or in other machine readable
17        form may be required by rules of the state tax commission to  file  corre-
18        sponding state returns on similar magnetic media or other machine readable
19        form.
20        (c)  All  moneys deducted and withheld by every employer shall immediately
21    upon such deduction be state money and every employer who deducts and  retains
22    any  amount of money under the provisions of this  act   chap-
23    ter  shall hold the same in trust for the state of  Idaho  and  for  the
24    payment  thereof to the state tax commission in the manner and at the times in
25    this  act   chapter  provided. Any employer who does not
26    possess real property situated within the state of Idaho, which, in the  opin-
27    ion  of the state tax commission, is of sufficient value to cover his probable
28    tax liability, may be required to post a surety bond in such sum as the  state
29    tax commission shall deem adequate to protect the state.
30        (d)  The provisions of this  act   chapter  relating
31    to  additions  to  tax  in  case of delinquency, and penalties, shall apply to
32    employers subject to the provisions of this section and for these purposes any
33    amount deducted, or required to be deducted and remitted to the state tax com-
34    mission under this section, shall be considered to be the tax of the  employer
35    and with respect to such amount he shall be considered the taxpayer.
36        (e)  Amounts  deducted  from wages of an employee during any calendar year
37    in accordance with the provisions of this section shall be considered to be in
38    part payment of the tax imposed on such employee for his tax year which begins
39    within such calendar year and the return made by the employer under this  sub-
40    section (e) shall be accepted by the state tax commission as evidence in favor
41    of  the  employee  of  the  amount so deducted from his wages. Where the total
42    amount so deducted exceeds the amount of tax on the  employee,  based  on  his
43    Idaho  taxable income, or where his income is not taxable under this  act
44      chapter , the state tax commission shall,  after  examining
45    the  annual  return  filed  by  the employee in accordance with this  act
46      chapter , but not later than sixty (60) days after the fil-
47    ing of each return, refund the amount of the excess  deducted.  No  credit  or
48    refund  shall be made to an employee who fails to file his return, as required
49    under this  act   chapter , within three (3) years  from
50    the  due date of the return, without regard to extensions, in respect of which
51    the tax withheld might have been credited. In the event that  the  excess  tax
52    deducted  is less than one dollar ($1.00), no refund shall be made unless spe-
53    cifically requested by the taxpayer at the time such return is filed.
54        (f)  This section shall in no way relieve any taxpayer from his obligation
55    of filing a return at the time required under  this    act    


                                      4

 1    chapter  ,  and, should the amount withheld under the provisions of this
 2    section be insufficient to pay the total tax of such taxpayer, such unpaid tax
 3    shall be paid at the time prescribed by section 63-3034, Idaho Code.
 4        (g)  An employee receiving wages shall on any day be entitled to the  same
 5    number  of  withholding  exemptions to which he is entitled under the Internal
 6    Revenue Code for federal income tax withholding purposes.
 7        (h)  An employer shall use the exemption certificate filed by the employee
 8    with the employer under the withholding exemption provisions of  the  Internal
 9    Revenue  Code  in  determining  the  amount  of  tax  to  be withheld from the
10    employee's wages or salary under this  act    chapter  .
11    The  tax  commission  may  redetermine the number of withholding exemptions to
12    which an employee is entitled under subsection (g) of this  section,  and  the
13    state  tax  commission may require such exemption certificate to be filed on a
14    form prescribed by the commission in any  circumstance  where  the  commission
15    finds  that the exemption certificate filed for Internal Revenue Code purposes
16    does not properly reflect the number of withholding exemptions  to  which  the
17    employee  is  entitled under this  act   chapter . In no
18    event shall any employee give an exemption certificate which claims  a  higher
19    number  of  withholding  exemptions  than  the number to which the employee is
20    entitled by subsection (g) of this section.

21        SECTION 3.  That Section 63-3036, Idaho Code, be, and the same  is  hereby
22    repealed.

23        SECTION  4.  That  Chapter  30,  Title 63, Idaho Code, be, and the same is
24    hereby amended by the addition thereto of a  NEW SECTION  ,  to  be
25    known and designated as Section 63-3036, Idaho Code, and to read as follows:

26        63-3036.  JOINT  POWER AUTHORIZATION. The state tax commission may, pursu-
27    ant to sections 67-2326 through 67-2333, Idaho Code, enter into  an  agreement
28    with the department of labor providing for the joint administration of employ-
29    ment  security taxes and income tax withholding through common registration of
30    employers, common tax reporting  forms,  centralized  filing  of  returns  and
31    receipting of revenue and effective exchange of information.

32        SECTION  5.  That  Section 63-3037, Idaho Code, be, and the same is hereby
33    amended to read as follows:

34        63-3037.  INFORMATION RETURNS. (a)  All  persons,  in  whatever  capacity,
35    including  lessees or mortgagors of real or personal property, fiduciaries and
36    employers, making payment to  another  person  of  interest,  rent,  salaries,
37    wages,  except  as  provided by subsection (b) of section 63-3035, Idaho Code,
38     and section 63-3036, Idaho Code,  premiums,  annuities,  compensa-
39    tion,  remunerations,  emoluments,  payments to subcontractors, other fixed or
40    determinable gains, profits and income, or corporate liquidation distributions
41    shall make returns to the state tax commission setting  forth  the  amount  of
42    such  gains,  profits and income, and the name and address of the recipient of
43    such payment. Such returns shall correspond to the requirements of the  Inter-
44    nal Revenue Code.
45        (b)  The state tax commission may, by regulation, excuse the filing of any
46    returns  required  by  subsection  (a)  of this section when it finds that the
47    returns required of any class or group of persons do  not  contribute  to  the
48    efficient administration of the taxes imposed by this chapter.

49        SECTION  6.  That Section 63-3077A, Idaho Code, be, and the same is hereby


                                      5

 1    amended to read as follows:

 2        63-3077A.  AGREEMENTS FOR EXCHANGE OF INFORMATION AND JOINT ADMINISTRATION
 3    WITH DEPARTMENT OF  EMPLOYMENT   LABOR . (a)  The  state
 4    tax  commission  and  the    Idaho   department of  employment
 5      labor  may enter into a written agreement for  exchange  of
 6    information relating to  persons who have or may have undischarged duties
 7    or  liabilities under  tax laws administered by the state tax commission
 8    or the department of  employment   labor . Any  informa-
 9    tion so exchanged shall be confidential information in the hands of the recip-
10    ient  thereof  and may be used only for the  purpose of   fol-
11    lowing: 
12         (1)  D  d etermining whether the person to whom the
13        information relates may have an undischarged duty or liability  under  any
14        tax  law  of this state, the amount of such liability, the person's where-
15        abouts, social security number,  and  information  helpful  in  collecting
16        taxes due ;
17        (2)  Administering any joint agreement between the department of labor and
18        the  state tax commission relating to employment security taxes and income
19        tax withholding for the  common  registration  of  employers,  common  tax
20        reporting forms, centralized filing and processing of forms;
21        (3)  Administration  of the state directory of new hires provided in chap-
22        ter 16, title 72, Idaho Code .
23         (b)   No such information shall be public  information  unless
24    it  is used in the course of a judicial proceeding arising under a tax statute
25    of this state.
26        ( b  c )  An agreement made pursuant to this section
27    may provide for the offset of any refunds owed to any person by  either  party
28    to  the agreement against any tax liability or overpayment of benefits owed to
29    the other party. No offset may be made unless the liability against  which  it
30    is applied is final, without any further right on the part of the person owing
31    the liability to either administrative or judicial review.

32        SECTION  7.  That  Section 72-1605, Idaho Code, be, and the same is hereby
33    amended to read as follows:

34        72-1605.  USE OF NEW HIRE INFORMATION. (1) The information collected  pur-
35    suant to this chapter shall be used only for the following purposes:
36        (a)  The  department  of  health  and welfare shall use the information to
37        assist in its administration of any  public  assistance  program  and  for
38        child support enforcement purposes.
39        (b)  The  department  of  labor  shall  transmit  the  information  to the
40        national directory of new hires and may use the information to  administer
41        programs  under  the  employment  security  law   and may provide the
42        information to the state tax commission for the proper  administration  of
43        income tax withholding under the Idaho income tax act .
44        (c)  The  state  insurance  fund and the industrial commission may use the
45        information to administer the worker's compensation program.
46        (2)  Agencies that obtain information collected pursuant to  this  chapter
47    shall maintain the confidentiality of the information received, except as pro-
48    vided  in this chapter. If any employee or agent of the state, in violation of
49    the provisions of this chapter, discloses information  collected  pursuant  to
50    this chapter, he or she shall be guilty of a misdemeanor.

51        SECTION  8.  This act shall be in full force and effect on and after Janu-


                                      6

 1    ary 1, 1999.

Statement of Purpose / Fiscal Impact


    





                           STATEMENT OF PURPOSE
    
                                  RS07865
    
    This bill enables the State Tax Commission to enter into a program with the 
    Idaho Department of Labor for joint filing and payment of employment related 
    taxes. Under the program, employers would file a single tax return reporting 
    income tax withholding to the State Tax Commission and employment security 
    taxes to the Department of Labor on a single quarterly tax return.
    
    To enable this to happen, the bill changes the filing frequency for 
    withholding returns (but not the payment requirement) from monthly to 
    quarterly, modifies the special withholding provisions relating to 
    agricultural employees and authorized exchanges of employment information 
    between the agencies. The exchanged information remains confidential.
    
                               FISCAL IMPACT
    
    + $150,000
    
    CONTACT
    Name: Dan John/Ted Spangler
    Agency: State Tax Commission
    Phone: 334-7530
    Statement of Purpose/Fiscal Impact
    
    H 685