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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
|||| 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 actchapter . 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 andpay 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 actchapter , 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 andpay 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 andpayment 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 by48 him to the state tax commission, deliver to the state tax commission49 file a return upon such form as shall be prescribed by 50 saidthe state tax commission showing51 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 actchap- 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 actchapter 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 actchapter 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 act44 chapter , the state tax commission shall, after examining 45 the annual return filed by the employee in accordance with this act46 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 actchapter , 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 act4 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 actchapter . 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 actchapter . 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 EMPLOYMENTLABOR . (a) The state 4 tax commission and the Idahodepartment of employment5 labor may enter into a written agreement for exchange of 6 information relating to persons who have or may have undischarged duties7 or liabilities undertax laws administered by the state tax commission 8 or the department of employmentlabor . 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 offol- 11 lowing: 12 (1) D determining 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 ( bc ) 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 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