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H0788...............................................by REVENUE AND TAXATION
EMPLOYERS - WITHHOLDING TAXES - Amends and adds to existing law to
authorize a joint filing of employer related tax returns with the
Department of Labor and the State Tax Commission and to authorize an
exchange of information between the Department of Labor and the State Tax
Commission.
02/27 House intro - 1st rdg - to printing
03/02 Rpt prt - to 2nd rdg
03/03 2nd rdg - to 3rd rdg
03/05 3rd rdg - PASSED - 64-2-4
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, 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(9),
Jones(20), Judd, Kellogg, Kempton, Kendell, Kjellander, Kunz, Lake,
Linford, Mader, Marley, McKague, Meyer, Miller, Mortensen, Newcomb,
Pischner, Pomeroy, Richman, Robison, Sali, Schaefer, Stevenson,
Stoicheff, Stubbs, Taylor, Tilman, Tippets, Trail, Watson, Wheeler,
Wood, Zimmermann, Mr Speaker
NAYS -- Loertscher, Ridinger
Absent and excused -- Bivens, Jones(22), Reynolds, Stone
Floor Sponsor - Gould
Title apvd - to Senate
03/06 Senate intro - 1st rdg - to Loc Gov
03/12 Rpt out - rec d/p - to 2nd rdg
03/13 2nd rdg - to 3rd rdg
03/18 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stennett,
Sweeney, Thorne, Twiggs, Wheeler, Whitworth
NAYS--None
Absent and excused--Hansen
Floor Sponsor - Ipsen
Title apvd - to House
03/19 To enrol - rpt enrol - Sp signed
Pres signed - to Governor
03/20 Governor signed
Session Law Chapter 230
Effective: 01/01/99
H0788|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 788 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 TECHNICAL CORRECTIONS; 7 AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SEC- 8 TION 63-3035B, IDAHO CODE, TO AUTHORIZE JOINT FILING OF EMPLOYMENT RELATED 9 TAX RETURNS WITH THE DEPARTMENT OF LABOR; AMENDING SECTION 63-3036, IDAHO 10 CODE, TO REVISE PROCEDURES FOR WITHHOLDING TAX FOR FARMERS AND OTHERS 11 EXEMPT FROM FEDERAL WITHHOLDING; AMENDING SECTIONS 63-3077A AND 72-1605, 12 IDAHO CODE, TO AUTHORIZE EXCHANGES OF INFORMATION BETWEEN THE STATE TAX 13 COMMISSION AND THE IDAHO DEPARTMENT OF LABOR FOR THE PURPOSE OF ADMINIS- 14 TERING JOINT FILING OF EMPLOYMENT RELATED RETURNS WITH THE DEPARTMENT OF 15 LABOR; AND PROVIDING AN EFFECTIVE 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 effective exchange of 24 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 thisactchapter . 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) mustmake 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 thisactchapter , 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, and23return 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 subsections (a)(2) and (a)(4) 26 of this section are equal to the withholding under this section shown or 27 required to be shown on the return required by subsection (b)(1) of this 28 section, no penalty shall apply to the underpayment for the period between 29 the due date of the payment and the due date of the return. Interest, at 30 the rate provided by section 63-3045, Idaho Code, shall apply to any such 31 underpayment. 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 modifica- 37 tions determined by the United States secretary of health and human ser- 38 vices pursuant to 42 USC 415(i). When the cumulative percentage applied to 39 the monthly threshold amount equals or exceeds one thousand dollars 40 ($1,000), the commission shall promulgate a rule adjusting the monthly 41 threshold amount by one thousand dollars ($1,000) and making the necessary 42 proportional adjustment to the annual threshold amount. The rule shall be 43 effective for the next succeeding calendar year and each year thereafter 44 until again adjusted by the commission. The tax commission shall determine 45 subsequent adjustments in the same manner, in each case using the year of 46 the last adjustment as the base year. 47 (b) (1) Every employer shall,at the time of each payment made by48him to the state tax commission, deliver to the state tax commission49file a return upon such form as shall be prescribed by 50saidthe state tax commission , 51showingbut not more frequently than quarterly, or as 52 required pursuant to any agreement between the state tax commission and 53 the department of labor under section 63-3035B, Idaho Code. The return 54 shall show, for the period to which it relates, the total amount of 55 wages, salary, bonus or other emoluments paid to his employees, the amount 3 1 deducted therefrom in accordance with the provisions of the Internal Reve- 2 nue Code, the amount deducted therefrom in accordance with the provisions 3 of this section, the amount of any previous payments made pursuant 4 to this section, and such pertinent and necessary information as 5 the state tax commission may require. 6 (2) Every employer making a declaration of withholding as provided herein 7 shall furnish to the employees annually, but not later than thirty (30) 8 days after the end of the calendar year, a record of the amount of tax 9 withheld from such employee on forms to be prescribed, prepared and fur- 10 nished by the state tax commission and on or before the last day of Febru- 11 ary every employer shall file a copy thereof with the state tax commis- 12 sion. Every employer who is required, under Internal Revenue Code section 13 6011, to file returns on magnetic media or in other machine readable form 14 may be required by rules of the state tax commission to file corresponding 15 state returns on similar magnetic media or other machine readable form. 16 (c) All moneys deducted and withheld by every employer shall immediately 17 upon such deduction be state money and every employer who deducts and retains 18 any amount of money under the provisions of thisactchap- 19 ter shall hold the same in trust for the state of Idaho and for the 20 payment thereof to the state tax commission in the manner and at the times in 21 thisactchapter provided. Any employer who does not 22 possess real property situated within the state of Idaho, which, in the opin- 23 ion of the state tax commission, is of sufficient value to cover his probable 24 tax liability, may be required to post a surety bond in such sum as the state 25 tax commission shall deem adequate to protect the state. 26 (d) The provisions of thisactchapter relating 27 to additions to tax in case of delinquency, and penalties, shall apply to 28 employers subject to the provisions of this section and for these purposes any 29 amount deducted, or required to be deducted and remitted to the state tax com- 30 mission under this section, shall be considered to be the tax of the employer 31 and with respect to such amount he shall be considered the taxpayer. 32 (e) Amounts deducted from wages of an employee during any calendar year 33 in accordance with the provisions of this section shall be considered to be in 34 part payment of the tax imposed on such employee for his tax year which begins 35 within such calendar year and the return made by the employer under this sub- 36 section (e) shall be accepted by the state tax commission as evidence in favor 37 of the employee of the amount so deducted from his wages. Where the total 38 amount so deducted exceeds the amount of tax on the employee, based on his 39 Idaho taxable income, or where his income is not taxable under thisact40chapter , the state tax commission shall, after examining 41 the annual return filed by the employee in accordance with thisact42chapter , but not later than sixty (60) days after the fil- 43 ing of each return, refund the amount of the excess deducted. No credit or 44 refund shall be made to an employee who fails to file his return, as required 45 under thisactchapter , within three (3) years from 46 the due date of the return, without regard to extensions, in respect of which 47 the tax withheld might have been credited. In the event that the excess tax 48 deducted is less than one dollar ($1.00), no refund shall be made unless spe- 49 cifically requested by the taxpayer at the time such return is filed. 50 (f) This section shall in no way relieve any taxpayer from his obligation 51 of filing a return at the time required under thisact52 chapter , and, should the amount withheld under the provisions of this 53 section be insufficient to pay the total tax of such taxpayer, such unpaid tax 54 shall be paid at the time prescribed by section 63-3034, Idaho Code. 55 (g) An employee receiving wages shall on any day be entitled to the same 4 1 number of withholding exemptions to which he is entitled under the Internal 2 Revenue Code for federal income tax withholding purposes. 3 (h) An employer shall use the exemption certificate filed by the employee 4 with the employer under the withholding exemption provisions of the Internal 5 Revenue Code in determining the amount of tax to be withheld from the 6 employee's wages or salary under thisactchapter . 7 The tax commission may redetermine the number of withholding exemptions to 8 which an employee is entitled under subsection (g) of this section, and the 9 state tax commission may require such exemption certificate to be filed on a 10 form prescribed by the commission in any circumstance where the commission 11 finds that the exemption certificate filed for Internal Revenue Code purposes 12 does not properly reflect the number of withholding exemptions to which the 13 employee is entitled under thisactchapter . In no 14 event shall any employee give an exemption certificate which claims a higher 15 number of withholding exemptions than the number to which the employee is 16 entitled by subsection (g) of this section. 17 SECTION 3. That Chapter 30, Title 63, Idaho Code, be, and the same is 18 hereby amended by the addition thereto of a NEW SECTION , to be 19 known and designated as Section 63-3035B, Idaho Code, and to read as follows: 20 63-3035B. JOINT POWER AUTHORIZATION. The state tax commission may, pursu- 21 ant to sections 67-2326 through 67-2333, Idaho Code, enter into an agreement 22 with the department of labor providing for the joint administration of employ- 23 ment security taxes and income tax withholding through common registration of 24 employers, common tax reporting forms, centralized filing of returns and 25 receipting of revenue and effective exchange of information. 26 SECTION 4. That Section 63-3036, Idaho Code, be, and the same is hereby 27 amended to read as follows: 28 63-3036. STATE WITHHOLDING TAXON PERCENTAGE BASISFOR 29 FARMERS .AND OTHERS EXEMPT FROM FEDERAL WITHHOLDING.30 (1) Every farmer who is an employerand employers exempt31from withholding by the Internal Revenue Codeshall at the time of the 32 payment of wages, salaries, bonus es or other emoluments to an 33 employee, deduct and retain therefrom an amountequal to one per cent34(1%) of such wage, salary, bonus or emolument or the value of such emolument35determined in accordance with section 63-3035, Idaho Code , 36 and the amount so withheld and deducted shall be held by said farmer-employer 37and other employersin trust for the state of Idaho and for the 38 payment thereof to the state tax commission. Provided, that no tax need 39 be withheld from an employee whose wages, salaries, bonuses and other emolu- 40 ments total less than one thousand dollars ($1,000) for the tax year. 41 (2) The tax so withheld by a farmer-employer subject to this section 42 shall be paid to the state tax commission: 43 (a) Except as provided in paragraph (b) of this subsection, on or before 44 the last day of February of the year following the year in which such 45 deduction was made. 46 (b) On the last day of the month following the close of a calendar quar- 47 ter if, in that quarter, a farmer-employer subject to this section pays 48 gross wages, salaries, bonuses and other emoluments exceeding twenty thou- 49 sand dollars ($20,000). 50 (3) The farmer-employerand other employersshall 51 deliver to the state tax commission a return upon such form as shall be pre- 5 1 scribed by said state tax commission showing the amounts of wages,sal-2ary, bonussalaries, bonuses or other emoluments paid to 3 his employee, the amount deducted therefrom in accordance with this section, 4 and such other pertinent and necessary information as the state tax commission 5 may require on or before thelast day of February of the year following6the year in which such deduction was madedate payments required 7 by this section are due . 8 (4) The farmer-employeror other employersmak- 9 ing such a deduction as provided for in this section shall furnish to the 10 employee annually, but not later than thirty (30) days after the end of the 11 calendar year, a record of the amount of the tax withheld from such employee 12 on forms to be prescribed, prepared and furnished by the state tax commission 13 and at the same time every employer shall file a copy thereof with the state 14 tax commission. The provisions of subsections (d), (e) ,and15(f) , (g) and (h) of section 63-3035, Idaho Code, shall be 16 applicable to the tax withheld by the farmer-employeror other employers17under this section.The tax so withheld by the farmer-employer or18other employers shall be paid annually to the state tax commission on or19before the last day of February of the year following the year in which such20deduction was made. Provided, that no tax need be withheld from an employee21whose wages, salaries, bonuses and other emoluments total less than one thou-22sand dollars ($1,000) for the tax year.23 SECTION 5. That Section 63-3077A, Idaho Code, be, and the same is hereby 24 amended to read as follows: 25 63-3077A. AGREEMENTS FOR EXCHANGE OF INFORMATION AND JOINT ADMINISTRATION 26 WITH DEPARTMENT OFEMPLOYMENTLABOR . (a) The state 27 tax commission and theIdahodepartment ofemployment28labor may enter into a written agreement for exchange of 29 information relating topersons who have or may have undischarged duties30or liabilities undertax laws administered by the state tax commission 31 or the department ofemploymentlabor . Any informa- 32 tion so exchanged shall be confidential information in the hands of the recip- 33 ient thereof and may be used only for thepurpose offol- 34 lowing: 35 (1)dD etermining whether the person to 36 whom the information relates may have an undischarged duty or liability 37 under any tax law of this state, the amount of such liability, the 38 person's whereabouts, social security number, and information helpful in 39 collecting taxes due. 40 (2) Administering any joint agreement between the department of 41 labor and the state tax commission relating to employment security taxes 42 and income tax withholding for the common registration of employers, com- 43 mon tax reporting forms, centralized filing and processing of forms. 44 (3) Administration of the state directory of new hires provided in chap- 45 ter 16, title 72, Idaho Code. 46 (b) No such information shall be public information unless it is 47 used in the course of a judicial proceeding arising under a tax statute of 48 this state. 49 (bc ) An agreement made pursuant to this section 50 may provide for the offset of any refunds owed to any person by either party 51 to the agreement against any tax liability or overpayment of benefits owed to 52 the other party. No offset may be made unless the liability against which it 53 is applied is final, without any further right on the part of the person owing 6 1 the liability to either administrative or judicial review. 2 SECTION 6. That Section 72-1605, Idaho Code, be, and the same is hereby 3 amended to read as follows: 4 72-1605. USE OF NEW HIRE INFORMATION. (1) The information collected pur- 5 suant to this chapter shall be used only for the following purposes: 6 (a) The department of health and welfare shall use the information to 7 assist in its administration of any public assistance program and for 8 child support enforcement purposes. 9 (b) The department of labor shall transmit the information to the 10 national directory of new hires and may use the information to administer 11 programs under the employment security law and may provide the 12 information to the state tax commission for the proper administration of 13 income tax withholding under the Idaho income tax act . 14 (c) The state insurance fund and the industrial commission may use the 15 information to administer the worker's compensation program. 16 (2) Agencies that obtain information collected pursuant to this chapter 17 shall maintain the confidentiality of the information received, except as pro- 18 vided in this chapter. If any employee or agent of the state, in violation of 19 the provisions of this chapter, discloses information collected pursuant to 20 this chapter, he or she shall be guilty of a misdemeanor. 21 SECTION 7. This act shall be in full force and effect on and after Janu- 22 ary 1, 1999.
STATEMENT OF PURPOSE
RS08164
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, amends the special
withholding provisions relating to agricultural employees and
authorized exchanges of employment information between the
agencies. The exchanged information remains confidential.
FISCAL NOTE
One time increase in general fund revenues in FY 1999 of
$125,000
Contact
Name: Dan John / Ted Spangler
Agency: State Tax Commission
Phone: 334-7530
STATEMENT OF PURPOSE/FISCAL NOTE
H 788