1999 Legislation
Print Friendly

HOUSE BILL NO. 121 – Income tax, employee, withholding

HOUSE BILL NO. 121

View Daily Data Tracking History

View Bill Text

View Statement of Purpose / Fiscal Impact



Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Daily Data Tracking History



H0121...............................................by REVENUE AND TAXATION
INCOME TAX  - Amends existing law to allow employees to claim fewer
personal exemptions for state income tax withholding than are claimed for
federal income tax withholding; and to coordinate the filing and payment of
withholding taxes for certain agricultural employers with the payment of
contributions under the Employment Security Law.

01/27    House intro - 1st rdg - to printing
01/29    Rpt prt - to Rev/Tax
02/03    Rpt out - rec d/p - to 2nd rdg
02/04    2nd rdg - to 3rd rdg
02/08    3rd rdg - PASSED - 67-0-3
      AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
      Bruneel, Callister, Campbell, Chase, Clark, Crow, Cuddy, Deal,
      Denney, Field(13), Field(20), Gagner, Geddes, Gould, Hadley, Hammond,
      Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd,
      Kellogg, Kempton, Kendell, Kjellander, Kunz, Lake, Limbaugh, Linford,
      Loertscher, Mader, Marley, McKague, Meyer, Montgomery, Mortensen,
      Moyle, Pischner, Pomeroy, Reynolds, Ridinger, Ringo, Robison, Sali,
      Schaefer, Sellman, Smith, Stevenson, Stoicheff, Stone, Tilman,
      Tippets, Trail, Watson, Wheeler, Wood, Zimmermann, Mr Speaker
      NAYS -- None
      Absent and excused -- Ellsworth, Taylor, Williams
    Floor Sponsor - Gould
    Title apvd - to Senate
02/09    Senate intro - 1st rdg - to Loc Gov
02/19    Rpt out - rec d/p - to 2nd rdg
02/22    2nd rdg - to 3rd rdg
02/25    3rd rdg - PASSED - 29-0-6
      AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
      Crow, Davis, Deide, Dunklin, Frasure, Geddes, Hawkins, Ingram, Ipsen,
      Keough, King, Lee, Noh, Richardson, Riggs, Risch, Sandy, Schroeder,
      Sorensen, Stegner, Thorne, Wheeler, Whitworth
      NAYS--None
      Absent and excused--Danielson, Darrington, McLaughlin, Parry,
      Stennett, Twiggs
    Floor Sponsor - Schroeder
    Title apvd - to House
02/26    To enrol
03/01    Rpt enrol - Sp signed
03/02    Pres signed - to Governor
03/08    Governor signed
         Session Law Chapter 41
         Effective: 01/01/99

Bill Text


H0121


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fifth Legislature                 First Regular Session - 1999
                                                                        

                             IN THE HOUSE OF REPRESENTATIVES

                                    HOUSE BILL NO. 121

                            BY REVENUE AND TAXATION COMMITTEE

 1                                        AN ACT
 2    RELATING TO WITHHOLDING STATE INCOME TAXES; AMENDING  SECTION  63-3035,  IDAHO
 3        CODE,  TO  ALLOW  EMPLOYEES  TO  CLAIM FEWER PERSONAL EXEMPTIONS FOR STATE
 4        INCOME TAX WITHHOLDING THAN ARE CLAIMED FOR FEDERAL INCOME  TAX  WITHHOLD-
 5        ING;  AMENDING  SECTION  63-3036, IDAHO CODE, TO COORDINATE THE FILING AND
 6        PAYMENT OF WITHHOLDING TAXES FOR CERTAIN AGRICULTURAL EMPLOYERS  WITH  THE
 7        PAYMENT  OF  CONTRIBUTIONS UNDER THE EMPLOYMENT SECURITY LAW; DECLARING AN
 8        EMERGENCY AND PROVIDING A RETROACTIVE EFFECTIVE DATE.

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

10        SECTION 1.  That Section 63-3035, Idaho Code, be, and the same  is  hereby
11    amended to read as follows:

12        63-3035.  STATE  WITHHOLDING  TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL-
13    LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the  pro-
14    visions  of  the Internal Revenue Code to withhold, collect and pay income tax
15    on wages or salaries paid by such employer to any employee (other than employ-
16    ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the  time
17    of  such  payment of wages, salary, bonus or other emolument to such employee,
18    deduct and retain therefrom an amount substantially equivalent to the tax rea-
19    sonably calculated by the state tax commission to be  due  from  the  employee
20    under  this  chapter.  The  state  tax commission shall prepare tables showing
21    amounts to be withheld, and shall supply same to each employer subject to this
22    section. In the event that an employer can demonstrate administrative inconve-
23    nience in complying with the exact requirements set forth in these tables,  he
24    may,  with the consent of the state tax commission and upon application to it,
25    use a different method which will produce substantially  the  same  amount  of
26    taxes  withheld. Every employer making payments of wages or salaries earned in
27    Idaho, regardless of the place where such payment is made:
28        (1)  shall be liable to the state of Idaho for  the  payment  of  the  tax
29        required  to  be deducted and withheld under this section and shall not be
30        liable to any individual for the amount deducted from his wages  and  paid
31        over in compliance or intended compliance with this section;
32        (2)  must  pay  to  the state tax commission monthly on or before the 20th
33        day of the succeeding month, or at such other times as the state tax  com-
34        mission  may  allow,  an amount of tax which, under the provisions of this
35        chapter, he is required to deduct and withhold;
36        (3)  shall register with the state tax  commission,  in  the  manner  pre-
37        scribed  by it, to establish an employer's withholding account number. The
38        account number will be used to report all amounts withheld, for the annual
39        reconciliation required in this  section,  and  for  such  other  purposes
40        relating to withholding as the state tax commission may require; and
41        (4)  must,  notwithstanding  the  provisions  of paragraphs (1) and (2) of
42        this subsection, if the amount of withholding of  such  employer  for  the
43        preceding  twelve  (12) month period equals or exceeds sixty thousand dol-


                                          2

 1        lars ($60,000) per annum or an average of five thousand  dollars  ($5,000)
 2        per month per annum, pay to the state tax commission on the basis of with-
 3        holding  periods  which  begin on the 16th day of the month and end on the
 4        15th day of the following month, and payment shall be made not later  than
 5        five (5) days after the end of the withholding period.
 6        (5)  If  the  payments  made  pursuant to subsections (a)(2) and (a)(4) of
 7        this section are equal to the withholding  under  this  section  shown  or
 8        required  to  be shown on the return required by subsection (b)(1) of this
 9        section, no penalty shall apply to the underpayment for the period between
10        the due date of the payment and the due date of the return.  Interest,  at
11        the  rate provided by section 63-3045, Idaho Code, shall apply to any such
12        underpayment.
13        (6)  Commencing in 1994, the state tax commission shall determine  whether
14        the  threshold  amounts  established  by subsection (a)(4) of this section
15        must be adjusted to reflect fluctuations in the cost of living.  The  com-
16        mission  shall  base  its  determination  on  the cumulative effect of the
17        annual cost-of-living percentage modifications determined  by  the  United
18        States  secretary  of health and human services pursuant to 42 USC 415(i).
19        When the cumulative percentage applied to  the  monthly  threshold  amount
20        equals or exceeds one thousand dollars ($1,000), the commission shall pro-
21        mulgate a rule adjusting the monthly threshold amount by one thousand dol-
22        lars  ($1,000)  and  making  the  necessary proportional adjustment to the
23        annual threshold amount. The rule shall be effective for the next succeed-
24        ing calendar year and each year thereafter until  again  adjusted  by  the
25        commission.  The  tax commission shall determine subsequent adjustments in
26        the same manner, in each case using the year of the last adjustment as the
27        base year.
28        (b)  (1) Every employer shall, file a return upon such form  as  shall  be
29        prescribed by the state tax commission, but not more frequently than quar-
30        terly, or as required pursuant to any agreement between the state tax com-
31        mission  and  the  department of labor under section 63-3035B, Idaho Code.
32        The return shall show, for the period  to  which  it  relates,  the  total
33        amount  of wages, salary, bonus or other emoluments paid to his employees,
34        the amount deducted therefrom in accordance with  the  provisions  of  the
35        Internal  Revenue  Code,  the amount deducted therefrom in accordance with
36        the provisions of this section, the amount of any previous  payments  made
37        pursuant  to this section, and such pertinent and necessary information as
38        the state tax commission may require.
39        (2)  Every employer making a declaration of withholding as provided herein
40        shall furnish to the employees annually, but not later  than  thirty  (30)
41        days  after  the  end  of the calendar year, a record of the amount of tax
42        withheld from such employee on forms to be prescribed, prepared  and  fur-
43        nished by the state tax commission and on or before the last day of Febru-
44        ary  every  employer  shall file a copy thereof with the state tax commis-
45        sion. Every employer who is required, under Internal Revenue Code  section
46        6011,  to file returns on magnetic media or in other machine readable form
47        may be required by rules of the state tax commission to file corresponding
48        state returns on similar magnetic media or other machine readable form.
49        (c)  All moneys deducted and withheld by every employer shall  immediately
50    upon  such deduction be state money and every employer who deducts and retains
51    any amount of money under the provisions of this chapter shall hold  the  same
52    in  trust  for the state of Idaho and for the payment thereof to the state tax
53    commission in the manner and at  the  times  in  this  chapter  provided.  Any
54    employer  who  does  not  possess  real  property situated within the state of
55    Idaho, which, in the opinion of the state tax  commission,  is  of  sufficient


                                          3

 1    value  to  cover  his probable tax liability, may be required to post a surety
 2    bond in such sum as the state tax commission shall deem  adequate  to  protect
 3    the state.
 4        (d)  The  provisions  of this chapter relating to additions to tax in case
 5    of  delinquency, and penalties, shall apply to employers subject to the provi-
 6    sions of this section and for these purposes any amount deducted, or  required
 7    to  be  deducted  and remitted to the state tax commission under this section,
 8    shall be considered to be the tax of the employer and  with  respect  to  such
 9    amount he shall be considered the taxpayer.
10        (e)  Amounts  deducted  from wages of an employee during any calendar year
11    in accordance with the provisions of this section shall be considered to be in
12    part payment of the tax imposed on such employee for his tax year which begins
13    within such calendar year and the return made by the employer under this  sub-
14    section (e) shall be accepted by the state tax commission as evidence in favor
15    of  the  employee  of  the  amount so deducted from his wages. Where the total
16    amount so deducted exceeds the amount of tax on the  employee,  based  on  his
17    Idaho  taxable  income, or where his income is not taxable under this chapter,
18    the state tax commission shall, after examining the annual return filed by the
19    employee in accordance with this chapter, but not later than sixty  (60)  days
20    after  the filing of each return, refund the amount of the excess deducted. No
21    credit or refund shall be made to an employee who fails to file his return, as
22    required under this chapter, within three (3) years from the due date  of  the
23    return,  without  regard  to  extensions, in respect of which the tax withheld
24    might have been credited. In the event that the excess tax  deducted  is  less
25    than one dollar ($1.00), no refund shall be made unless specifically requested
26    by the taxpayer at the time such return is filed.
27        (f)  This section shall in no way relieve any taxpayer from his obligation
28    of  filing  a  return at the time required under this chapter, and, should the
29    amount withheld under the provisions of this section be  insufficient  to  pay
30    the total tax of such taxpayer, such unpaid tax shall be paid at the time pre-
31    scribed by section 63-3034, Idaho Code.
32        (g)  An employee receiving wages shall on any day be entitled to  not
33    more  than,  but  may claim fewer than,  the  same  number of
34    withholding exemptions to which he is entitled under the Internal Revenue Code
35    for federal income tax withholding purposes.
36        (h)  An employer shall use the exemption certificate filed by the employee
37    with the employer under the withholding exemption provisions of  the  Internal
38    Revenue  Code  in  determining  the  amount  of  tax  to  be withheld from the
39    employee's wages or salary under this chapter. The tax commission may redeter-
40    mine the number of withholding exemptions to which  an  employee  is  entitled
41    under subsection (g) of this section, and the state tax commission may require
42    such  exemption certificate to be filed on a form prescribed by the commission
43    in any circumstance where the commission finds that the exemption  certificate
44    filed  for Internal Revenue Code purposes does not properly reflect the number
45    of withholding exemptions to which the employee is entitled under  this  chap-
46    ter. In no event shall any employee give an exemption certificate which claims
47    a  higher  number  of  withholding  exemptions  than  the  number to which the
48    employee is entitled by subsection (g) of this section.

49        SECTION 2.  That Section 63-3036, Idaho Code, be, and the same  is  hereby
50    amended to read as follows:

51        63-3036.  STATE  WITHHOLDING  TAX  FOR FARMERS. (1) Every farmer who is an
52    employer shall at the time of the payment of wages, salaries, bonuses or other
53    emoluments to an employee, deduct and retain therefrom an amount determined in


                                          4

 1    accordance with section 63-3035, Idaho Code, and the amount  so  withheld  and
 2    deducted shall be held by said farmer-employer in trust for the state of Idaho
 3    and  for  the  payment thereof to the state tax commission. Provided,  that no
 4    tax need be withheld from an employee whose wages, salaries, bonuses and other
 5    emoluments total less than one thousand dollars ($1,000) for the tax year.
 6        (2)  The tax so withheld by a  farmer-employer  subject  to  this  section
 7    shall be paid to the state tax commission:
 8        (a)  Except  as provided in paragraph (b) of this subsection, on or before
 9        the last day of February of the year following  the  year  in  which  such
10        deduction was made.
11        (b)    On the last day of the month following the close of a calendar
12        quarter if, in that quarter, a farmer-employer  subject  to  this  section
13        pays  gross wages, salaries, bonuses and other emoluments exceeding twenty
14        thousand dollars ($20,000)   In the case of an employer who  is
15        a "covered employer" paying wages for "agricultural labor," as those terms
16        are  defined in the employment security law in chapter 13, title 72, Idaho
17        Code, on or before the date  on  which  contributions  are  due  from  the
18        employer  to  the  department  of  labor under the employment security law
19        .
20        (3)  The farmer-employer shall deliver  to  the  state  tax  commission  a
21    return  upon  such  form  as  shall be prescribed by said state tax commission
22    showing the amounts of wages, salaries, bonuses or other  emoluments  paid  to
23    his  employee,  the amount deducted therefrom in accordance with this section,
24    and such other pertinent and necessary information as the state tax commission
25    may require on or before the date payments required by this section are due.
26        (4)  The farmer-employer making such a deduction as provided for  in  this
27    section shall furnish to the employee annually, but not later than thirty (30)
28    days  after  the  end  of the calendar year, a record of the amount of the tax
29    withheld from such employee on forms to be prescribed, prepared and  furnished
30    by  the  state tax commission and at the same time every employer shall file a
31    copy thereof with the state tax commission. The provisions of subsections (d),
32    (e), (f), (g) and (h) of section 63-3035, Idaho Code, shall be  applicable  to
33    the tax withheld by the farmer-employer under this section.

34        SECTION  3.  An  emergency  existing  therefor,  which emergency is hereby
35    declared to exist, this act shall be in full force and effect on and after its
36    passage and approval, and retroactively to January 1, 1999.

Statement of Purpose / Fiscal Impact


                        STATEMENT OF PURPOSE

                              RS08400

This bill amends code sections relating to withholding state
income taxes.

Section 1 allows employees to claim fewer personal exemptions
for state income tax withholding than are claimed for federal
income tax withholding.

Section 2 coordinates the filing and payment of withholding
taxes for certain agricultural employers with the payment of
contributions under the employment security law.

Section 3 provides a retroactive effective date to January 1,
1999.

                           FISCAL IMPACT

No fiscal effect.

CONTACT Name: Dan John/Ted Spangler 
Agency: State Tax Commission
Phone: 334-7530


Statement of Purpose/Fiscal Impact                          H 121