View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
H0627...............................................by REVENUE AND TAXATION COLLEGE SAVINGS PROGRAM - Amends and adds to existing law to establish the College Savings Program; and to establish the College Savings Program Board; and to provide the powers and duties of the board. 02/18 House intro - 1st rdg - to printing 02/21 Rpt prt - to Rev/Tax 03/02 Rpt out - rec d/p - to 2nd rdg 03/03 2nd rdg - to 3rd rdg 03/08 3rd rdg - PASSED - 65-4-1 AYES -- Alltus, Barraclough(Barraclough), Barrett, Bell, Bieter, Black, Boe, Bruneel, Callister, Campbell, Chase, Cheirrett, Clark, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13), Field(20), Gagner, Gould, Hadley, Hammond, Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd, Kellogg, Kempton, Kendell, Kunz, Lake, Linford, Loertscher, Mader, Marley, Meyer, Montgomery, Mortensen, Moss, Moyle, Pischner, Pomeroy, Reynolds, Ridinger, Ringo, Robison, Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stoicheff, Stone, Tilman, Trail, Wood, Zimmermann, Mr Speaker NAYS -- Geddes, McKague, Pearce, Taylor Absent and excused -- Wheeler Floor Sponsors - Gagner, Boe Title apvd - to Senate 03/09 Senate intro - 1st rdg - to Loc Gov 03/21 Rpt out - rec d/p - to 2nd rdg 03/22 2nd rdg - to 3rd rdg 04/03 3rd rdg - PASSED - 35-0-0 AYES -- Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron, Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee, McLaughlin, Noh, Parry, Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner, Stennett, Thorne, Wheeler, Whitworth, Williams NAYS -- None Absent and excused -- None Floor Sponsor - Ipsen Title apvd - to House 04/04 To enrol - rpt enrol - Sp signed 04/05 Pres signed - to Governor 04/12 Governor signed Session Law Chapter 213 Effective: 01/01/00
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature Second Regular Session - 2000 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 627 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO A COLLEGE SAVINGS PROGRAM; AMENDING TITLE 33, IDAHO CODE, BY THE 3 ADDITION OF A NEW CHAPTER 54, TITLE 33, IDAHO CODE, TO DEFINE TERMS, TO 4 ESTABLISH AND PROVIDE POWERS AND DUTIES TO THE STATE COLLEGE SAVINGS PRO- 5 GRAM BOARD REGARDING THE COLLEGE SAVINGS PROGRAM, TO PROVIDE THE USE OF A 6 CONTRACTOR OR CONTRACTORS AS ACCOUNT DEPOSITORY AND MANAGER, TO PROVIDE 7 PROGRAM REQUIREMENTS, TO PROVIDE FOR TAXATION, TO PROVIDE SCHOLARSHIP AND 8 FINANCIAL AID PROVISIONS, TO PROVIDE LIMITATIONS AND TO PROVIDE AN ANNUAL 9 REPORT; AMENDING SECTION 63-3022, IDAHO CODE, TO PROVIDE A DEDUCTION WITH 10 A LIMITATION TO COLLEGE SAVINGS PROGRAMS; DECLARING AN EMERGENCY AND PRO- 11 VIDING RETROACTIVE APPLICATION. 12 Be It Enacted by the Legislature of the State of Idaho: 13 SECTION 1. That Title 33, Idaho Code, be, and the same is hereby amended 14 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 15 ter 54, Title 33, Idaho Code, and to read as follows: 16 CHAPTER 54 17 COLLEGE SAVINGS PROGRAM 18 33-5401. DEFINITIONS. As used in this chapter, the following terms have 19 the following meanings unless the context clearly denotes otherwise: 20 (1) "Account" means an individual trust account or savings account estab- 21 lished as prescribed in this chapter. 22 (2) "Account owner" means the person designated at the time an account is 23 opened as having the right to withdraw moneys from the account before the 24 account is disbursed to or for the benefit of the designated beneficiary. 25 (3) "Board" means the state college savings program board created in sec- 26 tion 33-5402, Idaho Code. 27 (4) "Designated beneficiary," except as provided in section 33-5404, 28 Idaho Code, means, with respect to an account, the person designated at the 29 time the account is opened as the person whose higher education expenses are 30 expected to be paid from the account or, if this designated beneficiary is 31 replaced in accordance with section 33-5404, Idaho Code, the replacement bene- 32 ficiary. 33 (5) "Financial institution" means any state bank, national bank, savings 34 bank, savings and loan association, credit union, insurance company, brokerage 35 firm or other similar entity that is authorized to do business in this state. 36 (6) "Higher education institution" means any of the following: 37 (a) An institution described in the higher education act of 1965 (P.L. 38 89-329; 79 Stat. 1219; 20 U.S.C. sections 1001 et seq.); 39 (b) An area vocational educational school as defined in 20 U.S.C. section 40 2471(4); 41 (c) An institution regulated by the state board of education. 42 (7) "Member of the family" means any of the following: 2 1 (a) A son or daughter of a person or a descendant of the son or daughter 2 of the person; 3 (b) A stepson or stepdaughter of a person; 4 (c) A brother, sister, stepbrother or stepsister of a person. For pur- 5 poses of this paragraph, "brother" and "sister" include a brother or sis- 6 ter by the half-blood; 7 (d) The father or mother of a person or the ancestor of the father or 8 mother of a person; 9 (e) A stepfather or stepmother of a person; 10 (f) A son or daughter of a person's brother or sister. For purposes of 11 this paragraph, "brother" and "sister" include a brother or sister by the 12 half-blood; 13 (g) A brother or sister of the person's father or mother. For purposes of 14 this paragraph, "brother" and "sister" include a brother or sister by the 15 half-blood; 16 (h) A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother- 17 in-law or sister-in-law of a person; 18 (i) The spouse of a person or the spouse of any individual described in 19 this paragraph; 20 (j) Any individual who meets the criteria for family membership described 21 in this subsection as a result of legal adoption. 22 (8) "Nonqualified withdrawal" means a withdrawal from an account other 23 than one (1) of the following: 24 (a) A qualified withdrawal; 25 (b) A withdrawal made as the result of the death or disability of the 26 designated beneficiary of an account; 27 (c) A withdrawal that is made on the account of a scholarship, or the 28 allowance or payment described in section 135(d)(1)(B) or (C) of the 29 Internal Revenue Code, and that is received by the designated beneficiary, 30 but only to the extent of the amount of this scholarship, allowance or 31 payment; 32 (d) A rollover or change of the designated beneficiary. 33 (9) "Program" means the college savings program established under this 34 chapter. 35 (10) "Qualified higher education expenses" means tuition, fees, books, 36 supplies, room and board, and equipment required for enrollment or attendance 37 of a designated beneficiary at a higher education institution. 38 (11) "Qualified withdrawal" means a withdrawal from an account to pay the 39 qualified higher education expenses of the designated beneficiary of the 40 account, but only if the withdrawal is made in accordance with this chapter. 41 33-5402. STATE COLLEGE SAVINGS PROGRAM BOARD -- COLLEGE SAVINGS PROGRAM 42 -- POWERS AND DUTIES. There is hereby created the state college savings pro- 43 gram board. The board shall consist of the state treasurer or his designee who 44 shall serve as chair, the governor or designee, the state controller or desig- 45 nee, the attorney general or designee, the superintendent of public instruc- 46 tion or designee, and the secretary of state or designee. A quorum shall be 47 necessary to transact business. Members of the board shall be compensated by 48 their appointing entity. The state college savings program board shall: 49 (1) Develop and implement the program in a manner consistent with this 50 chapter through the adoption of rules, guidelines and procedures; 51 (2) Retain professional services, if necessary, including accountants, 52 auditors, consultants and other experts; 53 (3) Seek rulings and other guidance from the United States department of 54 the treasury, the internal revenue service and the state tax commission relat- 3 1 ing to the program; 2 (4) Make changes to the program required for the participants in the pro- 3 gram to obtain the federal income tax benefits or treatment provided by sec- 4 tion 529 of the Internal Revenue Code of 1986, as amended. 5 (5) Interpret, in rules, policies, guidelines and procedures, the provi- 6 sions of this chapter broadly in light of its purpose and objectives; 7 (6) Charge, impose and collect administrative fees and service charges in 8 connection with any agreement, contract or transaction relating to the pro- 9 gram; 10 (7) Select the financial institution or institutions to act as the depos- 11 itory and manager of the program in accordance with this chapter. 12 33-5403. USE OF CONTRACTOR AS ACCOUNT DEPOSITORY AND MANAGER. (1) The 13 board shall implement the program through the use of one (1) or more financial 14 institutions to act as the depositories and managers. Under the program, per- 15 sons may establish accounts through the program at the depository. 16 (2) The board shall solicit proposals from financial institutions to act 17 as the depositories and managers of the program. Financial institutions that 18 submit proposals must describe the financial instruments that will be held in 19 accounts. 20 (3) The board shall select as program depositories and managers the 21 financial institution or institutions from among bidding financial institu- 22 tions that demonstrate the most advantageous combination, both to potential 23 program participants and this state, of the following factors: 24 (a) Financial stability and integrity; 25 (b) The safety of the investment instruments being offered, taking into 26 account any insurance provided with respect to these instruments; 27 (c) The ability of the investment instruments to track estimated costs of 28 higher education as calculated by the board and provided by the financial 29 institution to the account holder; 30 (d) The ability of the financial institutions, directly or through a sub- 31 contract, to satisfy recordkeeping and reporting requirements; 32 (e) The financial institution's plan for promoting the program and the 33 investment it is willing to make to promote the program; 34 (f) The fees, if any, proposed to be charged to persons for maintaining 35 accounts; 36 (g) The minimum initial deposit and minimum contributions that the finan- 37 cial institution will require and the willingness of the financial insti- 38 tution to accept contributions through payroll deduction plans and other 39 deposit plans; 40 (h) Any other benefits to this state or its residents included in the 41 proposal, including an account opening fee payable to the board by the 42 account owner and an additional fee from the financial institution for 43 statewide program marketing by the board. 44 (4) The board shall enter into a contract with a financial institution 45 or, except as provided in subsection (5) of this section, contracts with 46 financial institutions, to serve as program managers and depositories. 47 (5) The board may select more than one (1) financial institution and 48 investment for the program if both of the following conditions exist: 49 (a) The United States internal revenue service has provided guidance that 50 giving a contributor a choice of two (2) investment instruments under a 51 state plan will not cause the plan to fail to qualify for favorable tax 52 treatment under section 529 of the Internal Revenue Code; 53 (b) The board concludes that the choice of instrument vehicles is in the 54 best interest of college savers and will not interfere with the promotion 4 1 of the program. 2 (6) A program manager shall: 3 (a) Take all action required to keep the program in compliance with the 4 requirements of this chapter and all action not contrary to this chapter 5 or its contract to manage the program so that it is treated as a qualified 6 state tuition plan under section 529 of the Internal Revenue Code; 7 (b) Keep adequate records of each account, keep each account segregated 8 from each other account and provide the board with the information neces- 9 sary to prepare statements required by section 33-5404, Idaho Code, or 10 file these statements on behalf of the board; 11 (c) Compile and total information contained in statements required to be 12 prepared under section 33-5404, Idaho Code, and provide these compila- 13 tions to the board; 14 (d) If there is more than one (1) program manager, provide the board with 15 this information to assist the board to determine compliance with section 16 33-5404, Idaho Code; 17 (e) Provide representatives of the board, including other contractors or 18 other state agencies, access to the books and records of the program man- 19 ager to the extent needed to determine compliance with the contract; 20 (f) Hold all accounts in trust for the benefit of this state and the 21 account owner. 22 (7) Any contract executed between the board and a financial institution 23 pursuant to this section shall be for a term not to exceed five (5) years. 24 (8) If a contract executed between the board and a financial institution 25 pursuant to this section is not renewed, all of the following conditions apply 26 at the end of the term of the nonrenewed contract: 27 (a) Accounts previously established and held in investment instruments at 28 the financial institution shall not be terminated; 29 (b) Additional contributions may be made to the accounts; 30 (c) No new accounts may be placed with that financial institution. 31 (9) The board may terminate a contract with a financial institution at 32 any time for good cause on the recommendation of the board. If a contract is 33 terminated pursuant to this subsection, the board shall take custody of 34 accounts held at that financial institution and shall seek to promptly trans- 35 fer the accounts to another financial institution that is selected as a pro- 36 gram manager and into investment instruments as similar to the original 37 investments as is possible. 38 33-5404. PROGRAM REQUIREMENTS. (1) The program shall be operated through 39 the use of accounts. An account may be opened by any person who desires to 40 save to pay the qualified higher education expenses of a person by satisfying 41 each of the following requirements: 42 (a) Completing an application in the form prescribed by the board. The 43 application shall include the following information: 44 (i) The name, address and social security number or employer iden- 45 tification number of the contributor; 46 (ii) The name, address and social security number of the account 47 owner if the account owner is not the contributor; 48 (iii) The name, address and social security number of the designated 49 beneficiary; 50 (iv) The certification relating to no excess contributions required 51 by subsection (17) of this section; 52 (v) Any other information that the board may require; 53 (b) Paying the one-time application fee established by the board; 54 (c) Making the minimum contribution required by the board or by opening 5 1 an account; 2 (d) Designating the type of account to be opened if more than one (1) 3 type of account is offered. 4 (2) Any person may make contributions to an account after the account is 5 opened. 6 (3) Contributions to accounts may be made only in cash. 7 (4) Account owners may withdraw all or part of the balance from an 8 account on sixty (60) days' notice, or a shorter period as may be authorized 9 by the board, under rules prescribed by the board. These rules shall include 10 provisions that will generally enable the board or program manager to deter- 11 mine if a withdrawal is a nonqualified withdrawal or a qualified withdrawal. 12 The rules may, but need not, require one (1) or more of the following: 13 (a) Account owners seeking to make a qualified withdrawal or other with- 14 drawal that is not a nonqualified withdrawal shall provide certifications, 15 copies of bills for qualified higher education expenses or other support- 16 ing material; 17 (b) Qualified withdrawals from an account shall be made only by a check 18 payable as designated by the account owner; 19 (c) Withdrawals not meeting certain requirements shall be treated as 20 nonqualified withdrawals by the program manager, and if these withdrawals 21 are not nonqualified withdrawals, the account owner must seek refunds of 22 penalties directly from the board. 23 (5) An account owner may change the designated beneficiary of an account 24 to an individual who is a member of the family of the former designated bene- 25 ficiary in accordance with procedures established by the board. 26 (6) On the direction of an account owner, all or a portion of an account 27 may be transferred to another account of which the designated beneficiary is a 28 member of the family of the designated beneficiary of the transferee account. 29 (7) Changes in designated beneficiaries and rollovers under this section 30 are not permitted if the changes or rollovers would violate either of the fol- 31 lowing provisions of this section relating to excess contributions or to 32 investment choice. 33 (8) In the case of any nonqualified withdrawal from an account, an amount 34 equal to ten percent (10%) of the portion of the proposed withdrawal that 35 would constitute income as determined in accordance with section 529 of the 36 Internal Revenue Code shall be withheld as a penalty and paid to the board for 37 use in operating and marketing the program and for state student financial 38 aid. 39 (9) The board, by rule, shall increase the percentage of the penalty pre- 40 scribed in subsection (8) of this section or change the basis of this penalty 41 if the board determines that the amount of the penalty must be increased to 42 constitute a penalty that is more than a de minimis penalty for purposes of 43 qualifying the program as a qualified state tuition program under section 529 44 of the Internal Revenue Code. 45 (10) The board may decrease the percentage of the penalty prescribed in 46 subsection (8) of this section if it determines that both of the following 47 conditions exist: 48 (a) The penalty is greater than is required to constitute a penalty that 49 is more than a de minimis penalty for purposes of qualifying the program 50 as a qualified state tuition program under section 529 of the Internal 51 Revenue Code; 52 (b) The penalty, when combined with other revenue generated under this 53 chapter, is producing more revenue than is required to cover the costs of 54 operating and marketing the program and to recover any costs not previ- 55 ously recovered. 6 1 (11) If an account owner makes a nonqualified withdrawal and no penalty 2 amount is withheld pursuant to subsection (8) of this section or the amount 3 withheld is less than the amount required to be withheld under that subsection 4 for nonqualified withdrawals, the account owner shall pay the unpaid portion 5 of the penalty to the state tax commission on or before April 15 of the fol- 6 lowing tax year. 7 (12) Each account shall be maintained separately from each other account 8 under the program. 9 (13) Separate records and accounting shall be maintained for each account 10 for each designated beneficiary. 11 (14) No contributor to, account owner of or designated beneficiary of any 12 account may direct the investment of any contributions to an account or the 13 earnings from the account. 14 (15) If the board terminates the authority of a financial institution to 15 hold accounts and accounts must be moved from that financial institution to 16 another financial institution, the board shall select the financial institu- 17 tion and type of investment to which the balance of the account is moved 18 unless the internal revenue service provides guidance stating that allowing 19 the account owner to select among several financial institutions that are cur- 20 rent contractors would not cause a plan to cease to be a qualified state 21 tuition plan. 22 (16) Neither an account owner nor a designated beneficiary may use an 23 interest in an account as security for a loan. Any pledge of an interest in an 24 account is of no force and effect. 25 (17) The board shall adopt rules to prevent contributions on behalf of a 26 designated beneficiary in excess of those necessary to pay the qualified 27 higher education expenses of the designated beneficiaries. The rules shall 28 address the following: 29 (a) Procedures for aggregating the total balances of multiple accounts 30 established for a designated beneficiary; 31 (b) The establishment of a maximum total balance that may be held in 32 accounts for a designated beneficiary; 33 (c) The board shall review the quarterly reports received from partici- 34 pating financial institutions and certify that the balance in all quali- 35 fied state tuition programs, as defined in section 529 of the Internal 36 Revenue Code, of which that person is the designated beneficiary does not 37 exceed the lesser of: 38 (i) A maximum college savings amount established by the board from 39 time to time; 40 (ii) The cost in current dollars of qualified higher education 41 expenses that the contributor reasonably anticipates the designated 42 beneficiary will incur; 43 (d) Requirements that any excess balances with respect to a designated 44 beneficiary be promptly withdrawn in a nonqualified withdrawal or rolled 45 over to another account in accordance with this section. 46 (18) If there is any distribution from an account to any person or for the 47 benefit of any person during a calendar year, the distribution shall be 48 reported to the internal revenue service and the account owner or the desig- 49 nated beneficiary to the extent required by federal law. 50 (19) The financial institution shall provide statements to each account 51 owner at least once each year within thirty-one (31) days after the twelve 52 (12) month period to which they relate. The statement shall identify the con- 53 tributions made during a preceding twelve (12) month period, the total contri- 54 butions made through the end of the period, the value of the account as of the 55 end of this period, distributions made during this period and any other mat- 7 1 ters that the board requires be reported to the account owner. 2 (20) Statements and information returns relating to accounts shall be pre- 3 pared and filed to the extent required by federal or state tax law. 4 (21) A state or local government or organization described in section 5 501(c)(3) of the Internal Revenue Code may open and become the account owner 6 of an account to fund scholarships for persons whose identity will be deter- 7 mined after an account is opened. 8 (22) In the case of any account described in subsection (21) of this sec- 9 tion, the requirement that a designated beneficiary be designated when an 10 account is opened does not apply and each person who receives an interest in 11 the account as a scholarship shall be treated as a designated beneficiary with 12 respect to the interest. 13 (23) Any social security numbers, addresses or telephone numbers of indi- 14 vidual account holders and designated beneficiaries that come into the posses- 15 sion of the board are confidential, are not public records and shall not be 16 released by the board. 17 33-5405. TAXATION TO BENEFICIARY. The designated beneficiary, as defined 18 in section 529(e)(1) of the Internal Revenue Code, from an individual trust 19 account or savings account established under this chapter is liable for taxes 20 that may accrue under chapter 30, title 63, Idaho Code, when a qualified with- 21 drawal is made by the designated beneficiary. 22 33-5406. SCHOLARSHIPS AND FINANCIAL AID PROVISIONS. (1) Any student loan 23 program, student grant program or other financial assistance program estab- 24 lished or administered by this state shall treat the balance in an account of 25 which the student is a designated beneficiary as if it were an asset of the 26 parent of the designated beneficiary and not as a scholarship or grant or as 27 an asset of the student for determining a student's or parent's income, assets 28 or financial need. 29 (2) Subsection (1) of this section applies to any financial assistance 30 program administered by a state-supported college or university. 31 (3) Subsections (1) and (2) of this section do not apply if any of the 32 following conditions exist: 33 (a) Federal law requires all or a portion of the amount in an account to 34 be taken into account in a different manner; 35 (b) Federal benefits could be lost if all or a portion of the amount in 36 an account is not taken into account in a different manner; 37 (c) A specific grant establishing a financial assistance program requires 38 that all or a portion of the amount in an account be taken into account. 39 33-5407. LIMITATIONS OF CHAPTER. (1) Nothing in this chapter shall be 40 construed to: 41 (a) Give any designated beneficiary any rights or legal interest with 42 respect to an account unless the designated beneficiary is the account 43 owner; 44 (b) Guarantee that a designated beneficiary will be admitted to a higher 45 education institution or be allowed to continue enrollment at or graduate 46 from a higher education institution located in this state after admission; 47 (c) Establish state residency for a person merely because the person is a 48 designated beneficiary; 49 (d) Guarantee that amounts saved pursuant to the program will be suffi- 50 cient to cover the qualified higher education expenses of a designated 51 beneficiary. 52 (2) Nothing in this chapter establishes any obligation of this state or 8 1 any agency or instrumentality of this state to guarantee for the benefit of 2 any account owner, contributor to an account or designated beneficiary any of 3 the following: 4 (a) The return of any amounts contributed to an account; 5 (b) The rate of interest or other return on any account; 6 (c) The payment of interest or other return on any account; 7 (d) Tuition rates or the cost of related higher education expenditures. 8 (3) Under rules adopted by the board, every contract, application, 9 deposit slip or other similar document that may be used in connection with a 10 contribution to an account shall clearly indicate that the account is not 11 insured by this state and neither the principal deposited nor the investment 12 return is guaranteed by this state. 13 33-5408. ANNUAL REPORT. The board shall submit an annual report to the 14 speaker of the house of representatives and the president pro tempore of the 15 senate by February 1 that summarizes the board's findings and recommendations 16 concerning the program established by this chapter. 17 SECTION 2. That Section 63-3022, Idaho Code, be, and the same is hereby 18 amended to read as follows: 19 63-3022. ADJUSTMENTS TO TAXABLE INCOME. The additions and subtractions 20 set forth in this section, and in sections 63-3022A through 63-3022M, Idaho 21 Code, are to be applied to the extent allowed in computing Idaho taxable 22 income: 23 (a) Add any state taxes, measured by net income, paid or accrued during 24 the taxable year adjusted for state tax refunds used in arriving at taxable 25 income. 26 (b) Add the net operating loss deduction used in arriving at taxable 27 income. 28 (c) (1) A net operating loss for any taxable year commencing on and after 29 January 1, 1999, shall be a net operating loss carryback not to exceed a 30 total of one hundred thousand dollars ($100,000) to the two (2) immedi- 31 ately preceding taxable years. Any portion of the net operating loss not 32 subtracted in the two (2) preceding years may be subtracted in the next 33 twenty (20) years succeeding the taxable year in which the loss arises in 34 order until exhausted. The sum of the deductions may not exceed the amount 35 of the net operating loss deduction incurred. At the election of the tax- 36 payer, the two (2) year carryback may be foregone and the loss subtracted 37 from income received in taxable years arising in the next twenty (20) 38 years succeeding the taxable year in which the loss arises in order until 39 exhausted. The election shall be made as under section 172(b)(3) of the 40 Internal Revenue Code. An election under this subsection must be in the 41 manner prescribed in the rules of the state tax commission and once made 42 is irrevocable for the year in which it is made. The term "income" as used 43 in this subsection (c) means Idaho taxable income as defined in this chap- 44 ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code. 45 (2) Net operating losses incurred by a corporation during a year in which 46 such corporation did not transact business in Idaho or was not included in 47 a group of corporations combined under subsection (t) of section 63-3027, 48 Idaho Code, may not be subtracted. However, if at least one (1) corpora- 49 tion within a group of corporations combined under subsection (t) of sec- 50 tion 63-3027, Idaho Code, was transacting business in Idaho during the 51 taxable year in which the loss was incurred, then the net operating loss 52 may be subtracted. Net operating losses incurred by a person, other than a 9 1 corporation, in business activities not taxable by Idaho may not be sub- 2 tracted. 3 (d) In the case of a corporation, add the amount deducted under the pro- 4 visions of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue 5 Code (relating to dividends received by corporations) as limited by section 6 246(b)(1) of said code. 7 (e) In the case of a corporation, subtract an amount determined under 8 section 78 of the Internal Revenue Code to be taxable as dividends. 9 (f) Subtract the amount of any income received or accrued during the tax- 10 able year which is exempt from taxation by this state, under the provisions of 11 any other law of this state or a law of the United States, if not previously 12 subtracted in arriving at taxable income. 13 (g) In the case of corporations and partnerships, add Idaho taxable 14 income of nonresident officers, directors, shareholders, partners or members 15 to the extent such income is attributed to the corporation or partnership in 16 section 63-3022L, Idaho Code. 17 (h) For the purpose of determining the Idaho taxable income of the bene- 18 ficiary of a trust or of an estate, distributable net income as defined for 19 federal tax purposes shall be corrected for the other adjustments required by 20 this section. In the event that a nonresident beneficiary of a trust or estate 21 fails to file an Idaho income tax return reporting all or any part of distrib- 22 utable net income taxable in Idaho or fails to pay any tax due thereon, the 23 trust or estate making the payment or distribution shall be taxable upon the 24 amount of such distribution or payment at the rates established by section 25 63-3024, Idaho Code. 26 (i) In the case of an individual who is on active duty as a full-time 27 officer, enlistee or draftee, with the armed forces of the United States, 28 which full-time duty is or will be continuous and uninterrupted for one hun- 29 dred twenty (120) consecutive days or more, deduct compensation paid by the 30 armed forces of the United States for services performed outside this state. 31 The deduction is allowed only to the extent such income is included in taxable 32 income, and provided that appropriate adjustments shall be made in determining 33 the deductions and exemptions allowed pursuant to section 63-3026A(4), Idaho 34 Code. 35 (j) In the case of a corporation, including any corporation included in a 36 group of corporations combined under subsection (t) of section 63-3027, Idaho 37 Code, add any capital loss deducted which loss was incurred during any year in 38 which such corporation did not transact business in Idaho. However, do not add 39 any capital loss deducted if a corporation, including any corporation in a 40 group of corporations combined under subsection (t) of section 63-3027, Idaho 41 Code, was transacting business in Idaho during the taxable year in which the 42 loss was incurred. In the case of persons, other than corporations, add any 43 capital loss deducted which was incurred in business activities not taxable by 44 Idaho at the time such loss was incurred. In computing the income taxable to 45 an S corporation or partnership under this section, deduction shall not be 46 allowed for a carryover or carryback of a net operating loss provided for in 47 subsection (c) of this section or a capital loss provided for in section 1212 48 of the Internal Revenue Code. 49 (k) In the case of an individual, there shall be allowed as a deduction 50 from gross income either (1) or (2) at the option of the taxpayer: 51 (1) The standard deduction as defined in section 63, Internal Revenue 52 Code. 53 (2) Itemized deductions as defined in section 63 of the Internal Revenue 54 Code except state income taxes as specified in section 164 of the Internal 55 Revenue Code. 10 1 (l) Add the taxable amount of any lump sum distribution deducted from 2 gross income pursuant to section 402(d)(3) of the Internal Revenue Code. The 3 taxable amount will include the ordinary income portion and the amount eligi- 4 ble for the capital gain election. 5 (m) Deduct any amounts included in gross income under the provisions of 6 section 86 of the Internal Revenue Code relating to certain social security 7 and railroad benefits. 8 (n) In the case of a self-employed individual, deduct the actual cost of 9 premiums paid to secure worker's compensation insurance for coverage in Idaho, 10 if such cost has not been deducted in arriving at taxable income. 11 (o) In the case of an individual, deduct the amount contributed to a col- 12 lege savings program pursuant to chapter 54, title 33, Idaho Code, but not 13 more than four thousand dollars ($4,000) per tax year. 14 SECTION 3. An emergency existing therefor, which emergency is hereby 15 declared to exist, this act shall be in full force and effect on and after its 16 passage and approval, and retroactively to January 1, 2000.
REPRINT REPRINT REPRINT REPRINT REPRINT REPRINT STATEMENT OF PURPOSE RS 09893C1 This legislation is designed to encourage savings in an educational fund. Under IRS Tax Code 529, the fund will grow tax deferred from state and federal income tax, until withdrawn by the beneficiary for the purpose of post-secondary education at an accredited college, university or professional-technical school. The proceeds, when withdrawn, would be taxed at the beneficiary's tax rate. An annual contribution to the fund of ($4,000 maximum) would be deductible from the contributor's state taxable income. Under the State Treasurer's review, state approved financial institutions would receive and invest the funds. Safeguards are provided to assure that all funds are used only for the purpose of higher education as IRS tax code allows. FISCAL IMPACT A state income deduction of $4,000.00 would result in a state income tax reduction of up to $328.00. If a student withdrew $10,000 taxable annually, it would be subject to state income tax when withdrawn. Because of the multiple variables for payment, the state income taxes paid would range from a $20.00 credit to $674.00 depending on the marital status of the student. it is anticipated that a limited negative fiscal impact would result. Contact Name: Senator Grant Ipsen Phone:(208) 332-1326 Representative Lee Gagner Phone:(208) 332-1000 Representative Donna Boe Phone:(208) 332-1000 STATEMENT OF PURPOSE/FISCAL NOTE Bill No. 627