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H0120...............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law to govern the time within which income tax
refund claims must be filed.
01/30 House intro - 1st rdg - to printing
01/31 Rpt prt - to Rev/Tax
02/06 Rpt out - rec d/p - to 2nd rdg
02/07 2nd rdg - to 3rd rdg
02/13 3rd rdg - PASSED - 65-0-5
AYES -- Barraclough, Barrett, Bell, Bieter, Black, Boe, Bolz,
Bradford, Bruneel, Campbell, Chase, Clark, Collins, Crow, Deal,
Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20), Gagner,
Gould, Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck, Jaquet,
Jones, Kellogg, Kendell, Kunz, Lake, Langford, Loertscher, Mader,
Marley, McKague, Meyer, Montgomery, Mortensen, Moyle, Pearce,
Pischner, Pomeroy, Raybould, Ridinger, Roberts, Robison, Sali,
Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stone, Swan,
Tilman, Trail, Wheeler, Wood, Young
NAYS -- None
Absent and excused -- Bedke, Callister, Cuddy, Moss, Mr. Speaker
Floor Sponsor - Raybould
Title apvd - to Senate
02/14 Senate intro - 1st rdg - to Loc Gov
02/19 Rpt out - rec d/p - to 2nd rdg
02/20 2nd rdg - to 3rd rdg
03/08 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
Burtenshaw, Cameron, Danielson, Darrington, Davis, Deide, Dunklin,
Frasure, Geddes, Goedde, Hawkins, Ingram, Ipsen, Keough,
King-Barrutia, Lee, Lodge, Noh, Richardson, Risch, Sandy, Schroeder,
Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Whitworth,
Williams,
NAYS -- None
Absent and excused -- None
Floor Sponsor -- Bunderson
Title apvd - to House
03/09 To enrol
03/12 Rpt enrol - Sp signed
03/13 Pres signed
03/14 To Governor
03/19 Governor signed
Session Law Chapter 56
Effective: 07/01/01
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 120
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO REFUNDS OF INCOME TAXES; AMENDING SECTION 63-3035, IDAHO CODE, TO
3 STRIKE PROVISIONS RELATING TO THE TIME WITHIN WHICH TO CLAIM REFUNDS FROM
4 WITHHOLDING, RELATING TO REFUNDS OF LESS THAN WHOLE DOLLAR AMOUNTS AND TO
5 MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3035A, IDAHO CODE, TO
6 STRIKE PROVISIONS RELATING TO THE TIME WITHIN WHICH TO CLAIM REFUNDS FROM
7 WITHHOLDING OF LOTTERY WINNINGS AND TO MAKE TECHNICAL CORRECTIONS; AMEND-
8 ING SECTION 63-3036A, IDAHO CODE, TO CHANGE A CROSS REFERENCE AND TO MAKE
9 TECHNICAL CORRECTIONS; AND AMENDING SECTION 63-3072, IDAHO CODE, TO PRO-
10 VIDE THE TIME WITHIN WHICH TO CLAIM REFUNDS FROM WITHHOLDING AND TO PRO-
11 VIDE PROCEDURES.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Section 63-3035, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 63-3035. STATE WITHHOLDING TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL-
16 LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the pro-
17 visions of the Internal Revenue Code to withhold, collect and pay income tax
18 on wages or salaries paid by such employer to any employee (other than employ-
19 ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the time
20 of such payment of wages, salary, bonus or other emolument to such employee,
21 deduct and retain therefrom an amount substantially equivalent to the tax rea-
22 sonably calculated by the state tax commission to be due from the employee
23 under this chapter. The state tax commission shall prepare tables showing
24 amounts to be withheld, and shall supply same to each employer subject to this
25 section. In the event that an employer can demonstrate administrative inconve-
26 nience in complying with the exact requirements set forth in these tables, he
27 may, with the consent of the state tax commission and upon application to it,
28 use a different method which will produce substantially the same amount of
29 taxes withheld. Every employer making payments of wages or salaries earned in
30 Idaho, regardless of the place where such payment is made:
31 (1) shall be liable to the state of Idaho for the payment of the tax
32 required to be deducted and withheld under this section and shall not be
33 liable to any individual for the amount deducted from his wages and paid
34 over in compliance or intended compliance with this section;
35 (2) must pay to the state tax commission monthly on or before the 20th
36 day of the succeeding month, or at such other times as the state tax com-
37 mission may allow, an amount of tax which, under the provisions of this
38 chapter, he is required to deduct and withhold;
39 (3) shall register with the state tax commission, in the manner pre-
40 scribed by it, to establish an employer's withholding account number. The
41 account number will be used to report all amounts withheld, for the annual
42 reconciliation required in this section, and for such other purposes
43 relating to withholding as the state tax commission may require; and
2
1 (4) must, notwithstanding the provisions of paragraphs (1) and (2) of
2 this subsection, if the amount of withholding of such employer for the
3 preceding twelve (12) month period equals or exceeds sixty thousand dol-
4 lars ($60,000) per annum or an average of five thousand dollars ($5,000)
5 per month per annum, pay to the state tax commission on the basis of with-
6 holding periods which begin on the 16th day of the month and end on the
7 15th day of the following month, and payment shall be made not later than
8 five (5) days after the end of the withholding period.
9 (5) If the payments made pursuant to subsections (a)(2) and (a)(4) of
10 this section are equal to the withholding under this section shown or
11 required to be shown on the return required by subsection (b)(1) of this
12 section, no penalty shall apply to the underpayment for the period between
13 the due date of the payment and the due date of the return. Interest, at
14 the rate provided by section 63-3045, Idaho Code, shall apply to any such
15 underpayment.
16 (6) Commencing in 1994, the state tax commission shall determine whether
17 the threshold amounts established by subsection (a)(4) of this section
18 must be adjusted to reflect fluctuations in the cost of living. The com-
19 mission shall base its determination on the cumulative effect of the
20 annual cost-of-living percentage modifications determined by the United
21 States secretary of health and human services pursuant to 42 USC 415(i).
22 When the cumulative percentage applied to the monthly threshold amount
23 equals or exceeds one thousand dollars ($1,000), the commission shall pro-
24 mulgate a rule adjusting the monthly threshold amount by one thousand dol-
25 lars ($1,000) and making the necessary proportional adjustment to the
26 annual threshold amount. The rule shall be effective for the next succeed-
27 ing calendar year and each year thereafter until again adjusted by the
28 commission. The tax commission shall determine subsequent adjustments in
29 the same manner, in each case using the year of the last adjustment as the
30 base year.
31 (b) (1) Every employer shall, file a return upon such form as shall be
32 prescribed by the state tax commission, but not more frequently than quar-
33 terly, or as required pursuant to any agreement between the state tax com-
34 mission and the department of labor under section 63-3035B, Idaho Code.
35 The return shall show, for the period to which it relates, the total
36 amount of wages, salary, bonus or other emoluments paid to his employees,
37 the amount deducted therefrom in accordance with the provisions of the
38 Internal Revenue Code, the amount deducted therefrom in accordance with
39 the provisions of this section, the amount of any previous payments made
40 pursuant to this section, and such pertinent and necessary information as
41 the state tax commission may require.
42 (2) Every employer making a declaration of withholding as provided herein
43 shall furnish to the employees annually, but not later than thirty (30)
44 days after the end of the calendar year, a record of the amount of tax
45 withheld from such employee on forms to be prescribed, prepared and fur-
46 nished by the state tax commission and on or before the last day of Febru-
47 ary every employer shall file a copy thereof with the state tax commis-
48 sion. Every employer who is required, under Internal Revenue Code section
49 6011, to file returns on magnetic media or in other machine readable form
50 may be required by rules of the state tax commission to file corresponding
51 state returns on similar magnetic media or other machine readable form.
52 (c) All moneys deducted and withheld by every employer shall immediately
53 upon such deduction be state money and every employer who deducts and retains
54 any amount of money under the provisions of this chapter shall hold the same
55 in trust for the state of Idaho and for the payment thereof to the state tax
3
1 commission in the manner and at the times in this chapter provided. Any
2 employer who does not possess real property situated within the state of
3 Idaho, which, in the opinion of the state tax commission, is of sufficient
4 value to cover his probable tax liability, may be required to post a surety
5 bond in such sum as the state tax commission shall deem adequate to protect
6 the state.
7 (d) The provisions of this chapter relating to additions to tax in case
8 of delinquency, and penalties, shall apply to employers subject to the provi-
9 sions of this section and for these purposes any amount deducted, or required
10 to be deducted and remitted to the state tax commission under this section,
11 shall be considered to be the tax of the employer and with respect to such
12 amount he shall be considered the taxpayer.
13 (e) Amounts deducted from wages of an employee during any calendar year
14 in accordance with the provisions of this section shall be considered to be in
15 part payment of the tax imposed on such employee for his tax year which begins
16 within such calendar year and the return made by the employer under this sub-
17 section (e) shall be accepted by the state tax commission as evidence in favor
18 of the employee of the amount so deducted from his wages. Where the total
19 amount so deducted exceeds the amount of tax on the employee, based on his
20 Idaho taxable income, or where his income is not taxable under this chapter,
21 the state tax commission shall, after examining the annual return filed by the
22 employee in accordance with this chapter, but not later than sixty (60) days
23 after the filing of each return, refund the amount of the excess deducted. No
24 credit or refund shall be made to an employee who fails to file his return, as
25 required under this chapter, within three (3) years from the due date of the
26 return, without regard to extensions, in respect of which the tax withheld
27 might have been credited. In the event that the excess tax deducted is less
28 than one dollar ($1.00), no refund shall be made unless specifically requested
29 by the taxpayer at the time such return is filed.
30 (f) This section shall in no way relieve any taxpayer from his obligation
31 of filing a return at the time required under this chapter, and, should the
32 amount withheld under the provisions of this section be insufficient to pay
33 the total tax of such taxpayer, such unpaid tax shall be paid at the time pre-
34 scribed by section 63-3034, Idaho Code.
35 (g) An employee receiving wages shall on any day be entitled to not more
36 than, but may claim fewer than, the number of withholding exemptions to which
37 he is entitled under the Internal Revenue Code for federal income tax with-
38 holding purposes.
39 (h) An employer shall use the exemption certificate filed by the employee
40 with the employer under the withholding exemption provisions of the Internal
41 Revenue Code in determining the amount of tax to be withheld from the
42 employee's wages or salary under this chapter. The tax commission may redeter-
43 mine the number of withholding exemptions to which an employee is entitled
44 under subsection (g) of this section, and the state tax commission may require
45 such exemption certificate to be filed on a form prescribed by the commission
46 in any circumstance where the commission finds that the exemption certificate
47 filed for Internal Revenue Code purposes does not properly reflect the number
48 of withholding exemptions to which the employee is entitled under this chap-
49 ter. In no event shall any employee give an exemption certificate which claims
50 a higher number of withholding exemptions than the number to which the
51 employee is entitled by subsection (g) of this section.
52 SECTION 2. That Section 63-3035A, Idaho Code, be, and the same is hereby
53 amended to read as follows:
4
1 63-3035A. STATE INCOME TAX WITHHOLDING TAX ON LOTTERY WINNINGS. (1) When-
2 ever the Idaho state lottery is required by the iInternal rRevenue cCode to
3 withhold, collect and pay over income tax on any prize, proceeds or winnings
4 it shall, at the time of payment of such prize, proceeds or winnings to the
5 recipient, withhold from the payment an amount equal to eight and two-tenths
6 percent (8.2%) of the prize, proceeds or winnings to be applied to Idaho
7 income taxes due from the recipient.
8 (2) The state tax commission shall accept amounts withheld according to
9 this section as payment by the recipient of the amount so withheld of income
10 taxes imposed on the recipient for the taxable year in which the prize, pro-
11 ceeds or winnings are includable in the recipient's Idaho taxable income.
12 (3) When the total amount withheld (along with other credits due, with-
13 holding or payments attributable to the taxpayer) exceeds the taxes due from
14 the recipient, the state tax commission shall, after examining the state
15 income tax return filed by the recipient, refund the amount of the excess
16 withheld in the manner provided for refunds of withholding under section
17 63-3035, Idaho Code. The state tax commission shall make no credit or refund
18 to a person who fails to file within three (3) years from the due date, with-
19 out regard to extensions, the return on which the tax withheld could have been
20 credited.
21 (4) The Idaho state lottery shall remit the amounts withheld to the state
22 tax commission on or before the date similar payments and reports are due to
23 the internal revenue service.
24 (5) The Idaho state lottery shall furnish to the recipient, not later
25 than thirty (30) days after the end of the calendar year, a record of the tax
26 withheld during that year and shall, not later than the last day of the fol-
27 lowing February, file a copy of the record with the state tax commission.
28 (6) The Idaho state lottery and the state tax commission may agree to
29 different times and procedures for making the remittances or reports required
30 in this section.
31 (7) Nothing in this section relieves any taxpayer from an obligation to
32 file a return or pay taxes at the time and in the manner required by this
33 chapter.
34 SECTION 3. That Section 63-3036A, Idaho Code, be, and the same is hereby
35 amended to read as follows:
36 63-3036A. PAYMENT OF ESTIMATED TAX. (a) Any corporation subject to this
37 chapter which is required to make a payment of estimated taxes to the
38 Iinternal Rrevenue Sservice and will have an Idaho income tax liability of
39 five hundred dollars ($500) or more shall pay to the state tax commission
40 estimated taxes due under this chapter.
41 (b) The provisions of the Internal Revenue Code relating to determination
42 of reporting periods and the due dates of payments of estimated tax shall
43 apply to the estimated payments due under this section.
44 (c) The amount of estimated tax due shall be determined as follows:
45 (1) Commencing with the calendar quarter that begins July 1, 1987, in the
46 case of any corporation which was required to pay tax under this chapter
47 for its immediately preceding taxable year, the amount of each quarterly
48 payment for its current taxable year shall be twenty-five per cent percent
49 (25%) of the lesser of:
50 (i) The tax amount required to be reported on the return for the
51 immediately preceding taxable year; or
52 (ii) Ninety per cent percent (90%) of the tax required to be paid
53 with the current year's return.
5
1 (2) Any corporation required to make estimated payments under this sec-
2 tion and who makes annualized estimated payments under the Internal Reve-
3 nue Code shall be permitted to annualize its estimated payments under this
4 section in the manner prescribed by regulation of the state tax commis-
5 sion. Such regulations shall, to the extent practicable, follow the provi-
6 sions of the Internal Revenue Code and the regulations thereunder relating
7 to annualization of estimated payments.
8 (d) The amounts paid as estimated taxes pursuant to subsection (c) of
9 this section shall be considered to be in part payment of the tax imposed by
10 this chapter on the person reporting such estimated tax. The part payment
11 shall apply to such tax for the tax year during which the reporting period for
12 which the estimate is made occurs. In the event that such part payments,
13 together with all other part payments, estimated payments, withheld taxes or
14 other credits allowable against the taxes imposed by this chapter shall exceed
15 the amount of tax due, the state tax commission shall refund such excess
16 within the time and in the manner prescribed in section 63-3035(e)72(c), Idaho
17 Code, relating to refund of taxes withheld by employers.
18 (e) The provisions of this section shall in no way relieve any person
19 from any obligation to file a return under any provision of this chapter at
20 the time such return may be due. In the event that the estimated payments
21 required under this section, together with any other part payments, estimated
22 payments, withheld taxes or other credits applicable to the same taxable year
23 are less than the amount of taxes imposed by this chapter, the unpaid tax
24 shall be paid at the time prescribed in section 63-3034, Idaho Code.
25 (f) The payment due for the first full reporting period occurring after
26 the effective date of this act, and the payment due for each of the next three
27 (3) succeeding reporting periods shall be one-half (1/2) of the amount other-
28 wise due under this section.
29 SECTION 4. That Section 63-3072, Idaho Code, be, and the same is hereby
30 amended to read as follows:
31 63-3072. CREDITS AND REFUNDS. (a) Subject to the provisions of subsec-
32 tions (b), (c) and (g) of this section, where there has been an overpayment of
33 the tax imposed by the provisions of this chapter, the amount of such overpay-
34 ment shall be credited against any tax administered by the state tax commis-
35 sion which tax is then due from the taxpayer, and any balance of such excess
36 shall be refunded to the taxpayer.
37 (b) The state tax commission is authorized, and the state board of tax
38 appeals is authorized to order the state tax commission in proper cases, to
39 credit, remit, refund, or pay back all tax, penalties, and interest, errone-
40 ously or illegally assessed or collected, regardless of whether the same have
41 been paid under protest, which claim for refund shall be certified to the
42 state board of examiners by the state tax commission.
43 (c) Except in regard to amounts withheld as provided in subsection (e) of
44 section 63-3035, 63-3035A or 63-3036, Idaho Code, or amounts paid as estimated
45 payments under section 63-3036A, Idaho Code, a claim for credit or refund of
46 tax, penalties, or interest paid shall be made within the later of three (3)
47 years of the due date of the return, without regard to extensions, or three
48 (3) years from the date the return was filed. However, with regard to remit-
49 tances received with an extension of time to file, or a tentative return, a
50 claim for credit or refund of such remittances shall be made within three (3)
51 years from the due date of the return without regard to extensions.
52 (c) With regard to amounts withheld as provided in section 63-3035,
53 63-3035A or 63-3036, Idaho Code, or amounts paid as estimated payments under
6
1 section 63-3036A, Idaho Code, a claim for credit or refund shall be made
2 within three (3) years from the due date of the return, without regard to
3 extensions, for the taxable year in respect to which the tax was withheld.
4 (d) Notwithstanding any other provisions of this section, when Idaho tax-
5 able income and/or tax credits for any taxable year have been adjusted as a
6 result of a final federal determination, the period of limitations for claim-
7 ing a refund or credit of tax, penalties, or interest shall be reopened and
8 shall not expire until the later of one (1) year from the date of delivery of
9 the final federal determination to the taxpayer by the internal revenue ser-
10 vice, three (3) years from the due date of the return, without regard to
11 extensions, or three (3) years from the date the return was filed. For pur-
12 poses of this subsection, the term "final federal determination" shall mean
13 the final resolution of all issues which were adjusted by the internal revenue
14 service. When the final federal determination is submitted, the taxpayer shall
15 also submit copies of all schedules and written explanations provided by the
16 internal revenue service. Upon the expiration of the period of limitations as
17 provided in subsections (cb) and (g) of this section, only those specific
18 items of income, deductions, gains, losses or credits which were adjusted in
19 the final federal determination shall be subject to adjustment for purposes of
20 recomputing Idaho income, deductions, gains, losses, credits, and the effect
21 of such adjustments on Idaho allocations and apportionments.
22 (e) If a claim for credit or refund relates to an overpayment attribut-
23 able to a net operating loss carryback, in lieu of the period of limitations
24 prescribed in subsection (cb) of this section, the period shall be that period
25 which ends with the expiration of the fifteenth day of the fortieth month fol-
26 lowing the end of the taxable year of the net operating loss which results in
27 such carryback.
28 (f) If an adjustment, which was made within the period of limitations as
29 provided in this section, affects the amount of tax credit, net operating
30 loss, or capital loss, claimed in a taxable year other than the tax year in
31 which the adjustment is made, then adjustments to the credit, net operating
32 loss, or capital loss, claimed in such other tax year may be made and a claim
33 for credit or refund of tax, penalties or interest may be made even though
34 such claim would otherwise be barred under the provisions of this section.
35 (g) Prior to the expiration of the time prescribed in this section for
36 credit or refund of any tax imposed by the provisions of this chapter, both
37 the state tax commission or its delegate or deputy and the taxpayer may con-
38 sent in writing to extend such period of time. The period so agreed upon may
39 be extended by subsequent agreements in writing made before the expiration of
40 the period previously agreed upon. When a pass-through entity extends the
41 period of limitations in accordance with the provisions of this subsection the
42 period of limitations for the other taxpayers is automatically extended for
43 the same period for the purpose of claiming a credit or refund of tax, penal-
44 ties or interest by the other taxpayers reflecting the pass-through entity
45 adjustments.
46 (h) The expiration of the period of limitations as provided in this sec-
47 tion shall be suspended for the time period during which the taxpayer is pro-
48 hibited from claiming a credit or refund of tax, penalties or interest imposed
49 under the provisions of this chapter, and for thirty (30) days thereafter
50 between the issuance by the state tax commission of a notice under either sec-
51 tion 63-3045 or 63-3065, Idaho Code, and the final resolution of any proceed-
52 ing resulting from the notice.
53 (i) Appeal of a state tax commission decision denying in whole or in part
54 a claim for credit or refund shall be made in accordance with and within the
55 time limits prescribed in section 63-3049, Idaho Code.
7
1 (j) For purposes of this section, "return" includes a notice of defi-
2 ciency determination issued by the state tax commission when no return was
3 filed by the taxpayer. Such a return is deemed filed on the date the taxes
4 determined by the state tax commission are assessed.
STATEMENT OF PURPOSE
R.S. 10475C1
This bill would change the law relating to refunds of income tax
withholding in two particulars.
It suspends the statute of limitations on refund claims for
withholding during the pendency of administrative or judicial
review of income tax cases.
It strikes language relating to withholding refunds of less than
a dollar. This provision was made obsolete by the whole
dollar rounding statute.
Moves language relating to the time to claim refunds of
withholding or estimated payments from several different
sections to one section.
FISCAL NOTE
Less than $10,000 revenue loss from some additional
withholding refunds.
CONTACT
Name: Dan John/Ted Spangler, State Tax Commission
Phone: 334-7530
HOUSE
STATEMENT OF PURPOSE/FISCAL NOTE H 12