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H0159...............................................by REVENUE AND TAXATION
SALES TAX - FOOD - Amends existing law to delete the grocery tax credit for
state income tax purposes; to provide an exemption from sales and use tax
on certain food sold for human consumption; and to provide for an increase
in the percentage of appropriated funds distributed to the Revenue Sharing
Account.
02/06 House intro - 1st rdg - to printing
02/07 Rpt prt - to Rev/Tax
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 159
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO CERTAIN CREDITS AND REFUNDS AND SALES AND USE TAX; REPEALING SEC-
3 TION 63-3024A, IDAHO CODE; AMENDING SECTION 63-3619, IDAHO CODE, TO PRO-
4 VIDE AN EXEMPTION FROM SALES TAX FOR CERTAIN FOOD SOLD FOR HUMAN CONSUMP-
5 TION AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3621, IDAHO
6 CODE, TO PROVIDE AN EXEMPTION FROM USE TAX FOR CERTAIN FOOD SOLD FOR HUMAN
7 CONSUMPTION AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3638,
8 IDAHO CODE, TO PROVIDE FOR AN INCREASE IN THE PERCENTAGE OF APPROPRIATED
9 FUNDS DISTRIBUTED TO THE REVENUE SHARING ACCOUNT AND TO MAKE TECHNICAL
10 CORRECTIONS; AMENDING SECTION 63-3029F, IDAHO CODE, TO DELETE A CODE REF-
11 ERENCE; DECLARING AN EMERGENCY AND PROVIDING A RETROACTIVE EFFECTIVE DATE.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Section 63-3024A, Idaho Code, be, and the same is hereby
14 repealed.
15 SECTION 2. That Section 63-3619, Idaho Code, be, and the same is hereby
16 amended to read as follows:
17 63-3619. IMPOSITION AND RATE OF THE SALES TAX. An excise tax is hereby
18 imposed upon each sale at retail at the rate of five per cent percent (5%) of
19 the sales price of all retail sales subject to taxation under this chapter and
20 such amount with the exception of food sold for human consumption which shall
21 be exempt from sales taxation. The types and kinds of food products eligible
22 for sales tax exemption shall be the same types and kinds of food products
23 that are eligible for purchases made with coupons issued under the federal
24 food stamp act of 1977 and the food security act of 1985 and do not include
25 restaurant sales of food. The excise tax as set forth herein shall be computed
26 monthly on all sales at retail within the preceding month.
27 (a) The tax shall apply to, be computed on, and collected for all credit,
28 instalment installment, conditional or similar sales at the time of the sale
29 or, in the case of rentals, at the time the rental is charged.
30 (b) The tax hereby imposed shall be collected by the retailer from the
31 consumer.
32 (c) The state tax commission shall provide schedules for collection of
33 the tax on sales which involve a fraction of a dollar. The retailer shall cal-
34 culate the tax upon the entire amount of the purchases of the consumer made at
35 a particular time and not separately upon each item purchased. The retailer
36 may retain any amount collected under the bracket system prescribed which is
37 in excess of the amount of tax for which he is liable to the state during the
38 period as compensation for the work of collecting the tax.
39 (d) It is unlawful for any retailer to advertise or hold out or state to
40 the public or to any customer, directly or indirectly, that the tax or any
41 part thereof will be assumed or absorbed by the retailer or that it will not
42 be added to the selling price of the property sold or that if added it or any
2
1 part thereof will be refunded. Any person violating any provision of this sec-
2 tion is guilty of a misdemeanor.
3 (e) The tax commission may by rule provide that the amount collected by
4 the retailer from the customer in reimbursement of the tax be displayed sepa-
5 rately from the list price, the price advertised on the premises, the marked
6 price, or other price on the sales slip or other proof of sale.
7 (f) The taxes imposed by this chapter shall apply to the sales to con-
8 tractors purchasing for use in the performance of contracts with the United
9 States.
10 SECTION 3. That Section 63-3621, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 63-3621. IMPOSITION AND RATE OF THE USE TAX -- EXEMPTIONS. An excise tax
13 is hereby imposed on the storage, use, or other consumption in this state of
14 tangible personal property acquired on or after July 1, 1965, for storage,
15 use, or other consumption in this state at the rate of five percent (5%) of
16 the value of the property, and with the exception of food sold for human con-
17 sumption which shall be exempt from use taxation. The types and kinds of food
18 products eligible for use tax exemption shall be the same types and kinds of
19 food products that are eligible for purchases made with coupons issued under
20 the federal food stamp act of 1977 and the food security act of 1985 and do
21 not include restaurant sales of food. Aa recent sales price shall be presump-
22 tive evidence of the value of the property unless the property is wireless
23 telecommunications equipment, in which case a recent sales price shall be con-
24 clusive evidence of the value of the property.
25 (a) Every person storing, using, or otherwise consuming, in this state,
26 tangible personal property is liable for the tax. His liability is not extin-
27 guished until the tax has been paid to this state except that a receipt from a
28 retailer maintaining a place of business in this state or engaged in business
29 in this state given to the purchaser is sufficient to relieve the purchaser
30 from further liability for the tax to which the receipt refers. A retailer
31 shall not be considered to have stored, used or consumed wireless telecommuni-
32 cations equipment by virtue of giving, selling or otherwise transferring such
33 equipment at a discount as an inducement to a consumer to commence or continue
34 a contract for telecommunications service.
35 (b) Every retailer engaged in business in this state, and making sales of
36 tangible personal property for the storage, use, or other consumption in this
37 state, not exempted under section 63-3622, Idaho Code, shall, at the time of
38 making the sales or, if storage, use, or other consumption of the tangible
39 personal property is not then taxable hereunder, at the time the storage, use,
40 or other consumption becomes taxable, collect the tax from the purchaser and
41 give to the purchaser a receipt therefor in the manner and form prescribed by
42 the state tax commission.
43 (c) The provisions of this section shall not apply when the retailer pays
44 sales tax on the transaction and collects reimbursement for such sales tax
45 from the customer.
46 (d) Every retailer engaged in business in this state or maintaining a
47 place of business in this state shall register with the state tax commission
48 and give the name and address of all agents operating in this state, the loca-
49 tion of all distributions or sales houses or offices or other places of busi-
50 ness in this state, and such other information as the state tax commission may
51 require.
52 (e) For the purpose of the proper administration of this act and to pre-
53 vent evasion of the use tax and the duty to collect the use tax, it shall be
3
1 presumed that tangible personal property sold by any person for delivery in
2 this state is sold for storage, use, or other consumption in this state. The
3 burden of proving the sale is tax exempt is upon the person who makes the sale
4 unless he obtains from the purchaser a resale certificate to the effect that
5 the property is purchased for resale or rental. It shall be presumed that
6 sales made to a person who has completed a resale certificate for the seller's
7 records are not taxable and the seller need not collect sales or use taxes
8 unless the tangible personal property purchased is taxable to the purchaser as
9 a matter of law in the particular instance claimed on the resale certificate.
10 A seller may accept a resale certificate from a purchaser prior to the
11 time of sale, at the time of sale, or at any reasonable time after the sale
12 when necessary to establish the privilege of the exemption. The resale certif-
13 icate relieves the person selling the property from the burden of proof only
14 if taken from a person who is engaged in the business of selling or renting
15 tangible personal property and who holds the permit provided for by section
16 63-3620, Idaho Code, or who is a retailer not engaged in business in this
17 state, and who, at the time of purchasing the tangible personal property,
18 intends to sell or rent it in the regular course of business or is unable to
19 ascertain at the time of purchase whether the property will be sold or will be
20 used for some other purpose. Other than as provided elsewhere in this section,
21 when a resale certificate, properly executed, is presented to the seller, the
22 seller has no duty or obligation to collect sales or use taxes in regard to
23 any sales transaction so documented regardless of whether the purchaser prop-
24 erly or improperly claimed an exemption. A seller so relieved of the obliga-
25 tion to collect tax is also relieved of any liability to the purchaser for
26 failure to collect tax or for making any report or disclosure of information
27 required or permitted under this chapter.
28 The resale certificate shall bear the name and address of the purchaser,
29 shall be signed by the purchaser or his agent, shall indicate the number of
30 the permit issued to the purchaser, or that the purchaser is an out-of-state
31 retailer, and shall indicate the general character of the tangible personal
32 property sold by the purchaser in the regular course of business. The certifi-
33 cate shall be substantially in such form as the state tax commission may pre-
34 scribe.
35 (f) If a purchaser who gives a resale certificate makes any storage or
36 use of the property other than retention, demonstration or display while hold-
37 ing it for sale in the regular course of business, the storage or use is tax-
38 able as of the time the property is first so stored or used.
39 (g) Any person violating any provision of this section is guilty of a
40 misdemeanor and punishable by a fine not in excess of one hundred dollars
41 ($100), and each violation shall constitute a separate offense.
42 (h) It shall be presumed that tangible personal property shipped or
43 brought to this state by the purchaser was purchased from a retailer, for
44 storage, use, or other consumption in this state.
45 (i) It shall be presumed that tangible personal property delivered out-
46 side this state to a purchaser known by the retailer to be a resident of this
47 state was purchased from a retailer for storage, use, or other consumption in
48 this state. This presumption may be controverted by evidence satisfactory to
49 the state tax commission that the property was not purchased for storage, use,
50 or other consumption in this state.
51 (j) When the tangible personal property subject to use tax has been sub-
52 jected to a general retail sales or use tax by another state of the United
53 States in an amount equal to or greater than the amount of the Idaho tax, and
54 evidence can be given of such payment, the property will not be subject to
55 Idaho use tax. If the amount paid the other state was less, the property will
4
1 be subject to use tax to the extent that the Idaho tax exceeds the tax paid to
2 the other state. For the purposes of this subsection, a registration certifi-
3 cate or title issued by another state or subdivision thereof for a vehicle or
4 trailer or a vessel as defined in section 67-7003, Idaho Code, shall be suffi-
5 cient evidence of payment of a general retail sales or use tax.
6 (k) The use tax herein imposed shall not apply to the use by a nonresi-
7 dent of this state of a motor vehicle which is registered or licensed under
8 the laws of the state of his residence and is not used in this state more than
9 a cumulative period of time totaling ninety (90) days in any consecutive
10 twelve (12) months, and which is not required to be registered or licensed
11 under the laws of this state.
12 (l) The use tax herein imposed shall not apply to the use of household
13 goods and personal effects by a resident of this state, if such articles were
14 acquired by such person in another state while a resident of that state and
15 primarily for use outside this state and if such use was actual and substan-
16 tial, but if an article was acquired less than three (3) months prior to the
17 time he entered this state, it will be presumed that the article was acquired
18 for use in this state and that its use outside this state was not actual and
19 substantial. For purposes of this subsection, "resident" shall be as defined
20 in section 63-3013 or 63-3013A, Idaho Code.
21 (m) The use tax herein imposed shall not apply to the storage, use, or
22 other consumption of tangible personal property which is or will be incorpo-
23 rated into real property and which has been donated to and has become the
24 property of:
25 (1) A nonprofit organization as defined in section 63-3622O, Idaho Code;
26 or
27 (2) The state of Idaho; or
28 (3) Any political subdivision of the state.
29 This exemption applies whether the tangible personal property is incorporated
30 in real property by the donee, a contractor or subcontractor of the donee, or
31 any other person.
32 SECTION 4. That Section 63-3638, Idaho Code, be, and the same is hereby
33 amended to read as follows:
34 63-3638. SALES TAX -- DISTRIBUTION. All moneys collected under this chap-
35 ter, except as may otherwise be required in section 63-3203, Idaho Code, shall
36 be distributed by the tax commission as follows:
37 (1) An amount of money shall be distributed to the state refund account
38 sufficient to pay current refund claims. All refunds authorized under this
39 chapter by the commission shall be paid through the state refund account, and
40 those moneys are continuously appropriated.
41 (2) Five million dollars ($5,000,000) per year is continuously appropri-
42 ated and shall be distributed to the permanent building fund, provided by sec-
43 tion 57-1108, Idaho Code.
44 (3) Four million eight hundred thousand dollars ($4,800,000) per year is
45 continuously appropriated and shall be distributed to the water pollution con-
46 trol account established by section 39-3605, Idaho Code.
47 (4) An amount equal to the sum required to be certified by the chairman
48 of the Idaho housing and finance association to the state tax commission pur-
49 suant to section 67-6211, Idaho Code, in each year is continuously appropri-
50 ated and shall be paid to any capital reserve fund, established by the Idaho
51 housing and finance association pursuant to section 67-6211, Idaho Code. Such
52 amounts, if any, as may be appropriated hereunder to the capital reserve fund
53 of the Idaho housing and finance association shall be repaid for distribution
5
1 under the provisions of this section, subject to the provisions of section
2 67-6215, Idaho Code, by the Idaho housing and finance association, as soon as
3 possible, from any moneys available therefor and in excess of the amounts
4 which the association determines will keep it self-supporting.
5 (5) An amount equal to the sum required by the provisions of section
6 63-709, Idaho Code, is continuously appropriated and shall be paid as provided
7 by section 63-709, Idaho Code.
8 (6) An amount required by the provisions of chapter 53, title 33, Idaho
9 Code. of this section
10 (7) One dollar ($1.00) on each application for certificate of title or
11 initial application for registration of a motor vehicle, snowmobile, all-
12 terrain vehicle or other vehicle processed by the county assessor or the Idaho
13 transportation department excepting those applications in which any sales or
14 use taxes due have been previously collected by a retailer, shall be a fee for
15 the services of the assessor of the county or the Idaho transportation depart-
16 ment in collecting such taxes, and shall be paid into the current expense fund
17 of the county or state highway account established in section 40-702, Idaho
18 Code.
19 (8) Thirteen Sixteen and three-quarters two-tenths percent (13.7516.2%)
20 is continuously appropriated and shall be distributed to the revenue sharing
21 account which is created in the state treasury, and the moneys in the revenue
22 sharing account will be paid by the tax commission as follows:
23 (a) Twenty-eight and two-tenths percent (28.2%) shall be paid to the var-
24 ious cities as follows:
25 (i) Fifty percent (50%) of such amount shall be paid to the various
26 cities, and each city shall be entitled to an amount in the propor-
27 tion that the population of that city bears to the population of all
28 cities within the state; and
29 (ii) Fifty percent (50%) of such amount shall be paid to the various
30 cities, and each city shall be entitled to an amount in the propor-
31 tion that the preceding year's market value for assessment purposes
32 for that city bears to the preceding year's market value for assess-
33 ment purposes for all cities within the state.
34 (b) Twenty-eight and two-tenths percent (28.2%) shall be paid to the var-
35 ious counties as follows:
36 (i) One million three hundred twenty thousand dollars ($1,320,000)
37 shall be distributed one forty-fourth (1/44) to each of the various
38 counties; and
39 (ii) The balance of such amount shall be paid to the various coun-
40 ties, and each county shall be entitled to an amount in the propor-
41 tion that the population of that county bears to the population of
42 the state;
43 (c) Thirty-five and nine-tenths percent (35.9%) of the amount appropri-
44 ated in this subsection (8) shall be paid to the several counties for dis-
45 tribution to the cities and counties as follows:
46 (i) Each city and county which received a payment under the provi-
47 sions of section 63-3638(e), Idaho Code, during the fourth quarter of
48 calendar year 1999, shall be entitled to a like amount during suc-
49 ceeding calendar quarters.
50 (ii) If the dollar amount of money available under this subsection
51 (8)(c) in any quarter does not equal the amount paid in the fourth
52 quarter of calendar year 1999, each city's and county's payment shall
53 be reduced proportionately.
54 (iii) If the dollar amount of money available under this subsection
55 (8)(c) in any quarter exceeds the amount paid in the fourth quarter
6
1 of calendar year 1999, each city and county shall be entitled to a
2 proportionately increased payment, but such increase shall not exceed
3 one hundred five percent (105%) of the total payment made in the
4 fourth quarter of calendar year 1999.
5 (iv) If the dollar amount of money available under this subsection
6 (8)(c) in any quarter exceeds one hundred five percent (105%) of the
7 total payment made in the fourth quarter of calendar year 1999, any
8 amount over and above such one hundred five percent (105%) shall be
9 paid fifty percent (50%) to the various cities in the proportion that
10 the population of the city bears to the population of all cities
11 within the state, and fifty percent (50%) to the various counties in
12 the proportion that the population of a county bears to the popula-
13 tion of the state; and
14 (d) Seven and seven-tenths percent (7.7%) of the amount appropriated in
15 this subsection (8) shall be paid to the several counties for distribution
16 to special purpose taxing districts as follows:
17 (i) Each such district which received a payment under the provi-
18 sions of section 63-3638(e), Idaho Code, during the fourth quarter of
19 calendar year 1999, shall be entitled to a like amount during suc-
20 ceeding calendar quarters.
21 (ii) If the dollar amount of money available under this subsection
22 (8)(d) in any quarter exceeds the amount distributed under paragraph
23 (i) of this subsection (8)(d), each special purpose taxing district
24 shall be entitled to a share of the excess based on the proportion
25 each such district's current property tax budget bears to the sum of
26 the current property tax budgets of all such districts in the state.
27 The state tax commission shall calculate district current property
28 tax budgets to include any unrecovered foregone amounts as determined
29 under section 63-802(1)(e), Idaho Code. When a special purpose taxing
30 district is situated in more than one (1) county, the tax commission
31 shall determine the portion attributable to the special purpose tax-
32 ing district from each county in which it is situated.
33 (iii) If special purpose taxing districts are consolidated, the
34 resulting district is entitled to a base amount equal to the sum of
35 the base amounts which were received in the last calendar quarter by
36 each district prior to the consolidation.
37 (iv) If a special purpose taxing district is dissolved or
38 disincorporated, the state tax commission shall continuously distrib-
39 ute to the board of county commissioners an amount equal to the last
40 quarter's distribution prior to dissolution or disincorporation. The
41 board of county commissioners shall determine any redistribution of
42 moneys so received.
43 (v) Taxing districts formed after January 1, 2001, are not entitled
44 to a payment under the provisions of this subsection (8)(d).
45 (vi) For purposes of this subsection (8)(d), a special purpose tax-
46 ing district is any taxing district which is not a city, a county or
47 a school district.
48 (9) Any moneys remaining over and above those necessary to meet and
49 reserve for payments under other subsections of this section shall be distrib-
50 uted to the general account fund.
51 SECTION 5. That Section 63-3029F, Idaho Code, be, and the same is hereby
52 amended to read as follows:
53 63-3029F. SPECIAL CREDIT AVAILABLE -- NEW EMPLOYEES. (1) Any taxpayer
7
1 shall be allowed a credit, in an amount determined under subsection (2) of
2 this section, against the tax imposed by this chapter, other than the tax
3 imposed by section 63-3082, Idaho Code, for any taxable year during which the
4 taxpayer's employment of new employees, as defined under section 63-3029E(1),
5 Idaho Code, increases above the taxpayer's average employment for either: (a)
6 the prior taxable year, or (b) the average of three (3) prior taxable years,
7 whichever is higher. No credit shall be allowed under this section unless the
8 number of new employees equals or exceeds one (1) person.
9 (2) The credit authorized in subsection (1) of this section shall be five
10 hundred dollars ($500) per new employee, but the total credit allowed shall
11 not exceed three and one-quarter percent (3.25%) of net income from the
12 taxpayer's corporate, proprietorship, partnership, small business corporation
13 or limited liability company revenue-producing enterprise in which the employ-
14 ment occurred. Additionally, the total of this and all other credits allowed
15 under this chapter except for the credits allowed under sections 63-3024A,
16 63-3025D and 63-3029, Idaho Code, taken during any taxable year shall not
17 exceed forty-five percent (45%) of the tax otherwise imposed on the taxpayer
18 for the taxable year for which such credit is allowed.
19 (3) If the sum of the credit carryovers from the credit allowed by sub-
20 section (2) of this section and the amount of credit for the taxable year from
21 the credit allowed by subsection (2) of this section exceed the limitation
22 imposed by subsection (2) of this section for the current taxable year, the
23 excess attributable to the current taxable year's credit shall be a credit
24 carryover to the three (3) succeeding taxable years. The entire amount of
25 unused credit shall be carried forward to the earliest of the succeeding
26 years, wherein the oldest available unused credit shall be used first, so long
27 as the employment level for which the credit was granted is still maintained.
28 SECTION 6. An emergency existing therefor, which emergency is hereby
29 declared to exist, Sections 1 and 5 of this act shall be in full force and
30 effect on and after its passage and approval, and retroactively to January 1,
31 2001.
STATEMENT OF PURPOSE
RS10820C1
This legislation repeals sales tax on food. Section 1: Repeals grocery tax credit. Section
2: Sales tax exemption on food. Section 3: Use tax on food.
Section 4: Adjustment to distribution to counties offset loss of revenue via sales
tax.
Section 5: An emergency clause and retroactive date for section 1 regarding
grocery tax credit(others effective 7 1-01).
FISCAL IMPACT
125.4 million approximately. Recovering 18 million from grocery tax credit leaving a
negative impact on the general fund of 107.4 million.
STATEMENT OF PURPOSE/FISCAL NOTE H 159
Contact
Name: Sen. Boatright
Phone:
332 1407