2001 Legislation
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HOUSE BILL NO. 357 – Income tax withholding/employr pymt


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Daily Data Tracking History

H0357...............................................by REVENUE AND TAXATION
INCOME TAX - WITHHOLDING - Amends existing law to delete the requirement
that certain employers must remit payment of state income tax withholding
to the State Tax Commission five days after the end of the withholding
period; and to delete the inflation adjustment of certain income limits for
reporting purposes.
03/09    House intro - 1st rdg - to printing
03/12    Rpt prt - to Rev/Tax
03/14    Rpt out - rec d/p - to 2nd rdg
03/15    2nd rdg - to 3rd rdg
03/16    3rd rdg - PASSED - 58-0-12
      AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Bolz,
      Bruneel, Callister, Chase, Collins, Crow, Cuddy, Deal, Denney,
      Ellsworth, Eskridge, Field(20), Gagner, Hadley, Hammond, Harwood,
      Higgins, Hornbeck, Jaquet, Jones, Kellogg, Kendell, Kunz, Lake,
      Langford, Loertscher, Mader, Marley, Meyer, Montgomery, Moss, Pearce,
      Pischner, Pomeroy, Raybould, Ridinger, Roberts, Robison, Sali,
      Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stone,
      Swan(Block), Tilman, Trail, Wood, Young, Mr. Speaker
      NAYS -- None
      Absent and excused -- Boe, Bradford, Campbell, Clark, Ellis,
      Field(13), Gould, Henbest, McKague, Mortensen, Moyle, Wheeler
    Floor Sponsor --  Kellogg
    Title apvd - to Senate
03/19    Senate intro - 1st rdg - to Loc Gov

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 357
                             BY REVENUE AND TAXATION COMMITTEE
  1                                        AN ACT
  7        DATE.
  8    Be It Enacted by the Legislature of the State of Idaho:
  9        SECTION 1.  That Section 63-3035, Idaho Code, be, and the same  is  hereby
 10    amended to read as follows:
 12    LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the  pro-
 13    visions  of  the Internal Revenue Code to withhold, collect and pay income tax
 14    on wages or salaries paid by such employer to any employee (other than employ-
 15    ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the  time
 16    of  such  payment of wages, salary, bonus or other emolument to such employee,
 17    deduct and retain therefrom an amount substantially equivalent to the tax rea-
 18    sonably calculated by the state tax commission to be  due  from  the  employee
 19    under  this  chapter.  The  state  tax commission shall prepare tables showing
 20    amounts to be withheld, and shall supply same to each employer subject to this
 21    section. In the event that an employer can demonstrate administrative inconve-
 22    nience in complying with the exact requirements set forth in these tables,  he
 23    may,  with the consent of the state tax commission and upon application to it,
 24    use a different method which will produce substantially  the  same  amount  of
 25    taxes  withheld. Every employer making payments of wages or salaries earned in
 26    Idaho, regardless of the place where such payment is made:
 27        (1)  shall be liable to the state of Idaho for  the  payment  of  the  tax
 28        required  to  be deducted and withheld under this section and shall not be
 29        liable to any individual for the amount deducted from his wages  and  paid
 30        over in compliance or intended compliance with this section;
 31        (2)  must  pay  to  the state tax commission monthly on or before the 20th
 32        day of the succeeding month, or at such other times as the state tax  com-
 33        mission  may  allow,  an amount of tax which, under the provisions of this
 34        chapter, he is required to deduct and withhold; and
 35        (3)  shall register with the state tax  commission,  in  the  manner  pre-
 36        scribed  by it, to establish an employer's withholding account number. The
 37        account number will be used to report all amounts withheld, for the annual
 38        reconciliation required in this  section,  and  for  such  other  purposes
 39        relating to withholding as the state tax commission may require.; and
 40        (4)  must,  notwithstanding  the  provisions  of paragraphs (1) and (2) of
 41        this subsection, if the amount of withholding of  such  employer  for  the
 42        preceding  twelve  (12) month period equals or exceeds sixty thousand dol-
 43        lars ($60,000) per annum or an average of five thousand  dollars  ($5,000)
  1        per month per annum, pay to the state tax commission on the basis of with-
  2        holding  periods  which  begin on the 16th day of the month and end on the
  3        15th day of the following month, and payment shall be made not later  than
  4        five (5) days after the end of the withholding period.
  5        (5)  If  the  payments  made  pursuant to subsections (a)(2) and (a)(4) of
  6        this section are equal to the withholding  under  this  section  shown  or
  7        required  to  be shown on the return required by subsection (b)(1) of this
  8        section, no penalty shall apply to the underpayment for the period between
  9        the due date of the payment and the due date of the return.  Interest,  at
 10        the  rate provided by section 63-3045, Idaho Code, shall apply to any such
 11        underpayment.
 12        (6)  Commencing in 1994, the state tax commission shall determine  whether
 13        the  threshold  amounts  established  by subsection (a)(4) of this section
 14        must be adjusted to reflect fluctuations in the cost of living.  The  com-
 15        mission  shall  base  its  determination  on  the cumulative effect of the
 16        annual cost-of-living percentage modifications determined  by  the  United
 17        States  secretary  of health and human services pursuant to 42 USC 415(i).
 18        When the cumulative percentage applied to  the  monthly  threshold  amount
 19        equals or exceeds one thousand dollars ($1,000), the commission shall pro-
 20        mulgate a rule adjusting the monthly threshold amount by one thousand dol-
 21        lars  ($1,000)  and  making  the  necessary proportional adjustment to the
 22        annual threshold amount. The rule shall be effective for the next succeed-
 23        ing calendar year and each year thereafter until  again  adjusted  by  the
 24        commission.  The  tax commission shall determine subsequent adjustments in
 25        the same manner, in each case using the year of the last adjustment as the
 26        base year.
 27        (b)  (1) Every employer shall, file a return upon such form  as  shall  be
 28        prescribed by the state tax commission, but not more frequently than quar-
 29        terly, or as required pursuant to any agreement between the state tax com-
 30        mission  and  the  department of labor under section 63-3035B, Idaho Code.
 31        The return shall show, for the period  to  which  it  relates,  the  total
 32        amount  of wages, salary, bonus or other emoluments paid to his employees,
 33        the amount deducted therefrom in accordance with  the  provisions  of  the
 34        Internal  Revenue  Code,  the amount deducted therefrom in accordance with
 35        the provisions of this section, the amount of any previous  payments  made
 36        pursuant  to this section, and such pertinent and necessary information as
 37        the state tax commission may require.
 38        (2)  Every employer making a declaration of withholding as provided herein
 39        shall furnish to the employees annually, but not later  than  thirty  (30)
 40        days  after  the  end  of the calendar year, a record of the amount of tax
 41        withheld from such employee on forms to be prescribed, prepared  and  fur-
 42        nished by the state tax commission and on or before the last day of Febru-
 43        ary  every  employer  shall file a copy thereof with the state tax commis-
 44        sion. Every employer who is required, under Internal Revenue Code  section
 45        6011,  to file returns on magnetic media or in other machine readable form
 46        may be required by rules of the state tax commission to file corresponding
 47        state returns on similar magnetic media or other machine readable form.
 48        (c)  All moneys deducted and withheld by every employer shall  immediately
 49    upon  such deduction be state money and every employer who deducts and retains
 50    any amount of money under the provisions of this chapter shall hold  the  same
 51    in  trust  for the state of Idaho and for the payment thereof to the state tax
 52    commission in the manner and at  the  times  in  this  chapter  provided.  Any
 53    employer  who  does  not  possess  real  property situated within the state of
 54    Idaho, which, in the opinion of the state tax  commission,  is  of  sufficient
 55    value  to  cover  his probable tax liability, may be required to post a surety
  1    bond in such sum as the state tax commission shall deem  adequate  to  protect
  2    the state.
  3        (d)  The  provisions  of this chapter relating to additions to tax in case
  4    of delinquency, and penalties, shall apply to employers subject to the  provi-
  5    sions  of this section and for these purposes any amount deducted, or required
  6    to be deducted and remitted to the state tax  commission under  this  section,
  7    shall  be  considered  to  be the tax of the employer and with respect to such
  8    amount he shall be considered the taxpayer.
  9        (e)  Amounts deducted from wages of an employee during any  calendar  year
 10    in accordance with the provisions of this section shall be considered to be in
 11    part payment of the tax imposed on such employee for his tax year which begins
 12    within  such calendar year and the return made by the employer under this sub-
 13    section (e) shall be accepted by the state tax commission as evidence in favor
 14    of the employee of the amount so deducted from  his  wages.  Where  the  total
 15    amount  so  deducted  exceeds  the amount of tax on the employee, based on his
 16    Idaho taxable income, or where his income is not taxable under  this  chapter,
 17    the state tax commission shall, after examining the annual return filed by the
 18    employee  in  accordance with this chapter, but not later than sixty (60) days
 19    after the filing of each return, refund the amount of the excess deducted.  No
 20    credit or refund shall be made to an employee who fails to file his return, as
 21    required  under  this chapter, within three (3) years from the due date of the
 22    return, without regard to extensions, in respect of  which  the  tax  withheld
 23    might  have  been  credited. In the event that the excess tax deducted is less
 24    than one dollar ($1.00), no refund shall be made unless specifically requested
 25    by the taxpayer at the time such return is filed.
 26        (f)  This section shall in no way relieve any taxpayer from his obligation
 27    of filing a return at the time required under this chapter,  and,  should  the
 28    amount  withheld  under  the provisions of this section be insufficient to pay
 29    the total tax of such taxpayer, such unpaid tax shall be paid at the time pre-
 30    scribed by section 63-3034, Idaho Code.
 31        (g)  An employee receiving wages shall on any day be entitled to not  more
 32    than,  but may claim fewer than, the number of withholding exemptions to which
 33    he is entitled under the Internal Revenue Code for federal  income  tax  with-
 34    holding purposes.
 35        (h)  An employer shall use the exemption certificate filed by the employee
 36    with  the  employer under the withholding exemption provisions of the Internal
 37    Revenue Code in determining  the  amount  of  tax  to  be  withheld  from  the
 38    employee's wages or salary under this chapter. The tax commission may redeter-
 39    mine  the  number  of  withholding exemptions to which an employee is entitled
 40    under subsection (g) of this section, and the state tax commission may require
 41    such exemption certificate to be filed on a form prescribed by the  commission
 42    in  any circumstance where the commission finds that the exemption certificate
 43    filed for Internal Revenue Code purposes does not properly reflect the  number
 44    of  withholding  exemptions to which the employee is entitled under this chap-
 45    ter. In no event shall any employee give an exemption certificate which claims
 46    a higher number of  withholding  exemptions  than  the  number  to  which  the
 47    employee is entitled by subsection (g) of this section.
 48        SECTION  2.  This  act shall be in full force and effect on and after July
 49    1, 2002.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE 

        This bill simplifies Idaho incom tax withholding for large
employers.  It will repeal the "split month withholding" adopted
as a revenue acceleration measure in 1983 and still required of 
large employers.  It will return them to calendar motnh filers.

                        FISCAL NOTE

        No increase or decrease int total tax revenues over time. An
estimated $20 million would shift from FY 2002 to FY 2003.  This 
is a one-time effect.

Name:  Representative Hilde Kellogg
Phone:  332-1000