2002 Legislation
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HOUSE BILL NO. 442 – Income tax relief, techn amens

HOUSE BILL NO. 442

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H0442...............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law relating to individual and corporate
income tax to make clarifying and technical amendments to the Income Tax
Relief Act (House Bill Number 377, As Amended in the Senate) passed by the
Legislature of the State of Idaho in 2001.
                                                                        
01/16    House intro - 1st rdg - to printing
01/17    Rpt prt - to Rev/Tax
01/25    Rpt out - rec d/p - to 2nd rdg
01/28    2nd rdg - to 3rd rdg
01/29    3rd rdg - PASSED - 64-0-6
      AYES -- Aikele, Barraclough, Barrett, Bedke, Bell, Bieter, Block,
      Boe, Bolz, Bradford, Bruneel, Callister, Campbell, Collins, Crow,
      Cuddy, Deal, Ellis, Ellsworth, Field(13), Field(20), Gagner, Gould,
      Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck, Jaquet, Jones,
      Kellogg, Kendell, Kunz, Lake, Langford, Loertscher, Mader, Martinez,
      McKague, Meyer, Montgomery, Mortensen, Moyle, Pearce, Pischner,
      Pomeroy, Raybould, Ridinger, Roberts, Robison, Sali, Sellman,
      Shepherd, Smith(33), Smith(23), Smylie, Stevenson, Stone, Tilman,
      Trail, Wheeler, Wood, Young
      NAYS -- None
      Absent and excused -- Black, Clark, Denney, Eskridge, Schaefer, Mr.
      Speaker
    Floor Sponsor - Moyle
    Title apvd - to Senate
01/30    Senate intro - 1st rdg - to Loc Gov
02/07    Rpt out - rec d/p - to 2nd rdg
02/08    2nd rdg - to 3rd rdg
02/12    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
      Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Frasure,
      Goedde, Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia, Little,
      Lodge, Marley, Noh, Risch, Sandy, Schroeder, Sims, Sorensen, Stegner,
      Stennett, Thorne, Wheeler, Williams
      NAYS -- None
      Absent and excused -- Geddes, Richardson
    Floor Sponsor - Wheeler
    Title apvd - to House
02/13    To enrol
02/14    Rpt enrol - Sp signed
02/15    Pres signed
02/18    To Governor
02/19    Governor signed
         Session Law Chapter 35
         Effective: 01/01/02, Section 8
         01/01/02, All Others

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 442
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO INCOME TAXES; AMENDING SECTION 63-3029G, IDAHO CODE, TO CHANGE THE
  3        TERM "QUALIFIED RESEARCH PAYMENT" TO "QUALIFIED RESEARCH EXPENSES"; AMEND-
  4        ING SECTION 63-3022H, IDAHO CODE, TO PROVIDE A  DEDUCTION  IF  A  TAXPAYER
  5        REPORTS  CAPITAL GAIN NET INCOME IN DETERMINING TAXABLE INCOME AND TO PRO-
  6        VIDE THAT THE CAPITAL GAINS DEDUCTION IS LIMITED TO THE AMOUNT OF THE CAP-
  7        ITAL GAIN NET INCOME FROM ALL PROPERTY INCLUDED IN TAXABLE INCOME;  AMEND-
  8        ING  SECTION  63-3022J, IDAHO CODE, TO PROVIDE THAT THE DEDUCTION OF VALUE
  9        FOR TECHNOLOGICAL EQUIPMENT SHALL NOT REDUCE IDAHO TAXABLE INCOME TO  LESS
 10        THAN  ZERO;  REPEALING  SECTION  63-3022O,  IDAHO  CODE;  AMENDING SECTION
 11        63-3022P, IDAHO CODE, AS ADDED BY SECTION 1, CHAPTER 384, LAWS OF 2001, TO
 12        REDESIGNATE THE SECTION AND TO CLARIFY THE DEDUCTION  FOR  LONG-TERM  CARE
 13        INSURANCE; AMENDING SECTION 63-3024, IDAHO CODE, TO CORRECT TERMINOLOGY TO
 14        CONFORM WITH STATUTORY DEFINITIONS; AMENDING SECTION 63-3025D, IDAHO CODE,
 15        TO CLARIFY THE PAYMENT  FOR PERSONS WITH DEVELOPMENTAL DISABILITIES AND TO
 16        MAKE  A  TECHNICAL  CORRECTION;  AMENDING SECTION 63-3029E, IDAHO CODE, AS
 17        AMENDED BY SECTION 11, CHAPTER 386, LAWS OF 2001, TO REMOVE  REFERENCE  TO
 18        AN  OBSOLETE  TERM;  AMENDING SECTION 63-3029I, IDAHO CODE, TO CLARIFY THE
 19        TRANSFERABILITY OF THE  CREDIT  FOR  INVESTMENT  IN  BROADBAND  EQUIPMENT;
 20        AMENDING  SECTION  63-3046, IDAHO CODE, TO CLARIFY THE PENALTY FOR FAILURE
 21        TO FILE TAX RETURNS; AMENDING SECTION 63-3068, IDAHO CODE, TO CLARIFY  THE
 22        STATUTE  OF  LIMITATIONS  ON  ASSESSMENTS OR REFUNDS OF TAX IN THE CASE OF
 23        CERTAIN DUPLICATE RETURNS AND TO PROVIDE CORRECT REFERENCES; AMENDING SEC-
 24        TION 63-3072, IDAHO CODE, TO CLARIFY THE STATUTE OF LIMITATIONS ON ASSESS-
 25        MENTS OR REFUNDS OF TAX IN THE CASE OF CERTAIN DUPLICATE  RETURNS  AND  TO
 26        PROVIDE  CORRECT REFERENCES; DECLARING AN EMERGENCY AND PROVIDING RETROAC-
 27        TIVE EFFECTIVE DATES.
                                                                        
 28    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 29        SECTION 1.  That Section 63-3029G, Idaho Code, be, and the same is  hereby
 30    amended to read as follows:
                                                                        
 31        63-3029G.  CREDITS  FOR  RESEARCH  ACTIVITIES  CONDUCTED  IN THIS STATE --
 32    CARRY FORWARD.
 33        (1) (a)  Subject to the limitations of this  section,  for  taxable  years
 34        beginning between January 1, 2001, and December 31, 2005, inclusive, there
 35        shall  be  allowed  to  a  taxpayer  a  nonrefundable credit against taxes
 36        imposed by  sections  63-3024,  63-3025  and  63-3025A,  Idaho  Code,  for
 37        increasing  research  activities  in Idaho during any consecutive five (5)
 38        year period beginning, at the election of the taxpayer, either:
 39             (i)   January 1, 2001, or
 40             (ii)  The first day of the taxpayer's taxable year beginning in 2001.
 41        (b)  The credit allowed by subsection (1)(a) of this section shall be  the
 42        sum of:
 43             (i)   Five  percent (5%) of the excess of qualified research payments
                                                                        
                                           2
                                                                        
  1             expenses for research conducted in Idaho over the base amount; and
  2             (ii)  Five percent (5%) basic research payments allowable under  sub-
  3             section  (e)  of  section  41  of the Internal Revenue Code for basic
  4             research conducted in Idaho.
  5        (c)  Subject to the limitation in subsection (3) of this section,  a  tax-
  6        payer  making  the election permitted by subsection (1)(a)(i) of this sec-
  7        tion, credit for research activities occurring prior to the  beginning  of
  8        the  taxpayer's  taxable  year  beginning  in 2001 shall be claimed on the
  9        taxpayer's return for its taxable year 2001 in addition to credit relating
 10        to activity in that year.
 11        (2)  As used in this section:
 12        (a)  The  terms  "qualified  research   payments   expenses,"   "qualified
 13        research,"  "basic  research  payments"  and  "basic research" shall be as
 14        defined in section 41  of  the  Internal  Revenue  Code  except  that  the
 15        research must be conducted in Idaho.
 16        (b)  The term "base amount" shall mean an amount calculated as provided in
 17        sections 41(c) and 41(h) of the Internal Revenue Code, except that:
 18             (i)   The  base amount does not include the calculation of the alter-
 19             native incremental credit provided for in  section  41(c)(4)  of  the
 20             Internal Revenue Code;
 21             (ii)  A  taxpayer's  gross receipts include only those gross receipts
 22             attributable to sources within this state as provided in  subsections
 23             (q) and (r) of section 63-3027, Idaho Code; and
 24             (iii) Notwithstanding section 41(c) of the Internal Revenue Code, for
 25             purposes of calculating the base amount, a taxpayer:
 26                  (A)  May  elect  to be treated as a start-up company as provided
 27                  in section 41(c)(3)(B) of the Internal Revenue Code,  regardless
 28                  of  whether  the  taxpayer  meets  the  requirements  of section
 29                  41(c)(3)(B)(i)(I) or (II) of the Internal Revenue Code; and
 30                  (B)  May not revoke an election to be treated as a start-up com-
 31                  pany.
 32        (3)  The credit allowed by subsection (1)(a) of this section together with
 33    any credits carried forward under subsection (5) of  this  section  shall  not
 34    exceed  the  amount  of  tax due under sections 63-3024, 63-3025 and 63-3025A,
 35    Idaho Code, after allowance for all other credits permitted by  this  chapter.
 36    When  credits earned in more than one (1) taxable year are available, the old-
 37    est credits shall be applied first.
 38        (4)  In the case of a group of corporations filing a combined report under
 39    subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
 40    of the group but not used by that member may be used by another member of  the
 41    group. For a combined group of corporations, any member of the group may claim
 42    credit  carried  forward  unless the member who earned the credit is no longer
 43    included in the combined group.
 44        (5)  The credit allowed by subsection (1)(a)  of  this  section  shall  be
 45    claimed  for  the  taxable  year  during  which the taxpayer qualifies for the
 46    credit. If the credit exceeds the limitation under subsection (3) of this sec-
 47    tion, the excess amount may be carried forward for  a  period  that  does  not
 48    exceed the next fourteen (14) taxable years.
 49        (6)  In  addition to other needed rules, the state tax commission may pro-
 50    mulgate rules prescribing, in the case of S corporations, partnerships, trusts
 51    or estates, a method of attributing the  credit  under  this  section  to  the
 52    shareholders,  partners  or  beneficiaries in proportion to their share of the
 53    income from the S corporation, partnership, trust or estate.
                                                                        
 54        SECTION 2.  That Section 63-3022H, Idaho Code, be, and the same is  hereby
                                                                        
                                           3
                                                                        
  1    amended to read as follows:
                                                                        
  2        63-3022H.  DEDUCTION  OF  CAPITAL  GAINS.  (1)  If  an individual taxpayer
  3    reports a net capital gain net income in determining  taxable  income,  eighty
  4    percent  (80%)  in  taxable year 2001 and sixty percent (60%) in taxable years
  5    thereafter of the net capital gain net income from the  sale  or  exchange  of
  6    qualified property shall be a deduction in determining Idaho taxable income.
  7        (2)  The  deduction  provided  in this section is limited to the amount of
  8    the capital gain net income from all  property  included  in  federal  taxable
  9    income.  Gains  treated as ordinary income by the Internal Revenue Code do not
 10    qualify for the deduction allowed in this  section.  The  deduction  otherwise
 11    allowable  under  this  section  shall be reduced by the amount of any federal
 12    capital gains deduction relating to such property, but not below zero.
 13        (3)  As used in this section  "qualified  property"  means  the  following
 14    property having an Idaho situs at the time of sale:
 15        (a)  Real property held at least eighteen (18) months;
 16        (b)  Tangible  personal  property  used  in Idaho for at least twelve (12)
 17        months by a revenue-producing enterprise;
 18        (c)  Cattle or horses held for breeding, draft, dairy or sporting purposes
 19        for at least twenty-four (24) months if more than one-half  (1/2)  of  the
 20        taxpayer's gross income (as defined in section 61(a) of the Internal Reve-
 21        nue  Code)  for the taxable year is from farming or ranching operations in
 22        Idaho;
 23        (d)  Breeding livestock other than cattle or horses held at  least  twelve
 24        (12) months if more than one-half (1/2) of the taxpayer's gross income (as
 25        defined  in  section  61(a)  of the Internal Revenue Code) for the taxable
 26        year is from farming or ranching operations in Idaho;
 27        (e)  Timber grown in Idaho and held at least twenty-four (24) months;
 28        (f)  In determining the period for which property subject to this  section
 29        has  been held by a taxpayer, the provisions of section 1223 of the Inter-
 30        nal Revenue Code shall apply, except that the  holding  period  shall  not
 31        include  the holding period of property given up in an exchange, when such
 32        property would not have constituted qualified property under this  section
 33        without regard to meeting the holding period.
 34        (4)  If  an individual reports a capital gain from qualified property from
 35    an S corporation or a partnership, a deduction shall  be  allowed  under  this
 36    section  only  to the extent the individual held his interest in the income of
 37    the S corporation or the partnership for the time required by  subsection  (3)
 38    of this section for the property sold.
 39        (5)  If  an  individual reports a capital gain from an estate or a capital
 40    gain from property acquired as a beneficiary of an estate, no deduction  shall
 41    be allowed under this section unless the holding period required in subsection
 42    (3)  of this section was satisfied by the decedent, the estate, or the benefi-
 43    ciary, or a combination thereof.
 44        (6)  If an individual reports a capital gain from a  trust  or  a  capital
 45    gain from property acquired as a beneficiary of a trust, no deduction shall be
 46    allowed  under  this  section unless the holding period required in subsection
 47    (3) of this section was satisfied by the grantor, the trust,  or  the  benefi-
 48    ciary, or a combination thereof.
 49        (7)  As used in this section "revenue-producing enterprise" means:
 50        (a)  The  production, assembly, fabrication, manufacture, or processing of
 51        any agricultural, mineral or manufactured product;
 52        (b)  The storage, warehousing, distribution, or sale at wholesale  of  any
 53        products of agriculture, mining or manufacturing;
 54        (c)  The feeding of livestock at a feedlot;
                                                                        
                                           4
                                                                        
  1        (d)  The  operation  of  laboratories  or other facilities for scientific,
  2        agricultural, animal husbandry, or industrial  research,  development,  or
  3        testing.
                                                                        
  4        SECTION  3.  That Section 63-3022J, Idaho Code, be, and the same is hereby
  5    amended to read as follows:
                                                                        
  6        63-3022J.  DEDUCTION OF VALUE FOR TECHNOLOGICAL EQUIPMENT. (1) For taxable
  7    years commencing on and after January 1, 1985, any individual  or  corporation
  8    may  deduct  from  taxable  income an amount equal to the fair market value of
  9    technological equipment donated  to  public  elementary  or  public  secondary
 10    schools,  public  universities, private universities, public colleges, private
 11    colleges, public community colleges, private community colleges, public  tech-
 12    nical  colleges or private technical colleges, or public libraries and library
 13    districts located within the state of Idaho, except that  the  amount  of  the
 14    deduction  shall not reduce Idaho taxable income to less than zero. The deduc-
 15    tion allowed pursuant to this section shall be in addition to any other deduc-
 16    tion allowed pursuant to this chapter. In order to take the deduction pursuant
 17    to this section, the taxpayer shall receive a written statement from the donee
 18    in which the donee agrees to accept the technological equipment donated.
 19        (2)  For the purposes of this section, "technological equipment"  means  a
 20    computer,  computer  software, scientific equipment or apparatus to be used by
 21    the university, college,  community  college,  technical  college,  school  or
 22    library  directly  or  indirectly  in the education program of the university,
 23    college, community college, technical college, school or library and which  is
 24    donated  to  the  university,  college,  community college, technical college,
 25    school or library no later than five (5) years after its manufacture has  been
 26    substantially completed.
 27        (3)  For  the purposes of this section, a public elementary or public sec-
 28    ondary school means one that is located within this state and receives funding
 29    pursuant to chapter 10, title 33, Idaho Code.
 30        (4)  For the purposes of this section, a public library  or  library  dis-
 31    trict  means one that is located within this state and receives funding pursu-
 32    ant to chapters 26 and 27, title 33, Idaho Code.
 33        (5)  For purposes of this section, a public  university,  public  college,
 34    public community college or public technical college means one that is located
 35    within this state and receives an appropriation from the legislature.
 36        (6)  For  purposes of this section, a private university, private college,
 37    private community college or private  technical  college  means  one  that  is
 38    located within this state and is operated on a nonprofit basis.
 39        (7)  The  state  tax  commission  shall promulgate rules to administer the
 40    provisions of this section. The rules shall be promulgated in compliance  with
 41    chapter 52, title 67, Idaho Code.
                                                                        
 42        SECTION  4.  That Section 63-3022O, Idaho Code, be, and the same is hereby
 43    repealed.
                                                                        
 44        SECTION 5.  That Section 63-3022P, Idaho Code,  as  added  by  Section  1,
 45    Chapter  384, Laws of 2001, be, and the same is hereby amended to read as fol-
 46    lows:
                                                                        
 47        63-3022PQ.  LONG-TERM CARE INSURANCE. For taxable years commencing  on  or
 48    after  January  1,  2001,  fifty percent (50%) of the premiums paid during the
 49    taxable year, by a taxpayer for long-term  care  insurance  as  that  term  is
 50    defined  in  section 41-4603, Idaho Code, which long-term care insurance is to
                                                                        
                                           5
                                                                        
  1    be for the benefit of the taxpayer, a dependent of the taxpayer or an employee
  2    of the taxpayer, may be deducted from taxable income to the  extent  that  the
  3    premium  is  not otherwise deducted or accounted for by the taxpayer for Idaho
  4    income tax purposes.
                                                                        
  5        SECTION 6.  That Section 63-3024, Idaho Code, be, and the same  is  hereby
  6    amended to read as follows:
                                                                        
  7        63-3024.  INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For taxable year
  8    2001, and each taxable year thereafter, a tax measured by Idaho taxable income
  9    as  defined in this chapter is hereby imposed upon every individual, trust, or
 10    estate required by this chapter to file a return.
 11        (a)  The tax imposed upon individuals, trusts and estates  shall  be  com-
 12    puted at the following rates:
 13    When Idaho taxable income is:    The rate is:
 14    Less than $1,000                 One and  six-tenths percent (1.6%)
 15    $1,000 but less than $2,000      $16, plus  three and  six-tenths
 16                                     percent (3.6%) of the amount over $1,000
 17    $2,000 but less than $3,000      $52, plus four and   one-tenth
 18                                     percent (4.1%) of the amount over $2,000
 19    $3,000 but less than $4,000      $93, plus five and   one-tenth
 20                                     percent (5.1%) of the amount over $3,000
 21    $4,000 but less than $5,000      $144, plus six and   one-tenth
 22                                     percent (6.1%) of the amount over $4,000
 23    $5,000 but less than $7,500      $205, plus seven and   one-tenth
 24                                     percent (7.1%) of the amount over $5,000
 25    $7,500 but less than $20,000     $383, plus seven and  four-tenths
 26                                     percent (7.4%) of the amount over $7,500
 27    Over $20,000                     $1,308, plus  seven
 28                                     and eight-tenths percent
 29                                     (7.8%) of the amount over $20,000
 30        For  taxable  year 2000 and each year thereafter, the state tax commission
 31    shall prescribe a factor which shall be used to compute the Idaho  income  tax
 32    brackets provided in  subsection (a) of this section. The factor shall provide
 33    an adjustment to the Idaho tax brackets so that inflation will not result in a
 34    tax  increase.  The  Idaho tax brackets shall be adjusted as follows: multiply
 35    the bracket amounts by the percentage (the consumer price index for the calen-
 36    dar year immediately preceding the calendar year to which the adjusted  brack-
 37    ets  will  apply  divided by the consumer price index for calendar year 1998).
 38    For the purpose of this computation, the consumer price index for any calendar
 39    year is the average of the consumer price index as of  the close of the twelve
 40    (12) month period for the immediately preceding calendar year  as  adopted  by
 41    the state tax commission. This adoption shall be exempt from the provisions of
 42    chapter 52, title 67, Idaho Code. The consumer price index shall mean the con-
 43    sumer  price index for all U.S. urban consumers published by the United States
 44    department of labor. The state tax commission shall annually include the  fac-
 45    tor as provided in this subsection to multiply against Idaho taxable income in
 46    the  brackets  above  to  arrive  at  that year's Idaho taxable income for tax
 47    bracket purposes.
 48        (b)  In case a joint return is filed by husband and wife pursuant  to  the
 49    provisions  of  section  63-3031,  Idaho Code, the tax imposed by this section
 50    shall be twice the tax which would be imposed on one-half (1/2) of the  aggre-
 51    gate  Idaho  taxable  income.  For the purposes of this section, a return of a
 52    surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and
 53    a head of household, as defined in section 2(b) of the Internal Revenue  Code,
                                                                        
                                           6
                                                                        
  1    shall  be treated as a joint return and the tax imposed shall be twice the tax
  2    which would be imposed on one-half (1/2) of the Idaho taxable income.
  3        (c)  The state tax commission shall compute and publish Idaho  income  tax
  4    liability  for  taxpayers  at  the  midpoint  of each bracket of Idaho taxable
  5    income in fifty dollar ($50.00) steps to  fifty  thousand  dollars  ($50,000),
  6    rounding  such  calculations  to  the  nearest dollar. Taxpayers having income
  7    within such brackets shall file returns based upon and pay taxes according  to
  8    the schedule thus established. The state tax commission shall promulgate rules
  9    defining the conditions upon which such returns shall be filed.
                                                                        
 10        SECTION  7.  That Section 63-3025D, Idaho Code, be, and the same is hereby
 11    amended to read as follows:
                                                                        
 12        63-3025D.  PAYMENT FOR DEPENDENTS SIXTY-FIVE YEARS OF AGE OR OLDER OR PER-
 13    SONS WITH DEVELOPMENTAL DISABILITIES. (1) In lieu of the deduction  from  tax-
 14    able income allowed by section 63-3022E, Idaho Code, a resident individual who
 15    maintains  a  household,  which  includes as an immediate member of the family
 16    residing in that household, one (1) or more individuals sixty-five (65)  years
 17    of  age or older or individuals with developmental disabilities, as defined in
 18    subsection (5) of section 66-402, Idaho Code, regardless of  the  age  of  the
 19    person when such developmental disability appeared, each of whom receives more
 20    than one-half (1/2) of his or her support for the year from the individual who
 21    maintains  the  household,  shall  be  entitled  to  a payment from the refund
 22    account of one hundred dollars ($100) for each such elderly member of the fam-
 23    ily or family member with a developmental disability. Any such  payment  shall
 24    be  paid  to such individual only upon his making application therefor at such
 25    time and in such manner as may be prescribed by the state tax commission.
 26        (2)  No more than three (3) such payments shall be made under  the  provi-
 27    sions of this section to any one (1) individual in any calendar year.
 28        (3)  No payment may be claimed under the provisions of this section by the
 29    individual himself except as set forth in subsection (4) of this section.
 30        (4)  A  credit  of  one hundred dollars ($100) shall be allowed under this
 31    section for a person with a developmental disability as defined in  subsection
 32    (5) of section 66-402, Idaho Code, who is filing his own tax return.
                                                                        
 33        SECTION  8.  That  Section 63-3029E, Idaho Code, as amended by Section 11,
 34    Chapter 386, Laws of 2001, be,  and the same is hereby amended to read as fol-
 35    lows:
                                                                        
 36        63-3029E.  DEFINITIONS -- CONSTRUCTION OF TERMS. As used in  this  section
 37    and in section 63-3029F, Idaho Code:
 38        (1)  (a)  "New  employee"  means  a  person from whom Idaho income tax has
 39        been withheld, employed by the  taxpayer,  and  covered  for  unemployment
 40        insurance purposes under chapter 13, title 72, Idaho Code, during the tax-
 41        able year for which the credit allowed by section 63-3029F, Idaho Code, is
 42        claimed. A person shall be deemed to be so engaged if such person performs
 43        duties on:
 44             (i)   A regular full-time basis; or
 45             (ii)  A part-time basis if such person is customarily performing such
 46             duties at least twenty (20) hours per week.
 47        No  credit  shall  be  earned unless the new employee shall have performed
 48        such duties for the taxpayer for a minimum of nine (9) months  during  the
 49        taxable year for which the credit is claimed.
 50        (b)  The  provisions  of paragraph (a) of this subsection notwithstanding,
 51        no credit shall be allowed for employment of persons  by  a  taxpayer  who
                                                                        
                                           7
                                                                        
  1        acquires  a revenue-producing enterprise business from another taxpayer or
  2        who operates in a place of business the same or a substantially  identical
  3        business  as  operated  by  another  taxpayer within the prior twelve (12)
  4        months, except as the prior taxpayer would have qualified under the provi-
  5        sions of paragraph (c) of this subsection. Employees  transferred  from  a
  6        related taxpayer shall not be included in the computation of the credit.
  7        (c)  The  number  of  employees  during  any taxable year for any taxpayer
  8        shall be the mathematical average of the number of employees  reported  to
  9        the  Idaho department of labor for employment security purposes during the
 10        twelve (12) months of the taxable year which qualified under paragraph (a)
 11        of this subsection. In the event the business is  in  operation  for  less
 12        than  the entire taxable year, the number of employees of the business for
 13        the year shall be the average number actually employed during  the  months
 14        of  operation,  providing that the qualifications of paragraph (a) of this
 15        subsection are met.
 16        (2)  "Same or a substantially identical  business"  means  a  business  in
 17    which  the products produced or sold, or the activities conducted are the same
 18    in character and use and are produced, sold or conducted in  the  same  manner
 19    as,  or  for  the  same types of customers as, the products or activities pro-
 20    duced, sold or conducted in another business.
                                                                        
 21        SECTION 9.  That Section 63-3029I, Idaho Code, be, and the same is  hereby
 22    amended to read as follows:
                                                                        
 23        63-3029I.  INCOME  TAX  CREDIT  FOR INVESTMENT IN BROADBAND EQUIPMENT. (1)
 24    Subject to the limitations  of  this  section,  for  taxable  years  beginning
 25    between  January  1,  2001,  and  December 31, 2005, inclusive, there shall be
 26    allowed to a taxpayer a nonrefundable credit  against taxes  imposed  by  sec-
 27    tions 63-3024, 63-3025 and 63-3025A, Idaho Code, for qualified expenditures in
 28    qualified broadband equipment in Idaho.
 29        (2)  The credit permitted in subsection (1) of this section shall be three
 30    percent  (3%)  of the qualified investment in qualified broadband equipment in
 31    Idaho and shall be in addition to the credit for capital investment  permitted
 32    by section 63-3029B, Idaho Code.
 33        (3)  As used in this section the term:
 34        (a)  "Qualified investment" shall be as defined in section 63-3029B, Idaho
 35        Code.
 36        (b)  "Qualified  broadband  equipment"  means equipment that qualifies for
 37        the credit for capital investment permitted  by  section  63-3029B,  Idaho
 38        Code,  and  is  capable  of transmitting signals at a rate of at least two
 39        hundred thousand (200,000) bits per second to a subscriber  and  at  least
 40        one  hundred  twenty-five  thousand  (125,000) bits per second from a sub-
 41        scriber, and
 42             (i)   In the case of a telecommunications  carrier,  such  qualifying
 43             equipment  shall  be  necessary to the provision of broadband service
 44             and an integral part of a broadband network. "Telecommunications car-
 45             rier" has the meaning given such term by section 3(44) of the  commu-
 46             nications  act of 1934, as amended, but does not include a commercial
 47             mobile service provider.
 48             (ii)  In the case of a commercial mobile service carrier, such quali-
 49             fying equipment shall extend from the subscriber side of  the  mobile
 50             telecommunications   switching  office  to  a  transmitting/receiving
 51             antenna, including such antenna, on the outside of the  structure  in
 52             which  the subscriber is located. "Commercial mobile service carrier"
 53             means any person authorized to provide commercial mobile  radio  ser-
                                                                        
                                           8
                                                                        
  1             vice  to  subscribers as defined in section 20.3 of title 47, Code of
  2             Federal Regulations (10-1-99 ed.), as amended.
  3             (iii) In the case of a cable or  open  video  system  operator,  such
  4             qualifying  equipment  shall extend from the subscriber's side of the
  5             headend to the outside of the structure in which  the  subscriber  is
  6             located.  The terms "cable operator" and "open video system operator"
  7             have the meanings given  such  terms  by  sections  602(5)  and  653,
  8             respectively, of the communications act of 1934, as amended.
  9             (iv)  In  the case of a satellite carrier or a wireless carrier other
 10             than listed above, such qualifying equipment is only  that  equipment
 11             that  extends  from  a transmitting/receiving antenna, including such
 12             antenna, which transmits and receives signals  to  or  from  multiple
 13             subscribers to a transmitting/receiving antenna on the outside of the
 14             structure  in  which  the  subscriber is located. "Satellite carrier"
 15             means any person using the facilities of  a  satellite  or  satellite
 16             services  licensed by the federal communications commission and oper-
 17             ating a fixed-satellite service or direct  broadcast  satellite  ser-
 18             vices  to provide point-to-multipoint distribution of signals. "Other
 19             wireless carrier" means any person, other than  a  telecommunications
 20             carrier,  commercial  mobile  service  carrier,  cable operator, open
 21             video operator, or satellite carrier, providing broadband services to
 22             subscribers through the radio transmission of energy.
 23             (v)   In the case of packet switching equipment, such  packet  equip-
 24             ment  installed  in connection with other qualifying equipment listed
 25             in subsections (2)(b)(i) through (2)(b)(iv) of this section, provided
 26             it is the last in a series of equipment that transmits signals  to  a
 27             subscriber or the first in a series of equipment that transmits  sig-
 28             nals  from  a  subscriber.  "Packet  switching"  means controlling or
 29             routing the path of a digital transmission signal which is  assembled
 30             into packets or cells.
 31             (vi)  In  the case of multiplexing and demultiplexing equipment, such
 32             equipment only to the extent that it is deployed in  connection  with
 33             providing  broadband  services  in locations between packet switching
 34             equipment and the structure  in  which  the  subscriber  is  located.
 35             "Multiplexing" means the transmission of two (2) or more signals over
 36             a  communications  circuit without regard to the communications tech-
 37             nology.
 38             (vii) Any property not primarily used to provide services in Idaho to
 39             public subscribers is not qualified broadband equipment.
 40        (4)  No equipment described in subsections (2)(b)(i) through (2)(b)(vi) of
 41    this section shall qualify for the credit provided in subsection (1)  of  this
 42    section until the taxpayer applies to and obtains from the Idaho public utili-
 43    ties  commission an order confirming that the installed equipment is qualified
 44    broadband equipment. Applications submitted to the commission  shall  be  gov-
 45    erned  by the commission's rules of procedure. The commission may issue proce-
 46    dural orders necessary to implement this section.
 47        (5)  The credit allowed by subsection (1) of this  section  together  with
 48    any credits carried forward under subsection (7) of this section shall not, in
 49    any one (1) taxable year, exceed the lesser of:
 50        (a)  The  amount  of tax due under sections 63-3024, 63-3025 and 63-3025A,
 51        Idaho Code, after allowance for all other credits permitted by this  chap-
 52        ter; or
 53        (b)  Seven hundred fifty thousand dollars ($750,000).
 54    When  credits earned in more than one (1) taxable year are available, the old-
 55    est credits shall be applied first.
                                                                        
                                           9
                                                                        
  1        (6)  In the case of a group of corporations filing a combined report under
  2    subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
  3    of the group but not used by that member may be used by another member of  the
  4    group, subject to the provisions of subsection (7) of this section, instead of
  5    carried over. For a combined group of corporations, credit carried forward may
  6    be  claimed by any member of the group unless the member who earned the credit
  7    is no longer included in the combined group.
  8        (7)  If the credit allowed by subsection (1) of this section  exceeds  the
  9    limitation under subsection (5) of this section, the excess amount may be car-
 10    ried  forward for a period that does not exceed the next fourteen (14) taxable
 11    years.
 12        (8)  In the event that qualified broadband equipment upon which the credit
 13    allowed by this section has been used ceases to qualify for the credit allowed
 14    by section 63-3029B, Idaho Code, or is subject to recapture  of  that  credit,
 15    the recapture of credit under this section shall be in the same proportion and
 16    subject  to  the same provisions as the amount of credit required to be recap-
 17    tured under section 63-3029B, Idaho Code.
 18        (9)  (a) Subject to the requirements of this subsection, a taxpayer  enti-
 19        tled  to  the credit or to an unused portion of the credit allowed by this
 20        section may transfer the unused credit to  another  taxpayer  required  to
 21        file  a  return  under this chapter.  In the event of such a transfer, the
 22        transferee may claim the credit on  the  transferee's  income  tax  return
 23        originally  filed  during  the  calendar  year in which the transfer takes
 24        place and, in the case of carryover of the  credit,  on  the  transferee's
 25        returns  for  the number of years of carryover available to the transferor
 26        at the time of the transfer unless earlier exhausted.
 27        (b)  Before completing a transfer under this  subsection,  the  transferor
 28        shall  notify  the  state  tax commission of its intention to transfer the
 29        credit and the identity of the transferee. The state tax commission  shall
 30        provide  the  transferor with a written statement  of the amount of credit
 31        available under this section as then appearing in the commission's records
 32        and the number of years the credit may be  carried  over.  The  transferee
 33        shall  attach a copy of the statement to any return in regard to which the
 34        transferred credit is claimed.
 35        (c)  In the event that after the transfer the state tax commission  deter-
 36        mines  that  the amount of credit properly available under this section is
 37        less than the amount claimed by the transferor of the credit or  that  the
 38        credit  is subject to recapture, the commission shall assess the amount of
 39        overstated or recaptured credit as taxes due from the transferor  and  not
 40        the  transferee. The assessment shall be made in the manner provided for a
 41        deficiency in taxes under this chapter.
 42        (10) In addition to other needed rules, the state tax commission may  pro-
 43    mulgate rules prescribing, in the case of S corporations, partnerships, trusts
 44    or  estates,  a  method  of  attributing  the credit under this section to the
 45    shareholders, partners or beneficiaries in proportion to their  share  of  the
 46    income from the S corporation, partnership, trust or estate.
                                                                        
 47        SECTION  10.  That Section 63-3046, Idaho Code, be, and the same is hereby
 48    amended to read as follows:
                                                                        
 49        63-3046.  PENALTIES AND ADDITIONS TO THE TAX IN CASE OF DEFICIENCY. (a) If
 50    any part of any deficiency is due to negligence  or  disregard  of  rules  but
 51    without  intent to defraud, five percent (5%) of the total amount of the defi-
 52    ciency (in addition to such deficiency) shall be assessed, collected and  paid
 53    in the same manner as if it were a deficiency.
                                                                        
                                           10
                                                                        
  1        (b)  If  any  part  of any deficiency is due to fraud with intent to evade
  2    tax, then fifty percent (50%) of the total amount of the deficiency (in  addi-
  3    tion to such deficiency) shall be so assessed, collected and paid.
  4        (c)  (1) In  the event the return required by this chapter is not filed on
  5        or before the due date (including extensions) of the return, there may  be
  6        collected  a  penalty  of five percent (5%) of the tax due on such returns
  7        for each month elapsing after the due date (including extensions) of  such
  8        returns until the return is filed.
  9        (2)  In the event the return required by this chapter is filed but the tax
 10        shown  thereon  to be due is not paid, there may be collected a penalty of
 11        one-half percent (0.5%) of the tax due  on  such  return  for  each  month
 12        elapsing  after  the  later of the due date of such return or the date the
 13        return was filed until the tax is paid.
 14        (d)  (1) If there is a substantial understatement of tax for  any  taxable
 15        year, there shall be added to the tax an amount equal to ten percent (10%)
 16        of the amount of any underpayment attributable to such understatement.
 17        (2)  For  purposes  of this subsection, there is a substantial understate-
 18        ment of tax for any taxable year if the amount of the  understatement  for
 19        the taxable year exceeds the greater of:
 20             (i)  Ten  percent (10%) of the tax required to be shown on the return
 21             for the taxable year, or
 22             (ii) Five thousand dollars ($5,000).
 23        (3)  In the case of a corporation, paragraph (d)(2)(ii)  of  this  section
 24        shall  be  applied by substituting ten thousand dollars ($10,000) for five
 25        thousand dollars ($5,000).
 26        (4)  For  purposes  of  paragraph  (d)(2)  of  this  section,   the   term
 27        "understatement" means the excess of:
 28             (i)  The  amount  of  tax  required to be shown on the return for the
 29             taxable year, over
 30             (ii) The amount of the tax imposed which is shown on the return.
 31        (5)  The amount of the understatement under paragraph (4) shall be reduced
 32        by that portion of the understatement which is attributable to:
 33             (i)  The tax treatment of any item by the taxpayer if there is or was
 34             substantial authority for such treatment, or
 35             (ii) Any item with respect to which the relevant facts affecting  the
 36             item's  tax  treatment are adequately disclosed in the return or in a
 37             statement attached to the return.
 38        (6)  In the case of any item attributable to a tax shelter as  defined  in
 39        section 6661 of the Internal Revenue Code:
 40             (i)  Paragraph (5)(ii) shall not apply, and
 41             (ii) Paragraph  (5)(i) shall not apply unless (in addition to meeting
 42             the requirements of such paragraph) the taxpayer reasonably  believed
 43             that  the  tax treatment of such item by the taxpayer was more likely
 44             than not the proper treatment.
 45        (7)  The state tax commission may waive all or any part of the addition to
 46        tax provided by this section on a showing by the taxpayer that  there  was
 47        reasonable  cause  for  the  understatement (or part thereof) and that the
 48        taxpayer acted in good faith.
 49        (e)  (1) Any person who fails to file a statement of  payment  to  another
 50        person  required by this chapter, including the duplicate statement of tax
 51        withheld on wages, on the date prescribed therefor (including  any  exten-
 52        sion  of  time  for  filing) shall, be subject to a penalty of two dollars
 53        ($2.00) for each month or part of a month each statement is not so  filed,
 54        but  the  total amount imposed on the delinquent person for all such fail-
 55        ures during any calendar  year  shall  not  exceed  two  thousand  dollars
                                                                        
                                           11
                                                                        
  1        ($2,000).
  2        (2)  Any  employer  required  to  register under the provisions of section
  3        63-3035, Idaho Code, who fails to register after receiving written  notice
  4        from the state tax commission of the requirement to register shall be sub-
  5        ject  to a penalty of one hundred dollars ($100) for each month or part of
  6        a month after the date of the notice during which the failure occurs.
  7        (3)  The penalties provided in this subsection shall not apply if the per-
  8        son shows that the failure to register is due to reasonable cause and  not
  9        to willful neglect.
 10        (f)  If the penalty to be added to the tax by subsection (a), (b), (c)(1),
 11    (d) or (e) of this section or by section 63-3033, Idaho Code, is less than ten
 12    dollars ($10.00), the penalty to be added to the tax shall be a minimum of ten
 13    dollars ($10.00).
 14        (g)  Total  penalties  imposed  under subsections (a), (c) and (d) of this
 15    section and under section 63-3033, Idaho Code, shall  not  exceed  twenty-five
 16    percent (25%) of the tax due on the return.
 17        (h)  A  processing charge to be determined and established annually by the
 18    state tax commission shall be collected from any person who draws or  delivers
 19    a check, draft or order for the payment of money in complete or partial satis-
 20    faction of the tax imposed by this chapter if that person does not have suffi-
 21    cient  funds  in  or  credit with the bank or depository upon which the check,
 22    draft or order is drawn. Money collected under this subsection shall  be  paid
 23    to  the state tax commission to defer costs of handling such checks, drafts or
 24    orders.
                                                                        
 25        SECTION 11.  That Section 63-3068, Idaho Code, be, and the same is  hereby
 26    amended to read as follows:
                                                                        
 27        63-3068.  PERIOD  OF  LIMITATIONS  FOR  ISSUING A NOTICE OF DEFICIENCY AND
 28    COLLECTION OF TAX. (a) Except as otherwise provided in this section, a  notice
 29    of deficiency, as provided in section 63-3045, Idaho Code, for the tax imposed
 30    in  this  chapter  shall  be issued within three (3) years from either the due
 31    date of the return, without regard to extensions, or from the date the  return
 32    was filed, whichever is later.
 33        (b)  If an assessment has been made as provided in this chapter, then such
 34    tax  shall  be  collected either by levy, or by a proceeding brought in court,
 35    within a period of six (6) years from the date of assessment of  the  tax  and
 36    provided, further, that this shall not be in derogation of any of the remedies
 37    elsewhere provided in this chapter.
 38        (c)  In  the case of a fraudulent return or a false return with the intent
 39    to evade the tax imposed in this chapter, or a willful attempt in  any  manner
 40    to defeat or evade the tax imposed in this chapter, a notice of deficiency may
 41    be issued, the tax may be assessed, or a proceeding in court for collection of
 42    such tax may be begun without assessment, at any time.
 43        (d)  In  the  case of a failure to file a return, for any reason, a notice
 44    of deficiency may be issued, the tax imposed in this chapter may be  assessed,
 45    or  a  proceeding  in  court  for  collection of such tax may be begun without
 46    assessment, at any time.
 47        (e)  In the case of income received during the lifetime of a decedent,  or
 48    by  his  estate  during  the  period of administration, a notice of deficiency
 49    shall be issued, a claim shall be made, the tax shall be assessed or any  pro-
 50    ceeding  in  court  without assessment for the collection of such tax shall be
 51    begun, within twelve (12) months after written request for  prompt  action  is
 52    filed  with  the state tax commission by the executor, administrator, or other
 53    fiduciary representing the estate of such decedent. This subsection shall  not
                                                                        
                                           12
                                                                        
  1    apply  if  the  return for which the request for prompt action relates has not
  2    been filed with the state tax commission.
  3        (f)  When Idaho taxable income or tax credits for any  taxable  year  have
  4    been adjusted as a result of a final federal determination, the period of lim-
  5    itation  for  issuing  a  notice of deficiency shall be reopened and shall not
  6    expire until the later of one (1) year from the date of delivery of the  final
  7    federal  determination  to the state tax commission by the taxpayer, three (3)
  8    years from the due date of the return, without regard to extensions, or  three
  9    (3)  years from the date the return was filed. For purposes of this subsection
 10    the term "final federal determination" shall mean the final resolution of  all
 11    issues  which  were  adjusted  by the internal revenue service. When the final
 12    federal determination is submitted, the taxpayer shall also submit  copies  of
 13    all  schedules  and written explanations provided by the internal revenue ser-
 14    vice. Upon the expiration of the period of limitations as provided in  subsec-
 15    tions  (a)  and  (lm)  of  this  section, only those specific items of income,
 16    deductions, gains, losses, or credits which were adjusted in the final federal
 17    determination shall be subject to adjustment for purposes of recomputing Idaho
 18    income, deductions, gains, losses, credits, and the effect of such adjustments
 19    on Idaho allocations and apportionments.
 20        (g)  If an adjustment, which was made within the period of limitations  as
 21    provided  in  this  section,  affects  the amount of tax credit, net operating
 22    loss, or capital loss, claimed in a taxable year other than the  tax  year  in
 23    which  the  adjustment  is made, then adjustments to the credit, net operating
 24    loss, or capital loss claimed in such other tax year may be made and a result-
 25    ing notice of deficiency may be issued even though such notice  of  deficiency
 26    would otherwise be barred under the provisions of this section.
 27        (h)  Notwithstanding any other provisions of this section, when an amended
 28    Idaho  return is filed within the period of limitations as provided in subsec-
 29    tions (a) and (lm) of this section, the period of limitations  for  issuing  a
 30    notice of deficiency shall be three (3) years from the date the amended return
 31    was  filed.  However, upon the expiration of the period of limitations as pro-
 32    vided in subsections (a) and (lm) of this section, only those  specific  items
 33    of  income,  deductions, gains, losses, or credits, which were adjusted in the
 34    amended  Idaho  return  shall  be  subject  to  adjustment  for  purposes   of
 35    recomputing  Idaho  income, deductions, gains, losses, credits, and the effect
 36    of such adjustments on Idaho allocations and apportionments.
 37        (i)  If a taxpayer has filed an amended federal return, and no correspond-
 38    ing Idaho amended return has been filed with the state  tax  commission,  then
 39    the period of limitations for issuing a notice of deficiency shall be reopened
 40    and  shall  not  expire until three (3) years from the date of delivery to the
 41    tax commission by the taxpayer of the amended federal  return.  However,  upon
 42    the expiration of the period of limitations as provided in subsections (a) and
 43    (lm)  of  this  section, then only those specific items of income, deductions,
 44    gains, losses, or credits, which were adjusted in the amended  federal  return
 45    shall  be  subject  to  adjustment  for  purposes of recomputing Idaho income,
 46    deductions, gains, losses, credits, and the  effect  of  such  adjustments  on
 47    Idaho allocations and apportionments.
 48        (j)  Notwithstanding  any  other  provisions  of this section, a notice of
 49    deficiency, related to items on the return  of  any  pass-through  entity,  as
 50    defined  in this section, which other taxpayers are required by law to report,
 51    shall be issued to such other taxpayers within the later of  three  (3)  years
 52    from  the  due  date  of the other taxpayers' return, without regard to exten-
 53    sions, three (3) years from the date the other taxpayers' returns were  filed,
 54    or  three  (3)  years  from  the  date  of filing of the pass-through entity's
 55    return. If the pass-through entity files an amended return, notices  of  defi-
                                                                        
                                           13
                                                                        
  1    ciency  may  be  issued to the other taxpayers within three (3) years from the
  2    date the amended return for the pass-through entity was filed with  the  state
  3    tax  commission.  If  the pass-through entity files an amended return with the
  4    internal revenue service, or the  internal  revenue  service  issues  a  final
  5    determination  to  the pass-through entity, then the period of limitations for
  6    issuing a notice of deficiency to the other taxpayers shall  be  reopened  and
  7    shall  not  expire  until three (3) years from the date of delivery to the tax
  8    commission by the pass-through entity of the amended  federal  return  or  the
  9    later of one (1) year from the date of delivery to the state tax commission by
 10    the  pass-through  entity  of the final federal determination, three (3) years
 11    from the due date of the  pass-through  entity's  return,  without  regard  to
 12    extensions,  or three (3) years from the date the pass-through entity's return
 13    was filed.
 14        (k)  For purposes of this section, "pass-through entity" means a  partner-
 15    ship,  S-corporation,  trust,  limited  liability  company or any other entity
 16    whose items of income, deductions, gains, losses and credits must be  reported
 17    by  other  taxpayer(s).  For further purposes of this section, the term "other
 18    taxpayer" shall include, by way of unlimiting example, such taxpayers as part-
 19    ners, shareholders, beneficiaries, joint venturers or investors.
 20        (l)  In the case of a duplicate return filed under  section  63-217(1)(b),
 21    Idaho  Code,  the  limitation under this section shall be the later of one (1)
 22    year from the filing of the duplicate return or the date otherwise  applicable
 23    under this section.
 24        (m)  Prior  to  the  expiration of the time prescribed in this section for
 25    the issuance of a notice of deficiency for the tax imposed  in  this  chapter,
 26    both  the  state  tax commission, its delegate or deputy, and the taxpayer may
 27    consent in writing to extend the period of time within which a notice of defi-
 28    ciency may be issued. The period so agreed upon may be extended by  subsequent
 29    agreements  in  writing  made  before  the expiration of the period previously
 30    agreed upon. When a pass-through entity extends the period of  limitations  in
 31    accordance  with this subsection, the period of limitations for the other tax-
 32    payers  is automatically extended for the same period for the purpose of issu-
 33    ing a notice of deficiency to the other taxpayers reflecting  the  adjustments
 34    to the pass-through entity's return.
 35        (mn)  The expiration of the period of limitations as provided in this sec-
 36    tion shall be suspended for the time period during which the state tax commis-
 37    sion is prohibited from issuing a notice of deficiency, making the assessment,
 38    or  from collecting by levy or a proceeding in court, and for thirty (30) days
 39    thereafter.
 40        (no)  For the purposes of this section,  "return"  includes  a  notice  of
 41    deficiency determination issued by the state tax commission when no return was
 42    filed  by  the  taxpayer.  Such a return is deemed filed on the date the taxes
 43    determined by the state tax commission are assessed.
                                                                        
 44        SECTION 12.  That Section 63-3072, Idaho Code, be, and the same is  hereby
 45    amended to read as follows:
                                                                        
 46        63-3072.  CREDITS  AND  REFUNDS.  (a) Subject to the provisions of subsec-
 47    tions (b), (c) and (gh) of this section, where there has been  an  overpayment
 48    of the tax imposed by the provisions of this chapter, the amount of such over-
 49    payment  shall  be credited against any tax administered by the state tax com-
 50    mission which tax is then due from the  taxpayer,  and  any  balance  of  such
 51    excess shall be refunded to the taxpayer.
 52        (b)  Except  in 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
                                                                        
                                           14
                                                                        
  1    section  63-3036A, Idaho Code, a claim for credit or refund of tax, penalties,
  2    or interest paid shall be made within the later of three (3) years of the  due
  3    date  of the return, without regard to extensions, or three (3) years from the
  4    date the return was filed. However, with regard to remittances  received  with
  5    an  extension  of  time  to file, or a tentative return, a claim for credit or
  6    refund of such remittances shall be made within three (3) years from  the  due
  7    date of the return without regard to extensions.
  8        (c)  With  regard  to  amounts  withheld  as  provided in section 63-3035,
  9    63-3035A or 63-3036, Idaho Code, or amounts paid as estimated  payments  under
 10    section  63-3036A,  Idaho  Code,  a  claim  for credit or refund shall be made
 11    within three (3) years from the due date of  the  return,  without  regard  to
 12    extensions,  for  the taxable year in respect to which the tax was withheld or
 13    paid.
 14        (d)  Notwithstanding any other provisions of this section, when Idaho tax-
 15    able income and/or tax credits for any taxable year have been  adjusted  as  a
 16    result  of a final federal determination, the period of limitations for claim-
 17    ing a refund or credit of tax, penalties, or interest shall  be  reopened  and
 18    shall  not expire until the later of one (1) year from the date of delivery of
 19    the final federal determination to the taxpayer by the internal  revenue  ser-
 20    vice,  three  (3)  years  from  the  due date of the return, without regard to
 21    extensions, or three (3) years from the date the return was  filed.  For  pur-
 22    poses  of  this  subsection, the term "final federal determination" shall mean
 23    the final resolution of all issues which were adjusted by the internal revenue
 24    service. When the final federal determination is submitted, the taxpayer shall
 25    also submit copies of all schedules and written explanations provided  by  the
 26    internal  revenue service. Upon the expiration of the period of limitations as
 27    provided in subsections (b) and (gh) of  this  section,  only  those  specific
 28    items  of  income, deductions, gains, losses or credits which were adjusted in
 29    the final federal determination shall be subject to adjustment for purposes of
 30    recomputing Idaho income, deductions, gains, losses, credits, and  the  effect
 31    of such adjustments on Idaho allocations and apportionments.
 32        (e)  If  a  claim for credit or refund relates to an overpayment attribut-
 33    able to a net operating loss carryback, in lieu of the period  of  limitations
 34    prescribed  in subsection (b) of this section, the period shall be that period
 35    which ends with the expiration of the fifteenth day of the fortieth month fol-
 36    lowing the end of the taxable year of the net operating loss which results  in
 37    such carryback.
 38        (f)  If  an adjustment, which was made within the period of limitations as
 39    provided in this section, affects the amount  of  tax  credit,  net  operating
 40    loss,  or  capital  loss, claimed in a taxable year other than the tax year in
 41    which the adjustment is made, then adjustments to the  credit,  net  operating
 42    loss,  or capital loss, claimed in such other tax year may be made and a claim
 43    for credit or refund of tax, penalties or interest may  be  made  even  though
 44    such claim would otherwise be barred under the provisions of this section.
 45        (g)  In  the  case of a duplicate return filed under section 63-217(1)(b),
 46    Idaho Code, the limitations under this section shall be the later of  one  (1)
 47    year  from the filing of the duplicate return or the date otherwise applicable
 48    under this section.
 49        (h)  Prior to the expiration of the time prescribed in  this  section  for
 50    credit  or  refund  of any tax imposed by the provisions of this chapter, both
 51    the state tax commission or its delegate or deputy and the taxpayer  may  con-
 52    sent  in  writing to extend such period of time. The period so agreed upon may
 53    be extended by subsequent agreements in writing made before the expiration  of
 54    the  period  previously  agreed  upon.  When a pass-through entity extends the
 55    period of limitations in accordance with the provisions of this subsection the
                                                                        
                                           15
                                                                        
  1    period of limitations for the other taxpayers is  automatically  extended  for
  2    the  same period for the purpose of claiming a credit or refund of tax, penal-
  3    ties or interest by the other taxpayers  reflecting  the  pass-through  entity
  4    adjustments.
  5        (hi)  The expiration of the period of limitations as provided in this sec-
  6    tion  shall be suspended for the time period between the issuance by the state
  7    tax commission of a notice under either  section  63-3045  or  63-3065,  Idaho
  8    Code, and the final resolution of any proceeding resulting from the notice.
  9        (ij)  Appeal  of  a  state  tax commission decision denying in whole or in
 10    part a claim for credit or refund shall be made in accordance with and  within
 11    the time limits prescribed in section 63-3049, Idaho Code.
 12        (jk)  For  purposes  of  this section, "return" includes a notice of defi-
 13    ciency determination issued by the state tax commission  when  no  return  was
 14    filed  by  the  taxpayer.  Such a return is deemed filed on the date the taxes
 15    determined by the state tax commission are assessed.
                                                                        
 16        SECTION 13.  An emergency existing therefor,  which  emergency  is  hereby
 17    declared to exist, this act shall be in full force and effect on and after its
 18    passage  and  approval, and retroactively to January 1, 2002, except that Sec-
 19    tion 8 of this act shall be in full force and effect on and after its  passage
 20    and approval and retroactively to January 1, 2001.

Statement of Purpose / Fiscal Impact


                       STATEMENT OF PURPOSE

                             RS 11474C1

The State Tax Commission proposes a number of technical corrections 
to Idaho Income Tax Act.   Section 1 conforms the research credit to 
the terms used in the federal research credit by changing the term 
"qualified research payment" to "qualified research expense."  
Sections 2, 3, & 6 correct terminology to conform to statutory 
definitions.   Section 4 repeals redundant provisions relating to 
health insurance costs.   Section 5 clarifies the deduction for 
long-term care insurance.  Section 7 clarifies the payment for 
dependents sixty-five years of age or older or person with 
developmental disabilities.  Section 8 removes a reference to 
an obsolete term in the new jobs credit.  Section 9 clarifies 
the transferability of the broadband investment credit.  Section 
10 clarifies the penalty for failure to file tax returns.   Sections 
11 & 12 clarify the statute of limitations on assessments and refunds 
of tax when there are duplicate returns.   Section 13 provides 
effective dates.
    
                         FISCAL IMPACT
None.

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

Statement of Purpose/Fiscal Impact                   H 442