2002 Legislation
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HOUSE BILL NO. 727 – Property tax, operating property


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Daily Data Tracking History

H0727...............................................by REVENUE AND TAXATION
PROPERTY TAX - Amends existing law to revise the definition of "operating
property" to eliminate an exemption for items defined as "intangible
personal property" including: goodwill, customer lists, contracts and
contract rights, patents, trademarks, custom computer programs, franchises,
licenses and certain rights-of-way.
03/06    House intro - 1st rdg - to printing
03/07    Rpt prt - to Rev/Tax

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 727
                             BY REVENUE AND TAXATION COMMITTEE
  1                                        AN ACT
  8    Be It Enacted by the Legislature of the State of Idaho:
  9        SECTION 1.  That Section 63-201, Idaho Code, be, and the  same  is  hereby
 10    amended to read as follows:
 11        63-201.  DEFINITIONS. As used for property tax purposes in title 63, chap-
 12    ters  1  through  23, Idaho Code, the terms defined in this section shall have
 13    the following meanings, unless the context clearly indicates another meaning:
 14        (1)  "Appraisal" means an estimate of property value for property tax pur-
 15    poses.
 16        (a)  For the purpose of estimated property value to place the value on any
 17        assessment roll, the value estimation must be made by the  assessor  or  a
 18        certified property tax appraiser.
 19        (b)  For the purpose of estimating property value to present for an appeal
 20        filed  pursuant  to  sections  63-501A, 63-407 and 63-409, Idaho Code, the
 21        value estimation may be made by the assessor,  a  certified  property  tax
 22        appraiser,  a licensed appraiser, or a certified appraiser or any party as
 23        specified by law.
 24        (2)  "Bargeline" means those water  transportation  tugs,  boats,  barges,
 25    lighters  and  other equipment and property used in conjunction with waterways
 26    for bulk transportation of freight or ship assist.
 27        (3)  "Cogenerators" means facilities which produce  electric  energy,  and
 28    steam  or  forms  of  useful energy which are used for industrial, commercial,
 29    heating or cooling purposes.
 30        (4)  "Collection costs" are amounts authorized by law to  be  added  after
 31    the date of delinquency and collected in the same manner as property tax.
 32        (5)  "Delinquency"  means  any property tax, special assessment, fee, col-
 33    lection cost, or charge collected in the same manner as property tax, that has
 34    not been paid in the manner and within the time limits provided by law.
 35        (6)  "Improvements" means all buildings, structures, fixtures  and  fences
 36    erected upon or affixed to the land, and all fruit, nut-bearing and ornamental
 37    trees  or  vines  not of natural growth, growing upon the land, except nursery
 38    stock.
 39        (7)  "Late charge" means a charge of two percent (2%) of the delinquency.
 40        (8)  "Lawful money of the United States" means currency and  coin  of  the
 41    United  States at par value and checks and drafts which are payable in dollars
 42    of the United States at par value, payable upon demand or presentment.
 43        (9)  "Manufactured home" means a structure defined as a manufactured  home
  1    in section 39-4105, Idaho Code.
  2        (10) "Market  value"  means the amount of United States dollars or equiva-
  3    lent for which, in all probability, a property would exchange hands between  a
  4    willing  seller,  under no compulsion to sell, and an informed, capable buyer,
  5    with a reasonable time allowed to consummate the sale, substantiated by a rea-
  6    sonable down or full cash payment.
  7        (11) "Operating property" means all franchises, rights-of-way  accompanied
  8    by title; roadbeds; tracks; pipelines; bargelines; equipment and docks; termi-
  9    nals;  rolling  stock;  equipment;  power stations; power sites; lands; reser-
 10    voirs, generating plants, transmission lines, distribution lines  and  substa-
 11    tions;  and  all immovable or movable property operated in connection with any
 12    public utility, railroad or private railcar fleet,  wholly  or  partly  within
 13    this  state,  and  necessary  to the maintenance and operation of such road or
 14    line, or in conducting its business, and shall include all title and  interest
 15    in  such  property,  as  owner, lessee or otherwise. The term does not include
 16    personal property exempt from taxation  pursuant  to  section  63-602L,  Idaho
 17    Code.
 18        (12) "Party  in  interest"  means  a  person who holds a properly recorded
 19    mortgage, deed of trust or security interest.
 20        (13) "Person" means  any  entity,  individual,  corporation,  partnership,
 21    firm, association, limited liability company, limited liability partnership or
 22    other such entities as recognized by the state of Idaho.
 23        (14) "Personal  property"  includes all goods, chattels, stocks and bonds,
 24    equities in state lands, easements, reservations,  leasehold  real  properties
 25    and  all  other  property  which the law defines, or the courts may interpret,
 26    declare and hold to be personal property under the letter, spirit, intent  and
 27    meaning of the law, for the purposes of property taxation. For the purposes of
 28    payment  and  collection  of  property  taxes pursuant to chapter 9, title 63,
 29    Idaho Code, collection of delinquency pursuant to chapter 10, title 63,  Idaho
 30    Code,  and seizure and sale of personal property for taxes pursuant to chapter
 31    11, title 63, Idaho Code, personal property includes  manufactured  homes  not
 32    declared as real property pursuant to section 63-304, Idaho Code.
 33        (15) "Private  railcar fleet" means railroad cars or locomotives owned by,
 34    leased to, occupied by or franchised to any person other than a railroad  com-
 35    pany  operating  a  line  of  railroad in Idaho or any company classified as a
 36    railroad by the interstate commerce commission and entitled  to  possess  such
 37    railroad cars and locomotives except those possessed solely for the purpose of
 38    repair,  rehabilitation  or  remanufacturing  of  such locomotives or railroad
 39    cars.
 40        (16) "Public utility" means electrical companies, pipeline companies, nat-
 41    ural gas distribution companies, or power producers  included  within  federal
 42    law,  bargelines,  and water companies which are under the jurisdiction of the
 43    Idaho public utilities commission. The term also includes  telephone  corpora-
 44    tions,  as that term is defined in section 62-603, Idaho Code, except as here-
 45    inafter provided, whether or not such telephone corporation has been issued  a
 46    certificate of convenience and necessity by the Idaho public utilities commis-
 47    sion.
 48        This  term does not include cogenerators, mobile telephone service or com-
 49    panies, nor does it include pager service or companies, except when such  ser-
 50    vices are an integral part of services provided by a certificated utility com-
 51    pany  nor  does the term "public utility" include companies or persons engaged
 52    in the business of providing solely on a resale basis, any telephone or  tele-
 53    communication  service which is purchased from a telephone corporation or com-
 54    pany.
 55        (17) "Railroad" means every kind of railway, whether its line of rails  or
  1    tracks  be  at, above or below the surface of the earth, and without regard to
  2    the kind of power used in moving its rolling stock, and shall be considered to
  3    include every kind of street railway, suburban railway or  interurban  railway
  4    excepting  facilities  established  solely  for  maintenance and rebuilding of
  5    railroad cars or locomotives.
  6        (18) "Real property" means land, and all standing timber thereon,  includ-
  7    ing  standing  timber  owned  separately  from the ownership of  the land upon
  8    which the same  may stand, except as modified in chapter 17, title  63,  Idaho
  9    Code,  and  all  buildings,  structures and improvements, or other fixtures of
 10    whatsoever kind on land, including water ditches constructed for mining, manu-
 11    facturing or irrigation purposes, water and gas mains, wagon and turnpike toll
 12    roads, and toll bridges, and all rights and privileges thereto  belonging,  or
 13    any  way appertaining, all quarries and fossils in and under the land, and all
 14    other property which the law defines, or the courts may interpret, declare and
 15    hold to be real property under the letter, spirit, intent and meaning  of  the
 16    law, for the purposes of property taxation. Manufactured homes constitute real
 17    property  when  located  on  taxable  land, and after a statement of intent to
 18    declare as real property has been recorded, provided said  statement  has  not
 19    been  revoked.  Timber,  forest,  forest  land,  and  forest products shall be
 20    defined as provided in chapter 17, title 63, Idaho Code.
 21        (19) "Record owner" means the person or persons in whose name or names the
 22    property stands upon the records of the county recorder's  office.  Where  the
 23    record  owners  are husband and wife at the time of notice of pending issue of
 24    tax deed, notice to one (1) shall be deemed and imputed as notice to the other
 25    spouse.
 26        (20) "Special assessment" means a charge imposed upon property for a  spe-
 27    cific purpose, collected and enforced in the same manner as property taxes.
 28        (21) "System  value" means the market value for assessment purposes of the
 29    operating property when considered as a unit.
 30        (22) "Tax code area" means a geographical area made up of one (1) or  more
 31    taxing districts with one (1) total levy within the geographic area, except as
 32    otherwise provided by law.
 33        (23) "Taxing district" means any entity or unit with the statutory author-
 34    ity to levy a property tax.
 35        (24) "Taxable  value"  means  market  value  for assessment purposes, less
 36    applicable exemptions or other statutory provisions.
 37        (25) "Transient personal property" is personal property, specifically such
 38    construction, logging or mining machinery and equipment  which is kept, moved,
 39    transported, shipped, hauled into or remaining for periods of  not  less  than
 40    thirty  (30)  days,  in  more than one (1) county in the state during the same
 41    year.
 42        (26) "Warrant of distraint" means a warrant ordering the seizure  of  per-
 43    sonal  property  to  enforce  payment  of  property  tax,  special assessment,
 44    expense, fee, collection cost or charge collected in the same manner  as  per-
 45    sonal property tax.
 46        SECTION  2.  That  Section  63-401, Idaho Code, be, and the same is hereby
 47    amended to read as follows:
 49    property, completed or under construction, and the franchises of persons oper-
 50    ating a public utility, railroad or private railcar fleet shall be assessed by
 51    the state tax commission.
 52        SECTION  3.  That  Section 63-602L, Idaho Code, be, and the same is hereby
  1    amended to read as follows:
  3    (1)  The following intangible personal property is exempt from taxation: capi-
  4    tal stock and bonds and other intangible personal property.  The  deposits  in
  5    national  banks,  state  banks,  and savings and loan associations. Shares and
  6    accounts of savings and loan associations, credit unions or associations orga-
  7    nized under the laws of the state of Idaho for the purpose of accumulating the
  8    savings and funds of their members and lending  the  same  to  their  members.
  9    Goodwill,  customer lists, contracts and contract rights, patents, trademarks,
 10    custom computer programs as defined in  section  63-3616,  Idaho  Code,  copy-
 11    rights,   trade   secrets,   franchises,  licenses,  rights-of-way  which  are
 12    possessory only and not accompanied by title.
 13        (2)  The commission shall promulgate rules which  shall  provide  for  the
 14    exclusion of exempt intangible personal property from taxable value of operat-
 15    ing  property. Such rules shall allow each taxpayer the right to elect one (1)
 16    of the following three (3) methods for exclusion of exempt intangible personal
 17    property from its taxable value:
 18        (a)  Separate exclusion of the exempt intangible personal property at  the
 19        system level value; or
 20        (b)  Separate  exclusion of the exempt intangible personal property at the
 21        state allocated value; or
 22        (c)  Exclusion of the exempt intangible personal property by valuation  of
 23        only tangible personal property and nonexempt intangible personal property
 24        using  valuation  models  which  do  not  impound or include values of the
 25        exempt intangible personal property.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE

                            RS 11796

The purpose of this legislation is to repeal the intangibles
exemption in 63-201 that caused a state-wide tax shift amounting
to several million dollars of additional county property taxes
assessed to small businessmen, landowners, and homeowners. The
result of this legislation will be to reverse that shift and
(based on 2001 taxes) give $2,580,715 in statewide local property
tax relief to the aforementioned taxpayers.

                          FISCAL IMPACT

The fiscal impact of this legislation will be a tax shift of
local property taxes totaling $2,580,715 statewide.

Name:   Representative Langford 
        Representative Stevenson
Phone:  332-1000