Print Friendly HOUSE BILL NO. 727 – Property tax, operating property
HOUSE BILL NO. 727
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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
|||| 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
2 RELATING TO VALUATION AND ASSESSMENT OF PUBLIC UTILITY PROPERTY FOR TAX PUR-
3 POSES; AMENDING SECTION 63-201, IDAHO CODE, TO REVISE THE DEFINITION OF
4 "OPERATING PROPERTY"; AMENDING SECTION 63-401, IDAHO CODE, TO SPECIFY THAT
5 THE ASSESSMENT OF OPERATING PROPERTY INCLUDES CERTAIN FRANCHISES; AND
6 AMENDING SECTION 63-602L, IDAHO CODE, TO REMOVE AN EXCLUSION OF CERTAIN
7 PROPERTY FROM THE TAXABLE VALUE OF OPERATING PROPERTY.
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-
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
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
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
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-
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-
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
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
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:
48 63-401. OPERATING PROPERTY ASSESSED BY STATE TAX COMMISSION. Operating
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:
2 63-602L. PROPERTY EXEMPT FROM TAXATION -- INTANGIBLE PERSONAL PROPERTY.
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
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.
The fiscal impact of this legislation will be a tax shift of
local property taxes totaling $2,580,715 statewide.
Name: Representative Langford
STATEMENT OF PURPOSE/FISCAL NOTE H 727