2003 Legislation
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HOUSE BILL NO. 81 – Income tax credit/certain/transfer

HOUSE BILL NO. 81

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H0081..................................................by REVENUE AND TAXATION
INCOME TAX - CREDITS - Amends existing law to clarify that the state income
tax credit for investment in broadband equipment is transferable only by the
taxpayer who earned the credit; and to provide that the incentive investment
state income tax credit is transferable only by the taxpayer who earned the
credit.
                                                                        
01/15    House intro - 1st rdg - to printing
01/16    Rpt prt - to Rev/Tax

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 81
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO INCOME TAX CREDITS; AMENDING  SECTION  63-3029I,  IDAHO  CODE,  TO
  3        CLARIFY  THAT  THE  TAX  CREDIT  FOR  INVESTMENT IN BROADBAND EQUIPMENT IS
  4        TRANSFERABLE ONLY BY THE TAXPAYER WHO EARNED THE CREDIT; AMENDING  SECTION
  5        63-3029J,  IDAHO CODE, TO CLARIFY THAT THE INCENTIVE INVESTMENT TAX CREDIT
  6        IS TRANSFERABLE ONLY BY THE TAXPAYER WHO EARNED THE CREDIT;  DECLARING  AN
  7        EMERGENCY AND PROVIDING A RETROACTIVE EFFECTIVE DATE.
                                                                        
  8    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  9        SECTION  1.  That Section 63-3029I, Idaho Code, be, and the same is hereby
 10    amended to read as follows:
                                                                        
 11        63-3029I.  INCOME TAX CREDIT FOR INVESTMENT IN  BROADBAND  EQUIPMENT.  (1)
 12    Subject  to  the  limitations  of  this  section,  for taxable years beginning
 13    between January 1, 2001, and December 31,  2005,  inclusive,  there  shall  be
 14    allowed to a taxpayer a nonrefundable credit against taxes imposed by sections
 15    63-3024, 63-3025 and 63-3025A, Idaho Code, for qualified expenditures in qual-
 16    ified broadband equipment in Idaho.
 17        (2)  The credit permitted in subsection (1) of this section shall be three
 18    percent  (3%)  of the qualified investment in qualified broadband equipment in
 19    Idaho and shall be in addition to the credit for capital investment  permitted
 20    by section 63-3029B, Idaho Code.
 21        (3)  As used in this section the term:
 22        (a)  "Qualified investment" shall be as defined in section 63-3029B, Idaho
 23        Code.
 24        (b)  "Qualified  broadband  equipment"  means equipment that qualifies for
 25        the credit for capital investment permitted  by  section  63-3029B,  Idaho
 26        Code,  and  is  capable  of transmitting signals at a rate of at least two
 27        hundred thousand (200,000) bits per second to a subscriber  and  at  least
 28        one  hundred  twenty-five  thousand  (125,000) bits per second from a sub-
 29        scriber, and
 30             (i)   In the case of a telecommunications  carrier,  such  qualifying
 31             equipment  shall  be  necessary to the provision of broadband service
 32             and an integral part of a broadband network. "Telecommunications car-
 33             rier" has the meaning given such term by section 3(44) of the  commu-
 34             nications  act of 1934, as amended, but does not include a commercial
 35             mobile service provider.
 36             (ii)  In the case of a commercial mobile service carrier, such quali-
 37             fying equipment shall extend from the subscriber side of  the  mobile
 38             telecommunications   switching  office  to  a  transmitting/receiving
 39             antenna, including such antenna, on the outside of the  structure  in
 40             which  the subscriber is located. "Commercial mobile service carrier"
 41             means any person authorized to provide commercial mobile  radio  ser-
 42             vice  to  subscribers as defined in section 20.3 of title 47, Code of
 43             Federal Regulations (10-1-99 ed.), as amended.
                                                                        
                                           2
                                                                        
  1             (iii) In the case of a cable or  open  video  system  operator,  such
  2             qualifying  equipment  shall extend from the subscriber's side of the
  3             headend to the outside of the structure in which  the  subscriber  is
  4             located.  The terms "cable operator" and "open video system operator"
  5             have the meanings given  such  terms  by  sections  602(5)  and  653,
  6             respectively, of the communications act of 1934, as amended.
  7             (iv)  In  the case of a satellite carrier or a wireless carrier other
  8             than listed above, such qualifying equipment is only  that  equipment
  9             that  extends  from a transmitting/receiving  antenna, including such
 10             antenna, which transmits and receives signals  to  or  from  multiple
 11             subscribers to a transmitting/receiving antenna on the outside of the
 12             structure  in  which  the  subscriber is located. "Satellite carrier"
 13             means any person using the facilities of  a  satellite  or  satellite
 14             services  licensed by the federal communications commission and oper-
 15             ating a fixed-satellite service or direct  broadcast  satellite  ser-
 16             vices  to provide point-to-multipoint distribution of signals. "Other
 17             wireless carrier" means any person, other than  a  telecommunications
 18             carrier,  commercial  mobile  service  carrier,  cable operator, open
 19             video operator, or satellite carrier, providing broadband services to
 20             subscribers through the radio transmission of energy.
 21             (v)   In the case of packet switching equipment, such  packet  equip-
 22             ment  installed  in connection with other qualifying equipment listed
 23             in subsections (2)(b)(i) through (2)(b)(iv) of this section, provided
 24             it is the last in a series of equipment that transmits signals  to  a
 25             subscriber or the first in a series of equipment that transmits  sig-
 26             nals  from  a  subscriber.  "Packet  switching"  means controlling or
 27             routing the path of a digital transmission signal which is  assembled
 28             into packets or cells.
 29             (vi)  In  the case of multiplexing and demultiplexing equipment, such
 30             equipment only to the extent that it is deployed in  connection  with
 31             providing  broadband  services  in locations between packet switching
 32             equipment and the structure  in  which  the  subscriber  is  located.
 33             "Multiplexing" means the transmission of two (2) or more signals over
 34             a  communications  circuit without regard to the communications tech-
 35             nology.
 36             (vii) Any property not primarily used to provide services in Idaho to
 37             public subscribers is not qualified broadband equipment.
 38        (4)  No equipment described in subsections (2)(b)(i) through (2)(b)(vi) of
 39    this section shall qualify for the credit provided in subsection (1)  of  this
 40    section until the taxpayer applies to and obtains from the Idaho public utili-
 41    ties  commission an order confirming that the installed equipment is qualified
 42    broadband equipment. Applications submitted to the commission  shall  be  gov-
 43    erned  by the commission's rules of procedure. The commission may issue proce-
 44    dural orders necessary to implement this section.
 45        (5)  The credit allowed by subsection (1) of this  section  together  with
 46    any credits carried forward under subsection (7) of this section shall not, in
 47    any one (1) taxable year, exceed the lesser of:
 48        (a)  The  amount  of tax due under sections 63-3024, 63-3025 and 63-3025A,
 49        Idaho Code, after allowance for all other credits permitted by this  chap-
 50        ter; or
 51        (b)  Seven hundred fifty thousand dollars ($750,000).
 52    When  credits earned in more than one (1) taxable year are available, the old-
 53    est credits shall be applied first.
 54        (6)  In the case of a group of corporations filing a combined report under
 55    subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
                                                                        
                                           3
                                                                        
  1    of the group but not used by that member may be used by another member of  the
  2    group, subject to the provisions of subsection (7) of this section, instead of
  3    carried over. For a combined group of corporations, credit carried forward may
  4    be  claimed by any member of the group unless the member who earned the credit
  5    is no longer included in the combined group.
  6        (7)  If the credit allowed by subsection (1) of this section  exceeds  the
  7    limitation under subsection (5) of this section, the excess amount may be car-
  8    ried  forward for a period that does not exceed the next fourteen (14) taxable
  9    years.
 10        (8)  In the event that qualified broadband equipment upon which the credit
 11    allowed by this section has been used ceases to qualify for the credit allowed
 12    by section 63-3029B, Idaho Code, or is subject to recapture  of  that  credit,
 13    the recapture of credit under this section shall be in the same proportion and
 14    subject  to  the same provisions as the amount of credit required to be recap-
 15    tured under section 63-3029B, Idaho Code.
 16        (9)  (a) Subject to the requirements of this subsection,  a  taxpayer  who
 17        earns  and is entitled to the credit or to an unused portion of the credit
 18        allowed by this section may transfer the unused credit to another taxpayer
 19        required to file a return under this chapter.  In  the  event  of  such  a
 20        transfer,  the  transferee may claim the credit on the transferee's income
 21        tax return originally filed during the calendar year in which the transfer
 22        takes place  and,  in  the  case  of  carryover  of  the  credit,  on  the
 23        transferee's returns for the number of years of carryover available to the
 24        transferor at the time of the transfer unless earlier exhausted.
 25        (b)  Before  completing  a  transfer under this subsection, the transferor
 26        shall notify the state tax commission of its  intention  to  transfer  the
 27        credit  and the identity of the transferee. The state tax commission shall
 28        provide the transferor with a written statement of the  amount  of  credit
 29        available under this section as then appearing in the commission's records
 30        and  the  number  of  years the credit may be carried over. The transferee
 31        shall attach a copy of the statement to any return in regard to which  the
 32        transferred credit is claimed.
 33        (c)  In  the event that after the transfer the state tax commission deter-
 34        mines that the amount of credit properly available under this  section  is
 35        less  than  the amount claimed by the transferor of the credit or that the
 36        credit is subject to recapture, the commission shall assess the amount  of
 37        overstated  or  recaptured credit as taxes due from the transferor and not
 38        the transferee. The assessment shall be made in the manner provided for  a
 39        deficiency in taxes under this chapter.
 40        (10) In  addition to other needed rules, the state tax commission may pro-
 41    mulgate rules prescribing, in the case of S corporations, partnerships, trusts
 42    or estates, a method of attributing the  credit  under  this  section  to  the
 43    shareholders,  partners  or  beneficiaries in proportion to their share of the
 44    income from the S corporation, partnership, trust or estate.
                                                                        
 45        SECTION 2.  That Section 63-3029J, Idaho Code, be, and the same is  hereby
 46    amended to read as follows:
                                                                        
 47        63-3029J.  INCENTIVE INCOME TAX INVESTMENT CREDIT. (1) Subject to the lim-
 48    itations  of  this section, for taxable year 2001 only, there shall be allowed
 49    to a taxpayer  a  nonrefundable  credit  against  taxes  imposed  by  sections
 50    63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount allowed by subsection
 51    (2) of this section for qualified investments in Idaho. The credit shall be in
 52    addition  to  the credit for capital investment permitted by section 63-3029B,
 53    Idaho Code.
                                                                        
                                           4
                                                                        
  1        (2)  The credit permitted in subsection (1) of this section  shall  be  at
  2    the  percentage  rate  determined  under either subsection (2)(a) or (2)(b) of
  3    this section at the election of the taxpayer.
  4        (a)  (i)   One-half (1/2) of the amount by which  the  average  three-year
  5             unemployment  rate  in  the  county  in which the property is located
  6             exceeds six percent (6%).  In the case of mobile property, the  prop-
  7             erty shall be located in the county in which it is primarily based.
  8             (ii)  For  purposes of this section the director of the department of
  9             labor shall, on or before the first day of September of each calendar
 10             year, establish and certify to  the state tax commission the  average
 11             three-year  unemployment rate in each county in Idaho for the immedi-
 12             ately preceding three (3) calendar years. The  rates  thus  certified
 13             shall  apply  to  the  calculation  of  the  credit  under subsection
 14             (2)(a)(i) of this section for property qualifying in the taxable year
 15             beginning during the next calendar year.
 16        (b)  (i)   One-tenth of one percent (.1%) for each full percent  that  the
 17             three-year  average per capita personal income level in the county in
 18             which the property is located is below ninety percent  (90%)  of  the
 19             average statewide per capita personal income level.
 20             (ii)  For  purposes of this section the director of the department of
 21             commerce shall, on or before the first day of September of each  cal-
 22             endar  year,  establish  and  certify to the state tax commission the
 23             most current three-year average per capita personal income  level  in
 24             each  county  in  Idaho  and the statewide per capita personal income
 25             level for the most current preceding three (3)  calendar  years.  The
 26             levels  thus  certified  shall apply to the calculation of the credit
 27             under subsection (2)(b)(i) of this section for property qualifying in
 28             the taxable year beginning during the next calendar year.
 29        (3)  As used in this section the  term  "qualified  investment"  shall  be
 30    defined as in section 63-3029B, Idaho Code.
 31        (4)  The  credit  allowed  by subsection (1) of this section together with
 32    any credits carried forward under subsection (6) of  this  section  shall  not
 33    exceed in any one (1) taxable year the lesser of:
 34        (a)  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  chap-
 36        ter; or
 37        (b)  Five hundred thousand dollars ($500,000).
 38        (5)  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, subject to the provisions of subsection (6) of this section, instead of
 42    carried over. For a combined group of corporations, credit carried forward may
 43    be claimed by any member of the group unless the member who earned the  credit
 44    is no longer included in the combined group.
 45        (6)  If  the  credit allowed by subsection (1) of this section exceeds the
 46    limitation under subsection (4) of this section, the excess amount may be car-
 47    ried forward for a period that does not exceed the next fourteen (14)  taxable
 48    years.
 49        (7)  In the event that property upon which the credit allowed by this sec-
 50    tion  has  been  used  ceases  to  qualify  for  the credit allowed by section
 51    63-3029B, Idaho Code, the recapture of credit under this section shall  be  in
 52    the same proportion and subject to the same provisions as the amount of credit
 53    required to be recaptured under section 63-3029B, Idaho Code.
 54        (8)  (a) Subject  to  the  requirements of this subsection, a taxpayer who
 55        earns and is entitled to the credit or to an unused portion of the  credit
                                                                        
                                           5
                                                                        
  1        allowed by this section may transfer the unused credit to another taxpayer
  2        required to file a return under this chapter.
  3        (b)  Before  completing  a  transfer under this subsection, the transferor
  4        shall notify the state tax commission of its  intention  to  transfer  the
  5        credit  and the identity of the transferee. The state tax commission shall
  6        provide the transferor with a written statement of the  amount  of  credit
  7        available under this section as then appearing in the commission's records
  8        and  the  number  of  years the credit may be carried over. The transferor
  9        shall provide the transferee with the original statement.  The  transferee
 10        shall attach a copy  of the statement to any return in regard to which the
 11        transferred credit is claimed.
 12        (c)  In  the event that after the transfer the state tax commission deter-
 13        mines that the amount of credit properly available under this  section  is
 14        less  than the amount claimed by the transferor of the credit and shown in
 15        the statement described in subsection (8)(b) of this section or  that  the
 16        credit  is subject to recapture, the commission shall assess the amount of
 17        overstated credit as taxes due from the transferor and not the transferee.
 18        The assessment shall be made in the manner provided for  a  deficiency  in
 19        taxes under this chapter.
 20        (9)  In  addition to other needed rules, the state tax commission may pro-
 21    mulgate rules prescribing:
 22        (a)  In the case of S corporations, partnerships,  trusts  or  estates,  a
 23        method  of  attributing the credit under this section to the shareholders,
 24        partners or beneficiaries in proportion to their share of the income  from
 25        the S corporation, partnership, trust or estate.
 26        (b)  A requirement that a transferor under subsection (8) of this section,
 27        prior  to obtaining the written statement provided in subsection (8)(b) of
 28        this section, post such bond or security as the state tax  commission  may
 29        require  to  secure any liability referred to in subsection (8)(c) of this
 30        section.  Such rules shall provide an opportunity for a taxpayer,  upon  a
 31        showing  of  financial responsibility, to have the bond waiver, for notice
 32        of denial of waiver in accordance with section 63-3045,  Idaho  Code,  and
 33        for review in accordance with section 63-3045B, Idaho Code.
                                                                        
 34        SECTION  3.  An  emergency  existing  therefor,  which emergency is hereby
 35    declared to exist, this act shall be in full force and effect on and after its
 36    passage and approval, and retroactively to January 1, 2003.

Statement of Purpose / Fiscal Impact


                     STATEMENT OF PURPOSE

                             RS 12399

This bill clarifies that the tax credits for investment in
broadband equipment and the incentive income tax investment credit
are transferable only by the taxpayer who earned the credit.











                         FISCAL IMPACT


No fiscal effect.  








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

Statement of Purpose/Fiscal Impact                         H81