2003 Legislation
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HOUSE BILL NO. 225 – Income tax credit/certain/transfer

HOUSE BILL NO. 225

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H0225..................................................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.
                                                                        
02/11    House intro - 1st rdg - to printing
02/12    Rpt prt - to Rev/Tax
02/18    Rpt out - rec d/p - to 2nd rdg
02/19    2nd rdg - to 3rd rdg
02/21    3rd rdg - PASSED - 70-0-0
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter,
      Black, Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins,
      Crow, Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth,
      Eskridge, Field(18), Field(23), Gagner, Garrett, Harwood, Henbest,
      Jaquet, Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez,
      McGeachin, McKague, Meyer, Miller, Mitchell, Moyle, Naccarato, Nielsen,
      Raybould, Ridinger, Ring, Ringo, Roberts, Robison, Rydalch, Sali,
      Sayler, Schaefer(Schaefer), Shepherd, Shirley, Skippen, Smith(30),
      Smith(24), Smylie, Snodgrass, Stevenson, Tilman, Trail, Wills, Wood, Mr.
      Speaker.
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Moyle
    Title apvd - to Senate
02/24    Senate intro - 1st rdg - to Loc Gov
02/27    Rpt out - rec d/p - to 2nd rdg
02/28    2nd rdg - to 3rd rdg
03/10    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burtenshaw, Calabretta,
      Cameron, Compton, Darrington, Gannon, Geddes, Goedde, Hill, Ingram,
      Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams,
      Noble, Noh, Pearce, Richardson, Schroeder, Sorensen, Stegner, Stennett,
      Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Burkett, Davis
    Floor Sponsor - McKenzie
    Title apvd - to House
03/11    To enrol
03/12    Rpt enrol - Sp signed
03/13    Pres signed
03/14    To Governor
03/17    Governor signed
         Session Law Chapter 89
         Effective: 01/01/03

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 225
                                                                        
                             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 AND TO PROVIDE FOR
  5        THE TRANSFER; AMENDING SECTION 63-3029J, IDAHO CODE, TO CLARIFY  THAT  THE
  6        INCENTIVE  INVESTMENT  TAX CREDIT IS TRANSFERABLE ONLY BY THE TAXPAYER WHO
  7        EARNED THE CREDIT; DECLARING AN  EMERGENCY  AND  PROVIDING  A  RETROACTIVE
  8        EFFECTIVE DATE.
                                                                        
  9    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 10        SECTION  1.  That Section 63-3029I, Idaho Code, be, and the same is hereby
 11    amended to read as follows:
                                                                        
 12        63-3029I.  INCOME TAX CREDIT FOR INVESTMENT IN  BROADBAND  EQUIPMENT.  (1)
 13    Subject  to  the  limitations  of  this  section,  for taxable years beginning
 14    between January 1, 2001, and December 31,  2005,  inclusive,  there  shall  be
 15    allowed to a taxpayer a nonrefundable credit against taxes imposed by sections
 16    63-3024, 63-3025 and 63-3025A, Idaho Code, for qualified expenditures in qual-
 17    ified broadband equipment in Idaho.
 18        (2)  The credit permitted in subsection (1) of this section shall be three
 19    percent  (3%)  of the qualified investment in qualified broadband equipment in
 20    Idaho and shall be in addition to the credit for capital investment  permitted
 21    by section 63-3029B, Idaho Code.
 22        (3)  As used in this section the term:
 23        (a)  "Qualified investment" shall be as defined in section 63-3029B, Idaho
 24        Code.
 25        (b)  "Qualified  broadband  equipment"  means equipment that qualifies for
 26        the credit for capital investment permitted  by  section  63-3029B,  Idaho
 27        Code,  and  is  capable  of transmitting signals at a rate of at least two
 28        hundred thousand (200,000) bits per second to a subscriber  and  at  least
 29        one  hundred  twenty-five  thousand  (125,000) bits per second from a sub-
 30        scriber, and
 31             (i)   In the case of a telecommunications  carrier,  such  qualifying
 32             equipment  shall  be  necessary to the provision of broadband service
 33             and an integral part of a broadband network. "Telecommunications car-
 34             rier" has the meaning given such term by section 3(44) of the  commu-
 35             nications  act of 1934, as amended, but does not include a commercial
 36             mobile service provider.
 37             (ii)  In the case of a commercial mobile service carrier, such quali-
 38             fying equipment shall extend from the subscriber side of  the  mobile
 39             telecommunications   switching  office  to  a  transmitting/receiving
 40             antenna, including such antenna, on the outside of the  structure  in
 41             which  the subscriber is located. "Commercial mobile service carrier"
 42             means any person authorized to provide commercial mobile  radio  ser-
 43             vice  to  subscribers as defined in section 20.3 of title 47, Code of
                                                                        
                                           2
                                                                        
  1             Federal Regulations (10-1-99 ed.), as amended.
  2             (iii) In the case of a cable or  open  video  system  operator,  such
  3             qualifying  equipment  shall extend from the subscriber's side of the
  4             headend to the outside of the structure in which  the  subscriber  is
  5             located.  The terms "cable operator" and "open video system operator"
  6             have the meanings given  such  terms  by  sections  602(5)  and  653,
  7             respectively, of the communications act of 1934, as amended.
  8             (iv)  In  the case of a satellite carrier or a wireless carrier other
  9             than listed above, such qualifying equipment is only  that  equipment
 10             that  extends  from a transmitting/receiving  antenna, including such
 11             antenna, which transmits and receives signals  to  or  from  multiple
 12             subscribers to a transmitting/receiving antenna on the outside of the
 13             structure  in  which  the  subscriber is located. "Satellite carrier"
 14             means any person using the facilities of  a  satellite  or  satellite
 15             services  licensed by the federal communications commission and oper-
 16             ating a fixed-satellite service or direct  broadcast  satellite  ser-
 17             vices  to provide point-to-multipoint distribution of signals. "Other
 18             wireless carrier" means any person, other than  a  telecommunications
 19             carrier,  commercial  mobile  service  carrier,  cable operator, open
 20             video operator, or satellite carrier, providing broadband services to
 21             subscribers through the radio transmission of energy.
 22             (v)   In the case of packet switching equipment, such  packet  equip-
 23             ment  installed  in connection with other qualifying equipment listed
 24             in subsections (2)(b)(i) through (2)(b)(iv) of this section, provided
 25             it is the last in a series of equipment that transmits signals  to  a
 26             subscriber or the first in a series of equipment that transmits  sig-
 27             nals  from  a  subscriber.  "Packet  switching"  means controlling or
 28             routing the path of a digital transmission signal which is  assembled
 29             into packets or cells.
 30             (vi)  In  the case of multiplexing and demultiplexing equipment, such
 31             equipment only to the extent that it is deployed in  connection  with
 32             providing  broadband  services  in locations between packet switching
 33             equipment and the structure  in  which  the  subscriber  is  located.
 34             "Multiplexing" means the transmission of two (2) or more signals over
 35             a  communications  circuit without regard to the communications tech-
 36             nology.
 37             (vii) Any property not primarily used to provide services in Idaho to
 38             public subscribers is not qualified broadband equipment.
 39        (4)  No equipment described in subsections (2)(b)(i) through (2)(b)(vi) of
 40    this section shall qualify for the credit provided in subsection (1)  of  this
 41    section until the taxpayer applies to and obtains from the Idaho public utili-
 42    ties  commission an order confirming that the installed equipment is qualified
 43    broadband equipment. Applications submitted to the commission  shall  be  gov-
 44    erned  by the commission's rules of procedure. The commission may issue proce-
 45    dural orders necessary to implement this section.
 46        (5)  The credit allowed by subsection (1) of this  section  together  with
 47    any credits carried forward under subsection (7) of this section shall not, in
 48    any one (1) taxable year, exceed the lesser of:
 49        (a)  The  amount  of tax due under sections 63-3024, 63-3025 and 63-3025A,
 50        Idaho Code, after allowance for all other credits permitted by this  chap-
 51        ter; or
 52        (b)  Seven hundred fifty thousand dollars ($750,000).
 53    When  credits earned in more than one (1) taxable year are available, the old-
 54    est credits shall be applied first.
 55        (6)  In the case of a group of corporations filing a combined report under
                                                                        
                                           3
                                                                        
  1    subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
  2    of the group but not used by that member may be used by another member of  the
  3    group, subject to the provisions of subsection (7) of this section, instead of
  4    carried over. For a combined group of corporations, credit carried forward may
  5    be  claimed by any member of the group unless the member who earned the credit
  6    is no longer included in the combined group.
  7        (7)  If the credit allowed by subsection (1) of this section  exceeds  the
  8    limitation under subsection (5) of this section, the excess amount may be car-
  9    ried  forward for a period that does not exceed the next fourteen (14) taxable
 10    years.
 11        (8)  In the event that qualified broadband equipment upon which the credit
 12    allowed by this section has been used ceases to qualify for the credit allowed
 13    by section 63-3029B, Idaho Code, or is subject to recapture  of  that  credit,
 14    the recapture of credit under this section shall be in the same proportion and
 15    subject  to  the same provisions as the amount of credit required to be recap-
 16    tured under section 63-3029B, Idaho Code.
 17        (9)  (a) Subject to the requirements of this subsection,  a  taxpayer  who
 18        earns  and is entitled to the credit or to an unused portion of the credit
 19        allowed by this section may transfer all or a portion of the unused credit
 20        to:
 21             (i)   Aanother taxpayer required to file a return under this chapter;
 22             or
 23             (ii)  To an intermediary for its use or  for  resale  to  a  taxpayer
 24             required to file a return under this chapter.
 25        In  the  event  of  either  such  a transfer, the transferee may claim the
 26        credit on the transferee's income tax return originally filed  during  the
 27        calendar year in which the transfer takes place and, in the case of carry-
 28        over of the credit, on the transferee's returns for the number of years of
 29        carryover  available  to the transferor at the time of the transfer unless
 30        earlier exhausted.
 31        (b)  Before completing a transfer under this  subsection,  the  transferor
 32        shall  notify  the  state  tax commission of its intention to transfer the
 33        credit and the identity of the transferee. The state tax commission  shall
 34        provide  the  transferor  with a written statement of the amount of credit
 35        available under this section as then appearing in the commission's records
 36        and the number of years the credit may be  carried  over.  The  transferee
 37        shall  attach a copy of the statement to any return in regard to which the
 38        transferred credit is claimed.
 39        (c)  In the event that after the transfer the state tax commission  deter-
 40        mines  that  the amount of credit properly available under this section is
 41        less than the amount claimed by the transferor of the credit or  that  the
 42        credit  is subject to recapture, the commission shall assess the amount of
 43        overstated or recaptured credit as taxes due from the transferor  and  not
 44        the  transferee. The assessment shall be made in the manner provided for a
 45        deficiency in taxes under this chapter.
 46        (10) In addition to other needed rules, the state tax commission may  pro-
 47    mulgate rules prescribing, in the case of S corporations, partnerships, trusts
 48    or  estates,  a  method  of  attributing  the credit under this section to the
 49    shareholders, partners or beneficiaries in proportion to their  share  of  the
 50    income from the S corporation, partnership, trust or estate.
                                                                        
 51        SECTION  2.  That Section 63-3029J, Idaho Code, be, and the same is hereby
 52    amended to read as follows:
                                                                        
 53        63-3029J.  INCENTIVE INCOME TAX INVESTMENT CREDIT. (1) Subject to the lim-
                                                                        
                                           4
                                                                        
  1    itations of this section, for taxable year 2001 only, there shall  be  allowed
  2    to  a  taxpayer  a  nonrefundable  credit  against  taxes  imposed by sections
  3    63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount allowed by subsection
  4    (2) of this section for qualified investments in Idaho. The credit shall be in
  5    addition to the credit for capital investment permitted by  section  63-3029B,
  6    Idaho Code.
  7        (2)  The  credit  permitted  in subsection (1) of this section shall be at
  8    the percentage rate determined under either subsection  (2)(a)  or  (2)(b)  of
  9    this section at the election of the taxpayer.
 10        (a)  (i)   One-half  (1/2)  of  the amount by which the average three-year
 11             unemployment rate in the county in  which  the  property  is  located
 12             exceeds  six percent (6%).  In the case of mobile property, the prop-
 13             erty shall be located in the county in which it is primarily based.
 14             (ii)  For purposes of this section the director of the department  of
 15             labor shall, on or before the first day of September of each calendar
 16             year,  establish  and certify to the state tax commission the average
 17             three-year unemployment rate in each county in Idaho for the  immedi-
 18             ately  preceding  three  (3) calendar years. The rates thus certified
 19             shall apply  to  the  calculation  of  the  credit  under  subsection
 20             (2)(a)(i) of this section for property qualifying in the taxable year
 21             beginning during the next calendar year.
 22        (b)  (i)   One-tenth  of  one percent (.1%) for each full percent that the
 23             three-year average per capita personal income level in the county  in
 24             which  the  property  is located is below ninety percent (90%) of the
 25             average statewide per capita personal income level.
 26             (ii)  For purposes of this section the director of the department  of
 27             commerce  shall, on or before the first day of September of each cal-
 28             endar year, establish and certify to the  state  tax  commission  the
 29             most  current  three-year average per capita personal income level in
 30             each county in Idaho and the statewide  per  capita  personal  income
 31             level  for  the  most current preceding three (3) calendar years. The
 32             levels thus certified shall apply to the calculation  of  the  credit
 33             under subsection (2)(b)(i) of this section for property qualifying in
 34             the taxable year beginning during the next calendar year.
 35        (3)  As  used  in  this  section  the term "qualified investment" shall be
 36    defined as in section 63-3029B, Idaho Code.
 37        (4)  The credit allowed by subsection (1) of this  section  together  with
 38    any  credits  carried  forward  under subsection (6) of this section shall not
 39    exceed in any one (1) taxable year the lesser of:
 40        (a)  The amount of tax due under sections 63-3024, 63-3025  and  63-3025A,
 41        Idaho  Code, after allowance for all other credits permitted by this chap-
 42        ter; or
 43        (b)  Five hundred thousand dollars ($500,000).
 44        (5)  In the case of a group of corporations filing a combined report under
 45    subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
 46    of the group but not used by that member may be used by another member of  the
 47    group, subject to the provisions of subsection (6) of this section, instead of
 48    carried over. For a combined group of corporations, credit carried forward may
 49    be  claimed by any member of the group unless the member who earned the credit
 50    is no longer included in the combined group.
 51        (6)  If the credit allowed by subsection (1) of this section  exceeds  the
 52    limitation under subsection (4) of this section, the excess amount may be car-
 53    ried  forward for a period that does not exceed the next fourteen (14) taxable
 54    years.
 55        (7)  In the event that property upon which the credit allowed by this sec-
                                                                        
                                           5
                                                                        
  1    tion has been used ceases  to  qualify  for  the  credit  allowed  by  section
  2    63-3029B,  Idaho  Code, the recapture of credit under this section shall be in
  3    the same proportion and subject to the same provisions as the amount of credit
  4    required to be recaptured under section 63-3029B, Idaho Code.
  5        (8)  (a) Subject to the requirements of this subsection,  a  taxpayer  who
  6        earns  and is entitled to the credit or to an unused portion of the credit
  7        allowed by this section may transfer the unused credit to another taxpayer
  8        required to file a return under this chapter.
  9        (b)  Before completing a transfer under this  subsection,  the  transferor
 10        shall  notify  the  state  tax commission of its intention to transfer the
 11        credit and the identity of the transferee. The state tax commission  shall
 12        provide  the  transferor  with a written statement of the amount of credit
 13        available under  this  section  as  then  appearing  in  the  commission's
 14        records and the number of years the credit may be carried over. The trans-
 15        feror  shall  provide  the  transferee  with  the original statement.  The
 16        transferee shall attach a copy of the statement to any return in regard to
 17        which the transferred credit is claimed.
 18        (c)  In the event that after the transfer the state tax commission  deter-
 19        mines  that  the amount of credit properly available under this section is
 20        less than the amount claimed by the transferor of the credit and shown  in
 21        the  statement  described in subsection (8)(b) of this section or that the
 22        credit is subject to recapture, the commission shall assess the amount  of
 23        overstated credit as taxes due from the transferor and not the transferee.
 24        The  assessment  shall  be made in the manner provided for a deficiency in
 25        taxes under this chapter.
 26        (9)  In addition to other needed rules, the state tax commission may  pro-
 27    mulgate rules prescribing:
 28        (a)  In  the  case  of  S corporations, partnerships, trusts or estates, a
 29        method of attributing the credit under this section to  the  shareholders,
 30        partners  or beneficiaries in proportion to their share of the income from
 31        the S corporation, partnership, trust or estate.
 32        (b)  A requirement that a transferor under subsection (8) of this section,
 33        prior to obtaining the written statement provided in subsection (8)(b)  of
 34        this  section,  post such bond or security as the state tax commission may
 35        require to secure any liability referred to in subsection (8)(c)  of  this
 36        section.   Such  rules shall provide an opportunity for a taxpayer, upon a
 37        showing of financial responsibility, to have the bond waiver,  for  notice
 38        of  denial  of  waiver in accordance with section 63-3045, Idaho Code, and
 39        for review in accordance with section 63-3045B, Idaho Code.
                                                                        
 40        SECTION 3.  An emergency existing  therefor,  which  emergency  is  hereby
 41    declared to exist, this act shall be in full force and effect on and after its
 42    passage and approval, and retroactively to January 1, 2003.

Statement of Purpose / Fiscal Impact




                           STATEMENT OF PURPOSE
                            RS 12941


This bill clarifies the transferability of the tax credits
for investment in broadband equipment and the incentive income
tax investment credit.  Once the credit has been transferred to a
taxpayer for use on the transferee's return, it may not be
transferred again.  In the case of the broadband credit, the
taxpayer who earned the credit may make the transfer through an
intermediary.













                                 FISCAL NOTE

     No fiscal effect. 




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


STATEMENT OF PURPOSE/FISCAL NOTE                    H 225