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H0279...............................................by REVENUE AND TAXATION INCOME TAX WITHHOLDING - Amends existing law to increase the maximum annual and monthly amounts of income tax withholding when the employer must pay to the State Tax Commission not later than five days after the end of the withholding period; to provide that commencing in 2006, the State Tax Commission shall determine whether the threshold amounts must be adjusted to reflect fluctuations in the cost of living; and to increase monthly threshold amounts. 02/19 House intro - 1st rdg - to printing 02/20 Rpt prt - to Rev/Tax 03/17 Rpt out - rec d/p - to 2nd rdg 03/19 2nd rdg - to 3rd rdg 03/24 3rd rdg - PASSED - 65-1-4 AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter(Bieter), Black, Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow, Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18), Gagner, Garrett, Harwood, Henbest(Bray), Jaquet, Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin, Meyer, Miller, Mitchell, Moyle, Naccarato, Nielsen, Raybould, Ridinger, Ring, Roberts, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen, Smith(30), Smylie, Snodgrass, Stevenson, Tilman, Trail, Wills, Mr. Speaker NAYS -- McKague Absent and excused -- Field(23), Ringo, Smith(24), Wood Floor Sponsors - Gagner & Kellogg Title apvd - to Senate 03/25 Senate intro - 1st rdg - to Loc Gov 04/01 Rpt out - rec d/p - to 2nd rdg 04/02 2nd rdg - to 3rd rdg 04/04 3rd rdg - PASSED - 32-0-3 AYES -- Bailey, Brandt, Bunderson, Burtenshaw, Calabretta, Cameron, Compton, Darrington, Davis, Gannon, Geddes, Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams, Noh, Pearce, Richardson, Schroeder, Sorensen, Stegner, Stennett, Sweet, Werk, Williams NAYS -- None Absent and excused -- Andreason, Burkett, Noble Floor Sponsor - Hill Title apvd - to House 04/07 To enrol 04/08 Rpt enrol - Sp signed 04/09 Pres signed 04/10 To Governor 04/15 Governor signed Session Law Chapter 296 Effective: 07/01/05
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-seventh Legislature First Regular Session - 2003IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 279 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO INCOME TAX WITHHOLDING; AMENDING SECTION 63-3035, IDAHO CODE, TO 3 INCREASE THE MAXIMUM ANNUAL AND MONTHLY AMOUNTS OF WITHHOLDING WHEN THE 4 EMPLOYER MUST PAY TO THE STATE TAX COMMISSION NOT LATER THAN FIVE DAYS 5 AFTER THE END OF THE WITHHOLDING PERIOD, TO PROVIDE THAT COMMENCING IN 6 2006, THE STATE TAX COMMISSION SHALL DETERMINE WHETHER THE THRESHOLD 7 AMOUNTS MUST BE ADJUSTED TO REFLECT FLUCTUATIONS IN THE COST OF LIVING AND 8 TO INCREASE MONTHLY THRESHOLD AMOUNTS; AND PROVIDING AN EFFECTIVE DATE. 9 Be It Enacted by the Legislature of the State of Idaho: 10 SECTION 1. That Section 63-3035, Idaho Code, be, and the same is hereby 11 amended to read as follows: 12 63-3035. STATE WITHHOLDING TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL- 13 LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the pro- 14 visions of the Internal Revenue Code to withhold, collect and pay income tax 15 on wages or salaries paid by such employer to any employee (other than employ- 16 ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the time 17 of such payment of wages, salary, bonus or other emolument to such employee, 18 deduct and retain therefrom an amount substantially equivalent to the tax rea- 19 sonably calculated by the state tax commission to be due from the employee 20 under this chapter. The state tax commission shall prepare tables showing 21 amounts to be withheld, and shall supply same to each employer subject to this 22 section. In the event that an employer can demonstrate administrative inconve- 23 nience in complying with the exact requirements set forth in these tables, he 24 may, with the consent of the state tax commission and upon application to it, 25 use a different method which will produce substantially the same amount of 26 taxes withheld. Every employer making payments of wages or salaries earned in 27 Idaho, regardless of the place where such payment is made: 28 (1) shall be liable to the state of Idaho for the payment of the tax 29 required to be deducted and withheld under this section and shall not be 30 liable to any individual for the amount deducted from his wages and paid 31 over in compliance or intended compliance with this section; 32 (2) must pay to the state tax commission monthly on or before the 20th 33 day of the succeeding month, or at such other times as the state tax com- 34 mission may allow, an amount of tax which, under the provisions of this 35 chapter, he is required to deduct and withhold; 36 (3) shall register with the state tax commission, in the manner pre- 37 scribed by it, to establish an employer's withholding account number. The 38 account number will be used to report all amounts withheld, for the annual 39 reconciliation required in this section, and for such other purposes 40 relating to withholding as the state tax commission may require; and 41 (4) must, notwithstanding the provisions of paragraphs (1) and (2) of 42 this subsection, if the amount of withholding of such employer for the 43 preceding twelve (12) month period equals or exceedssixtytwo hundred 2 1 forty thousand dollars ($6240,000) per annum or an average offivetwenty 2 thousand dollars ($520,000) per month per annum, pay to the state tax com- 3 mission on the basis of withholding periods which begin on the 16th day of 4 the month and end on the 15th day of the following month, and payment 5 shall be made not later than five (5) days after the end of the withhold- 6 ing period. 7 (5) If the payments made pursuant to subsections (a)(2) and (a)(4) of 8 this section are equal to the withholding under this section shown or 9 required to be shown on the return required by subsection (b)(1) of this 10 section, no penalty shall apply to the underpayment for the period between 11 the due date of the payment and the due date of the return. Interest, at 12 the rate provided by section 63-3045, Idaho Code, shall apply to any such 13 underpayment. 14 (6) Commencing in19942006, the state tax commission shall determine 15 whether the threshold amounts established by subsection (a)(4) of this 16 section must be adjusted to reflect fluctuations in the cost of living. 17 The commission shall base its determination on the cumulative effect of 18 the annual cost-of-living percentage modifications determined by the 19 United States secretary of health and human services pursuant to 42 USC 20 415(i). When the cumulative percentage applied to the monthly threshold 21 amount equals or exceedsonefive thousand dollars ($15,000), the commis- 22 sion shall promulgate a rule adjusting the monthly threshold amount byone23 five thousand dollars ($15,000) and making the necessary proportional 24 adjustment to the annual threshold amount. The rule shall be effective for 25 the next succeeding calendar year and each year thereafter until again 26 adjusted by the commission. The tax commission shall determine subsequent 27 adjustments in the same manner, in each case using the year of the last 28 adjustment as the base year. 29 (b) (1) Every employer shall file a return upon such form as shall be 30 prescribed by the state tax commission, but not more frequently than quar- 31 terly, or as required pursuant to any agreement between the state tax com- 32 mission and the department of labor under section 63-3035B, Idaho Code. 33 The return shall show, for the period to which it relates, the total 34 amount of wages, salary, bonus or other emolument paid to his employees, 35 the amount deducted therefrom in accordance with the provisions of the 36 Internal Revenue Code, the amount deducted therefrom in accordance with 37 the provisions of this section, the amount of any previous payments made 38 pursuant to this section, and such pertinent and necessary information as 39 the state tax commission may require. 40 (2) Every employer making a declaration of withholding as provided herein 41 shall furnish to the employees annually, but not later than thirty (30) 42 days after the end of the calendar year, a record of the amount of tax 43 withheld from such employee on forms to be prescribed, prepared and fur- 44 nished by the state tax commission and on or before the last day of Febru- 45 ary every employer shall file a copy thereof with the state tax commis- 46 sion. Every employer who is required, under Internal Revenue Code section 47 6011, to file returns on magnetic media or in other machine readable form 48 may be required by rules of the state tax commission to file corresponding 49 state returns on similar magnetic media or other machine readable form. 50 (c) All moneys deducted and withheld by every employer shall immediately 51 upon such deduction be state money and every employer who deducts and retains 52 any amount of money under the provisions of this chapter shall hold the same 53 in trust for the state of Idaho and for the payment thereof to the state tax 54 commission in the manner and at the times in this chapter provided. Any 55 employer who does not possess real property situated within the state of 3 1 Idaho, which, in the opinion of the state tax commission, is of sufficient 2 value to cover his probable tax liability, may be required to post a surety 3 bond in such sum as the state tax commission shall deem adequate to protect 4 the state. 5 (d) The provisions of this chapter relating to additions to tax in case 6 of delinquency, and penalties, shall apply to employers subject to the provi- 7 sions of this section and for these purposes any amount deducted, or required 8 to be deducted and remitted to the state tax commission under this section, 9 shall be considered to be the tax of the employer and with respect to such 10 amount he shall be considered the taxpayer. 11 (e) Amounts deducted from wages of an employee during any calendar year 12 in accordance with the provisions of this section shall be considered to be in 13 part payment of the tax imposed on such employee for his tax year which begins 14 within such calendar year and the return made by the employer under this sub- 15 section (e) shall be accepted by the state tax commission as evidence in favor 16 of the employee of the amount so deducted from his wages. Where the total 17 amount so deducted exceeds the amount of tax on the employee, based on his 18 Idaho taxable income, or where his income is not taxable under this chapter, 19 the state tax commission shall, after examining the annual return filed by the 20 employee in accordance with this chapter, but not later than sixty (60) days 21 after the filing of each return, refund the amount of the excess deducted. 22 (f) This section shall in no way relieve any taxpayer from his obligation 23 of filing a return at the time required under this chapter, and, should the 24 amount withheld under the provisions of this section be insufficient to pay 25 the total tax of such taxpayer, such unpaid tax shall be paid at the time pre- 26 scribed by section 63-3034, Idaho Code. 27 (g) An employee receiving wages shall on any day be entitled to not more 28 than, but may claim fewer than, the number of withholding exemptions to which 29 he is entitled under the Internal Revenue Code for federal income tax with- 30 holding purposes. 31 (h) An employer shall use the exemption certificate filed by the employee 32 with the employer under the withholding exemption provisions of the Internal 33 Revenue Code in determining the amount of tax to be withheld from the 34 employee's wages or salary under this chapter. The tax commission may redeter- 35 mine the number of withholding exemptions to which an employee is entitled 36 under subsection (g) of this section, and the state tax commission may require 37 such exemption certificate to be filed on a form prescribed by the commission 38 in any circumstance where the commission finds that the exemption certificate 39 filed for Internal Revenue Code purposes does not properly reflect the number 40 of withholding exemptions to which the employee is entitled under this chap- 41 ter. In no event shall any employee give an exemption certificate which claims 42 a higher number of withholding exemptions than the number to which the 43 employee is entitled by subsection (g) of this section. 44 SECTION 2. This act shall be in full force and effect on and after July 45 1, 2005.
STATEMENT OF PURPOSE RS 12765C1 This legislation simplifies Idaho income tax withholding for small and medium sized employers. It will repeal the "split month withholding" for 75% of businesses affected by "split month withholding" adopted as a revenue acceleration measure in 1983 and still required of approximately 1,050 businesses as of 2003. Increasing the threshold in current statute will exempt approximately 750 employers from this requirement and return them to calendar month filers. Three hundred employers retain the "split month withholding" requirement, about the same number of employers affected when the legislation was enacted in 1983. FISCAL IMPACT No increase or decrease in tax revenue over time. An estimated $3.2 million would shift from FY 2006. This is a one-time effect. Contact Name: Rep. Hilde Kellogg Phone: 332-1000 Rep. Lee Gagner Sen. Brent Hill STATEMENT OF PURPOSE/FISCAL NOTE H 279