2003 Legislation
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HOUSE BILL NO. 69 – College savings prog, withdrawals

HOUSE BILL NO. 69

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Daily Data Tracking History



H0069...........................................................by MR. SPEAKER
                 Requested by: Office of the State Treasurer
COLLEGE SAVINGS PROGRAM - Amends existing law to provide that, for state
income tax purposes, the amount of a nonqualified withdrawal from a college
savings account, less any amount of such nonqualified withdrawal included in
the individual's federal gross income, would be added in computing Idaho
taxable income.
                                                                        
01/06    House intro - 1st rdg - to printing
    Rpt prt - to Rev/Tax
01/16    Rpt out - rec d/p - to 2nd rdg
01/17    2nd rdg - to 3rd rdg
01/20    3rd rdg - PASSED - 67-0-3
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Black, Block, Boe,
      Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow, Cuddy, 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, Nacarrato, Nielsen, Raybould, Ridinger, Ring, Ringo,
      Roberts, Robison, Rydalch, Sali, Sayler, Schaefer(Schumacher), Shepherd,
      Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson,
      Tilman, Trail, Wills, Wood, Mr. Speaker
      NAYS -- None
      Absent and excused -- Bell, Bieter, Deal
    Floor Sponsor - Denney
    Title apvd - to Senate
01/21    Senate intro - 1st rdg - to Loc Gov
01/30    Rpt out - rec d/p - to 2nd rdg
01/31    2nd rdg - to 3rd rdg
02/03    3rd rdg - PASSED - 32-0-3
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett, Burtenshaw,
      Calabretta, Cameron, Compton, Darrington, Davis, Gannon, Geddes, Goedde,
      Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai, Marley,
      McKenzie, McWilliams, Noh, Pearce, Richardson, Schroeder, Stegner,
      Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Noble, Sorensen, Stennett
    Floor Sponsor - Malepeai
    Title apvd - to House
02/04    To enrol
02/05    Rpt enrol - Sp signed
02/06    Pres signed
02/07    To Governor
02/10    Governor signed
         Session Law Chapter 6
         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. 69
                                                                        
                                       BY MR. SPEAKER
                        Requested by: Office of the State Treasurer
                                                                        
  1                                        AN ACT
  2    RELATING TO THE IDAHO COLLEGE SAVINGS PROGRAM; AMENDING SECTION 63-3022, IDAHO
  3        CODE, TO PROVIDE THAT FOR STATE INCOME  TAX  PURPOSES,  THE  AMOUNT  OF  A
  4        NONQUALIFIED  WITHDRAWAL  FROM  AN  INDIVIDUAL  TRUST  ACCOUNT  OR SAVINGS
  5        ACCOUNT ESTABLISHED PURSUANT TO CHAPTER 54, TITLE 33, IDAHO CODE, LESS ANY
  6        AMOUNT OF SUCH NONQUALIFIED WITHDRAWAL INCLUDED IN THE  INDIVIDUAL'S  FED-
  7        ERAL GROSS INCOME PURSUANT TO 26 U.S.C. SECTION 529 WOULD BE ADDED IN COM-
  8        PUTING IDAHO TAXABLE INCOME; DECLARING AN EMERGENCY AND PROVIDING RETROAC-
  9        TIVE APPLICATION.
                                                                        
 10    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 11        SECTION  1.  That  Section 63-3022, Idaho Code, be, and the same is hereby
 12    amended to read as follows:
                                                                        
 13        63-3022.  ADJUSTMENTS TO TAXABLE INCOME. The  additions  and  subtractions
 14    set  forth  in  this section, and in sections 63-3022A through 63-3022M, Idaho
 15    Code, are to be applied to the  extent  allowed  in  computing  Idaho  taxable
 16    income:
 17        (a)  Add  any  state  and  local  taxes,  as defined in section 164 of the
 18    Internal Revenue Code and, measured by net income, paid or accrued during  the
 19    taxable  year adjusted for state or local tax refunds used in arriving at tax-
 20    able income.
 21        (b)  Add the net operating loss deduction  used  in  arriving  at  taxable
 22    income.
 23        (c)  (1) A net operating loss for any taxable year commencing on and after
 24        January  1,  2000, shall be a net operating loss carryback not to exceed a
 25        total of one hundred thousand dollars ($100,000) to the  two  (2)  immedi-
 26        ately  preceding  taxable years. Any portion of the net operating loss not
 27        subtracted in the two (2) preceding years may be subtracted  in  the  next
 28        twenty  (20) years succeeding the taxable year in which the loss arises in
 29        order until exhausted. The sum of the deductions may not exceed the amount
 30        of the net operating loss deduction incurred. At the election of the  tax-
 31        payer,  the two (2) year carryback may be foregone and the loss subtracted
 32        from income received in taxable years arising  in  the  next  twenty  (20)
 33        years  succeeding the taxable year in which the loss arises in order until
 34        exhausted. The election shall be made as under section  172(b)(3)  of  the
 35        Internal  Revenue  Code.  An election under this subsection must be in the
 36        manner prescribed in the rules of the state tax commission and  once  made
 37        is irrevocable for the year in which it is made. The term "income" as used
 38        in this subsection (c) means Idaho taxable income as defined in this chap-
 39        ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code.
 40        (2)  Net operating losses incurred by a corporation during a year in which
 41        such corporation did not transact business in Idaho or was not included in
 42        a  group of corporations combined under subsection (t) of section 63-3027,
 43        Idaho Code, may not be subtracted. However, if at least one  (1)  corpora-
                                                                        
                                           2
                                                                        
  1        tion  within a group of corporations combined under subsection (t) of sec-
  2        tion 63-3027, Idaho Code, was transacting business  in  Idaho  during  the
  3        taxable  year  in which the loss was incurred, then the net operating loss
  4        may be subtracted. Net operating losses incurred by a person, other than a
  5        corporation, in activities not taxable by Idaho may not be subtracted.
  6        (d)  In the case of a corporation, add the amount deducted under the  pro-
  7    visions  of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue
  8    Code (relating to  dividends received by corporations) as limited  by  section
  9    246(b)(1) of said code.
 10        (e)  In  the  case  of  a corporation, subtract an amount determined under
 11    section 78 of the Internal Revenue Code to be taxable as dividends.
 12        (f)  Subtract the amount of any income received or accrued during the tax-
 13    able year which is exempt from taxation by this state, under the provisions of
 14    any other law of this state or a law of the United States, if  not  previously
 15    subtracted in arriving at taxable income.
 16        (g)  For  the purpose of determining the Idaho taxable income of the bene-
 17    ficiary of a trust or of an estate:
 18        (1)  Distributable net income as defined for federal tax purposes shall be
 19        corrected for the other adjustments required by this section.
 20        (2)  Net operating losses attributable to a  beneficiary  of  a  trust  or
 21        estate under section 642 of the Internal Revenue Code shall be a deduction
 22        for  the  beneficiary  to  the extent that income from the trust or estate
 23        would be attributable to this state under the provisions of this chapter.
 24        (h)  In the case of an individual who is on active  duty  as  a  full-time
 25    officer,  enlistee  or  draftee,  with  the armed forces of the United States,
 26    which full-time duty is or will be continuous and uninterrupted for  one  hun-
 27    dred  twenty  (120)  consecutive days or more, deduct compensation paid by the
 28    armed forces of the United States for services performed outside  this  state.
 29    The deduction is allowed only to the extent such income is included in taxable
 30    income, and provided that appropriate adjustments shall be made in determining
 31    the  deductions  and exemptions allowed pursuant to section 63-3026A(4), Idaho
 32    Code.
 33        (i)  In the case of a corporation, including any corporation included in a
 34    group of corporations combined under subsection (t) of section 63-3027,  Idaho
 35    Code, add any capital loss deducted which loss was incurred during any year in
 36    which such corporation did not transact business in Idaho. However, do not add
 37    any  capital  loss  deducted  if a corporation, including any corporation in a
 38    group of corporations combined under subsection (t) of section 63-3027,  Idaho
 39    Code,  was  transacting business in Idaho during the taxable year in which the
 40    loss was incurred. In the case of persons, other than  corporations,  add  any
 41    capital loss deducted which was incurred in activities not taxable by Idaho at
 42    the  time such loss was incurred. In computing the income taxable to an S cor-
 43    poration or partnership under this section, deduction shall not be allowed for
 44    a carryover or carryback of a net operating loss provided  for  in  subsection
 45    (c)  of  this  section  or  a capital loss provided for in section 1212 of the
 46    Internal Revenue Code.
 47        (j)  In the case of an individual, there shall be allowed as  a  deduction
 48    from gross income either (1) or (2) at the option of the taxpayer:
 49        (1)  The  standard  deduction  as  defined in section 63, Internal Revenue
 50        Code.
 51        (2)  Itemized deductions as defined in section 63 of the Internal  Revenue
 52        Code  except state or local taxes measured by net income and as defined in
 53        section 164 of the Internal Revenue Code.
 54        (k)  Add the taxable amount of any lump  sum  distribution  excluded  from
 55    gross income for federal income tax purposes under the ten (10) year averaging
                                                                        
                                           3
                                                                        
  1    method.  The  taxable  amount will include the ordinary income portion and the
  2    amount eligible for the capital gain election.
  3        (l)  Deduct any amounts included in gross income under the  provisions  of
  4    section  86  of  the Internal Revenue Code relating to certain social security
  5    and railroad benefits.
  6        (m)  In the case of a self-employed individual, deduct the actual cost  of
  7    premiums paid to secure worker's compensation insurance for coverage in Idaho,
  8    if such cost  has not been deducted in arriving at taxable income.
  9        (n)  In the case of an individual, deduct the amount contributed to a col-
 10    lege  savings  program  pursuant  to chapter 54, title 33, Idaho Code, but not
 11    more than four thousand dollars ($4,000) per tax year. If the contribution  is
 12    made  on or before April 15, 2001, it may be deducted for tax year 2000 and an
 13    individual can make another contribution and claim the deduction according  to
 14    the  limits provided in this subsection during 2001 for tax year 2001, as long
 15    as the contribution is made on or before December 31, 2001.
 16        (o)  In the case of an individual, add the amount of a nonqualified  with-
 17    drawal  from an individual trust account or savings account established pursu-
 18    ant to chapter 54, title 33, Idaho Code, less any amount of such  nonqualified
 19    withdrawal  included  in  the individual's federal gross income pursuant to 26
 20    U.S.C. section 529.
                                                                        
 21        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 22    declared to exist, this act shall be in full force and effect on and after its
 23    passage and approval, and retroactively to January 1, 2003.

Statement of Purpose / Fiscal Impact


                     STATEMENT OF PURPOSE

                             RS 12337

This bill is necessary to clarify that a taxpayer will not be taxed
twice when a nonqualified withdrawal is made from the Idaho College
Savings Program (Idaho Code  33-5401, et. seq.).  The Program
provides, pursuant to Idaho Code  63-3022(n) for a state tax
deduction for contributions made to accounts established in the
Program.  Idaho Code  63-3022(o) provides that non-qualified
withdrawals from the Program  must be recaptured in the taxpayer's
income to offset the tax deduction taken when the contribution was
made.  Because of the interaction of the federal and state income
tax forms, this provision causes gains on nonqualified withdrawals
to be included twice in the taxpayer's state reportable income. 
The proposed amendment to Idaho Code  63-3022(o) will provide that
a taxpayer may exclude that portion of a nonqualified withdrawal
that has already been included in his federal taxable income.


                         FISCAL IMPACT

None





CONTACT
Name:        Judy Comstock
Agency:      Treasurer's Office
Phone:       334-3200

Statement of Purpose/Fiscal Impact                     H 6