2003 Legislation
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HOUSE BILL NO. 279 – Income tax withholding/employr/amt


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Daily Data Tracking History

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.
      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

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 279
                             BY REVENUE AND TAXATION COMMITTEE
  1                                        AN ACT
  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:
 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  exceeds  sixty  two  hundred
  1        forty  thousand dollars ($6240,000) per annum or an average of five twenty
  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  in  19942006,  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 exceeds one five thousand dollars ($15,000), the  commis-
 22        sion shall promulgate a rule adjusting the monthly threshold amount by one
 23        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
  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 / Fiscal Impact

                       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

Name: Rep. Hilde Kellogg 
Phone: 332-1000
Rep. Lee Gagner
Sen. Brent Hill