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H0453...............................................by REVENUE AND TAXATION
INCOME TAX CREDIT - CAPITAL INVESTMENT - Amends existing law to provide
that for qualified investments placed into service in taxable years
beginning in 2003 and thereafter, the taxpayer may elect, in lieu of the
credit provided by this section, a two year exemption from all taxes on
personal property on the qualified investment; to provide procedures; to
provide for cooperation between the State Tax Commission and the county
assessors; and to provide penalties.
04/28 House intro - 1st rdg - to printing
Rpt prt - to 2nd rdg
Rls susp - PASSED - 51-18-1
AYES -- Andersen(Guyon), Barraclough(Schanz), Barrett, Bauer, Bedke,
Bell, Black, Block, Bolz, Bradford, Campbell, Cannon, Clark, Collins,
Crow, Cuddy, Deal, Denney, Eberle, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Gagner, Garrett, Harwood, Jaquet, Kellogg,
Lake, Langford, McKague, Meyer, Miller, Moyle, Nielsen, Raybould,
Ring, Roberts, Rydalch, Sali, Schaefer, Shepherd(Buell), Shirley,
Skippen, Smylie, Snodgrass, Stevenson, Tilman, Wills, Mr. Speaker
NAYS -- Bieter, Boe, Douglas, Henbest, Kulczyk, Langhorst,
Martinez(Echohawk), McGeachin, Mitchell, Naccarato(Riggs), Ridinger,
Ringo, Robison, Sayler, Smith(30), Smith(24), Trail, Wood
Absent and excused -- Jones
Floor Sponsor - Moyle
Title apvd - to Senate
04/28 Senate intro - 1st rdg
Rls susp - Motion to refer to 14th Ord
Notice served for reconsideration of motion
Held at Desk
04/29 Reconsider Motion to refer to 14th Ord PASSED
Motion to refer to 14th Order FAILED
Rls previously susp - PASSED - 23-9-3
AYES -- Andreason, Bailey, Brandt, Bunderson, Burtenshaw, Cameron,
Darrington, Davis, Gannon, Geddes, Goedde, Ingram, Kennedy, Little,
Lodge, Malepeai, McKenzie, Pearce, Richardson, Sorensen, Stennett,
Werk, Williams
NAYS -- Burkett, Compton, Hill (Hill), Keough, Marley, McWilliams,
Noh, Schroeder, Stegner
Absent and excused -- Calabretta, Noble, Sweet
Floor Sponsor - McKenzie
Title apvd - to House
04/30 To enrol
05/01 Rpt enrol - Sp signed - Pres signed
05/02 To Governor
05/05 Governor signed
Session Law Chapter 345
Effective: 01/01/03
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 453
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO TAXATION; AMENDING SECTION 63-3029B, IDAHO CODE, TO PROVIDE THAT
3 FOR QUALIFIED INVESTMENTS PLACED IN SERVICE IN TAXABLE YEARS BEGINNING IN
4 2003 AND THEREAFTER, THE TAXPAYER MAY ELECT, IN LIEU OF THE INCOME TAX
5 CREDIT PROVIDED FOR CAPITAL INVESTMENT, A TWO YEAR EXEMPTION FROM ALL
6 TAXES ON PERSONAL PROPERTY ON THE QUALIFIED INVESTMENT, TO PROVIDE PROCE-
7 DURES, TO PROVIDE FOR COOPERATION BETWEEN THE STATE TAX COMMISSION AND
8 COUNTY ASSESSORS AND TO PROVIDE PENALTIES; PROVIDING FOR SEVERABILITY;
9 DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Section 63-3029B, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
14 of the taxpayer there shall be allowed, subject to the applicable limitations
15 provided herein as a credit against the income tax imposed by chapter 30,
16 title 63, Idaho Code, an amount equal to the sum of:
17 (a) The tax credit carryovers; and
18 (b) The tax credit for the taxable year.
19 (2) The maximum allowable amount of the credit for the current taxable
20 year shall be three percent (3%) of the amount of qualified investments made
21 during the taxable year.
22 (3) As used in this section "qualified investment" means certain depre-
23 ciable property which:
24 (a) (i) Is eligible for the federal investment tax credit, as defined in
25 sections 46(c) and 48 of the Internal Revenue Code subject to the
26 limitations provided for certain regulated companies in section 46(f)
27 of the Internal Revenue Code and is not a motor vehicle under eight
28 thousand (8,000) pounds gross weight; or
29 (ii) Is qualified broadband equipment as defined in section 63-3029I,
30 Idaho Code; and
31 (b) Is acquired, constructed, reconstructed, erected or placed into ser-
32 vice after December 31, 1981; and
33 (c) Has a situs in Idaho.
34 (4) (a) For qualified investments placed in service in taxable years
35 beginning in 2003 and thereafter, the taxpayer may elect, in lieu of the
36 credit provided by this section, a two (2) year exemption from all taxes
37 on personal property on the qualified investment. The exemption from per-
38 sonal property tax shall apply to the year the election is filed as pro-
39 vided in this section and the immediately following year. The election
40 provided by this paragraph is available only to a taxpayer whose Idaho
41 taxable income in the second preceding taxable year in which the invest-
42 ment is placed in service is negative.
43 (b) The election shall be made in the form prescribed by the state tax
2
1 commission and shall include a specific description and location of all
2 qualified investments placed into service and located in the jurisdiction
3 of the assessing authority, a designation of the specific assets for which
4 the exemption is claimed, and such other information as the state tax com-
5 mission may require. The election must be made by including the election
6 form with the listing of personal property required by section 63-302,
7 Idaho Code, or, in the case of operating property assessed under chapter
8 4, title 63, Idaho Code, with the operator's statement required by section
9 63-404, Idaho Code, for the calendar year immediately following the tax-
10 able year in which the property was placed in service. Once made the
11 election is irrevocable. If no election is made, the election is not
12 otherwise available. A copy of the election form must also be attached to
13 the original income tax return due for the taxable year in which the claim
14 was made.
15 (c) The state tax commission and the various county assessors are autho-
16 rized to exchange information as necessary to properly coordinate the
17 exemption provided in this subsection.
18 (d) In the event that an investment in regard to which the election under
19 this section was made is determined by the state tax commission to not be
20 a qualified investment or ceases to qualify during the recapture period,
21 the taxpayer shall be subject to a penalty equal to the amount of the
22 claimed investment times the average urban property tax levy of the state
23 as determined by the state tax commission times two (2).
24 (5) Notwithstanding the provisions of subsections (1) and (2) of this
25 section, the amount of the credit allowed shall not exceed fifty percent (50%)
26 of the tax liability of the taxpayer. The tax liability of the taxpayer shall
27 be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
28 (56) If the sum of credit carryovers from the credit allowed by subsec-
29 tion (2) of this section and the amount of credit for the taxable year from
30 the credit allowed by subsection (2) of this section exceed the limitation
31 imposed by subsection (45) of this section for the current taxable year, the
32 excess attributable to the current taxable year's credit shall be an invest-
33 ment credit carryover to the fourteen (14) succeeding taxable years. In the
34 case of a group of corporations filing a combined report under section
35 63-3027, Idaho Code, or sections 63-3027B through 63-3027E, Idaho Code, credit
36 earned by one (1) member of the group but not used by that member may be used
37 by another member of the group, subject to the provisions of subsection (45)
38 of this section, instead of carried over. The entire amount of unused credit
39 shall be carried forward to the earliest of the succeeding years, wherein the
40 oldest available unused credit shall be used first, so long as the qualified
41 investment property for which the unused credit was granted still maintains
42 Idaho situs. 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 (67) Any recapture of the credit allowed by subsection (2) of this sec-
46 tion on property disposed of or ceasing to qualify, prior to the close of the
47 recapture period, shall be determined according to the applicable recapture
48 provisions of the Internal Revenue Code. In the case of a unitary group of
49 corporations, the increase in tax due to the recapture of investment tax
50 credit must be reported by the member of the group who earned the credit
51 regardless of which member claimed the credit against tax.
52 (78) For the purpose of determining whether property placed in service is
53 a "qualified investment" as defined in subsection (3) of this section, the
54 provisions of section 49 of the Internal Revenue Code shall be disregarded.
55 (89) For purposes of this section, property has a situs in Idaho during a
3
1 taxable year if it is used in Idaho at any time during the taxable year. Prop-
2 erty not used in Idaho during a taxable year does not have a situs in Idaho in
3 the taxable year during which the property is not used in Idaho or in any sub-
4 sequent taxable year. No credit or carryover of credit is permitted under this
5 section if the credit or carryover relates to property that does not have a
6 situs in Idaho during the taxable year for which the credit or carryover is
7 claimed. The Idaho situs of property must be established by records maintained
8 by the taxpayer which are created reasonably contemporaneously with the use of
9 the property.
10 (910) In the case of property used both in and outside Idaho, the tax-
11 payer, electing to claim the credit provided in this section, must elect to
12 compute the qualified investment in property with a situs in Idaho for all
13 such investments first qualifying during that year in one (1), but only one
14 (1), of the following ways:
15 (a) The amount of each qualified investment in a specific asset shall be
16 separately computed based on the percentage of the actual use of the prop-
17 erty in Idaho by using a measure of the use, such as total miles or total
18 machine hours, that most accurately reflects the beneficial use during the
19 taxable year in which it is first acquired, constructed, reconstructed,
20 erected or placed into service; provided, that the asset is placed in ser-
21 vice more than ninety (90) days before the end of the taxable year. In the
22 case of assets acquired, constructed, reconstructed, erected or placed
23 into service within ninety (90) days prior to the end of the taxable year
24 in which the investment first qualifies, the measure of the use of that
25 asset within Idaho for that year shall be based upon the percentage of use
26 in Idaho during the first ninety (90) days of use of the asset;
27 (b) The investment in qualified property used both inside and outside
28 Idaho during the taxable year in which it is first acquired, constructed,
29 reconstructed, erected or placed into service shall be multiplied by the
30 percent of the investment that would be included in the numerator of the
31 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
32 for the same year.
33 (101) Only for the purposes of subsections (3)(a) and (78) of this sec-
34 tion, references to sections of the "Internal Revenue Code" mean the sections
35 referred to as they existed in the Internal Revenue Code of 1986 prior to
36 November 5, 1990.
37 SECTION 2. SEVERABILITY. The provisions of this act are hereby declared
38 to be severable and if any provision of this act or the application of such
39 provision to any person or circumstance is declared invalid for any reason,
40 such declaration shall not affect the validity of the remaining portions of
41 this act.
42 SECTION 3. An emergency existing therefor, which emergency is hereby
43 declared to exist, this act shall be in full force and effect on and after its
44 passage and approval, and retroactively to January 1, 2003.
STATEMENT OF PURPOSE
RS 13321
This bill allows taxpayers who make new personal property
investments in Idaho, on and after January 1, 2003, the
opportunity to forego the income tax investment tax credit (ITC)
by electing an exemption from personal tax on the property for a
period of two years.
Taxpayers who are in a loss situation are not able to claim the
ITC because they have no tax liability to offset. This bill will
allow taxpayers who have suffered loses to elect to be exempt
from property tax on personal property on new property
acquisitions/investments for two years in lieu of the ITC.
The average rural property tax rate is 1.2%. The average urban
property tax rate is 1.7%. Two years of property tax exemption
closely approximates the amount of ITC that would have been
earned.
FISCAL IMPACT
No fiscal cost to the General Fund. The cost to the counties in
Idaho is zero, as a tax shift occurs. It is estimated that the
tax shift will be in the $6 - $8 million range in the first year,
which equates to about 5% of total property tax on personal
property paid last year. The cost to schools is also zero in the
first year and about $665,000 in year two.
Contact
Name: Representative Mike Moyle
Phone: (208) 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 453