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H0760aa,aaS.........................................by REVENUE AND TAXATION
INCOME TAX CREDIT - Adds to and amends existing law to provide that
taxpayers making expenditures for qualified alternative energy generation
equipment are entitled to the income tax credit for capital investment; to
provide an income tax credit of certain expenditures relating to investment
in alternative energy generation equipment for taxable years 2004 through
2009; to provide definitions; to provide a carryover of unused credits; to
provide procedures; and to provide an income tax credit for certain
expenditures for qualified alternative energy equipment in certain areas of
Idaho with high unemployment or low personal income, at the election of the
taxpayer for taxable years 2004 through 2009.
02/25 House intro - 1st rdg - to printing
02/26 Rpt prt - to Rev/Tax
03/09 Rpt out - to Gen Ord
03/10 Rpt out amen - to engros
03/11 Rpt engros - 1st rdg - to 2nd rdg as amen
03/12 2nd rdg - to 3rd rdg as amen
Rls susp - PASSED - 65-2-3
AYES -- Andersen, Barraclough, Barrett, Bauer, Bayer, Bedke, Bell,
Black, Block, Boe, Bolz, Campbell, Cannon, Clark, Collins, Crow,
Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Gagner, Garrett, Harwood, Jaquet, Jones,
Kellogg, Kulczyk, Langford, Langhorst, Martinez, McKague, Meyer,
Miller, Mitchell, Moyle, Naccarato, Nielsen, Pasley-Stuart, Raybould,
Ridinger, Ring, Ringo, Roberts, Robison, Rydalch, Sali, Sayler,
Schaefer, Shepherd, Shirley, Skippen, Smith(30), Smylie, Snodgrass,
Stevenson, Trail, Wills, Wood, Mr. Speaker
NAYS -- Henbest, Lake
Absent and excused -- Bradford, McGeachin, Smith(24)
Floor Sponsor - Eskridge
Title apvd - to Senate
03/15 Senate intro - 1st rdg - to Loc Gov
03/18 Rpt out - to 14th Ord
Rpt out amen - to 1st rdg as amen
03/19 1st rdg - to 2nd rdg as amen
Rls susp - PASSED - 32-0-3
AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett(Maxand),
Calabretta, Cameron, Compton, Darrington, Davis, Gannon, Geddes,
Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai,
Marley, McKenzie, McWilliams, Noble, Noh, Richardson, Schroeder,
Sorensen, Stegner, Stennett, Werk, Williams
NAYS -- None
Absent and excused -- Burtenshaw, Pearce, Sweet
Floor Sponsor - Hill
Title apvd - to House
03/20 House concurred in Senate amens - to engros
Rpt engros - 1st rdg - to 2nd rdg as amen
Rls susp - PASSED - 62-0-8
AYES -- Andersen, Barraclough, Barrett, Bayer, Bedke, Bell, Black,
Block, Boe, Bolz, Bradford, Campbell, Cannon, Collins, Crow, Cuddy,
Deal, Denney, Douglas, Edmunson, Ellsworth, Eskridge, Field(18),
Field(23), Gagner, Garrett, Henbest, Jaquet, Jones, Kellogg, Kulczyk,
Lake, Langford, Langhorst, Martinez, McGeachin, McKague, Meyer,
Miller, Mitchell, Moyle, Naccarato, Nielsen, Pasley-Stuart, Raybould,
Ring, Ringo, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd,
Shirley, Skippen, Smith(30), Smylie, Snodgrass, Stevenson, Wills,
Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Bauer, Clark, Eberle, Harwood, Ridinger,
Roberts, Smith(24), Trail
Floor Sponsor - Eskridge
Title apvd - To enrol - Rpt enrol - Sp signed
03/20 Pres signed
03/22 To Governor
04/02 Governor VETOED
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 760
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAXATION; AMENDING SECTION 63-3029B, IDAHO CODE, TO PROVIDE
3 THAT TAXPAYERS MAKING EXPENDITURES FOR QUALIFIED ALTERNATIVE ENERGY GENER-
4 ATION EQUIPMENT ARE ENTITLED TO THE INCOME TAX CREDIT FOR CAPITAL INVEST-
5 MENT; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW
6 SECTION 63-3029Q, IDAHO CODE, TO PROVIDE AN INCOME TAX CREDIT FOR CERTAIN
7 EXPENDITURES RELATING TO INVESTMENT IN ALTERNATIVE ENERGY GENERATION
8 EQUIPMENT, TO PROVIDE A SUNSET DATE, TO PROVIDE DEFINITIONS, TO PROVIDE A
9 CARRYOVER OF UNUSED CREDITS AND TO PROVIDE PROCEDURES; AMENDING SECTION
10 63-3029J, IDAHO CODE, TO PROVIDE AN INCOME TAX CREDIT FOR CERTAIN EXPENDI-
11 TURES FOR QUALIFIED ALTERNATIVE ENERGY GENERATION EQUIPMENT IN CERTAIN
12 AREAS OF IDAHO WITH HIGH UNEMPLOYMENT OR LOW PERSONAL INCOME AT THE ELEC-
13 TION OF THE TAXPAYER FOR TAXABLE YEARS 2004 THROUGH 2009; DECLARING AN
14 EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
15 Be It Enacted by the Legislature of the State of Idaho:
16 SECTION 1. That Section 63-3029B, Idaho Code, be, and the same is hereby
17 amended to read as follows:
18 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
19 of the taxpayer there shall be allowed, subject to the applicable limitations
20 provided herein as a credit against the income tax imposed by chapter 30,
21 title 63, Idaho Code, an amount equal to the sum of:
22 (a) The tax credit carryovers; and
23 (b) The tax credit for the taxable year.
24 (2) The maximum allowable amount of the credit for the current taxable
25 year shall be three percent (3%) of the amount of qualified investments made
26 during the taxable year.
27 (3) As used in this section "qualified investment" means certain depre-
28 ciable property which:
29 (a) (i) Is eligible for the federal investment tax credit, as defined
30 in sections 46(c) and 48 of the Internal Revenue Code subject to the
31 limitations provided for certain regulated companies in section 46(f)
32 of the Internal Revenue Code and is not a motor vehicle under eight
33 thousand (8,000) pounds gross weight; or
34 (ii) Is qualified broadband equipment as defined in section
35 63-3029I, Idaho Code; or
36 (iii) Is qualified alternative energy generation equipment as defined
37 in section 63-3029Q, Idaho Code; and
38 (b) Is acquired, constructed, reconstructed, erected or placed into ser-
39 vice after December 31, 1981; and
40 (c) Has a situs in Idaho.
41 (4) (a) For qualified investments placed in service in taxable years
42 beginning in 2003 and thereafter, the taxpayer may elect, in lieu of the
43 credit provided by this section, a two (2) year exemption from all taxes
2
1 on personal property on the qualified investment. The exemption from per-
2 sonal property tax shall apply to the year the election is filed as pro-
3 vided in this section and the immediately following year. The election
4 provided by this paragraph is available only to a taxpayer whose Idaho
5 taxable income in the second preceding taxable year in which the invest-
6 ment is placed in service is negative.
7 (b) The election shall be made in the form prescribed by the state tax
8 commission and shall include a specific description and location of all
9 qualified investments placed into service and located in the jurisdiction
10 of the assessing authority, a designation of the specific assets for which
11 the exemption is claimed, and such other information as the state tax com-
12 mission may require. The election must be made by including the election
13 form with the listing of personal property required by section 63-302,
14 Idaho Code, or, in the case of operating property assessed under chapter
15 4, title 63, Idaho Code, with the operator's statement required by section
16 63-404, Idaho Code, for the calendar year immediately following the tax-
17 able year in which the property was placed in service. Once made the elec-
18 tion is irrevocable. If no election is made, the election is not otherwise
19 available. A copy of the election form must also be attached to the origi-
20 nal income tax return due for the taxable year in which the claim was
21 made.
22 (c) The state tax commission and the various county assessors are autho-
23 rized to exchange information as necessary to properly coordinate the
24 exemption provided in this subsection.
25 (d) In the event that an investment in regard to which the election under
26 this section was made is determined by the state tax commission to not be
27 a qualified investment or ceases to qualify during the recapture period,
28 the taxpayer shall be subject to a penalty equal to the amount of the
29 claimed investment times the average urban property tax levy of the state
30 as determined by the state tax commission times two (2).
31 (5) Notwithstanding the provisions of subsections (1) and (2) of this
32 section, the amount of the credit allowed shall not exceed fifty percent (50%)
33 of the tax liability of the taxpayer. The tax liability of the taxpayer shall
34 be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
35 (6) If the sum of credit carryovers from the credit allowed by subsection
36 (2) of this section and the amount of credit for the taxable year from the
37 credit allowed by subsection (2) of this section exceed the limitation imposed
38 by subsection (5) of this section for the current taxable year, the excess
39 attributable to the current taxable year's credit shall be an investment
40 credit carryover to the fourteen (14) succeeding taxable years. In the case of
41 a group of corporations filing a combined report under section 63-3027, Idaho
42 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one
43 (1) member of the group but not used by that member may be used by another
44 member of the group, subject to the provisions of subsection (5) of this sec-
45 tion, instead of carried over. The entire amount of unused credit shall be
46 carried forward to the earliest of the succeeding years, wherein the oldest
47 available unused credit shall be used first, so long as the qualified invest-
48 ment property for which the unused credit was granted still maintains Idaho
49 situs. For a combined group of corporations, credit carried forward may be
50 claimed by any member of the group unless the member who earned the credit is
51 no longer included in the combined group.
52 (7) Any recapture of the credit allowed by subsection (2) of this section
53 on property disposed of or ceasing to qualify, prior to the close of the
54 recapture period, shall be determined according to the applicable recapture
55 provisions of the Internal Revenue Code. In the case of a unitary group of
3
1 corporations, the increase in tax due to the recapture of investment tax
2 credit must be reported by the member of the group who earned the credit
3 regardless of which member claimed the credit against tax.
4 (8) For the purpose of determining whether property placed in service is
5 a "qualified investment" as defined in subsection (3) of this section, the
6 provisions of section 49 of the Internal Revenue Code shall be disregarded.
7 (9) For purposes of this section, property has a situs in Idaho during a
8 taxable year if it is used in Idaho at any time during the taxable year. Prop-
9 erty not used in Idaho during a taxable year does not have a situs in Idaho in
10 the taxable year during which the property is not used in Idaho or in any sub-
11 sequent taxable year. No credit or carryover of credit is permitted under this
12 section if the credit or carryover relates to property that does not have a
13 situs in Idaho during the taxable year for which the credit or carryover is
14 claimed. The Idaho situs of property must be established by records maintained
15 by the taxpayer which are created reasonably contemporaneously with the use of
16 the property.
17 (10) In the case of property used both in and outside Idaho, the taxpayer,
18 electing to claim the credit provided in this section, must elect to compute
19 the qualified investment in property with a situs in Idaho for all such
20 investments first qualifying during that year in one (1), but only one (1), of
21 the following ways:
22 (a) The amount of each qualified investment in a specific asset shall be
23 separately computed based on the percentage of the actual use of the prop-
24 erty in Idaho by using a measure of the use, such as total miles or total
25 machine hours, that most accurately reflects the beneficial use during the
26 taxable year in which it is first acquired, constructed, reconstructed,
27 erected or placed into service; provided, that the asset is placed in ser-
28 vice more than ninety (90) days before the end of the taxable year. In the
29 case of assets acquired, constructed, reconstructed, erected or placed
30 into service within ninety (90) days prior to the end of the taxable year
31 in which the investment first qualifies, the measure of the use of that
32 asset within Idaho for that year shall be based upon the percentage of use
33 in Idaho during the first ninety (90) days of use of the asset;
34 (b) The investment in qualified property used both inside and outside
35 Idaho during the taxable year in which it is first acquired, constructed,
36 reconstructed, erected or placed into service shall be multiplied by the
37 percent of the investment that would be included in the numerator of the
38 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
39 for the same year.
40 (11) Only for the purposes of subsections (3)(a) and (8) of this section,
41 references to sections of the "Internal Revenue Code" mean the sections
42 referred to as they existed in the Internal Revenue Code of 1986 prior to
43 November 5, 1990.
44 SECTION 2. That Chapter 30, Title 63, Idaho Code, be, and the same is
45 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
46 ignated as Section 63-3029Q, Idaho Code, and to read as follows:
47 63-3029Q. INCOME TAX CREDIT FOR INVESTMENT IN ALTERNATIVE ENERGY GENERA-
48 TION EQUIPMENT. (1) Subject to the limitations of this section, for taxable
49 years beginning between January 1, 2004, and December 31, 2009, inclusive,
50 there shall be allowed to a taxpayer a nonrefundable credit against taxes
51 imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho Code, for qualified
52 expenditures in qualified alternative energy generation equipment in Idaho.
53 (2) The credit permitted in subsection (1) of this section shall be three
4
1 percent (3%) of the qualified investment in qualified alternative energy gen-
2 eration equipment in Idaho and shall be in addition to the credit for capital
3 investment permitted by section 63-3029B, Idaho Code.
4 (3) As used in this section:
5 (a) "Qualified investment" shall be defined in section 63-3029B, Idaho
6 Code.
7 (b) "Qualified alternative energy generation equipment" means equipment
8 that:
9 (i) Qualifies for the credit for capital investment permitted by
10 section 63-3029B, Idaho Code;
11 (ii) Is capable of producing electricity from biomass, waste, renew-
12 able resources including, but not limited to, solar, wind, low-impact
13 hydro and pumped storage, geothermal resources, or any combination
14 thereof;
15 (iii) Does not receive more than twenty-five percent (25%) of its
16 total annual energy input from oil, propane, natural gas or coal that
17 may be used only for ignition, start-up, testing, flame stabilization
18 or to prevent outages;
19 (iv) Connects such electricity producing equipment to the transmis-
20 sion grid including, but not limited to, all facilities necessary to
21 synchronize the qualifying alternative energy generation equipment
22 with the utility transmission grid and the transmission line from the
23 qualifying alternative energy generation equipment with the nearest
24 usable utility transmission lines.
25 (c) "Low-impact hydro" means an electric generating facility utilizing
26 water for the generation of electricity, housed in a canal or reservoir
27 and not having a power production capacity of greater than fifty (50)
28 megawatts.
29 (4) No equipment described in subsection (3)(b) of this section shall
30 qualify for the credit provided in subsection (1) of this section until the
31 taxpayer applies for and obtains an order from the Idaho public utilities com-
32 mission confirming that the installed equipment is qualified alternative
33 energy generation equipment. Applications submitted to the public utilities
34 commission shall be governed by the public utilities commission's rules of
35 procedure. The public utilities commission may issue procedural orders neces-
36 sary to implement the provisions of this section.
37 (5) The credit allowed by subsection (1) of this section, together with
38 any credits carried forward under subsection (7) of this section, shall not,
39 in any one (1) taxable year, exceed 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) Seven hundred fifty thousand dollars ($750,000). When credits earned
44 in more than one (1) taxable year are available, the oldest credits shall
45 be applied first.
46 (6) In the case of a group of corporations filing a combined report under
47 subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
48 of the group but not used by that member may be used by another member of the
49 group, subject to the provisions of subsection (7) of this section, instead of
50 carried over. For a combined group of corporations, credit carried forward may
51 be claimed by any member of the group unless the member who earned the credit
52 is no longer included in the combined group.
53 (7) If the credit allowed by subsection (1) of this section exceeds the
54 limitation under subsection (5) of this section, the excess amount may be car-
55 ried forward for a period that does not exceed the next fourteen (14) taxable
5
1 years.
2 (8) In the event that qualified alternative energy generation equipment
3 upon which the credit allowed by this section has been used ceases to qualify
4 for the credit allowed by section 63-3029B, Idaho Code, or is subject to
5 recapture of that credit, the recapture of credit under this section shall be
6 in the same proportion and subject to the same provisions as the amount of
7 credit required to be recaptured under section 63-3029B, Idaho Code.
8 (9) In addition to other needed rules, the state tax commission may pro-
9 mulgate rules prescribing, in the case of S corporations, partnerships, trusts
10 or estates, a method of attributing the credit under this section to the
11 shareholders, partners or beneficiaries in proportion to their share of the
12 income from the S corporation, partnership, trust or estate.
13 SECTION 3. That Section 63-3029J, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 63-3029J. INCENTIVE INCOME TAX INVESTMENT CREDIT. (1) Subject to the lim-
16 itations of this section, for taxable year 2001 only, there shall be allowed
17 to a taxpayer a nonrefundable credit against taxes imposed by sections
18 63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount allowed by subsection
19 (23) of this section for qualified investments in Idaho. The credit shall be
20 in addition to the credit for capital investment permitted by section
21 63-3029B, Idaho Code.
22 (2) Subject to the limitations of this section, for taxable years 2004
23 through 2009, inclusive, there shall be allowed to a taxpayer a nonrefundable
24 credit against taxes imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho
25 Code, in the amount allowed by subsection (3) of this section for qualified
26 alternative energy generation equipment investments in Idaho permitted by sub-
27 section (3)(a)(iii) of section 63-3029B, Idaho Code. The credit shall be in
28 addition to the credit for capital investment permitted by sections 63-3029B
29 and 63-3029Q, Idaho Code.
30 (3) The credit permitted in subsection (1) of this section shall be at
31 the percentage rate determined under either subsection (23)(a) or (23)(b) of
32 this section at the election of the taxpayer.
33 (a) (i) One-half (1/2) of the amount by which the average three-year
34 unemployment rate in the county in which the property is located
35 exceeds six percent (6%). In the case of mobile property, the prop-
36 erty shall be located in the county in which it is primarily based.
37 (ii) For purposes of this section the director of the department of
38 labor shall, on or before the first day of September of each calendar
39 year, establish and certify to the state tax commission the average
40 three-year unemployment rate in each county in Idaho for the immedi-
41 ately preceding three (3) calendar years. The rates thus certified
42 shall apply to the calculation of the credit under subsection
43 (23)(a)(i) of this section for property qualifying in the taxable
44 year beginning during the next calendar year.
45 (b) (i) One-tenth of one percent (.1%) for each full percent that the
46 three-year average per capita personal income level in the county in
47 which the property is located is below ninety percent (90%) of the
48 average statewide per capita personal income level.
49 (ii) For purposes of this section the director of the department of
50 commerce shall, on or before the first day of September of each cal-
51 endar year, establish and certify to the state tax commission the
52 most current three-year average per capita personal income level in
53 each county in Idaho and the statewide per capita personal income
6
1 level for the most current preceding three (3) calendar years. The
2 levels thus certified shall apply to the calculation of the credit
3 under subsection (23)(b)(i) of this section for property qualifying
4 in the taxable year beginning during the next calendar year.
5 (34) As used in this section the term "qualified investment" shall be
6 defined as in section 63-3029B, Idaho Code.
7 (45) The credit allowed by subsection (1) of this section together with
8 any credits carried forward under subsection (67) of this section shall not
9 exceed in any one (1) taxable year the lesser of:
10 (a) The amount of tax due under sections 63-3024, 63-3025 and 63-3025A,
11 Idaho Code, after allowance for all other credits permitted by this chap-
12 ter; or
13 (b) Five hundred thousand dollars ($500,000).
14 (56) In the case of a group of corporations filing a combined report
15 under subsection (t) of section 63-3027, Idaho Code, credit earned by one (1)
16 member of the group but not used by that member may be used by another member
17 of the group, subject to the provisions of subsection (67) of this section,
18 instead of carried over. For a combined group of corporations, credit carried
19 forward may be claimed by any member of the group unless the member who earned
20 the credit is no longer included in the combined group.
21 (67) If the credit allowed by subsection (1) of this section exceeds the
22 limitation under subsection (45) of this section, the excess amount may be
23 carried forward for a period that does not exceed the next fourteen (14) tax-
24 able years.
25 (78) In the event that property upon which the credit allowed by this
26 section has been used ceases to qualify for the credit allowed by section
27 63-3029B, Idaho Code, the recapture of credit under this section shall be in
28 the same proportion and subject to the same provisions as the amount of credit
29 required to be recaptured under section 63-3029B, Idaho Code.
30 (89) (a) Subject to the requirements of this subsection, a taxpayer who
31 earns and is entitled to the credit or to an unused portion of the credit
32 allowed by this section may transfer the unused credit to another taxpayer
33 required to file a return under this chapter.
34 (b) Before completing a transfer under this subsection, the transferor
35 shall notify the state tax commission of its intention to transfer the
36 credit and the identity of the transferee. The state tax commission shall
37 provide the transferor with a written statement of the amount of credit
38 available under this section as then appearing in the commission's records
39 and the number of years the credit may be carried over. The transferor
40 shall provide the transferee with the original statement. The transferee
41 shall attach a copy of the statement to any return in regard to which the
42 transferred credit is claimed.
43 (c) In the event that after the transfer the state tax commission deter-
44 mines that the amount of credit properly available under this section is
45 less than the amount claimed by the transferor of the credit and shown in
46 the statement described in subsection (89)(b) of this section or that the
47 credit is subject to recapture, the commission shall assess the amount of
48 overstated credit as taxes due from the transferor and not the transferee.
49 The assessment shall be made in the manner provided for a deficiency in
50 taxes under this chapter.
51 (910) In addition to other needed rules, the state tax commission may pro-
52 mulgate rules prescribing:
53 (a) In the case of S corporations, partnerships, trusts or estates, a
54 method of attributing the credit under this section to the shareholders,
55 partners or beneficiaries in proportion to their share of the income from
7
1 the S corporation, partnership, trust or estate.
2 (b) A requirement that a transferor under subsection (89) of this sec-
3 tion, prior to obtaining the written statement provided in subsection
4 (89)(b) of this section, post such bond or security as the state tax com-
5 mission may require to secure any liability referred to in subsection
6 (89)(c) of this section. Such rules shall provide an opportunity for a
7 taxpayer, upon a showing of financial responsibility, to have the bond
8 waiver, for notice of denial of waiver in accordance with section 63-3045,
9 Idaho Code, and for review in accordance with section 63-3045B, Idaho
10 Code.
11 SECTION 4. An emergency existing therefor, which emergency is hereby
12 declared to exist, this act shall be in full force and effect on and after its
13 passage and approval, and retroactively to January 1, 2004.
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
Moved by Cuddy
Seconded by Ridinger
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 760
1 AMENDMENT TO SECTION 2
2 On page 5 of the printed bill, following line 7, insert:
3 "(9) (a) Subject to the requirements of this subsection, a taxpayer who
4 earns and is entitled to the credit or to an unused portion of the credit
5 allowed by this section may transfer all or a portion of the unused credit
6 to:
7 (i) Another taxpayer required to file a return under this chapter;
8 or
9 (ii) To an intermediary for its use or for resale to a taxpayer
10 required to file a return under this chapter.
11 In the event of either such a transfer, the transferee may claim the
12 credit on the transferee's income tax return originally filed during the
13 calendar year in which the transfer takes place and, in the case of car-
14 ryover of the credit, on the transferee's returns for the number of years
15 of carryover available to the transferor at the time of the transfer
16 unless earlier exhausted.
17 (b) Before completing a transfer under this subsection, the transferor
18 shall notify the state tax commission of its intention to transfer the
19 credit and the identity of the transferee. The state tax commission shall
20 provide the transferor with a written statement of the amount of credit
21 available under this section as then appearing in the commission's records
22 and the number of years the credit may be carried over. The transferee
23 shall attach a copy of the statement to any return in regard to which the
24 transferred credit is claimed.
25 (c) In the event that after the transfer the state tax commission deter-
26 mines that the amount of credit properly available under this section is
27 less than the amount claimed by the transferor of the credit or that the
28 credit is subject to recapture, the commission shall assess the amount of
29 overstated or recaptured credit as taxes due from the transferor and not
30 the transferee. The assessment shall be made in the manner provided for a
31 deficiency in taxes under this chapter.";
32 and in line 8, delete "(9)" and insert: "(10)".
33 CORRECTION TO TITLE
34 On page 1, delete line 9, and insert: "CARRYOVER OF UNUSED CREDITS, TO
35 PROVIDE PROCEDURES AND TO PROVIDE TRANSFERABILITY; AMENDING SECTION".
Moved by Hill
Seconded by Stegner
IN THE SENATE
SENATE AMENDMENT TO H.B. NO. 760, As Amended
]]]
2
1 AMENDMENT TO SECTION 2
2 On page 5 of the engrossed bill, delete lines 9 through 37; and in line
3 38, delete "(10)" and insert: "(9)".
4 CORRECTION TO TITLE
5 On page 1, delete lines 9 and 10 and insert: "CARRYOVER OF UNUSED CREDITS
6 AND TO PROVIDE PROCEDURES; AMENDING SECTION 63-3029J, IDAHO CODE, TO PROVIDE
7 AN INCOME".
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 760, As Amended, As Amended in the Senate
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAXATION; AMENDING SECTION 63-3029B, IDAHO CODE, TO PROVIDE
3 THAT TAXPAYERS MAKING EXPENDITURES FOR QUALIFIED ALTERNATIVE ENERGY GENER-
4 ATION EQUIPMENT ARE ENTITLED TO THE INCOME TAX CREDIT FOR CAPITAL INVEST-
5 MENT; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW
6 SECTION 63-3029Q, IDAHO CODE, TO PROVIDE AN INCOME TAX CREDIT FOR CERTAIN
7 EXPENDITURES RELATING TO INVESTMENT IN ALTERNATIVE ENERGY GENERATION
8 EQUIPMENT, TO PROVIDE A SUNSET DATE, TO PROVIDE DEFINITIONS, TO PROVIDE A
9 CARRYOVER OF UNUSED CREDITS AND TO PROVIDE PROCEDURES; AMENDING SECTION
10 63-3029J, IDAHO CODE, TO PROVIDE AN INCOME TAX CREDIT FOR CERTAIN EXPENDI-
11 TURES FOR QUALIFIED ALTERNATIVE ENERGY GENERATION EQUIPMENT IN CERTAIN
12 AREAS OF IDAHO WITH HIGH UNEMPLOYMENT OR LOW PERSONAL INCOME AT THE ELEC-
13 TION OF THE TAXPAYER FOR TAXABLE YEARS 2004 THROUGH 2009; DECLARING AN
14 EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
15 Be It Enacted by the Legislature of the State of Idaho:
16 SECTION 1. That Section 63-3029B, Idaho Code, be, and the same is hereby
17 amended to read as follows:
18 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
19 of the taxpayer there shall be allowed, subject to the applicable limitations
20 provided herein as a credit against the income tax imposed by chapter 30,
21 title 63, Idaho Code, an amount equal to the sum of:
22 (a) The tax credit carryovers; and
23 (b) The tax credit for the taxable year.
24 (2) The maximum allowable amount of the credit for the current taxable
25 year shall be three percent (3%) of the amount of qualified investments made
26 during the taxable year.
27 (3) As used in this section "qualified investment" means certain depre-
28 ciable property which:
29 (a) (i) Is eligible for the federal investment tax credit, as defined
30 in sections 46(c) and 48 of the Internal Revenue Code subject to the
31 limitations provided for certain regulated companies in section 46(f)
32 of the Internal Revenue Code and is not a motor vehicle under eight
33 thousand (8,000) pounds gross weight; or
34 (ii) Is qualified broadband equipment as defined in section
35 63-3029I, Idaho Code; or
36 (iii) Is qualified alternative energy generation equipment as defined
37 in section 63-3029Q, Idaho Code; and
38 (b) Is acquired, constructed, reconstructed, erected or placed into ser-
39 vice after December 31, 1981; and
40 (c) Has a situs in Idaho.
41 (4) (a) For qualified investments placed in service in taxable years
42 beginning in 2003 and thereafter, the taxpayer may elect, in lieu of the
43 credit provided by this section, a two (2) year exemption from all taxes
2
1 on personal property on the qualified investment. The exemption from per-
2 sonal property tax shall apply to the year the election is filed as pro-
3 vided in this section and the immediately following year. The election
4 provided by this paragraph is available only to a taxpayer whose Idaho
5 taxable income in the second preceding taxable year in which the invest-
6 ment is placed in service is negative.
7 (b) The election shall be made in the form prescribed by the state tax
8 commission and shall include a specific description and location of all
9 qualified investments placed into service and located in the jurisdiction
10 of the assessing authority, a designation of the specific assets for which
11 the exemption is claimed, and such other information as the state tax com-
12 mission may require. The election must be made by including the election
13 form with the listing of personal property required by section 63-302,
14 Idaho Code, or, in the case of operating property assessed under chapter
15 4, title 63, Idaho Code, with the operator's statement required by section
16 63-404, Idaho Code, for the calendar year immediately following the tax-
17 able year in which the property was placed in service. Once made the elec-
18 tion is irrevocable. If no election is made, the election is not otherwise
19 available. A copy of the election form must also be attached to the origi-
20 nal income tax return due for the taxable year in which the claim was
21 made.
22 (c) The state tax commission and the various county assessors are autho-
23 rized to exchange information as necessary to properly coordinate the
24 exemption provided in this subsection.
25 (d) In the event that an investment in regard to which the election under
26 this section was made is determined by the state tax commission to not be
27 a qualified investment or ceases to qualify during the recapture period,
28 the taxpayer shall be subject to a penalty equal to the amount of the
29 claimed investment times the average urban property tax levy of the state
30 as determined by the state tax commission times two (2).
31 (5) Notwithstanding the provisions of subsections (1) and (2) of this
32 section, the amount of the credit allowed shall not exceed fifty percent (50%)
33 of the tax liability of the taxpayer. The tax liability of the taxpayer shall
34 be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
35 (6) If the sum of credit carryovers from the credit allowed by subsection
36 (2) of this section and the amount of credit for the taxable year from the
37 credit allowed by subsection (2) of this section exceed the limitation imposed
38 by subsection (5) of this section for the current taxable year, the excess
39 attributable to the current taxable year's credit shall be an investment
40 credit carryover to the fourteen (14) succeeding taxable years. In the case of
41 a group of corporations filing a combined report under section 63-3027, Idaho
42 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one
43 (1) member of the group but not used by that member may be used by another
44 member of the group, subject to the provisions of subsection (5) of this sec-
45 tion, instead of carried over. The entire amount of unused credit shall be
46 carried forward to the earliest of the succeeding years, wherein the oldest
47 available unused credit shall be used first, so long as the qualified invest-
48 ment property for which the unused credit was granted still maintains Idaho
49 situs. For a combined group of corporations, credit carried forward may be
50 claimed by any member of the group unless the member who earned the credit is
51 no longer included in the combined group.
52 (7) Any recapture of the credit allowed by subsection (2) of this section
53 on property disposed of or ceasing to qualify, prior to the close of the
54 recapture period, shall be determined according to the applicable recapture
55 provisions of the Internal Revenue Code. In the case of a unitary group of
3
1 corporations, the increase in tax due to the recapture of investment tax
2 credit must be reported by the member of the group who earned the credit
3 regardless of which member claimed the credit against tax.
4 (8) For the purpose of determining whether property placed in service is
5 a "qualified investment" as defined in subsection (3) of this section, the
6 provisions of section 49 of the Internal Revenue Code shall be disregarded.
7 (9) For purposes of this section, property has a situs in Idaho during a
8 taxable year if it is used in Idaho at any time during the taxable year. Prop-
9 erty not used in Idaho during a taxable year does not have a situs in Idaho in
10 the taxable year during which the property is not used in Idaho or in any sub-
11 sequent taxable year. No credit or carryover of credit is permitted under this
12 section if the credit or carryover relates to property that does not have a
13 situs in Idaho during the taxable year for which the credit or carryover is
14 claimed. The Idaho situs of property must be established by records maintained
15 by the taxpayer which are created reasonably contemporaneously with the use of
16 the property.
17 (10) In the case of property used both in and outside Idaho, the taxpayer,
18 electing to claim the credit provided in this section, must elect to compute
19 the qualified investment in property with a situs in Idaho for all such
20 investments first qualifying during that year in one (1), but only one (1), of
21 the following ways:
22 (a) The amount of each qualified investment in a specific asset shall be
23 separately computed based on the percentage of the actual use of the prop-
24 erty in Idaho by using a measure of the use, such as total miles or total
25 machine hours, that most accurately reflects the beneficial use during the
26 taxable year in which it is first acquired, constructed, reconstructed,
27 erected or placed into service; provided, that the asset is placed in ser-
28 vice more than ninety (90) days before the end of the taxable year. In the
29 case of assets acquired, constructed, reconstructed, erected or placed
30 into service within ninety (90) days prior to the end of the taxable year
31 in which the investment first qualifies, the measure of the use of that
32 asset within Idaho for that year shall be based upon the percentage of use
33 in Idaho during the first ninety (90) days of use of the asset;
34 (b) The investment in qualified property used both inside and outside
35 Idaho during the taxable year in which it is first acquired, constructed,
36 reconstructed, erected or placed into service shall be multiplied by the
37 percent of the investment that would be included in the numerator of the
38 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
39 for the same year.
40 (11) Only for the purposes of subsections (3)(a) and (8) of this section,
41 references to sections of the "Internal Revenue Code" mean the sections
42 referred to as they existed in the Internal Revenue Code of 1986 prior to
43 November 5, 1990.
44 SECTION 2. That Chapter 30, Title 63, Idaho Code, be, and the same is
45 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
46 ignated as Section 63-3029Q, Idaho Code, and to read as follows:
47 63-3029Q. INCOME TAX CREDIT FOR INVESTMENT IN ALTERNATIVE ENERGY GENERA-
48 TION EQUIPMENT. (1) Subject to the limitations of this section, for taxable
49 years beginning between January 1, 2004, and December 31, 2009, inclusive,
50 there shall be allowed to a taxpayer a nonrefundable credit against taxes
51 imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho Code, for qualified
52 expenditures in qualified alternative energy generation equipment in Idaho.
53 (2) The credit permitted in subsection (1) of this section shall be three
4
1 percent (3%) of the qualified investment in qualified alternative energy gen-
2 eration equipment in Idaho and shall be in addition to the credit for capital
3 investment permitted by section 63-3029B, Idaho Code.
4 (3) As used in this section:
5 (a) "Qualified investment" shall be defined in section 63-3029B, Idaho
6 Code.
7 (b) "Qualified alternative energy generation equipment" means equipment
8 that:
9 (i) Qualifies for the credit for capital investment permitted by
10 section 63-3029B, Idaho Code;
11 (ii) Is capable of producing electricity from biomass, waste, renew-
12 able resources including, but not limited to, solar, wind, low-impact
13 hydro and pumped storage, geothermal resources, or any combination
14 thereof;
15 (iii) Does not receive more than twenty-five percent (25%) of its
16 total annual energy input from oil, propane, natural gas or coal that
17 may be used only for ignition, start-up, testing, flame stabilization
18 or to prevent outages;
19 (iv) Connects such electricity producing equipment to the transmis-
20 sion grid including, but not limited to, all facilities necessary to
21 synchronize the qualifying alternative energy generation equipment
22 with the utility transmission grid and the transmission line from the
23 qualifying alternative energy generation equipment with the nearest
24 usable utility transmission lines.
25 (c) "Low-impact hydro" means an electric generating facility utilizing
26 water for the generation of electricity, housed in a canal or reservoir
27 and not having a power production capacity of greater than fifty (50)
28 megawatts.
29 (4) No equipment described in subsection (3)(b) of this section shall
30 qualify for the credit provided in subsection (1) of this section until the
31 taxpayer applies for and obtains an order from the Idaho public utilities com-
32 mission confirming that the installed equipment is qualified alternative
33 energy generation equipment. Applications submitted to the public utilities
34 commission shall be governed by the public utilities commission's rules of
35 procedure. The public utilities commission may issue procedural orders neces-
36 sary to implement the provisions of this section.
37 (5) The credit allowed by subsection (1) of this section, together with
38 any credits carried forward under subsection (7) of this section, shall not,
39 in any one (1) taxable year, exceed 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) Seven hundred fifty thousand dollars ($750,000). When credits earned
44 in more than one (1) taxable year are available, the oldest credits shall
45 be applied first.
46 (6) In the case of a group of corporations filing a combined report under
47 subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
48 of the group but not used by that member may be used by another member of the
49 group, subject to the provisions of subsection (7) of this section, instead of
50 carried over. For a combined group of corporations, credit carried forward may
51 be claimed by any member of the group unless the member who earned the credit
52 is no longer included in the combined group.
53 (7) If the credit allowed by subsection (1) of this section exceeds the
54 limitation under subsection (5) of this section, the excess amount may be car-
55 ried forward for a period that does not exceed the next fourteen (14) taxable
5
1 years.
2 (8) In the event that qualified alternative energy generation equipment
3 upon which the credit allowed by this section has been used ceases to qualify
4 for the credit allowed by section 63-3029B, Idaho Code, or is subject to
5 recapture of that credit, the recapture of credit under this section shall be
6 in the same proportion and subject to the same provisions as the amount of
7 credit required to be recaptured under section 63-3029B, Idaho Code.
8 (9) In addition to other needed rules, the state tax commission may pro-
9 mulgate rules prescribing, in the case of S corporations, partnerships, trusts
10 or estates, a method of attributing the credit under this section to the
11 shareholders, partners or beneficiaries in proportion to their share of the
12 income from the S corporation, partnership, trust or estate.
13 SECTION 3. That Section 63-3029J, Idaho Code, be, and the same is hereby
14 amended to read as follows:
15 63-3029J. INCENTIVE INCOME TAX INVESTMENT CREDIT. (1) Subject to the lim-
16 itations of this section, for taxable year 2001 only, there shall be allowed
17 to a taxpayer a nonrefundable credit against taxes imposed by sections
18 63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount allowed by subsection
19 (23) of this section for qualified investments in Idaho. The credit shall be
20 in addition to the credit for capital investment permitted by section
21 63-3029B, Idaho Code.
22 (2) Subject to the limitations of this section, for taxable years 2004
23 through 2009, inclusive, there shall be allowed to a taxpayer a nonrefundable
24 credit against taxes imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho
25 Code, in the amount allowed by subsection (3) of this section for qualified
26 alternative energy generation equipment investments in Idaho permitted by sub-
27 section (3)(a)(iii) of section 63-3029B, Idaho Code. The credit shall be in
28 addition to the credit for capital investment permitted by sections 63-3029B
29 and 63-3029Q, Idaho Code.
30 (3) The credit permitted in subsection (1) of this section shall be at
31 the percentage rate determined under either subsection (23)(a) or (23)(b) of
32 this section at the election of the taxpayer.
33 (a) (i) One-half (1/2) of the amount by which the average three-year
34 unemployment rate in the county in which the property is located
35 exceeds six percent (6%). In the case of mobile property, the prop-
36 erty shall be located in the county in which it is primarily based.
37 (ii) For purposes of this section the director of the department of
38 labor shall, on or before the first day of September of each calendar
39 year, establish and certify to the state tax commission the average
40 three-year unemployment rate in each county in Idaho for the immedi-
41 ately preceding three (3) calendar years. The rates thus certified
42 shall apply to the calculation of the credit under subsection
43 (23)(a)(i) of this section for property qualifying in the taxable
44 year beginning during the next calendar year.
45 (b) (i) One-tenth of one percent (.1%) for each full percent that the
46 three-year average per capita personal income level in the county in
47 which the property is located is below ninety percent (90%) of the
48 average statewide per capita personal income level.
49 (ii) For purposes of this section the director of the department of
50 commerce shall, on or before the first day of September of each cal-
51 endar year, establish and certify to the state tax commission the
52 most current three-year average per capita personal income level in
53 each county in Idaho and the statewide per capita personal income
6
1 level for the most current preceding three (3) calendar years. The
2 levels thus certified shall apply to the calculation of the credit
3 under subsection (23)(b)(i) of this section for property qualifying
4 in the taxable year beginning during the next calendar year.
5 (34) As used in this section the term "qualified investment" shall be
6 defined as in section 63-3029B, Idaho Code.
7 (45) The credit allowed by subsection (1) of this section together with
8 any credits carried forward under subsection (67) of this section shall not
9 exceed in any one (1) taxable year the lesser of:
10 (a) The amount of tax due under sections 63-3024, 63-3025 and 63-3025A,
11 Idaho Code, after allowance for all other credits permitted by this chap-
12 ter; or
13 (b) Five hundred thousand dollars ($500,000).
14 (56) In the case of a group of corporations filing a combined report
15 under subsection (t) of section 63-3027, Idaho Code, credit earned by one (1)
16 member of the group but not used by that member may be used by another member
17 of the group, subject to the provisions of subsection (67) of this section,
18 instead of carried over. For a combined group of corporations, credit carried
19 forward may be claimed by any member of the group unless the member who earned
20 the credit is no longer included in the combined group.
21 (67) If the credit allowed by subsection (1) of this section exceeds the
22 limitation under subsection (45) of this section, the excess amount may be
23 carried forward for a period that does not exceed the next fourteen (14) tax-
24 able years.
25 (78) In the event that property upon which the credit allowed by this
26 section has been used ceases to qualify for the credit allowed by section
27 63-3029B, Idaho Code, the recapture of credit under this section shall be in
28 the same proportion and subject to the same provisions as the amount of credit
29 required to be recaptured under section 63-3029B, Idaho Code.
30 (89) (a) Subject to the requirements of this subsection, a taxpayer who
31 earns and is entitled to the credit or to an unused portion of the credit
32 allowed by this section may transfer the unused credit to another taxpayer
33 required to file a return under this chapter.
34 (b) Before completing a transfer under this subsection, the transferor
35 shall notify the state tax commission of its intention to transfer the
36 credit and the identity of the transferee. The state tax commission shall
37 provide the transferor with a written statement of the amount of credit
38 available under this section as then appearing in the commission's records
39 and the number of years the credit may be carried over. The transferor
40 shall provide the transferee with the original statement. The transferee
41 shall attach a copy of the statement to any return in regard to which the
42 transferred credit is claimed.
43 (c) In the event that after the transfer the state tax commission deter-
44 mines that the amount of credit properly available under this section is
45 less than the amount claimed by the transferor of the credit and shown in
46 the statement described in subsection (89)(b) of this section or that the
47 credit is subject to recapture, the commission shall assess the amount of
48 overstated credit as taxes due from the transferor and not the transferee.
49 The assessment shall be made in the manner provided for a deficiency in
50 taxes under this chapter.
51 (910) In addition to other needed rules, the state tax commission may pro-
52 mulgate rules prescribing:
53 (a) In the case of S corporations, partnerships, trusts or estates, a
54 method of attributing the credit under this section to the shareholders,
55 partners or beneficiaries in proportion to their share of the income from
7
1 the S corporation, partnership, trust or estate.
2 (b) A requirement that a transferor under subsection (89) of this sec-
3 tion, prior to obtaining the written statement provided in subsection
4 (89)(b) of this section, post such bond or security as the state tax com-
5 mission may require to secure any liability referred to in subsection
6 (89)(c) of this section. Such rules shall provide an opportunity for a
7 taxpayer, upon a showing of financial responsibility, to have the bond
8 waiver, for notice of denial of waiver in accordance with section 63-3045,
9 Idaho Code, and for review in accordance with section 63-3045B, Idaho
10 Code.
11 SECTION 4. An emergency existing therefor, which emergency is hereby
12 declared to exist, this act shall be in full force and effect on and after its
13 passage and approval, and retroactively to January 1, 2004.
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 760, As Amended
BY REVENUE AND TAXATION COMMITTEE
14 AN ACT
15 RELATING TO INCOME TAXATION; AMENDING SECTION 63-3029B, IDAHO CODE, TO PROVIDE
16 THAT TAXPAYERS MAKING EXPENDITURES FOR QUALIFIED ALTERNATIVE ENERGY GENER-
17 ATION EQUIPMENT ARE ENTITLED TO THE INCOME TAX CREDIT FOR CAPITAL INVEST-
18 MENT; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW
19 SECTION 63-3029Q, IDAHO CODE, TO PROVIDE AN INCOME TAX CREDIT FOR CERTAIN
20 EXPENDITURES RELATING TO INVESTMENT IN ALTERNATIVE ENERGY GENERATION
21 EQUIPMENT, TO PROVIDE A SUNSET DATE, TO PROVIDE DEFINITIONS, TO PROVIDE A
22 CARRYOVER OF UNUSED CREDITS, TO PROVIDE PROCEDURES AND TO PROVIDE TRANS-
23 FERABILITY; AMENDING SECTION 63-3029J, IDAHO CODE, TO PROVIDE AN INCOME
24 TAX CREDIT FOR CERTAIN EXPENDITURES FOR QUALIFIED ALTERNATIVE ENERGY GEN-
25 ERATION EQUIPMENT IN CERTAIN AREAS OF IDAHO WITH HIGH UNEMPLOYMENT OR LOW
26 PERSONAL INCOME AT THE ELECTION OF THE TAXPAYER FOR TAXABLE YEARS 2004
27 THROUGH 2009; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICA-
28 TION.
29 Be It Enacted by the Legislature of the State of Idaho:
30 SECTION 5. That Section 63-3029B, Idaho Code, be, and the same is hereby
31 amended to read as follows:
32 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
33 of the taxpayer there shall be allowed, subject to the applicable limitations
34 provided herein as a credit against the income tax imposed by chapter 30,
35 title 63, Idaho Code, an amount equal to the sum of:
36 (a) The tax credit carryovers; and
37 (b) The tax credit for the taxable year.
38 (2) The maximum allowable amount of the credit for the current taxable
39 year shall be three percent (3%) of the amount of qualified investments made
40 during the taxable year.
41 (3) As used in this section "qualified investment" means certain depre-
42 ciable property which:
43 (a) (i) Is eligible for the federal investment tax credit, as defined
44 in sections 46(c) and 48 of the Internal Revenue Code subject to the
45 limitations provided for certain regulated companies in section 46(f)
8
1 of the Internal Revenue Code and is not a motor vehicle under eight
2 thousand (8,000) pounds gross weight; or
3 (ii) Is qualified broadband equipment as defined in section
4 63-3029I, Idaho Code; or
5 (iii) Is qualified alternative energy generation equipment as defined
6 in section 63-3029Q, Idaho Code; and
7 (b) Is acquired, constructed, reconstructed, erected or placed into ser-
8 vice after December 31, 1981; and
9 (c) Has a situs in Idaho.
10 (4) (a) For qualified investments placed in service in taxable years
11 beginning in 2003 and thereafter, the taxpayer may elect, in lieu of the
12 credit provided by this section, a two (2) year exemption from all taxes
13 on personal property on the qualified investment. The exemption from per-
14 sonal property tax shall apply to the year the election is filed as pro-
15 vided in this section and the immediately following year. The election
16 provided by this paragraph is available only to a taxpayer whose Idaho
17 taxable income in the second preceding taxable year in which the invest-
18 ment is placed in service is negative.
19 (b) The election shall be made in the form prescribed by the state tax
20 commission and shall include a specific description and location of all
21 qualified investments placed into service and located in the jurisdiction
22 of the assessing authority, a designation of the specific assets for which
23 the exemption is claimed, and such other information as the state tax com-
24 mission may require. The election must be made by including the election
25 form with the listing of personal property required by section 63-302,
26 Idaho Code, or, in the case of operating property assessed under chapter
27 4, title 63, Idaho Code, with the operator's statement required by section
28 63-404, Idaho Code, for the calendar year immediately following the tax-
29 able year in which the property was placed in service. Once made the elec-
30 tion is irrevocable. If no election is made, the election is not otherwise
31 available. A copy of the election form must also be attached to the origi-
32 nal income tax return due for the taxable year in which the claim was
33 made.
34 (c) The state tax commission and the various county assessors are autho-
35 rized to exchange information as necessary to properly coordinate the
36 exemption provided in this subsection.
37 (d) In the event that an investment in regard to which the election under
38 this section was made is determined by the state tax commission to not be
39 a qualified investment or ceases to qualify during the recapture period,
40 the taxpayer shall be subject to a penalty equal to the amount of the
41 claimed investment times the average urban property tax levy of the state
42 as determined by the state tax commission times two (2).
43 (5) Notwithstanding the provisions of subsections (1) and (2) of this
44 section, the amount of the credit allowed shall not exceed fifty percent (50%)
45 of the tax liability of the taxpayer. The tax liability of the taxpayer shall
46 be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
47 (6) If the sum of credit carryovers from the credit allowed by subsection
48 (2) of this section and the amount of credit for the taxable year from the
49 credit allowed by subsection (2) of this section exceed the limitation imposed
50 by subsection (5) of this section for the current taxable year, the excess
51 attributable to the current taxable year's credit shall be an investment
52 credit carryover to the fourteen (14) succeeding taxable years. In the case of
53 a group of corporations filing a combined report under section 63-3027, Idaho
54 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one
55 (1) member of the group but not used by that member may be used by another
9
1 member of the group, subject to the provisions of subsection (5) of this sec-
2 tion, instead of carried over. The entire amount of unused credit shall be
3 carried forward to the earliest of the succeeding years, wherein the oldest
4 available unused credit shall be used first, so long as the qualified invest-
5 ment property for which the unused credit was granted still maintains Idaho
6 situs. For a combined group of corporations, credit carried forward may be
7 claimed by any member of the group unless the member who earned the credit is
8 no longer included in the combined group.
9 (7) Any recapture of the credit allowed by subsection (2) of this section
10 on property disposed of or ceasing to qualify, prior to the close of the
11 recapture period, shall be determined according to the applicable recapture
12 provisions of the Internal Revenue Code. In the case of a unitary group of
13 corporations, the increase in tax due to the recapture of investment tax
14 credit must be reported by the member of the group who earned the credit
15 regardless of which member claimed the credit against tax.
16 (8) For the purpose of determining whether property placed in service is
17 a "qualified investment" as defined in subsection (3) of this section, the
18 provisions of section 49 of the Internal Revenue Code shall be disregarded.
19 (9) For purposes of this section, property has a situs in Idaho during a
20 taxable year if it is used in Idaho at any time during the taxable year. Prop-
21 erty not used in Idaho during a taxable year does not have a situs in Idaho in
22 the taxable year during which the property is not used in Idaho or in any sub-
23 sequent taxable year. No credit or carryover of credit is permitted under this
24 section if the credit or carryover relates to property that does not have a
25 situs in Idaho during the taxable year for which the credit or carryover is
26 claimed. The Idaho situs of property must be established by records maintained
27 by the taxpayer which are created reasonably contemporaneously with the use of
28 the property.
29 (10) In the case of property used both in and outside Idaho, the taxpayer,
30 electing to claim the credit provided in this section, must elect to compute
31 the qualified investment in property with a situs in Idaho for all such
32 investments first qualifying during that year in one (1), but only one (1), of
33 the following ways:
34 (a) The amount of each qualified investment in a specific asset shall be
35 separately computed based on the percentage of the actual use of the prop-
36 erty in Idaho by using a measure of the use, such as total miles or total
37 machine hours, that most accurately reflects the beneficial use during the
38 taxable year in which it is first acquired, constructed, reconstructed,
39 erected or placed into service; provided, that the asset is placed in ser-
40 vice more than ninety (90) days before the end of the taxable year. In the
41 case of assets acquired, constructed, reconstructed, erected or placed
42 into service within ninety (90) days prior to the end of the taxable year
43 in which the investment first qualifies, the measure of the use of that
44 asset within Idaho for that year shall be based upon the percentage of use
45 in Idaho during the first ninety (90) days of use of the asset;
46 (b) The investment in qualified property used both inside and outside
47 Idaho during the taxable year in which it is first acquired, constructed,
48 reconstructed, erected or placed into service shall be multiplied by the
49 percent of the investment that would be included in the numerator of the
50 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
51 for the same year.
52 (11) Only for the purposes of subsections (3)(a) and (8) of this section,
53 references to sections of the "Internal Revenue Code" mean the sections
54 referred to as they existed in the Internal Revenue Code of 1986 prior to
55 November 5, 1990.
10
1 SECTION 6. That Chapter 30, Title 63, Idaho Code, be, and the same is
2 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
3 ignated as Section 63-3029Q, Idaho Code, and to read as follows:
4 63-3029Q. INCOME TAX CREDIT FOR INVESTMENT IN ALTERNATIVE ENERGY GENERA-
5 TION EQUIPMENT. (1) Subject to the limitations of this section, for taxable
6 years beginning between January 1, 2004, and December 31, 2009, inclusive,
7 there shall be allowed to a taxpayer a nonrefundable credit against taxes
8 imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho Code, for qualified
9 expenditures in qualified alternative energy generation equipment in Idaho.
10 (2) The credit permitted in subsection (1) of this section shall be three
11 percent (3%) of the qualified investment in qualified alternative energy gen-
12 eration equipment in Idaho and shall be in addition to the credit for capital
13 investment permitted by section 63-3029B, Idaho Code.
14 (3) As used in this section:
15 (a) "Qualified investment" shall be defined in section 63-3029B, Idaho
16 Code.
17 (b) "Qualified alternative energy generation equipment" means equipment
18 that:
19 (i) Qualifies for the credit for capital investment permitted by
20 section 63-3029B, Idaho Code;
21 (ii) Is capable of producing electricity from biomass, waste, renew-
22 able resources including, but not limited to, solar, wind, low-impact
23 hydro and pumped storage, geothermal resources, or any combination
24 thereof;
25 (iii) Does not receive more than twenty-five percent (25%) of its
26 total annual energy input from oil, propane, natural gas or coal that
27 may be used only for ignition, start-up, testing, flame stabilization
28 or to prevent outages;
29 (iv) Connects such electricity producing equipment to the transmis-
30 sion grid including, but not limited to, all facilities necessary to
31 synchronize the qualifying alternative energy generation equipment
32 with the utility transmission grid and the transmission line from the
33 qualifying alternative energy generation equipment with the nearest
34 usable utility transmission lines.
35 (c) "Low-impact hydro" means an electric generating facility utilizing
36 water for the generation of electricity, housed in a canal or reservoir
37 and not having a power production capacity of greater than fifty (50)
38 megawatts.
39 (4) No equipment described in subsection (3)(b) of this section shall
40 qualify for the credit provided in subsection (1) of this section until the
41 taxpayer applies for and obtains an order from the Idaho public utilities com-
42 mission confirming that the installed equipment is qualified alternative
43 energy generation equipment. Applications submitted to the public utilities
44 commission shall be governed by the public utilities commission's rules of
45 procedure. The public utilities commission may issue procedural orders neces-
46 sary to implement the provisions of this section.
47 (5) The credit allowed by subsection (1) of this section, together with
48 any credits carried forward under subsection (7) of this section, shall not,
49 in any one (1) taxable year, exceed the lesser of:
50 (a) The amount of tax due under sections 63-3024, 63-3025 and 63-3025A,
51 Idaho Code, after allowance for all other credits permitted by this chap-
52 ter; or
53 (b) Seven hundred fifty thousand dollars ($750,000). When credits earned
54 in more than one (1) taxable year are available, the oldest credits shall
11
1 be applied first.
2 (6) In the case of a group of corporations filing a combined report under
3 subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
4 of the group but not used by that member may be used by another member of the
5 group, subject to the provisions of subsection (7) of this section, instead of
6 carried over. For a combined group of corporations, credit carried forward may
7 be claimed by any member of the group unless the member who earned the credit
8 is no longer included in the combined group.
9 (7) If the credit allowed by subsection (1) of this section exceeds the
10 limitation under subsection (5) of this section, the excess amount may be car-
11 ried forward for a period that does not exceed the next fourteen (14) taxable
12 years.
13 (8) In the event that qualified alternative energy generation equipment
14 upon which the credit allowed by this section has been used ceases to qualify
15 for the credit allowed by section 63-3029B, Idaho Code, or is subject to
16 recapture of that credit, the recapture of credit under this section shall be
17 in the same proportion and subject to the same provisions as the amount of
18 credit required to be recaptured under section 63-3029B, Idaho Code.
19 (9) (a) Subject to the requirements of this subsection, a taxpayer who
20 earns and is entitled to the credit or to an unused portion of the credit
21 allowed by this section may transfer all or a portion of the unused credit
22 to:
23 (i) Another taxpayer required to file a return under this chapter;
24 or
25 (ii) To an intermediary for its use or for resale to a taxpayer
26 required to file a return under this chapter.
27 In the event of either such a transfer, the transferee may claim the
28 credit on the transferee's income tax return originally filed during the
29 calendar year in which the transfer takes place and, in the case of car-
30 ryover of the credit, on the transferee's returns for the number of years
31 of carryover available to the transferor at the time of the transfer
32 unless earlier exhausted.
33 (b) Before completing a transfer under this subsection, the transferor
34 shall notify the state tax commission of its intention to transfer the
35 credit and the identity of the transferee. The state tax commission shall
36 provide the transferor with a written statement of the amount of credit
37 available under this section as then appearing in the commission's records
38 and the number of years the credit may be carried over. The transferee
39 shall attach a copy of the statement to any return in regard to which the
40 transferred credit is claimed.
41 (c) In the event that after the transfer the state tax commission deter-
42 mines that the amount of credit properly available under this section is
43 less than the amount claimed by the transferor of the credit or that the
44 credit is subject to recapture, the commission shall assess the amount of
45 overstated or recaptured credit as taxes due from the transferor and not
46 the transferee. The assessment shall be made in the manner provided for a
47 deficiency in taxes under this chapter.
48 (10) In addition to other needed rules, the state tax commission may pro-
49 mulgate rules prescribing, in the case of S corporations, partnerships, trusts
50 or estates, a method of attributing the credit under this section to the
51 shareholders, partners or beneficiaries in proportion to their share of the
52 income from the S corporation, partnership, trust or estate.
53 SECTION 7. That Section 63-3029J, Idaho Code, be, and the same is hereby
54 amended to read as follows:
12
1 63-3029J. INCENTIVE INCOME TAX INVESTMENT CREDIT. (1) Subject to the lim-
2 itations of this section, for taxable year 2001 only, there shall be allowed
3 to a taxpayer a nonrefundable credit against taxes imposed by sections
4 63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount allowed by subsection
5 (23) of this section for qualified investments in Idaho. The credit shall be
6 in addition to the credit for capital investment permitted by section
7 63-3029B, Idaho Code.
8 (2) Subject to the limitations of this section, for taxable years 2004
9 through 2009, inclusive, there shall be allowed to a taxpayer a nonrefundable
10 credit against taxes imposed by sections 63-3024, 63-3025 and 63-3025A, Idaho
11 Code, in the amount allowed by subsection (3) of this section for qualified
12 alternative energy generation equipment investments in Idaho permitted by sub-
13 section (3)(a)(iii) of section 63-3029B, Idaho Code. The credit shall be in
14 addition to the credit for capital investment permitted by sections 63-3029B
15 and 63-3029Q, Idaho Code.
16 (3) The credit permitted in subsection (1) of this section shall be at
17 the percentage rate determined under either subsection (23)(a) or (23)(b) of
18 this section at the election of the taxpayer.
19 (a) (i) One-half (1/2) of the amount by which the average three-year
20 unemployment rate in the county in which the property is located
21 exceeds six percent (6%). In the case of mobile property, the prop-
22 erty shall be located in the county in which it is primarily based.
23 (ii) For purposes of this section the director of the department of
24 labor shall, on or before the first day of September of each calendar
25 year, establish and certify to the state tax commission the average
26 three-year unemployment rate in each county in Idaho for the immedi-
27 ately preceding three (3) calendar years. The rates thus certified
28 shall apply to the calculation of the credit under subsection
29 (23)(a)(i) of this section for property qualifying in the taxable
30 year beginning during the next calendar year.
31 (b) (i) One-tenth of one percent (.1%) for each full percent that the
32 three-year average per capita personal income level in the county in
33 which the property is located is below ninety percent (90%) of the
34 average statewide per capita personal income level.
35 (ii) For purposes of this section the director of the department of
36 commerce shall, on or before the first day of September of each cal-
37 endar year, establish and certify to the state tax commission the
38 most current three-year average per capita personal income level in
39 each county in Idaho and the statewide per capita personal income
40 level for the most current preceding three (3) calendar years. The
41 levels thus certified shall apply to the calculation of the credit
42 under subsection (23)(b)(i) of this section for property qualifying
43 in the taxable year beginning during the next calendar year.
44 (34) As used in this section the term "qualified investment" shall be
45 defined as in section 63-3029B, Idaho Code.
46 (45) The credit allowed by subsection (1) of this section together with
47 any credits carried forward under subsection (67) of this section shall not
48 exceed in any one (1) taxable year 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) Five hundred thousand dollars ($500,000).
53 (56) In the case of a group of corporations filing a combined report
54 under subsection (t) of section 63-3027, Idaho Code, credit earned by one (1)
55 member of the group but not used by that member may be used by another member
13
1 of the group, subject to the provisions of subsection (67) of this section,
2 instead of carried over. For a combined group of corporations, credit carried
3 forward may be claimed by any member of the group unless the member who earned
4 the credit is no longer included in the combined group.
5 (67) If the credit allowed by subsection (1) of this section exceeds the
6 limitation under subsection (45) of this section, the excess amount may be
7 carried forward for a period that does not exceed the next fourteen (14) tax-
8 able years.
9 (78) In the event that property upon which the credit allowed by this
10 section has been used ceases to qualify for the credit allowed by section
11 63-3029B, Idaho Code, the recapture of credit under this section shall be in
12 the same proportion and subject to the same provisions as the amount of credit
13 required to be recaptured under section 63-3029B, Idaho Code.
14 (89) (a) Subject to the requirements of this subsection, a taxpayer who
15 earns and is entitled to the credit or to an unused portion of the credit
16 allowed by this section may transfer the unused credit to another taxpayer
17 required to file a return under this chapter.
18 (b) Before completing a transfer under this subsection, the transferor
19 shall notify the state tax commission of its intention to transfer the
20 credit and the identity of the transferee. The state tax commission shall
21 provide the transferor with a written statement of the amount of credit
22 available under this section as then appearing in the commission's records
23 and the number of years the credit may be carried over. The transferor
24 shall provide the transferee with the original statement. The transferee
25 shall attach a copy of the statement to any return in regard to which the
26 transferred credit is claimed.
27 (c) In the event that after the transfer the state tax commission deter-
28 mines that the amount of credit properly available under this section is
29 less than the amount claimed by the transferor of the credit and shown in
30 the statement described in subsection (89)(b) of this section or that the
31 credit is subject to recapture, the commission shall assess the amount of
32 overstated credit as taxes due from the transferor and not the transferee.
33 The assessment shall be made in the manner provided for a deficiency in
34 taxes under this chapter.
35 (910) In addition to other needed rules, the state tax commission may pro-
36 mulgate rules prescribing:
37 (a) In the case of S corporations, partnerships, trusts or estates, a
38 method of attributing the credit under this section to the shareholders,
39 partners or beneficiaries in proportion to their share of the income from
40 the S corporation, partnership, trust or estate.
41 (b) A requirement that a transferor under subsection (89) of this sec-
42 tion, prior to obtaining the written statement provided in subsection
43 (89)(b) of this section, post such bond or security as the state tax com-
44 mission may require to secure any liability referred to in subsection
45 (89)(c) of this section. Such rules shall provide an opportunity for a
46 taxpayer, upon a showing of financial responsibility, to have the bond
47 waiver, for notice of denial of waiver in accordance with section 63-3045,
48 Idaho Code, and for review in accordance with section 63-3045B, Idaho
49 Code.
50 SECTION 8. An emergency existing therefor, which emergency is hereby
51 declared to exist, this act shall be in full force and effect on and after its
52 passage and approval, and retroactively to January 1, 2004.
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STATEMENT OF PURPOSE
RS13822
This legislation will provide an investment tax credit against
state income taxes for investments in wind turbines, solar energy, low
impact hydro, industrial waste, animal waste, municipal waste,
geothermal resources, other renewable resources. This credit is
patterned after the broadband tax credit that was enacted in 2001. The
credit escalates if a qualifying facility is located in certain
economically depressed counties. The credit is for new investment for
tax years 2004 through 2009.
FISCAL IMPACT
The strategic plan of the Energy Division of the Department of
Water Resources is to have 300 MW of Windpower installed in Idaho by
the year 2010. If we were to break this out into 50 MW per year new
energy coming on line this would be an annual total investment of
$42,500,000 based on the cost of $850 KW. The maximum credit that could
be taken per year would be $2,125,000 (3+2) if the facility were to be
in the qualifying counties in the legislation. If the remainder of
alternative energy is added at about fifty percent capacity of
windpower, the maximum credit that would be taken would be $1,620,500
annually. The first year the estimated credit would be $3,187,500. This
credit would not take into account any increased sales or income taxes
paid as a result of the construction of a facility.
Contact:
Name: Senator Brent Hill
Representative George Eskridge-Committee on Energy
Phone: 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 760