2004 Legislation
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HOUSE BILL NO. 782 – Invstmnt tax credit, taken in error


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Bill Status

H0782...............................................by REVENUE AND TAXATION
INVESTMENT TAX CREDIT - Amends existing law to provide that all moneys
collected by the State Tax Commission for an erroneously taken investment
tax credit shall be remitted to the county where the property was located
that was not a qualified investment or ceased to qualify during the
recapture period; to provide for distribution of moneys to taxing districts
within the county; and to provide application of these moneys to the three
percent property tax cap.
02/26    House intro - 1st rdg - to printing
02/27    Rpt prt - to Rev/Tax

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 782
                             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 63-3029B, Idaho Code, be, and the same is  hereby
 11    amended to read as follows:
 12        63-3029B.  INCOME  TAX  CREDIT FOR CAPITAL INVESTMENT. (1) At the election
 13    of the taxpayer there shall be allowed, subject to the applicable  limitations
 14    provided  herein  as  a  credit  against the income tax imposed by chapter 30,
 15    title 63, Idaho Code, an amount equal to the sum of:
 16        (a)  The tax credit carryovers; and
 17        (b)  The tax credit for the taxable year.
 18        (2)  The maximum allowable amount of the credit for  the  current  taxable
 19    year  shall  be three percent (3%) of the amount of qualified investments made
 20    during the taxable year.
 21        (3)  As used in this section "qualified investment" means  certain  depre-
 22    ciable property which:
 23        (a)  (i)  Is eligible for the federal investment tax credit, as defined in
 24             sections  46(c)  and  48  of the Internal Revenue Code subject to the
 25             limitations provided for certain regulated companies in section 46(f)
 26             of the Internal Revenue Code and is not a motor vehicle  under  eight
 27             thousand (8,000) pounds gross weight; or
 28             (ii) Is qualified broadband equipment as defined in section 63-3029I,
 29             Idaho Code; and
 30        (b)  Is  acquired, constructed, reconstructed, erected or placed into ser-
 31        vice after December 31, 1981; and
 32        (c)  Has a situs in Idaho.
 33        (4)  (a) For qualified investments placed  in  service  in  taxable  years
 34        beginning  in  2003 and thereafter, the taxpayer may elect, in lieu of the
 35        credit provided by this section, a two (2) year exemption from  all  taxes
 36        on  personal property on the qualified investment. The exemption from per-
 37        sonal property tax shall apply to the year the election is filed  as  pro-
 38        vided  in  this  section  and the immediately following year. The election
 39        provided by this paragraph is available only to  a  taxpayer  whose  Idaho
 40        taxable  income  in the second preceding taxable year in which the invest-
 41        ment is placed in service is negative.
 42        (b)  The election shall be made in the form prescribed by  the  state  tax
 43        commission  and  shall  include a specific description and location of all
  1        qualified investments placed into service and located in the  jurisdiction
  2        of the assessing authority, a designation of the specific assets for which
  3        the exemption is claimed, and such other information as the state tax com-
  4        mission  may  require. The election must be made by including the election
  5        form with the listing of personal property  required  by  section  63-302,
  6        Idaho  Code,  or, in the case of operating property assessed under chapter
  7        4, title 63, Idaho Code, with the operator's statement required by section
  8        63-404, Idaho Code, for the calendar  year immediately following the  tax-
  9        able year in which the property was placed in service. Once made the elec-
 10        tion is irrevocable. If no election is made, the election is not otherwise
 11        available. A copy of the election form must also be attached to the origi-
 12        nal  income  tax  return  due  for the taxable year in which the claim was
 13        made.
 14        (c)  The state tax commission and the various county assessors are  autho-
 15        rized  to  exchange  information  as  necessary to properly coordinate the
 16        exemption provided in this subsection.
 17        (d)  In the event that an investment in regard to which the election under
 18        this section was made is determined by the state tax commission to not  be
 19        a  qualified  investment or ceases to qualify during the recapture period,
 20        the taxpayer shall be subject to a penalty equal  to  the  amount  of  the
 21        claimed  investment times the average urban property tax levy of the state
 22        as determined by the state tax commission times two (2).
 23        (e)  All moneys collected by the state tax  commission  pursuant  to  this
 24        subsection,  which amounts are continuously appropriated for this purpose,
 25        shall be deposited with the state treasurer and placed in the state refund
 26        account, as provided by section 63-3067, Idaho Code, to be remitted to the
 27        county within which the property was located  that  was  not  a  qualified
 28        investment  or  ceased  to qualify during the recapture period. The county
 29        shall distribute this remittance to all appropriate taxing districts based
 30        on the proportion each appropriate taxing district's levy is to the  total
 31        of  all the levies of the taxing districts for the tax code area where the
 32        property was located for each year the exemption was granted. If any  tax-
 33        ing  district  is dissolved or disincorporated, the proportionate share of
 34        the remittance to be distributed to that taxing district shall  be  depos-
 35        ited in the county current expense fund.
 36        (f)  For  purposes  of  the  limitation  provided by section 63-802, Idaho
 37        Code, moneys received pursuant to this  subsection  shall  be  treated  as
 38        property tax revenue by taxing districts.
 39        (5)  Notwithstanding  the  provisions  of  subsections (1) and (2) of this
 40    section, the amount of the credit allowed shall not exceed fifty percent (50%)
 41    of the tax liability of the taxpayer. The tax liability of the taxpayer  shall
 42    be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
 43        (6)  If the sum of credit carryovers from the credit allowed by subsection
 44    (2)  of  this  section  and the amount of credit for the taxable year from the
 45    credit allowed by subsection (2) of this section exceed the limitation imposed
 46    by subsection (5) of this section for the current  taxable  year,  the  excess
 47    attributable  to  the  current  taxable  year's  credit shall be an investment
 48    credit carryover to the fourteen (14) succeeding taxable years. In the case of
 49    a group of corporations filing a combined report under section 63-3027,  Idaho
 50    Code,  or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one
 51    (1) member of the group but not used by that member may  be  used  by  another
 52    member  of the group, subject to the provisions of subsection (5) of this sec-
 53    tion, instead of carried over. The entire amount of  unused  credit  shall  be
 54    carried  forward  to  the earliest of the succeeding years, wherein the oldest
 55    available unused credit shall be used first, so long as the qualified  invest-
  1    ment  property  for  which the unused credit was granted still maintains Idaho
  2    situs. For a combined group of corporations, credit  carried  forward  may  be
  3    claimed  by any member of the group unless the member who earned the credit is
  4    no longer included in the combined group.
  5        (7)  Any recapture of the credit allowed by subsection (2) of this section
  6    on property disposed of or ceasing to qualify,  prior  to  the  close  of  the
  7    recapture  period,   shall be determined according to the applicable recapture
  8    provisions of the Internal Revenue Code. In the case of  a  unitary  group  of
  9    corporations,  the  increase  in  tax  due  to the recapture of investment tax
 10    credit must be reported by the member of  the  group  who  earned  the  credit
 11    regardless of which member claimed the credit against tax.
 12        (8)  For  the purpose of determining whether property placed in service is
 13    a "qualified investment" as defined in subsection (3)  of  this  section,  the
 14    provisions of section 49 of the Internal Revenue Code shall be disregarded.
 15        (9)  For  purposes of this section, property has a situs in Idaho during a
 16    taxable year if it is used in Idaho at any time during the taxable year. Prop-
 17    erty not used in Idaho during a taxable year does not have a situs in Idaho in
 18    the taxable year during which the property is not used in Idaho or in any sub-
 19    sequent taxable year. No credit or carryover of credit is permitted under this
 20    section if the credit or carryover relates to property that does  not  have  a
 21    situs  in  Idaho  during the taxable year for which the credit or carryover is
 22    claimed. The Idaho situs of property must be established by records maintained
 23    by the taxpayer which are created reasonably contemporaneously with the use of
 24    the property.
 25        (10) In the case of property used both in and outside Idaho, the taxpayer,
 26    electing to claim the credit provided in this section, must elect  to  compute
 27    the  qualified  investment  in  property  with  a  situs in Idaho for all such
 28    investments first qualifying during that year in one (1), but only one (1), of
 29    the following ways:
 30        (a)  The amount of each qualified investment in a specific asset shall  be
 31        separately computed based on the percentage of the actual use of the prop-
 32        erty  in Idaho by using a measure of the use, such as total miles or total
 33        machine hours, that most accurately reflects the beneficial use during the
 34        taxable year in which it is first  acquired,  constructed,  reconstructed,
 35        erected or placed into service; provided, that the asset is placed in ser-
 36        vice more than ninety (90) days before the end of the taxable year. In the
 37        case  of  assets  acquired,  constructed, reconstructed, erected or placed
 38        into service within ninety (90) days prior to the end of the taxable  year
 39        in  which  the  investment first qualifies, the measure of the use of that
 40        asset within Idaho for that year shall be based upon the percentage of use
 41        in Idaho during the first ninety (90) days of use of the asset;
 42        (b)  The investment in qualified property used  both  inside  and  outside
 43        Idaho  during the taxable year in which it is first acquired, constructed,
 44        reconstructed, erected or placed into service shall be multiplied  by  the
 45        percent  of  the investment that would be included in the numerator of the
 46        Idaho property factor determined pursuant to section 63-3027, Idaho  Code,
 47        for the same year.
 48        (11) Only  for the purposes of subsections (3)(a) and (8) of this section,
 49    references to sections of  the  "Internal  Revenue  Code"  mean  the  sections
 50    referred  to  as  they  existed  in the Internal Revenue Code of 1986 prior to
 51    November 5, 1990.

Statement of Purpose / Fiscal Impact

                       STATEMENT OF PURPOSE
                             RS 13609

The purpose of this bill is to amend Section 63-3029B, Idaho
Code, to provide that all moneys collected by the State Tax
Commission as a result of certain property ceasing to qualify for
the investment tax credit and where the owner has elected a
personal property tax credit in lieu of investment tax credit be
remitted to the county within which the property was located when
the property tax exemption was claimed.

                          FISCAL IMPACT

Name: Rep. Ken Roberts 
Phone: (208) 332-1000

STATEMENT OF PURPOSE/FISCAL NOTE                      H 782