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H0013...............................................by REVENUE AND TAXATION
INCOME TAX - DEDUCTIONS - Adds to existing law relating to income tax to
provide that a deduction for taxpayers who restore to income substantial
amounts held under claim of right not deductible on the taxpayer's federal
income tax return.
01/19 House intro - 1st rdg - to printing
01/20 Rpt prt - to Rev/Tax
01/26 Rpt out - rec d/p - to 2nd rdg
01/27 2nd rdg - to 3rd rdg
01/31 3rd rdg - PASSED - 65-0-5
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon,
Chadderdon, Clark, Collins, Crow, Deal, Denney, Ellsworth, Field(18),
Field(23), Garrett, Hart, Harwood, Henbest, Henderson, Jaquet, Kemp,
Lake, LeFavour, Loertscher, Martinez, Mathews, McGeachin, McKague,
Miller, Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence,
Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sayler, Schaefer,
Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30), Smith(24),
Snodgrass, Stevenson, Trail, Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Edmunson, Eskridge, Jones, Sali, Smylie
Floor Sponsor - Schaefer
Title apvd - to Senate
02/01 Senate intro - 1st rdg - to Loc Gov
02/04 Rpt out - rec d/p - to 2nd rdg
02/07 2nd rdg - to 3rd rdg
02/08 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai, Marley, McGee, McKenzie, Noble, Pearce,
Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Corder
Title apvd - to House
02/09 To enrol
02/10 Rpt enrol - Sp signed
02/11 Pres signed
02/14 To Governor
02/18 Governor signed
Session Law Chapter 16
Effective: 01/01/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 13
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAXES; AMENDING CHAPTER 30, TITLE 63, IDAHO CODE, BY THE
3 ADDITION OF A NEW SECTION 63-3022F, IDAHO CODE, TO PROVIDE A DEDUCTION FOR
4 TAXPAYERS WHO RESTORE TO INCOME SUBSTANTIAL AMOUNTS HELD UNDER CLAIM OF
5 RIGHT NOT DEDUCTIBLE ON THE TAXPAYER'S FEDERAL RETURN; DECLARING AN EMER-
6 GENCY AND PROVIDING A RETROACTIVE EFFECTIVE DATE.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Chapter 30, Title 63, Idaho Code, be, and the same is
9 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
10 ignated as Section 63-3022F, Idaho Code, and to read as follows:
11 63-3022F. COMPUTATION OF TAX WHERE TAXPAYER RESTORES SUBSTANTIAL AMOUNT
12 HELD UNDER THE CLAIM OF RIGHT. In the case of a taxpayer who is entitled to a
13 reduction in federal tax due to the restoration of an item of gross income
14 under section 1341 of the Internal Revenue Code (relating to the computation
15 of tax where the taxpayer restores a substantial amount held under claim of
16 right), there shall be allowed a deduction in determining Idaho taxable income
17 as provided in section 1341(a)(4) of the Internal Revenue Code, if not other-
18 wise deducted by the taxpayer for Idaho income tax purposes. In computing the
19 deduction allowable under this section, no deduction shall be allowed if the
20 item of gross income for a prior taxable year was not included in Idaho tax-
21 able income.
22 SECTION 2. An emergency existing therefor, which emergency is hereby
23 declared to exist, this act shall be in full force and effect on and after
24 passage and approval, and retroactively to January 1, 2005.
STATEMENT OF PURPOSE
RS 14437
This bill grants relief to businesses that report taxable income
that they later have to repay and are not entitled to an Idaho
deduction for the repayment.
It involves the federal "Claim of Right" doctrine, which allows
taxpayers to recalculate taxes paid on income that is reported in
one year but is later found to be over-reported. In that case,
taxpayers can deduct the amount in the year it is repaid. If the
deduction is more than $3,000, taxpayers can opt instead for a
credit against federal but not Idaho taxes when the credit benefits
them more than the deduction.
Under current Idaho law, taxpayers do not receive a credit or a
deduction for Idaho income taxes when they elect the federal
credit. This bill would allow an Idaho deduction in the amount of
the federal deduction taxpayers could take if they opt for the
federal credit instead of the deduction. If the original income
was not taxed in Idaho, a deduction would not be allowed.
FISCAL IMPACT
Reduces General Fund revenue by $50,000.
CONTACT
Name: Dan John
Agency: State Tax Commission
Phone: 334-7530
STATEMENT OF PURPOSE/FISCAL NOTE H 13