2005 Legislation
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HOUSE BILL NO. 28 – Income Tax Act, technical correctns

HOUSE BILL NO. 28

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H0028...............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law to provide technical corrections to the
Idaho income tax law to permit individuals in combat zones to file Idaho
income tax returns on the extended tax filing dates allowed by the Internal
Revenue Code; to include certain farmers among employers who are required
to file annual income tax withholding returns; to revise terms in the new
jobs credits; to provide correct cross references in the investment credit
for broadband equipment; to provide that equipment purchases that qualify
for a deduction under Section 179 of the Internal Revenue Code (property
expensed rather than treated as a capital asset) do not qualify for the
investment tax credit; and to provide that the statute of limitations on
collecting assessed tax, in all cases, begins on the date the record of
assessment is entered.
                                                                        
01/20    House intro - 1st rdg - to printing
01/21    Rpt prt - to Rev/Tax
02/02    Rpt out - rec d/p - to 2nd rdg
02/03    2nd rdg - to 3rd rdg
02/07    3rd rdg - PASSED - 68-0-2
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
      Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Cannon, Chadderdon,
      Clark, Collins, Crow, Deal, Edmunson, Ellsworth, Eskridge, Field(18),
      Field(23), Garrett, Hart, Harwood, Henbest, Henderson, Jaquet, Jones,
      Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews, McGeachin,
      McKague, Miller, Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart,
      Pence, Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sali, Sayler,
      Schaefer, Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30),
      Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills, Wood, Mr.
      Speaker
      NAYS -- None
      Absent and excused -- Bradford, Denney
    Floor Sponsor - Clark
    Title apvd - to Senate
02/08    Senate intro - 1st rdg - to Loc Gov
02/10    Rpt out - rec d/p - to 2nd rdg
02/11    2nd rdg - to 3rd rdg
02/14    3rd rdg - PASSED - 34-0-1
      AYES -- 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 -- Andreason
    Floor Sponsor - McKenzie
    Title apvd - to House
02/15    To enrol
02/16    Rpt enrol - Sp signed
02/17    Pres signed
02/18    To Governor
02/22    Governor signed
         Session Law Chapter 23
         Effective: 01/01/05

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   First Regular Session - 2005
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 28
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO TECHNICAL CORRECTIONS TO THE IDAHO INCOME TAX ACT;  AMENDING  SEC-
  3        TION 63-3029B, IDAHO CODE, TO PROVIDE THAT PURCHASE OF EQUIPMENT FOR WHICH
  4        A  DEDUCTION  IS ALLOWED UNDER SECTION 179 OF THE INTERNAL REVENUE CODE IS
  5        NOT A QUALIFIED INVESTMENT; AMENDING  SECTION  63-3029E,  IDAHO  CODE,  TO
  6        REVISE  DEFINITIONS; AMENDING SECTION 63-3029F, IDAHO CODE, TO CLARIFY THE
  7        NEW JOBS CREDIT IN RELATION TO A REVENUE PRODUCING ENTERPRISE AND A  TRADE
  8        OR  BUSINESS;  AMENDING  SECTION  63-3029I,  IDAHO CODE, TO PROVIDE PROPER
  9        CITATIONS; AMENDING SECTION 63-3033, IDAHO  CODE,  TO  CONFORM  INDIVIDUAL
 10        INCOME TAX FILING DATES TO THE DATES PROVIDED IN THE INTERNAL REVENUE CODE
 11        FOR CERTAIN PERSONS IN COMBAT ZONES; AMENDING SECTION 63-3036, IDAHO CODE,
 12        TO  PROVIDE  ANNUAL  WITHHOLDING TAX RETURNS FOR CERTAIN FARMER-EMPLOYERS;
 13        AMENDING SECTION 63-3068, IDAHO CODE, TO PROVIDE THAT IN  ALL  CASES  THAT
 14        THE  STATUTE  OF  LIMITATIONS  ON COLLECTION OF ASSESSED TAX BEGINS ON THE
 15        DATE OF ENTRY OF THE RECORD OF ASSESSMENT; DECLARING AN EMERGENCY AND PRO-
 16        VIDING A RETROACTIVE EFFECTIVE DATE.
                                                                        
 17    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 18        SECTION 1.  That Section 63-3029B, Idaho Code, be, and the same is  hereby
 19    amended to read as follows:
                                                                        
 20        63-3029B.  INCOME  TAX  CREDIT FOR CAPITAL INVESTMENT. (1) At the election
 21    of the taxpayer there shall be allowed, subject to the applicable  limitations
 22    provided  herein  as  a  credit  against the income tax imposed by chapter 30,
 23    title 63, Idaho Code, an amount equal to the sum of:
 24        (a)  The tax credit carryovers; and
 25        (b)  The tax credit for the taxable year.
 26        (2)  The maximum allowable amount of the credit for  the  current  taxable
 27    year  shall  be three percent (3%) of the amount of qualified investments made
 28    during the taxable year.
 29        (3)  As used in this section "qualified investment" means  certain  depre-
 30    ciable property which:
 31        (a)  (i)  Is eligible for the federal investment tax credit, as defined in
 32             sections  46(c)  and  48  of the Internal Revenue Code subject to the
 33             limitations provided for certain regulated companies in section 46(f)
 34             of the Internal Revenue Code and is not a motor vehicle  under  eight
 35             thousand (8,000) pounds gross weight; or
 36             (ii) Is qualified broadband equipment as defined in section 63-3029I,
 37             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 2003 and  thereaf-
 42        ter,  a  taxpayer,  other  than  a  person whose rate of charge or rate of
 43        return, or both, is regulated or limited according  to  federal  or  state
                                                                        
                                           2
                                                                        
  1        law,  may elect, in lieu of the credit provided by this section, a two (2)
  2        year exemption from all  taxes  on  personal  property  on  the  qualified
  3        investment.  The  exemption  from personal property tax shall apply to the
  4        year the election is filed as provided in this section and the immediately
  5        following year. The election provided by this paragraph is available  only
  6        to  a taxpayer whose Idaho taxable income, before application of net oper-
  7        ating losses carried back or forward, in the second preceding taxable year
  8        in which the investment is placed in service is negative.
  9        (b)  The election shall be made in the form prescribed by  the  state  tax
 10        commission  and  shall  include a specific description and location of all
 11        qualified investments  placed into service and located in the jurisdiction
 12        of the assessing authority, a designation of the specific assets for which
 13        the exemption is claimed, and such other information as the state tax com-
 14        mission may require. The election must be made by including  the  election
 15        form  with  the  listing  of personal property required by section 63-302,
 16        Idaho Code, or, in the case of operating property assessed  under  chapter
 17        4, title 63, Idaho Code, with the operator's statement required by section
 18        63-404,  Idaho Code. Once made the election is irrevocable. If no election
 19        is made, the election is not otherwise available. A copy of  the  election
 20        form  must  also be attached to the original income tax return due for the
 21        taxable year in which the claim was 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.  Information  disclosed  to  county
 25        officials under this subsection may be used only to determine the validity
 26        or  amount  of  a taxpayer's entitlement to the exemption provided in this
 27        section, and is not otherwise subject to public disclosure as provided  in
 28        section 9-340D, Idaho Code.
 29        (d)  In the event that an investment in regard to which the election under
 30        this subsection was made is determined by the state tax commission:
 31             (i)   To not be a qualified investment, or
 32             (ii)  To have ceased to qualify during the recapture period, or
 33             (iii) To be otherwise not qualified for the election,
 34        the taxpayer shall be subject to recapture of the property tax benefit.
 35        (e)  The  benefit  to  be  recaptured in subsection (4)(d) of this section
 36        shall be computed in the manner required in subsection (7) of this section
 37        and such recapture amount shall be subject to assessment in the same  man-
 38        ner as a deficiency in tax under this chapter. For purposes of calculating
 39        the recapture, the property tax benefit shall be:
 40             (i)   In  the  case  of locally assessed property located in a single
 41             county or nonapportioned  centrally  assessed  property,  the  market
 42             value  of  exempted  property times the average property tax levy for
 43             that county in the year or years for which the exemption was claimed.
 44             (ii)  In the case of other centrally assessed property  and  property
 45             located  in  more  than  one (1) county, the market value of exempted
 46             property times the average urban property tax levy of  the  state  as
 47             determined by the state tax commission in each of the years for which
 48             the exemption was claimed.
 49        (f)  All  moneys  collected  by  the state tax commission pursuant to this
 50        subsection, which amounts are continuously appropriated for this  purpose,
 51        shall be deposited with the state treasurer and placed in the state refund
 52        account, as provided by section 63-3067, Idaho Code, to be remitted to the
 53        county  within  which  the  property  was located that was not a qualified
 54        investment or  ceased to qualify during the recapture period.  The  county
 55        shall distribute this remittance to all appropriate taxing districts based
                                                                        
                                           3
                                                                        
  1        on  the proportion each appropriate taxing district's levy is to the total
  2        of all the levies of the taxing districts for the tax code area where  the
  3        property  was located for each year the exemption was granted. If any tax-
  4        ing district is dissolved or disincorporated, the proportionate  share  of
  5        the  remittance  to be distributed to that taxing district shall be depos-
  6        ited in the county current expense fund.
  7        (g)  For purposes of the limitation  provided  by  section  63-802,  Idaho
  8        Code,    moneys  received  pursuant to this subsection shall be treated as
  9        property tax revenue by taxing districts.
 10        (5)  Notwithstanding the provisions of subsections (1)  and  (2)  of  this
 11    section, the amount of the credit allowed shall not exceed fifty percent (50%)
 12    of  the tax liability of the taxpayer. The tax liability of the taxpayer shall
 13    be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
 14        (6)  If the sum of credit carryovers from the credit allowed by subsection
 15    (2) of this section and the amount of credit for the  taxable  year  from  the
 16    credit allowed by subsection (2) of this section exceed the limitation imposed
 17    by  subsection  (5)  of  this section for the current taxable year, the excess
 18    attributable to the current taxable  year's  credit  shall  be  an  investment
 19    credit carryover to the fourteen (14) succeeding taxable years. In the case of
 20    a  group of corporations filing a combined report under section 63-3027, Idaho
 21    Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by  one
 22    (1)  member  of  the  group but not used by that member may be used by another
 23    member of the group, subject to the provisions of subsection (5) of this  sec-
 24    tion,  instead  of  carried  over. The entire amount of unused credit shall be
 25    carried forward to the earliest of the succeeding years,  wherein  the  oldest
 26    available  unused credit shall be used first, so long as the qualified invest-
 27    ment property for which the unused credit was granted  still  maintains  Idaho
 28    situs.  For  a  combined  group of corporations, credit carried forward may be
 29    claimed by any member of the group unless the member who earned the credit  is
 30    no longer included in the combined group.
 31        (7)  Any recapture of the credit allowed by subsection (2) of this section
 32    on  property  disposed  of  or  ceasing  to qualify, prior to the close of the
 33    recapture period, shall be determined according to  the  applicable  recapture
 34    provisions  of  the  Internal  Revenue Code. In the case of a unitary group of
 35    corporations, the increase in tax due  to  the  recapture  of  investment  tax
 36    credit  must  be  reported  by  the  member of the group who earned the credit
 37    regardless of which member claimed the credit against tax.
 38        (8)  For the purpose of determining whether property placed in service  is
 39    a  "qualified  investment"  as  defined in subsection (3) of this section, the
 40    provisions of section 49 of the Internal Revenue Code  shall  be  disregarded.
 41    "Qualified  investment"  shall not include any amount for which a deduction is
 42    allowed under section 179 of the Internal Revenue Code  in  computing  taxable
 43    income.
 44        (9)  For  purposes of this section, property has a situs in Idaho during a
 45    taxable year if it is used in Idaho at any time during the taxable year. Prop-
 46    erty not used in Idaho during a taxable year does not have a situs in Idaho in
 47    the taxable year during which the property is not used in Idaho or in any sub-
 48    sequent taxable year. No credit or carryover of credit is permitted under this
 49    section if the credit or carryover relates to property that does  not  have  a
 50    situs  in  Idaho  during the taxable year for which the credit or carryover is
 51    claimed. The Idaho situs of property must be established by records maintained
 52    by the taxpayer which are created reasonably contemporaneously with the use of
 53    the property.
 54        (10) In the case of property used both in and outside Idaho, the taxpayer,
 55    electing to claim the credit provided in this section, must elect  to  compute
                                                                        
                                           4
                                                                        
  1    the  qualified  investment  in  property  with  a  situs in Idaho for all such
  2    investments first qualifying during that year in one (1), but only one (1), of
  3    the following ways:
  4        (a)  The amount of each qualified investment in a specific asset shall  be
  5        separately computed based on the percentage of the actual use of the prop-
  6        erty in Idaho  by using a measure of the use, such as total miles or total
  7        machine hours, that most accurately reflects the beneficial use during the
  8        taxable  year  in  which it is first acquired, constructed, reconstructed,
  9        erected or placed into service; provided, that the asset is placed in ser-
 10        vice more than ninety (90) days before the end of the taxable year. In the
 11        case of assets acquired, constructed,  reconstructed,  erected  or  placed
 12        into  service within ninety (90) days prior to the end of the taxable year
 13        in which the investment first qualifies, the measure of the  use  of  that
 14        asset within Idaho for that year shall be based upon the percentage of use
 15        in Idaho during the first ninety (90) days of use of the asset;
 16        (b)  The  investment  in  qualified  property used both inside and outside
 17        Idaho during the taxable year in which it is first acquired,  constructed,
 18        reconstructed,  erected  or placed into service shall be multiplied by the
 19        percent of the investment that would be included in the numerator  of  the
 20        Idaho  property factor determined pursuant to section 63-3027, Idaho Code,
 21        for the same year.
 22        (11) Only for the purposes of subsections (3)(a) and (8) of this  section,
 23    references  to  sections  of  the  "Internal  Revenue  Code" mean the sections
 24    referred to as they existed in the Internal Revenue  Code  of  1986  prior  to
 25    November 5, 1990.
                                                                        
 26        SECTION  2.  That Section 63-3029E, Idaho Code, be, and the same is hereby
 27    amended to read as follows:
                                                                        
 28        63-3029E.  DEFINITIONS -- CONSTRUCTION OF TERMS. As used in  this  section
 29    and in section 63-3029F, Idaho Code:
 30        (1)  (a) "New  employee"  means a person subject to Idaho income tax with-
 31        holding whether or not any amounts are required to be  withheld,  employed
 32        by  the  taxpayer  in  a revenue-producing enterprise creating value-added
 33        natural resource products trade or business, and covered for  unemployment
 34        insurance purposes under chapter 13, title 72, Idaho Code, during the tax-
 35        able year for which the credit allowed by section 63-3029F, Idaho Code, is
 36        claimed. A person shall be deemed to be so engaged if such person performs
 37        duties on:
 38             (i)   A regular full-time basis; or
 39             (ii)  A part-time basis if such person is customarily performing such
 40             duties at least twenty (20) hours per week.
 41        No  credit  shall  be  earned unless the new employee shall have performed
 42        such duties for the taxpayer for a minimum of nine (9) months  during  the
 43        taxable year for which the credit is claimed.
 44        (b)  The  provisions  of paragraph (a) of this subsection notwithstanding,
 45        no credit shall be allowed for employment of persons  by  a  taxpayer  who
 46        acquires  a  revenue-producing  enterprise  trade or business from another
 47        taxpayer or who operates in a place of business the  same  or  a  substan-
 48        tially  identical  revenue-producing value-added natural resource products
 49        enterprise trade or business as operated by another  taxpayer  within  the
 50        prior  twelve  (12) months, except as the prior taxpayer would have quali-
 51        fied under the provisions of paragraph (c) of this  subsection.  Employees
 52        transferred  from a related taxpayer shall not be included in the computa-
 53        tion of the credit.
                                                                        
                                           5
                                                                        
  1        (c)  The number of employees during any  taxable  year  for  any  taxpayer
  2        shall  be  the mathematical average of the number of employees reported to
  3        the Idaho department of labor for employment security purposes during  the
  4        twelve (12) months of the taxable year which qualified under paragraph (a)
  5        of  this  subsection.  In  the event the business is in operation for less
  6        than the entire taxable year, the number of employees of the business  for
  7        the  year  shall be the average number actually employed during the months
  8        of operation, providing that the qualifications of paragraph (a)  of  this
  9        subsection are met.
 10        (2)  "Revenue-producing enterprise" means the production, assembly, fabri-
 11    cation, manufacture or processing of any natural resource product.
 12        (3)  "Same or a substantially identical revenue-producing enterprise trade
 13    or  business"  means a revenue-producing enterprise trade or business in which
 14    the products produced or sold, or the activities conducted  are  the  same  in
 15    character  and  use and are produced, sold or conducted in the same manner as,
 16    or for the same types of customers as, the products  or  activities  produced,
 17    sold or conducted in another revenue-producing enterprise trade or business.
                                                                        
 18        SECTION  3.  That Section 63-3029F, Idaho Code, be, and the same is hereby
 19    amended to read as follows:
                                                                        
 20        63-3029F.  SPECIAL CREDIT AVAILABLE -- NEW  EMPLOYEES.  (1)  Any  taxpayer
 21    shall  be  allowed  a  credit, in an amount determined under subsection (2) of
 22    this section, against the tax imposed by this  chapter,  other  than  the  tax
 23    imposed  by section 63-3082, Idaho Code, for any taxable year during which the
 24    taxpayer's employment of new employees, as defined under section  63-3029E(1),
 25    Idaho Code, increases above the taxpayer's average employment for either:  (a)
 26    the  prior  taxable year, or (b) the average of three (3) prior taxable years,
 27    whichever is higher. No credit shall be allowed under this section unless  the
 28    number of new employees equals or exceeds one (1) person.
 29        (2)  (a) The credit authorized in subsection (1) of this section shall be:
 30             (i)   Five  hundred dollars ($500) per new employee described in sub-
 31             section (2)(d) of this section; or
 32             (ii)  One thousand dollars ($1,000) per  new  employee  described  in
 33             subsection (2)(c) of this section, but not both.
 34        (b)  The  total  credit allowed by this section shall not exceed three and
 35        one-quarter percent (3.25%) of net income from the  taxpayer's  corporate,
 36        proprietorship, partnership, small business corporation or limited liabil-
 37        ity  company  revenue-producing  enterprise trade or business in which the
 38        employment occurred. Additionally, the total amount of this and all  other
 39        credits  allowed  under  this chapter except for the credits allowed under
 40        section 63-3029, Idaho Code, shall not exceed fifty percent (50%)  of  the
 41        tax  liability of the taxpayer. The tax liability of the taxpayer shall be
 42        the tax after deducting the credit allowed by section 63-3029, Idaho Code.
 43        (c)  The one thousand dollar ($1,000) credit  allowed  for  new  employees
 44        described  in this paragraph shall apply to an employee who, in the calen-
 45        dar year ending during the taxable year for which the credit  is  claimed,
 46        received  annual  earnings at an average rate of fifteen dollars and fifty
 47        cents ($15.50) or more per hour worked and who, during such calendar year,
 48        was eligible to receive employer provided coverage under  an  accident  or
 49        health plan described in section 105 of the Internal Revenue Code.
 50        (d)  The  five  hundred  dollar  ($500)  credit  allowed for new employees
 51        described in this paragraph shall apply to an employee  not  described  in
 52        subsection  (2)(c)  of  this  section  and  who  is employed in a revenue-
 53        producing enterprise as defined in section 63-3029E, Idaho Code.
                                                                        
                                           6
                                                                        
  1        (3)  If the sum of the credit carryovers from the credit allowed  by  sub-
  2    section (2) of this section and the amount of credit for the taxable year from
  3    the  credit  allowed  by  subsection (2) of this section exceed the limitation
  4    imposed by subsection (2) of this section for the current  taxable  year,  the
  5    excess  attributable  to  the  current taxable year's credit shall be a credit
  6    carryover to the three (3) succeeding taxable  years.  The  entire  amount  of
  7    unused  credit  shall  be  carried  forward  to the earliest of the succeeding
  8    years, wherein the oldest available unused credit shall be used first, so long
  9    as the employment level for which the credit was granted is still maintained.
                                                                        
 10        SECTION 4.  That Section 63-3029I, Idaho Code, be, and the same is  hereby
 11    amended to read as follows:
                                                                        
 12        63-3029I.  INCOME  TAX  CREDIT  FOR INVESTMENT IN BROADBAND EQUIPMENT. (1)
 13    Subject to the limitations of this section, for taxable years beginning  after
 14    January  1,  2001, there shall be allowed to a taxpayer a nonrefundable credit
 15    against taxes imposed by sections 63-3024, 63-3025 and 63-3025A,  Idaho  Code,
 16    for qualified expenditures in qualified broadband equipment in Idaho.
 17        (2)  The credit permitted in subsection (1) of this section shall be three
 18    percent  (3%)  of the qualified investment in qualified broadband equipment in
 19    Idaho and shall  be in addition to the credit for capital investment permitted
 20    by section 63-3029B, Idaho Code.
 21        (3)  As used in this section the term:
 22        (a)  "Qualified investment" shall be as defined in section 63-3029B, Idaho
 23        Code.
 24        (b)  "Qualified broadband equipment" means equipment  that  qualifies  for
 25        the  credit  for  capital  investment permitted by section 63-3029B, Idaho
 26        Code, and is capable of transmitting signals at a rate  of  at  least  two
 27        hundred  thousand  (200,000)  bits per second to a subscriber and at least
 28        one hundred twenty-five thousand (125,000) bits per  second  from  a  sub-
 29        scriber, and
 30             (i)   In  the  case  of a telecommunications carrier, such qualifying
 31             equipment shall be necessary to the provision  of  broadband  service
 32             and an integral part of a broadband network. "Telecommunications car-
 33             rier"  has the meaning given such term by section 3(44) of the commu-
 34             nications act of 1934, as amended, but does not include a  commercial
 35             mobile service provider.
 36             (ii)  In the case of a commercial mobile service carrier, such quali-
 37             fying  equipment  shall extend from the subscriber side of the mobile
 38             telecommunications  switching  office  to  a   transmitting/receiving
 39             antenna,  including  such antenna, on the outside of the structure in
 40             which the subscriber is located. "Commercial mobile service  carrier"
 41             means  any  person authorized to provide commercial mobile radio ser-
 42             vice to subscribers as defined in section 20.3 of title 47,  Code  of
 43             Federal Regulations (10-1-99 ed.), as amended.
 44             (iii) In  the  case  of  a  cable or open video system operator, such
 45             qualifying equipment shall extend from the subscriber's side  of  the
 46             headend  to  the  outside of the structure in which the subscriber is
 47             located. The terms "cable operator" and "open video system  operator"
 48             have  the  meanings  given  such  terms  by  sections 602(5) and 653,
 49             respectively, of the communications act of 1934, as amended.
 50             (iv)  In the case of a satellite carrier or a wireless carrier  other
 51             than  listed  above, such qualifying equipment is only that equipment
 52             that extends from a transmitting/receiving  antenna,  including  such
 53             antenna,  which  transmits  and  receives signals to or from multiple
                                                                        
                                           7
                                                                        
  1             subscribers to a transmitting/receiving antenna on the outside of the
  2             structure in which the subscriber  is  located.  "Satellite  carrier"
  3             means  any  person  using  the facilities of a satellite or satellite
  4             services licensed by the federal communications commission and  oper-
  5             ating  a  fixed-satellite  service or direct broadcast satellite ser-
  6             vices to provide point-to-multipoint distribution of signals.  "Other
  7             wireless  carrier"  means any person, other than a telecommunications
  8             carrier, commercial mobile  service  carrier,  cable  operator,  open
  9             video operator, or satellite carrier, providing broadband services to
 10             subscribers through the radio transmission of energy.
 11             (v)   In  the  case of packet switching equipment, such packet equip-
 12             ment installed in connection with other qualifying  equipment  listed
 13             in  subsections  (23)(b)(i) through (23)(b)(iv) of this section, pro-
 14             vided it is the last in a series of equipment that transmits  signals
 15             to  a subscriber or the first in a series of equipment that transmits
 16             signals from a subscriber. "Packet switching"  means  controlling  or
 17             routing  the path of a digital transmission signal which is assembled
 18             into packets or cells.
 19             (vi)  In the case of multiplexing and demultiplexing equipment,  such
 20             equipment  only  to the extent that it is deployed in connection with
 21             providing broadband services in locations  between  packet  switching
 22             equipment  and  the  structure  in  which  the subscriber is located.
 23             "Multiplexing" means the transmission of two (2) or more signals over
 24             a communications  circuit without regard to the communications  tech-
 25             nology.
 26             (vii) Any property not primarily used to provide services in Idaho to
 27             public subscribers is not qualified broadband equipment.
 28        (4)  No  equipment described in subsections (23)(b)(i) through (23)(b)(vi)
 29    of this section shall qualify for the credit provided  in  subsection  (1)  of
 30    this  section  until the taxpayer applies to and obtains from the Idaho public
 31    utilities commission an order confirming that the installed equipment is qual-
 32    ified broadband equipment. Applications submitted to the commission  shall  be
 33    governed by the commission's rules of procedure. The commission may issue pro-
 34    cedural orders necessary to implement this section.
 35        (5)  The  credit  allowed  by subsection (1) of this section together with
 36    any credits carried forward under subsection (7) of this section shall not, in
 37    any one (1) taxable year, exceed the lesser of:
 38        (a)  The amount of tax due under sections 63-3024, 63-3025  and  63-3025A,
 39        Idaho  Code, after allowance for all other credits permitted by this chap-
 40        ter; or
 41        (b)  Seven hundred fifty thousand dollars ($750,000).
 42    When credits earned in more than one (1) taxable year are available, the  old-
 43    est credits shall be applied first.
 44        (6)  In the case of a group of corporations filing a combined report under
 45    subsection (t) of section 63-3027, Idaho Code, credit earned by one (1) member
 46    of  the group but not used by that member may be used by another member of the
 47    group, subject to the provisions of subsection (7) of this section, instead of
 48    carried over. For a combined group of corporations, credit carried forward may
 49    be claimed by any member of the group unless the member who earned the  credit
 50    is no longer included in the combined group.
 51        (7)  If  the  credit allowed by subsection (1) of this section exceeds the
 52    limitation under subsection (5) of this section, the excess amount may be car-
 53    ried forward for a period that does not exceed the next fourteen (14)  taxable
 54    years.
 55        (8)  In the event that qualified broadband equipment upon which the credit
                                                                        
                                           8
                                                                        
  1    allowed by this section has been used ceases to qualify for the credit allowed
  2    by  section  63-3029B,  Idaho Code, or is subject to recapture of that credit,
  3    the recapture of credit under this section shall be in the same proportion and
  4    subject to the same provisions as the amount of credit required to  be  recap-
  5    tured under section 63-3029B, Idaho Code.
  6        (9)  (a) Subject  to  the  requirements of this subsection, a taxpayer who
  7        earns and is entitled to the credit or to an unused portion of the  credit
  8        allowed by this section may transfer all or a portion of the unused credit
  9        to:
 10             (i)   Another  taxpayer required to file a return under this chapter;
 11             or
 12             (ii)  To an intermediary for its use or  for  resale  to  a  taxpayer
 13             required to file a return under this chapter.
 14        In  the  event  of  either  such  a transfer, the transferee may claim the
 15        credit on the transferee's income tax return originally filed  during  the
 16        calendar year in which the transfer takes place and, in the case of carry-
 17        over of the credit, on the transferee's returns for the number of years of
 18        carryover  available  to the transferor at the time of the transfer unless
 19        earlier exhausted.
 20        (b)  Before completing a transfer under this  subsection,  the  transferor
 21        shall  notify  the  state  tax commission of its intention to transfer the
 22        credit and the identity of the transferee. The state tax commission  shall
 23        provide  the  transferor with a written statement  of the amount of credit
 24        available under this section as then appearing in the commission's records
 25        and the number of years the credit may be  carried  over.  The  transferee
 26        shall  attach a copy of the statement to any return in regard to which the
 27        transferred credit is claimed.
 28        (c)  In the event that after the transfer the state tax commission  deter-
 29        mines  that  the amount of credit properly available under this section is
 30        less than the amount claimed by the transferor of the credit or  that  the
 31        credit  is subject to recapture, the commission shall assess the amount of
 32        overstated or recaptured credit as taxes due from the transferor  and  not
 33        the  transferee. The assessment shall be made in the manner provided for a
 34        deficiency in taxes under this chapter.
 35        (10) In addition to other needed rules, the state tax commission may  pro-
 36    mulgate rules prescribing, in the case of S corporations, partnerships, trusts
 37    or  estates,  a  method  of  attributing  the credit under this section to the
 38    shareholders, partners or beneficiaries in proportion to their  share  of  the
 39    income from the S corporation, partnership, trust or estate.
                                                                        
 40        SECTION  5.  That  Section 63-3033, Idaho Code, be, and the same is hereby
 41    amended to read as follows:
                                                                        
 42        63-3033.  EXTENSION OF TIME. (a) Taxpayers shall have an automatic  exten-
 43    sion  of time for filing any return, declaration, statement or other document,
 44    or payment required by this chapter for a period of six (6) months  if  on  or
 45    before  the  unextended due date the taxpayer has paid at least eighty percent
 46    (80%) of the total tax due on the income tax return when it is filed,  or  the
 47    total  tax  due  on  the  income tax return for the prior year if a return was
 48    filed for the prior year.
 49        (b)  If, on the unextended due date, the payment required to meet the pro-
 50    visions of subsection (a) of this section, after consideration of any previous
 51    credits or payments applicable to the return, is  fifty  dollars  ($50.00)  or
 52    less,  such  payment  shall not be required in order to qualify for the exten-
 53    sion. However, interest shall accrue as provided in  subsection  (f)  of  this
                                                                        
                                           9
                                                                        
  1    section.
  2        (c)  Taxpayers  residing  outside any of the United States and Puerto Rico
  3    (including persons in military or  naval  service)  shall  have  an  automatic
  4    extension  of time within which to file income tax returns with this state for
  5    a period which shall expire on the fifteenth day of the sixth month  following
  6    the close of their taxable year.
  7        (d)  Taxpayers  Individuals  who  are   military personnel or residents of
  8    foreign nations and entitled to  extensions  for  filing  federal  income  tax
  9    returns  as  a result of the application of the provisions of sections 911 and
 10    7508 of the Internal Revenue Code, shall be entitled to extensions of time for
 11    the same period for filing income tax returns with the state of Idaho  subject
 12    to the requirements imposed in implementation of the indicated sections.
 13        (e)  Any  taxpayer entitled to an extension under subsection (c) or (d) of
 14    this section shall attach a statement to his return claiming his right to  the
 15    extension.
 16        (f)  If the amount of payment made under subsection (a) of this section is
 17    less  than  eighty  percent (80%) of the total tax due under the provisions of
 18    this chapter and is less than the amount of the total tax due  on  the  income
 19    tax  return  for the prior year, except as permitted by subsection (b) of this
 20    section, a penalty may be applied to the total of the balance due unless  rea-
 21    sonable cause can be established. The penalty shall be:
 22        (1)  If  the taxes for the taxable year are paid on or before the extended
 23        due date, two percent (2%) per month from the original  due  date  to  the
 24        date of payment.
 25        (2)  If  the  taxes  for  the  taxable  year are not paid on or before the
 26        extended due date, the penalty provided in section 63-3046(c), Idaho Code,
 27        from the original due date.
 28        (g)  In all cases of an extension of time in which  to  file  any  return,
 29    interest  shall  be  paid on any tax due from the original due date to date of
 30    payment at the rate provided in section 63-3045, Idaho Code.
                                                                        
 31        SECTION 6.  That Section 63-3036, Idaho Code, be, and the same  is  hereby
 32    amended to read as follows:
                                                                        
 33        63-3036.  STATE  WITHHOLDING  TAX  FOR FARMERS. (1) Every farmer who is an
 34    employer required by the provisions of the Internal Revenue Code to  withhold,
 35    collect,  and  pay  income  tax on wages paid by such employer to any employee
 36    shall at the time of the payment of wages, salaries, bonuses or  other  emolu-
 37    ments  to  an  employee,  deduct  and retain therefrom an amount determined in
 38    accordance with section 63-3035, Idaho Code, and the amount  so  withheld  and
 39    deducted shall be held by said farmer-employer in trust for the state of Idaho
 40    and for the payment thereof to the state tax commission. Provided, that no tax
 41    need  be  withheld  from  an employee whose wages, salaries, bonuses and other
 42    emoluments total less than one thousand dollars ($1,000) for the tax year.
 43        (2)  The tax so withheld by a  farmer-employer  subject  to  this  section
 44    shall be paid to the state tax commission:
 45        (a)  Except  as provided in paragraph (b) of this subsection, on or before
 46        the last day of February of the year following  the  year  in  which  such
 47        deduction was made.
 48        (b)  In  the  case of an employer who is a "covered employer" paying wages
 49        for "agricultural labor," as those terms are  defined  in  the  employment
 50        security law in chapter 13, title 72, Idaho Code, on or before the date on
 51        which  contributions  are due from the employer to the department of labor
 52        under the employment security law on or before the date required  by  sub-
 53        section (b)(1) of section 63-3035, Idaho Code.
                                                                        
                                           10
                                                                        
  1        (3)  The  farmer-employer  shall  deliver  to  the  state tax commission a
  2    return upon such form as shall be prescribed  by  said  state  tax  commission
  3    showing  the  amounts  of wages, salaries, bonuses or other emoluments paid to
  4    his employee, the amount deducted therefrom in accordance with  this  section,
  5    and such other pertinent and necessary information as the state tax commission
  6    may require on or before the date payments required by this section are due.
  7        (4)  The  farmer-employer  making such a deduction as provided for in this
  8    section shall furnish to the employee annually, but not later than thirty (30)
  9    days after the end of the calendar year, a record of the  amount  of  the  tax
 10    withheld  from such employee on forms to be prescribed, prepared and furnished
 11    by the state tax commission and at the same time every employer shall  file  a
 12    copy thereof with the state tax commission. The provisions of subsections (d),
 13    (e),  (f),  (g) and (h) of section 63-3035, Idaho Code, shall be applicable to
 14    the tax withheld by the farmer-employer under this section.
                                                                        
 15        SECTION 7.  That Section 63-3068, Idaho Code, be, and the same  is  hereby
 16    amended to read as follows:
                                                                        
 17        63-3068.  PERIOD  OF  LIMITATIONS  FOR  ISSUING A NOTICE OF DEFICIENCY AND
 18    COLLECTION OF TAX. (a) Except as otherwise provided in this section, a  notice
 19    of deficiency, as provided in section 63-3045, Idaho Code, for the tax imposed
 20    in  this  chapter  shall  be issued within three (3) years from either the due
 21    date of the return, without regard to extensions, or from the date the  return
 22    was filed, whichever is later.
 23        (b)  If an assessment has been made as provided in this chapter, then such
 24    tax  shall  be  collected either by levy, or by a proceeding brought in court,
 25    within a period of six (6) years from the date  of  entry  of  the  record  of
 26    assessment  required  by section 63-3044, Idaho Code, of the tax and provided,
 27    further, that this shall not be in derogation of any of the remedies elsewhere
 28    provided in this chapter.
 29        (c)  In the case of a fraudulent return or a false return with the  intent
 30    to  evade  the tax imposed in this chapter, or a willful attempt in any manner
 31    to defeat or evade the tax imposed in this chapter, a notice of deficiency may
 32    be issued, the tax may be assessed, or a proceeding in court for collection of
 33    such tax may be begun without assessment, at any time.
 34        (d)  In the case of a failure to file a return, for any reason,  a  notice
 35    of  deficiency may be issued, the tax imposed in this chapter may be assessed,
 36    or a proceeding in court for collection of  such  tax  may  be  begun  without
 37    assessment, at any time.
 38        (e)  In  the case of income received during the lifetime of a decedent, or
 39    by his estate during the period of  administration,  a  notice  of  deficiency
 40    shall  be issued, a claim shall be made, the tax shall be assessed or any pro-
 41    ceeding in court without assessment for the collection of such  tax  shall  be
 42    begun,  within  twelve  (12) months after written request for prompt action is
 43    filed with the state tax commission by the executor, administrator,  or  other
 44    fiduciary  representing the estate of such decedent. This subsection shall not
 45    apply if the return for which the request for prompt action  relates  has  not
 46    been filed with the state tax commission.
 47        (f)  When  Idaho  taxable  income or tax credits for any taxable year have
 48    been  adjusted as a result of a final federal  determination,  the  period  of
 49    limitation  for issuing a notice of deficiency shall be reopened and shall not
 50    expire until the later of one (1) year from the date of delivery of the  final
 51    federal  determination  to the state tax commission by the taxpayer, three (3)
 52    years from the due date of the return, without regard to extensions, or  three
 53    (3)  years from the date the return was filed. For purposes of this subsection
                                                                        
                                           11
                                                                        
  1    the term "final federal determination" shall mean the final resolution of  all
  2    issues  which  were  adjusted  by the internal revenue service. When the final
  3    federal determination is submitted, the taxpayer shall also submit  copies  of
  4    all  schedules  and written explanations provided by the internal revenue ser-
  5    vice. Upon the expiration of the period of limitations as provided in  subsec-
  6    tions (a) and (m) of this section, only those specific items of income, deduc-
  7    tions,  gains,  losses,  or  credits  which were adjusted in the final federal
  8    determination shall be subject to adjustment for purposes of recomputing Idaho
  9    income, deductions, gains, losses, credits, and the effect of such adjustments
 10    on Idaho allocations and apportionments.
 11        (g)  If an adjustment, which was made within the period of limitations  as
 12    provided  in  this  section,  affects  the amount of tax credit, net operating
 13    loss, or capital loss, claimed in a taxable year other than the  tax  year  in
 14    which  the  adjustment  is made, then adjustments to the credit, net operating
 15    loss, or capital loss claimed in such other tax year may be made and a result-
 16    ing notice of deficiency may be issued even though such notice  of  deficiency
 17    would otherwise be barred under the provisions of this section.
 18        (h)  Notwithstanding any other provisions of this section, when an amended
 19    Idaho  return is filed within the period of limitations as provided in subsec-
 20    tions (a) and (m) of this section, the period of  limitations  for  issuing  a
 21    notice of deficiency shall be three (3) years from the date the amended return
 22    was  filed.  However, upon the expiration of the period of limitations as pro-
 23    vided in subsections (a) and (m) of this section, only those specific items of
 24    income, deductions, gains, losses, or credits,  which  were  adjusted  in  the
 25    amended   Idaho  return  shall  be  subject  to  adjustment  for  purposes  of
 26    recomputing Idaho income, deductions, gains, losses, credits, and  the  effect
 27    of such adjustments on Idaho allocations and apportionments.
 28        (i)  If a taxpayer has filed an amended federal return, and no correspond-
 29    ing  Idaho  amended  return has been filed with the state tax commission, then
 30    the period of limitations for issuing a notice of deficiency shall be reopened
 31    and shall not expire until three (3) years from the date of  delivery  to  the
 32    tax  commission  by  the taxpayer of the amended federal return. However, upon
 33    the expiration of the period of limitations as provided in subsections (a) and
 34    (m) of this section, then only those specific  items  of  income,  deductions,
 35    gains,  losses,  or credits, which were adjusted in the amended federal return
 36    shall be subject to adjustment  for  purposes  of  recomputing  Idaho  income,
 37    deductions,  gains,  losses,  credits,  and  the effect of such adjustments on
 38    Idaho allocations and apportionments.
 39        (j)  Notwithstanding any other provisions of this  section,  a  notice  of
 40    deficiency,  related  to  items  on  the return of any pass-through entity, as
 41    defined in this section, which other taxpayers are required by law to  report,
 42    shall  be  issued  to such other taxpayers within the later of three (3) years
 43    from the due date of the other taxpayers' return,  without  regard  to  exten-
 44    sions,  three (3) years from the date the other taxpayers' returns were filed,
 45    or three (3) years from the  date  of  filing  of  the  pass-through  entity's
 46    return.  If  the pass-through entity files an amended return, notices of defi-
 47    ciency may be issued to the other taxpayers within three (3)  years  from  the
 48    date  the  amended return for the pass-through entity was filed with the state
 49    tax commission. If the pass-through entity files an amended  return  with  the
 50    internal  revenue  service,    or  the internal revenue service issues a final
 51    determination to the pass-through entity, then the period of  limitations  for
 52    issuing  a  notice  of deficiency to the other taxpayers shall be reopened and
 53    shall not expire until three (3) years from the date of delivery  to  the  tax
 54    commission  by  the  pass-through  entity of the amended federal return or the
 55    later of one (1) year from the date of delivery to the state tax commission by
                                                                        
                                           12
                                                                        
  1    the pass-through entity of the final federal determination,  three  (3)  years
  2    from  the  due  date  of  the  pass-through entity's return, without regard to
  3    extensions, or three (3) years from the date the pass-through entity's  return
  4    was filed.
  5        (k)  For  purposes of this section, "pass-through entity" means a partner-
  6    ship, S-corporation, trust, limited liability  company  or  any  other  entity
  7    whose  items of income, deductions, gains, losses and credits must be reported
  8    by other taxpayer(s). For further purposes of this section,  the  term  "other
  9    taxpayer" shall include, by way of unlimiting example, such taxpayers as part-
 10    ners, shareholders, beneficiaries, joint venturers or investors.
 11        (l)  In  the  case of a duplicate return filed under section 63-217(1)(b),
 12    Idaho Code, the limitation under this section shall be the later  of  one  (1)
 13    year  from the filing of the duplicate return or the date otherwise applicable
 14    under this section.
 15        (m)  Prior to the expiration of the time prescribed in  this  section  for
 16    the  issuance  of  a notice of deficiency for the tax imposed in this chapter,
 17    both the state tax commission, its delegate or deputy, and  the  taxpayer  may
 18    consent in writing to extend the period of time within which a notice of defi-
 19    ciency  may be issued. The period so agreed upon may be extended by subsequent
 20    agreements in writing made before the  expiration  of  the  period  previously
 21    agreed  upon.  When a pass-through entity extends the period of limitations in
 22    accordance with this subsection, the period of limitations for the other  tax-
 23    payers  is automatically extended for the same period for the purpose of issu-
 24    ing a notice of deficiency to the other taxpayers reflecting  the  adjustments
 25    to the pass-through entity's return.
 26        (n)  The  expiration of the period of limitations as provided in this sec-
 27    tion shall be suspended for the time period during which the state tax commis-
 28    sion is prohibited from issuing a notice of deficiency, making the assessment,
 29    or from collecting by levy or a proceeding in court, and for thirty (30)  days
 30    thereafter.
 31        (o)  For the purposes of this section, "return" includes a notice of defi-
 32    ciency  determination  issued  by  the state tax commission when no return was
 33    filed by the taxpayer. Such a return is deemed filed on  the  date  the  taxes
 34    determined by the state tax commission are assessed.
                                                                        
 35        SECTION  8.  An  emergency  existing  therefor,  which emergency is hereby
 36    declared to exist, this act shall be in full force and effect on and after its
 37    passage and approval, and retroactively to January 1, 2005.

Statement of Purpose / Fiscal Impact


                 STATEMENT  OF  PURPOSE
                        RS 14454

This bill makes several technical corrections and updates to the
Idaho Income Tax Act: 

Section 1. More clearly states that equipment purchases that
qualify for a deduction under IRC section 179 (property expensed
rather than treated as a capital asset) does not qualify for the
investment tax credit.

Section 2 & 3.  Correct new jobs credit errors relating to a
revenue-producing enterprise and a trade or business.

Sections 4. Corrects cross-references relating to the investment
credit for broadband equipment.  The current references were not
changed when the referenced statutes were amended and renumbered.

Section 5. Permits individuals in combat zones to file Idaho income
tax returns on the same extended tax filing date allowed by the
Internal Revenue Code.

Section 6. Includes certain farmers among employers who are
required to file annual income tax withholding returns.  These
former-employers were overlooked in 2004 by H.B. 537, which changed
withholding returns to an annual basis.

Section 7.  Provides that the statute of limitations on collecting
assessed tax, in all cases, begins on the date the record of
assessment is entered.  This simplifies the statute and applies the
same standard to all taxpayers.  

Section 8.  The bill is effective beginning January 1, 2005. 


                           FISCAL NOTE

No fiscal impact.


CONTACT                               
Name:   Dan John/Ted Spangler
Agency: State Tax Commission
Phone:  334-7530

STATEMENT OF PURPOSE/FISCAL NOTE                  H 28