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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.
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
]]]] 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
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
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
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
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.
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.
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
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
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-
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
55 (8) In the event that qualified broadband equipment upon which the credit
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
10 (i) Another taxpayer required to file a return under this chapter;
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
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
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.
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
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
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
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
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.
No fiscal impact.
Name: Dan John/Ted Spangler
Agency: State Tax Commission
STATEMENT OF PURPOSE/FISCAL NOTE H 28