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H0259...............................................by REVENUE AND TAXATION
SMALL/MEDIUM BUSINESS GROWTH INCENTIVE - Adds to existing law to provide an
additional income tax credit for small and medium size businesses for
capital investment; to provide an additional income tax credit for new
jobs; to provide limitations and other provisions on credits against income
taxes; to provide sales and use tax incentives; to provide rebates; to
provide for recapture; and to allow the county board of equalization to
exempt all or a portion of certain property which has received the income
tax credits or sales tax exemptions from property taxation.
02/23 House intro - 1st rdg - to printing
02/24 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 259
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO TAXATION; PROVIDING A SHORT TITLE; AMENDING TITLE 63, IDAHO CODE,
3 BY THE ADDITION OF A NEW CHAPTER 39, TITLE 63, IDAHO CODE, TO PROVIDE
4 APPLICATION, TO DEFINE TERMS, TO PROVIDE AN ADDITIONAL INCOME TAX CREDIT
5 FOR CAPITAL INVESTMENT, TO PROVIDE AN ADDITIONAL INCOME TAX CREDIT FOR NEW
6 JOBS, TO PROVIDE LIMITATIONS AND OTHER PROVISIONS ON CREDITS AGAINST
7 INCOME TAXES, TO PROVIDE FOR RECAPTURE, TO PROVIDE SALES AND USE TAX
8 INCENTIVES, TO PROVIDE REBATES, TO PROVIDE FOR RECAPTURE AND TO PROVIDE
9 FOR ADMINISTRATION; AMENDING TITLE 63, IDAHO CODE, BY THE ADDITION OF A
10 NEW CHAPTER 43, TITLE 63, IDAHO CODE, TO PROVIDE APPLICATION, TO DEFINE
11 TERMS, TO PROVIDE AN ADDITIONAL INCOME TAX CREDIT FOR CAPITAL INVESTMENT,
12 TO PROVIDE AN ADDITIONAL INCOME TAX CREDIT FOR NEW JOBS, TO PROVIDE LIMI-
13 TATIONS AND OTHER PROVISIONS ON CREDITS AGAINST INCOME TAXES, TO PROVIDE
14 FOR RECAPTURE, TO PROVIDE SALES AND USE TAX INCENTIVES, TO PROVIDE
15 REBATES, TO PROVIDE FOR RECAPTURE AND TO PROVIDE FOR ADMINISTRATION;
16 AMENDING CHAPTER 6, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SECTION
17 63-606, IDAHO CODE, TO ALLOW THE COUNTY BOARD OF EQUALIZATION TO EXEMPT
18 ALL OR A PORTION OF CERTAIN PROPERTY FROM PROPERTY TAXATION AND TO PROVIDE
19 PROCEDURES; PROVIDING SEVERABILITY; DECLARING AN EMERGENCY AND PROVIDING
20 RETROACTIVE APPLICATION.
21 Be It Enacted by the Legislature of the State of Idaho:
22 SECTION 1. This act shall be known and may be cited as the "Idaho Small
23 and Medium-sized Business Growth Incentive Act of 2005."
24 SECTION 2. That Title 63, Idaho Code, be, and the same is hereby amended
25 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
26 ter 39, Title 63, Idaho Code, and to read as follows:
27 CHAPTER 39
28 SMALL BUSINESS GROWTH INCENTIVE ACT OF 2005
29 63-3901. APPLICATION. No provision of this chapter applies to a person,
30 taxpayer, or other entity entitled to, applying for, or receiving any credit,
31 rebate or other benefit under chapter 29 or 43, title 63, Idaho Code.
32 63-3902. DEFINITIONS. (1) The definitions contained in the Idaho income
33 tax act, shall apply to this chapter unless modified in this chapter or unless
34 the context clearly requires another definition.
35 (2) As used in this chapter:
36 (a) "Commission" means the Idaho state tax commission.
37 (b) "Headquarters or administrative facilities" means facility or facili-
38 ties, including related parking facilities, where corporate staff employ-
39 ees are physically employed, and where the majority of the company's ser-
40 vices are handled. Company services may include: accounts receivable and
2
1 payable, accounting, data processing, distribution management, employee
2 benefit plan, financial and securities accounting, information technology,
3 insurance, legal, merchandising, payroll, personnel,
4 purchasing/procurement, planning, reporting and compliance, tax, treasury,
5 or other headquarters-related services.
6 (c) "Idaho income tax act" means chapter 30, title 63, Idaho Code.
7 (d) "Investment in new plant" means investment in headquarters or admin-
8 istrative facilities, that are:
9 (i) Qualified investments; or
10 (ii) Buildings or structural components of buildings.
11 (e) "New employee":
12 (i) Means an individual, employed primarily within the project site
13 by the taxpayer, subject to Idaho income tax withholding whether or
14 not any amounts are required to be withheld, covered for unemployment
15 insurance purposes under chapter 13, title 72, Idaho Code, and who
16 was eligible to receive employer provided coverage under an accident
17 or health plan described in section 105 of the Internal Revenue Code
18 during the taxable year. A person shall be deemed to be so employed
19 if such person performs duties on a regular full-time basis.
20 (ii) The number of employees employed primarily within the project
21 site by the taxpayer, during any taxable year for a taxpayer shall be
22 the mathematical average of the number of such employees reported to
23 the Idaho department of commerce and labor for employment security
24 purposes during the twelve (12) months of the taxable year which
25 qualified under paragraph (e)(i) of this subsection (2). In the event
26 the business is in operation for less than the entire taxable year,
27 the number of employees of the taxpayer for the year shall be the
28 average number actually employed during the months of operation, pro-
29 vided that the qualifications of paragraph (e)(i) of this subsection
30 (2) are met.
31 (iii) Employees transferred from a related taxpayer or acquired as
32 part of the acquisition of a trade or business from another taxpayer
33 within the prior twelve (12) months are not included in this defini-
34 tion unless the transfer creates a net new job in Idaho.
35 (f) "Project period" means the period of time beginning at the earlier of
36 a physical change to the project site or the first employment of new
37 employees located in Idaho who are related to the activities at the proj-
38 ect site, but no earlier than January 1, 2005, and ending when the facili-
39 ties constituting the project are placed in service, but no later than
40 December 31, 2009.
41 (g) "Project site" means an area or areas at which headquarters and head-
42 quarters facilities are located and at which the tax incentive criteria
43 have been or will be met and which are either:
44 (i) A single geographic area located in this state at which the
45 headquarters or administrative facilities owned or leased by the tax-
46 payer are located; or
47 (ii) One (1) or more geographic areas located in this state if
48 eighty percent (80%) or more of the investment required by subsection
49 (2)(j)(i) of this section is made at one (1) of the areas.
50 (iii) The project site must be identified and described to the com-
51 mission by a taxpayer subject to tax under the Idaho income tax act,
52 in the form and manner prescribed by the commission.
53 (h) "Qualified investment" shall be defined as in section 63-3029B, Idaho
54 Code.
55 (i) "Recapture period" means:
3
1 (i) In the case of credits described in sections 63-3903 and
2 63-3904, Idaho Code, the same period for which a recapture of invest-
3 ment tax credit under section 63-3029B, Idaho Code, is required; or
4 (ii) In the case of credits described in section 63-3905, Idaho
5 Code, five (5) years from the date the project period ends.
6 (j) "Tax incentive criteria" means a taxpayer meeting at a project site
7 the requirements of both subparagraphs (i) and (ii) of this paragraph (j).
8 (i) During the project period, making capital investments in new
9 plant of at least fifteen million dollars ($15,000,000) at the proj-
10 ect site.
11 (ii) During a period of time beginning on January 1, 2005, and end-
12 ing at the conclusion of the project period:
13 1. Increasing employment at the project site by at least one
14 hundred twenty-five (125) new employees:
15 (A) Each of whom must earn at least fifteen dollars and
16 fifty cents ($15.50) per hour worked during the taxpayer's
17 taxable year; or
18 (B) Each of whom is part of a group of one hundred twenty-
19 five (125) or more employees at the project site, which
20 group on average earns at least twenty dollars and thirty-
21 one cents ($20.31) per hour worked during the taxpayer's
22 taxable year. Calculation of the group average earnings may
23 not include amounts paid to any employee earning more than
24 forty-eight dollars and eight cents ($48.08) per hour
25 worked during the taxpayer's taxable year.
26 (C) Earnings calculated pursuant to subparagraph (ii) of
27 this paragraph (j) shall include income upon which Idaho
28 income tax withholding is required under section 63-3035,
29 Idaho Code, but shall not include income such as stock
30 options or restricted stock grants.
31 (D) For purposes of determining whether the increased
32 employment threshold has been met, employment at the proj-
33 ect site shall be determined by calculating the increase of
34 such new employees reported to the Idaho department of com-
35 merce and labor for employment security purposes over the
36 employees so reported as of the beginning of the project
37 period or no earlier than January 1, 2005, whichever is
38 larger; and
39 2. Maintaining net increased employment in Idaho required by
40 subparagraph (ii)1. of this paragraph (j) during the remainder
41 of the project period.
42 (k) "Taxpayer," for purposes of paragraphs (j) and (e) of this subsection
43 (2), means either:
44 (i) A single taxpayer; or
45 (ii) In the context of a unitary group filing a combined report
46 under section 63-3027(t), Idaho Code, all members of a unitary group
47 includable in a combined report for the tax years in which the credit
48 provided for by this chapter may be claimed. For all other purposes,
49 the terms of section 63-3009, Idaho Code, and section 63-3027(t)(1),
50 Idaho Code, apply to the meaning of "taxpayer."
51 63-3903. ADDITIONAL INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) For
52 taxable years beginning on or after January 1, 2005, and before December 31,
53 2009, and subject to the limitations of this chapter, a taxpayer who has cer-
54 tified that the tax incentive criteria will be met within a project site dur-
4
1 ing a project period shall, in regard to qualified investments made after the
2 beginning of the project period and before December 31, 2009, in lieu of the
3 investment tax credit provided in section 63-3029B, Idaho Code, be allowed a
4 nonrefundable credit against taxes imposed by sections 63-3024, 63-3025 and
5 63-3025A, Idaho Code, in the amount of three and seventy-five one hundredths
6 percent (3.75%) of the amount of qualified investment made during a taxable
7 year, wherever located within this state.
8 (2) The credit allowed by this section shall not exceed sixty-two and
9 five-tenths percent (62.5%) of the tax liability of the taxpayer.
10 (3) The credit allowed by this section shall not exceed one million two
11 hundred fifty thousand dollars ($1,250,000) in any one (1) taxable year.
12 63-3904. REAL PROPERTY IMPROVEMENT TAX CREDIT. (1) For taxable years
13 beginning on or after January 1, 2005, and before December 31, 2009, subject
14 to the limitations of this chapter, a taxpayer who has certified that the tax
15 incentive criteria will be met within a project site during a project period
16 shall be allowed a nonrefundable credit against taxes imposed by sections
17 63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount of two and five-
18 tenths percent (2.5%) of the investment in new plant which is incurred during
19 the project period applicable to the project site in which the investment is
20 made.
21 (2) The credit allowed by this section shall not exceed one hundred
22 twenty-five thousand dollars ($125,000) in any one (1) taxable year.
23 (3) No credit is allowable under this section for a qualified investment
24 in regard to which a credit under section 63-3903, Idaho Code, is available.
25 (4) The credit allowed by this section is limited to buildings and struc-
26 tural components of buildings related to headquarters or administrative facil-
27 ities.
28 63-3905. ADDITIONAL INCOME TAX CREDIT FOR NEW JOBS. (1) Subject to the
29 limitations of this chapter, for taxable years beginning on or after January
30 1, 2005, and before December 31, 2009, a taxpayer who has certified that the
31 tax incentive criteria will be met within a project site during a project
32 period shall, for the number of new employees earning more than a rate of fif-
33 teen dollars and fifty cents ($15.50) per hour worked, in lieu of the credit
34 amount in subsection (2)(a) of section 63-3029F, Idaho Code, be allowed the
35 credit provided by this section. The number of new employees is the increase
36 in the number of employees for the current taxable year over the greater of
37 the following:
38 (a) The number of employees for the prior taxable year; or
39 (b) The average of the number of employees for the three (3) prior tax-
40 able years.
41 (2) The credit provided by this section shall be:
42 (a) One thousand dollars ($1,000) for each new employee whose annual sal-
43 ary during the taxable year for which the credit is earned is greater than
44 fifteen dollars and fifty cents ($15.50) per hour worked but equal to or
45 less than an average rate of twenty-four dollars and four cents ($24.04)
46 per hour worked;
47 (b) One thousand five hundred dollars ($1,500) for each new employee
48 whose annual salary during the taxable year for which the credit is earned
49 is greater than an average rate of twenty-four dollars and four cents
50 ($24.04) per hour worked but equal to or less than an average rate of
51 twenty-eight dollars and eighty-five cents ($28.85) per hour worked;
52 (c) Two thousand dollars ($2,000) for each new employee whose annual sal-
53 ary during the taxable year for which the credit is earned is greater than
5
1 an average rate of twenty-eight dollars and eighty-five cents ($28.85) per
2 hour worked but equal to or less than an average rate of thirty-six dol-
3 lars and six cents ($36.06) per hour worked;
4 (d) Two thousand five hundred dollars ($2,500) for each new employee
5 whose annual salary during the taxable year for which the credit is earned
6 is greater than an average rate of thirty-six dollars and six cents
7 ($36.06) per hour worked but equal to or less than an average rate of for-
8 ty-three dollars and twenty-seven cents ($43.27) per hour worked;
9 (e) Three thousand dollars ($3,000) for each new employee whose annual
10 salary during the taxable year for which the credit is earned is greater
11 than an average rate of forty-three dollars and twenty-seven cents
12 ($43.27) per hour worked.
13 (3) The credit allowed by subsection (1) of this section shall apply only
14 to employment primarily within the project site. No credit shall be earned
15 unless such employee shall have performed such duties for the taxpayer for a
16 minimum of nine (9) months during the taxable year for which the credit is
17 claimed.
18 (4) The credit allowed by this section shall not exceed sixty-two and
19 five-tenths percent (62.5%) of the tax liability of the taxpayer.
20 (5) Employees transferred from a related taxpayer or acquired from
21 another taxpayer within the prior twelve (12) months shall not be included in
22 the computation of the credit unless the transfer creates a net new job in
23 Idaho.
24 63-3906. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME
25 TAXES. (1) In addition to other needed rules, the state tax commission may
26 promulgate rules prescribing:
27 (a) In the case of S corporations, partnerships, trusts or estates, a
28 method of attributing a credit under this chapter to the shareholders,
29 partners or beneficiaries in proportion to their share of the income from
30 the S corporation, partnership, trust or estate; and
31 (b) The method by which the carryover of credits and the duty to recap-
32 ture credits shall survive and be transferred in the event of reorganiza-
33 tions, mergers or liquidations.
34 (2) In the case of a unitary group of corporations filing a combined
35 report under subsection (t) of section 63-3027, Idaho Code, credits against
36 income tax provided by sections 63-3903, 63-3904 and 63-3905, Idaho Code,
37 earned by one (1) member of the group but not used by that member may be used
38 by another member of the group, subject to the limitation in subsection (3) of
39 this section, instead of carried over. For a combined group of corporations,
40 credit carried forward may be claimed by any member of the group unless the
41 member or members who earned the credit are no longer included in the combined
42 group.
43 (3) The total of all credits allowed by sections 63-3903, 63-3904 and
44 63-3905, Idaho Code, together with any credits carried forward under subsec-
45 tion (4) of this section shall not exceed the amount of tax due under sections
46 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre-
47 dits permitted by this chapter and the Idaho income tax act.
48 (4) If the credits exceed the limitation under subsection (3) of this
49 section, the excess amount may be carried forward for a period that does not
50 exceed:
51 (a) The next fourteen (14) taxable years in the case of credits allowed
52 by sections 63-3903 and 63-3904, Idaho Code; or
53 (b) The next ten (10) taxable years in the case of credits allowed by
54 section 63-3905, Idaho Code.
6
1 63-3907. RECAPTURE. (1) In the event that any person to whom a tax credit
2 allowed by section 63-3903, 63-3904 or 63-3905, Idaho Code, fails to meet the
3 tax incentive criteria, the full amount of the credit shall be subject to
4 recapture by the commission.
5 (2) If, during any taxable year, an investment in new plant is disposed
6 of, or otherwise ceases to qualify with respect to the taxpayer, prior to the
7 close of the recapture period, recapture of the credit allowed by sections
8 63-3903 and 63-3904, Idaho Code, shall be determined for such taxable year in
9 the same proportion and subject to the same provisions as an amount of credit
10 required to be recaptured under section 63-3029B, Idaho Code.
11 (3) In the event that the employment required in section 63-3902(2)(j),
12 Idaho Code, is not maintained for the entire recapture period, recapture of
13 the credit allowed in section 63-3905, Idaho Code, shall be determined for
14 such taxable year in the same proportion as an amount of credit required to be
15 recaptured under section 63-3029B, Idaho Code. This subsection shall not be
16 construed to require that the required level of employment must be met by the
17 same individual employees.
18 (4) Any amount subject to recapture is a deficiency in tax for the amount
19 of the credit in the taxable year in which the disqualification first occurs
20 and may be enforced and collected in the manner provided by the Idaho income
21 tax act, provided however, that in lieu of the provisions of section
22 63-3068(a), Idaho Code, the period of time within which the commission may
23 issue a notice under section 63-3045, Idaho Code, in regard to an amount sub-
24 ject to recapture shall be the later of five (5) years after the end of the
25 taxable year in which the project period ends or three (3) years after the end
26 of the taxable year in which any amounts carried forward under section
27 63-3906, Idaho Code, expire.
28 63-3908. SALES AND USE TAX INCENTIVES -- REBATES -- RECAPTURE. (1) For
29 calendar years beginning on January 1, 2005, and ending on December 31, 2009,
30 subject to the limitations of this chapter, a taxpayer who has certified that
31 the tax incentive criteria will be met within the project site shall be enti-
32 tled to receive a rebate of twenty-five percent (25%) of all sales and use
33 taxes imposed by chapter 36, title 63, Idaho Code, and that the taxpayer or
34 its contractors actually paid in regard to any property constructed, located
35 or installed within the project site during the project period for that site.
36 (2) Upon filing of a written refund claim by the taxpayer entitled to the
37 rebate, and subject to such reasonable documentation and verification as the
38 commission may require, the rebate shall be paid by the commission as a refund
39 allowable under section 63-3626, Idaho Code. A claim for rebate under this
40 section must be filed on or before the last day of the third calendar year
41 following the year in which the taxes sought to be rebated were paid or the
42 right to the rebate is lost.
43 (3) Any rebate paid shall be subject to recapture by the commission:
44 (a) At one hundred percent (100%) in the event that the tax incentive
45 criteria are not met at the project site during the project period, or
46 (b) In the event that the property is not used, stored or otherwise con-
47 sumed within the project site for a period of sixty (60) consecutive full
48 months after the property was placed in service, or
49 (c) In the event that the employment required in section 63-3902(2)(j),
50 Idaho Code, is not maintained for sixty (60) consecutive full months from
51 the date the project period ends.
52 (d) Any recapture required by subsection (3)(b) or (3)(c) of this section
53 shall be in the same proportion as an amount of credit required to be
54 recaptured under section 63-3029B, Idaho Code.
7
1 (4) Any recapture amount due under this section shall be a deficiency in
2 tax for the period in which the disqualification first occurs for purposes of
3 section 63-3629, Idaho Code, and may be enforced and collected in the manner
4 provided by the Idaho sales tax act, provided however, that in lieu of the
5 provisions of section 63-3633, Idaho Code, the period of time within which the
6 commission may issue a notice under section 63-3629, Idaho Code, in regard to
7 an amount subject to recapture, shall be the later of five (5) years after the
8 end of the taxable year, for income tax purposes, in which the project period
9 ends.
10 (5) The rebate allowed by this section is limited to sales and use taxes
11 actually paid by the taxpayer or its contractors for taxable property related
12 to headquarters or administrative facilities.
13 63-3909. ADMINISTRATION. The commission shall enforce the provisions of
14 this chapter and may prescribe, adopt, and enforce reasonable rules relating
15 to the administration and enforcement of those provisions, including the pro-
16 mulgation of rules relating to information necessary to certify that the
17 incentive criteria have been or will be met. For the purpose of carrying out
18 its duties to enforce or administer the provisions of this chapter, the com-
19 mission shall have the powers and duties provided by sections 63-3038,
20 63-3039, 63-3042 through 63-3067, 63-3068, 63-3071, 63-3074 through 63-3078
21 and 63-217, Idaho Code.
22 SECTION 3. That Title 63, Idaho Code, be, and the same is hereby amended
23 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
24 ter 43, Title 63, Idaho Code, and to read as follows:
25 CHAPTER 43
26 MEDIUM-SIZED BUSINESS GROWTH INCENTIVE ACT OF 2005
27 63-4301. APPLICATION. No provision of this chapter applies to a person,
28 taxpayer, or other entity entitled to, applying for, or receiving any credit,
29 rebate or other benefit under chapter 29 or 39, title 63, Idaho Code.
30 63-4302. DEFINITIONS. (1) The definitions contained in the Idaho income
31 tax act, shall apply to this chapter unless modified in this chapter or unless
32 the context clearly requires another definition.
33 (2) As used in this chapter:
34 (a) "Commission" means the Idaho state tax commission.
35 (b) "Headquarters or administrative facilities" means facility or facili-
36 ties, including related parking facilities, where corporate staff employ-
37 ees are physically employed, and where the majority of the company's ser-
38 vices are handled. Company services may include: accounts receivable and
39 payable, accounting, data processing, distribution management, employee
40 benefit plan, financial and securities accounting, information technology,
41 insurance, legal, merchandising, payroll, personnel,
42 purchasing/procurement, planning, reporting and compliance, tax, treasury,
43 or other headquarters-related services.
44 (c) "Idaho income tax act" means chapter 30, title 63, Idaho Code.
45 (d) "Investment in new plant" means investment in headquarters or admin-
46 istrative facilities, that are:
47 (i) Qualified investments; or
48 (ii) Buildings or structural components of buildings.
49 (e) "New employee":
50 (i) Means an individual, employed primarily within the project site
8
1 by the taxpayer, subject to Idaho income tax withholding whether or
2 not any amounts are required to be withheld, covered for unemployment
3 insurance purposes under chapter 13, title 72, Idaho Code, and who
4 was eligible to receive employer provided coverage under an accident
5 or health plan described in section 105 of the Internal Revenue Code
6 during the taxable year. A person shall be deemed to be so employed
7 if such person performs duties on a regular full-time basis.
8 (ii) The number of employees employed primarily within the project
9 site by the taxpayer, during any taxable year for a taxpayer shall be
10 the mathematical average of the number of such employees reported to
11 the Idaho department of commerce and labor for employment security
12 purposes during the twelve (12) months of the taxable year which
13 qualified under paragraph (e)(i) of this subsection (2). In the event
14 the business is in operation for less than the entire taxable year,
15 the number of employees of the taxpayer for the year shall be the
16 average number actually employed during the months of operation, pro-
17 vided that the qualifications of paragraph (e)(i) of this subsection
18 (2) are met.
19 (iii) Employees transferred from a related taxpayer or acquired as
20 part of the acquisition of a trade or business from another taxpayer
21 within the prior twelve (12) months are not included in this defini-
22 tion unless the transfer creates a net new job in Idaho.
23 (f) "Project period" means the period of time beginning at the earlier of
24 a physical change to the project site or the first employment of new
25 employees located in Idaho who are related to the activities at the proj-
26 ect site, but no earlier than January 1, 2005, and ending when the facili-
27 ties constituting the project are placed in service, but no later than
28 December 31, 2009.
29 (g) "Project site" means an area or areas at which headquarters and head-
30 quarters facilities are located and at which the tax incentive criteria
31 have been or will be met and which are either:
32 (i) A single geographic area located in this state at which the
33 headquarters or administrative facilities owned or leased by the tax-
34 payer are located; or
35 (ii) One (1) or more geographic areas located in this state if
36 eighty percent (80%) or more of the investment required by subsection
37 (2)(j)(i) of this section is made at one (1) of the areas.
38 (iii) The project site must be identified and described to the com-
39 mission by a taxpayer subject to tax under the Idaho income tax act,
40 in the form and manner prescribed by the commission.
41 (h) "Qualified investment" shall be defined as in section 63-3029B, Idaho
42 Code.
43 (i) "Recapture period" means:
44 (i) In the case of credits described in sections 63-4303 and
45 63-4304, Idaho Code, the same period for which a recapture of invest-
46 ment tax credit under section 63-3029B, Idaho Code, is required; or
47 (ii) In the case of credits described in section 63-4305, Idaho
48 Code, five (5) years from the date the project period ends.
49 (j) "Tax incentive criteria" means a taxpayer meeting at a project site
50 the requirements of both subparagraphs (i) and (ii) of this paragraph (j).
51 (i) During the project period, making capital investments in new
52 plant of at least thirty million dollars ($30,000,000) at the project
53 site.
54 (ii) During a period of time beginning on January 1, 2005, and end-
55 ing at the conclusion of the project period:
9
1 1. Increasing employment at the project site by at least two
2 hundred fifty (250) new employees:
3 (A) Each of whom must earn at least nineteen dollars and
4 twenty-three cents ($19.23) per hour worked during the
5 taxpayer's taxable year; or
6 (B) Each of whom is part of a group of two hundred fifty
7 (250) or more employees at the project site which group on
8 average earns at least twenty-four dollars and four cents
9 ($24.04) per hour worked during the taxpayer's taxable
10 year. Calculation of the group average earnings may not
11 include amounts paid to any employee earning more than
12 forty-eight dollars and eight cents ($48.08) per hour
13 worked during the taxpayer's taxable year.
14 (C) Earnings calculated pursuant to subparagraph (ii) of
15 this paragraph (j) shall include income upon which Idaho
16 income tax withholding is required under section 63-3035,
17 Idaho Code, but shall not include income such as stock
18 options or restricted stock grants.
19 (D) For purposes of determining whether the increased
20 employment threshold has been met, employment at the proj-
21 ect site shall be determined by calculating the increase of
22 such new employees reported to the Idaho department of com-
23 merce and labor for employment security purposes over the
24 employees so reported as of the beginning of the project
25 period or no earlier than January 1, 2005, whichever is
26 larger; and
27 2. Maintaining net increased employment in Idaho required by
28 subparagraph (ii)1. of this paragraph (j) during the remainder
29 of the project period.
30 (k) "Taxpayer," for purposes of paragraphs (j) and (e) of this subsection
31 (2), means either:
32 (i) A single taxpayer; or
33 (ii) In the context of a unitary group filing a combined report
34 under section 63-3027(t), Idaho Code, all members of a unitary group
35 includable in a combined report for the tax years in which the credit
36 provided for by this chapter may be claimed. For all other purposes,
37 the terms of section 63-3009, Idaho Code, and section 63-3027(t)(1),
38 Idaho Code, apply to the meaning of "taxpayer."
39 63-4303. ADDITIONAL INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) For
40 taxable years beginning on or after January 1, 2005, and before December 31,
41 2009, and subject to the limitations of this chapter, a taxpayer who has cer-
42 tified that the tax incentive criteria will be met within a project site dur-
43 ing a project period shall, in regard to qualified investments made after the
44 beginning of the project period and before December 31, 2009, in lieu of the
45 investment tax credit provided in section 63-3029B, Idaho Code, be allowed a
46 nonrefundable credit against taxes imposed by sections 63-3024, 63-3025 and
47 63-3025A, Idaho Code, in the amount of four and five-tenths percent (4.5%) of
48 the amount of qualified investment made during a taxable year, wherever
49 located within this state.
50 (2) The credit allowed by this section shall not exceed seventy-five per-
51 cent (75%) of the tax liability of the taxpayer.
52 (3) The credit allowed by this section shall not exceed two million five
53 hundred thousand dollars ($2,500,000) in any one (1) taxable year.
10
1 63-4304. REAL PROPERTY IMPROVEMENT TAX CREDIT. (1) For taxable years
2 beginning on or after January 1, 2005, and before December 31, 2009, subject
3 to the limitations of this chapter, a taxpayer who has certified that the tax
4 incentive criteria will be met within a project site during a project period
5 shall be allowed a nonrefundable credit against taxes imposed by sections
6 63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount of five percent (5%)
7 of the investment in new plant which is incurred during the project period
8 applicable to the project site in which the investment is made.
9 (2) The credit allowed by this section shall not exceed two hundred fifty
10 thousand dollars ($250,000) in any one (1) taxable year.
11 (3) No credit is allowable under this section for a qualified investment
12 in regard to which a credit under section 63-4303, Idaho Code, is available.
13 (4) The credit allowed by this section is limited to buildings and struc-
14 tural components of buildings related to headquarters or administrative facil-
15 ities.
16 63-4305. ADDITIONAL INCOME TAX CREDIT FOR NEW JOBS. (1) Subject to the
17 limitations of this chapter, for taxable years beginning on or after January
18 1, 2005, and before December 31, 2009, a taxpayer who has certified that the
19 tax incentive criteria will be met within a project site during a project
20 period shall, for the number of new employees earning more than a rate of
21 nineteen dollars and twenty-three cents ($19.23) per hour worked, in lieu of
22 the credit amount in subsection (2)(a) of section 63-3029F, Idaho Code, be
23 allowed the credit provided by this section. The number of new employees is
24 the increase in the number of employees for the current taxable year over the
25 greater of the following:
26 (a) The number of employees for the prior taxable year; or
27 (b) The average of the number of employees for the three (3) prior tax-
28 able years.
29 (2) The credit provided by this section shall be:
30 (a) One thousand dollars ($1,000) for each new employee whose annual sal-
31 ary during the taxable year for which the credit is earned is greater than
32 fifteen dollars and fifty cents ($15.50) per hour worked but equal to or
33 less than an average rate of twenty-four dollars and four cents ($24.04)
34 per hour worked;
35 (b) One thousand five hundred dollars ($1,500) for each new employee
36 whose annual salary during the taxable year for which the credit is earned
37 is greater than an average rate of twenty-four dollars and four cents
38 ($24.04) per hour worked but equal to or less than an average rate of
39 twenty-eight dollars and eighty-five cents ($28.85) per hour worked;
40 (c) Two thousand dollars ($2,000) for each new employee whose annual sal-
41 ary during the taxable year for which the credit is earned is greater than
42 an average rate of twenty-eight dollars and eighty-five cents ($28.85) per
43 hour worked but equal to or less than an average rate of thirty-six dol-
44 lars and six cents ($36.06) per hour worked;
45 (d) Two thousand five hundred dollars ($2,500) for each new employee
46 whose annual salary during the taxable year for which the credit is earned
47 is greater than an average rate of thirty-six dollars and six cents
48 ($36.06) per hour worked but equal to or less than an average rate of for-
49 ty-three dollars and twenty-seven cents ($43.27) per hour worked;
50 (e) Three thousand dollars ($3,000) for each new employee whose annual
51 salary during the taxable year for which the credit is earned is greater
52 than an average rate of forty-three dollars and twenty-seven cents
53 ($43.27) per hour worked.
54 (3) The credit allowed by subsection (1) of this section shall apply only
11
1 to employment primarily within the project site. No credit shall be earned
2 unless such employee shall have performed such duties for the taxpayer for a
3 minimum of nine (9) months during the taxable year for which the credit is
4 claimed.
5 (4) The credit allowed by this section shall not exceed seventy-five per-
6 cent (75%) of the tax liability of the taxpayer.
7 (5) Employees transferred from a related taxpayer or acquired from
8 another taxpayer within the prior twelve (12) months shall not be included in
9 the computation of the credit unless the transfer creates a net new job in
10 Idaho.
11 63-4306. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME
12 TAXES. (1) In addition to other needed rules, the state tax commission may
13 promulgate rules prescribing:
14 (a) In the case of S corporations, partnerships, trusts or estates, a
15 method of attributing a credit under this chapter to the shareholders,
16 partners or beneficiaries in proportion to their share of the income from
17 the S corporation, partnership, trust or estate; and
18 (b) The method by which the carryover of credits and the duty to recap-
19 ture credits shall survive and be transferred in the event of reorganiza-
20 tions, mergers or liquidations.
21 (2) In the case of a unitary group of corporations filing a combined
22 report under subsection (t) of section 63-3027, Idaho Code, credits against
23 income tax provided by sections 63-4303, 63-4304 and 63-4305, Idaho Code,
24 earned by one (1) member of the group but not used by that member may be used
25 by another member of the group, subject to the limitation in subsection (3) of
26 this section, instead of carried over. For a combined group of corporations,
27 credit carried forward may be claimed by any member of the group unless the
28 member or members who earned the credit are no longer included in the combined
29 group.
30 (3) The total of all credits allowed by sections 63-4303, 63-4304 and
31 63-4305, Idaho Code, together with any credits carried forward under subsec-
32 tion (4) of this section shall not exceed the amount of tax due under sections
33 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre-
34 dits permitted by this chapter and the Idaho income tax act.
35 (4) If the credits exceed the limitation under subsection (3) of this
36 section, the excess amount may be carried forward for a period that does not
37 exceed:
38 (a) The next fourteen (14) taxable years in the case of credits allowed
39 by sections 63-4303 and 63-4304, Idaho Code; or
40 (b) The next ten (10) taxable years in the case of credits allowed by
41 section 63-4305, Idaho Code.
42 63-4307. RECAPTURE. (1) In the event that any person to whom a tax credit
43 allowed by section 63-4303, 63-4304 or 63-4305, Idaho Code, fails to meet the
44 tax incentive criteria, the full amount of the credit shall be subject to
45 recapture by the commission.
46 (2) If, during any taxable year, an investment in new plant is disposed
47 of, or otherwise ceases to qualify with respect to the taxpayer, prior to the
48 close of the recapture period, recapture of the credit allowed by sections
49 63-4303 and 63-4304, Idaho Code, shall be determined for such taxable year in
50 the same proportion and subject to the same provisions as an amount of credit
51 required to be recaptured under section 63-3029B, Idaho Code.
52 (3) In the event that the employment required in section 63-4302(2)(j),
53 Idaho Code, is not maintained for the entire recapture period, recapture of
12
1 the credit allowed in section 63-4305, Idaho Code, shall be determined for
2 such taxable year in the same proportion as an amount of credit required to be
3 recaptured under section 63-3029B, Idaho Code. This subsection shall not be
4 construed to require that the required level of employment must be met by the
5 same individual employees.
6 (4) Any amount subject to recapture is a deficiency in tax for the amount
7 of the credit in the taxable year in which the disqualification first occurs
8 and may be enforced and collected in the manner provided by the Idaho income
9 tax act, provided however, that in lieu of the provisions of section 63-
10 3068(a), Idaho Code, the period of time within which the commission may issue
11 a notice under section 63-3045, Idaho Code, in regard to an amount subject to
12 recapture shall be the later of five (5) years after the end of the taxable
13 year in which the project period ends or three (3) years after the end of the
14 taxable year in which any amounts carried forward under section 63-4306, Idaho
15 Code, expire.
16 63-4308. SALES AND USE TAX INCENTIVES -- REBATES -- RECAPTURE. (1) For
17 calendar years beginning on January 1, 2005, and ending on December 31, 2009,
18 subject to the limitations of this chapter, a taxpayer who has certified that
19 the tax incentive criteria will be met within the project site shall be enti-
20 tled to receive a rebate of fifty percent (50%) of all sales and use taxes
21 imposed by chapter 36, title 63, Idaho Code, and that the taxpayer or its con-
22 tractors actually paid in regard to any property constructed, located or
23 installed within the project site during the project period for that site.
24 (2) Upon filing of a written refund claim by the taxpayer entitled to the
25 rebate, and subject to such reasonable documentation and verification as the
26 commission may require, the rebate shall be paid by the commission as a refund
27 allowable under section 63-3626, Idaho Code. A claim for rebate under this
28 section must be filed on or before the last day of the third calendar year
29 following the year in which the taxes sought to be rebated were paid or the
30 right to the rebate is lost.
31 (3) Any rebate paid shall be subject to recapture by the commission:
32 (a) At one hundred percent (100%) in the event that the tax incentive
33 criteria are not met at the project site during the project period, or
34 (b) In the event that the property is not used, stored or otherwise con-
35 sumed within the project site for a period of sixty (60) consecutive full
36 months after the property was placed in service, or
37 (c) In the event that the employment required in section 63-4302(2)(j),
38 Idaho Code, is not maintained for sixty (60) consecutive full months from
39 the date the project period ends.
40 (d) Any recapture required by subsection (3)(b) or (3)(c) of this section
41 shall be in the same proportion as an amount of credit required to be
42 recaptured under section 63-3029B, Idaho Code.
43 (4) Any recapture amount due under this section shall be a deficiency in
44 tax for the period in which the disqualification first occurs for purposes of
45 section 63-3629, Idaho Code, and may be enforced and collected in the manner
46 provided by the Idaho sales tax act, provided however, that in lieu of the
47 provisions of section 63-3633, Idaho Code, the period of time within which the
48 commission may issue a notice under section 63-3629, Idaho Code, in regard to
49 an amount subject to recapture, shall be the later of five (5) years after the
50 end of the taxable year, for income tax purposes, in which the project period
51 ends.
52 (5) The rebate allowed by this section is limited to sales and use taxes
53 actually paid by the taxpayer or its contractors for taxable property related
54 to headquarters or administrative facilities.
13
1 63-4309. ADMINISTRATION. The commission shall enforce the provisions of
2 this chapter and may prescribe, adopt, and enforce reasonable rules relating
3 to the administration and enforcement of those provisions, including the pro-
4 mulgation of rules relating to information necessary to certify that the
5 incentive criteria have been or will be met. For the purpose of carrying out
6 its duties to enforce or administer the provisions of this chapter, the com-
7 mission shall have the powers and duties provided by sections 63-3038,
8 63-3039, 63-3042 through 63-3067, 63-3068, 63-3071, 63-3074 through 63-3078
9 and 63-217, Idaho Code.
10 SECTION 4. That Chapter 6, Title 63, Idaho Code, be, and the same is
11 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
12 ignated as Section 63-606, Idaho Code, and to read as follows:
13 63-606. SMALL AND MEDIUM-SIZED BUSINESS GROWTH INCENTIVE EXEMPTION. (1)
14 The county board of equalization of any county in which any property, the
15 investment in which qualifies for the income tax credits described in sections
16 63-3903, 63-3904, 63-4303 and 63-4304, Idaho Code, is located may exempt all
17 or a portion of the value of such property from property taxation. The board
18 may grant the exemption when it finds that the investments in such property
19 benefit the citizens within the county and taxing districts within the county
20 in a manner and to such a degree that to grant the exemption is necessary and
21 just.
22 (2) When granting an exemption under this section, the board shall also
23 specify whether the property exempted shall be included on any new construc-
24 tion roll prepared by the county assessor in accordance with section 63-301A,
25 Idaho Code.
26 (3) Applications for the exemption under this section shall be considered
27 by the board as other applications for exemption under section 63-501, Idaho
28 Code. Upon request of the board, the state tax commission may disclose to the
29 board or county official designated by the board information necessary to
30 identify and determine the property upon which the exemption may be granted.
31
32 SECTION 5. SEVERABILITY. The provisions of this act are hereby declared
33 to be severable and if any provision of this act or the application of such
34 provision to any person or circumstance is declared invalid for any reason,
35 such declaration shall not affect the validity of the remaining portions of
36 this act.
37 SECTION 6. An emergency existing therefor, which emergency is hereby
38 declared to exist, this act shall be in full force and effect on and after its
39 passage and approval, and retroactively to January 1, 2005.
STATEMENT OF PURPOSE
RS 15051
This bill is the Idaho "Small Business Growth Incentive Act of
2005" and the Idaho "Medium-Sized Business Growth Incentive Act of
2005." Together they provide qualifying businesses with:
Income tax credits:
o A 3.75% investment tax credit with a credit limitation of 62.5%;
Or a 4.50% investment tax credit with a credit limitation of 75%.
o An additional new jobs tax credit with a graduated scale starting
at $1,000 per job and climbing to $3,000 per job.
o A 2.5% or a 5.0% real property improvement tax credit for
investment in headquarters or administrative buildings of up to
$125,000 or $250,000 in any one year.
A temporary sales tax abatement of either 25% or 50% for materials
used in new headquarters and administrative buildings.
To qualify a company must:
o Create at least 125 or 250 new jobs in Idaho;
o Jobs must have a starting annual salary of at least $32,240 or
$40,000 per year, plus benefits;
o Invest at least $15 million or $30 million in new headquarters or
administrative buildings; and
o Accomplish this within a five-year period.
Existing recapture provisions apply.
Conveys authority to county boards of equalization to exempt new plant
investment at project site from property taxation.
FISCAL NOTE
Impact on General Fund
New New New Net
For Fiscal Year 2006- New Rev. Local State Costs Impact
If Option One $2.1 m $0.564 m $1.5 m $0.375 m $1.1 m
(if 250 new employees)
If Option Two $1.1 m $0.265 m $0.796 m $0.109 m $0.687 m
(if 125 new employees)
Impact on General Fund
New New New Net
For Life of Tax Credits - New Rev. Local State Costs Impact
If Option One $25.1 m $13.2 m $12.0 m $2.4 m $9.6 m
(if 250 new employees)
If Option Two $12.7 m $6.1 m $ 6.7 m $0.731 m $5.9 m
(if 125 new employees)
Contact: Brian Whitlock
Agency: Governor's Office
Telephone: 334-2100
STATEMENT OF PURPOSE/FISCAL NOTE H 259