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H0443aaS............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law relating to the Idaho income tax to
provide that subsequent changes to the consumer price index shall not
affect income tax brackets; to require reporting of recapture of property
tax on qualified investments; to conform the due date of electronically
filed withholding reports by employers to the federal due date; to delete
references to the assessment of tax; to provide provisions relating to the
assessment of tax and the record of assessment; and to provide code
references.
01/23 House intro - 1st rdg - to printing
01/24 Rpt prt - to Rev/Tax
02/14 Rpt out - rec d/p - to 2nd rdg
02/15 2nd rdg - to 3rd rdg
02/21 3rd rdg - PASSED - 68-0-2
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford,
Cannon, Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson,
Ellsworth, Eskridge, Field(18), Field(23), Garrett, Hart, Harwood,
Henbest, Henderson, Jaquet, Kemp, Lake, LeFavour, Loertscher,
Martinez, Mathews, McGeachin, McKague, Miller, Mitchell, Moyle,
Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo,
Roberts, Rusche, Rydalch, Sali(Sali), Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie,
Stevenson, Trail, Wills, Wood
NAYS -- None
Absent and excused -- Snodgrass, Mr. Speaker
Floor Sponsor - McGeachin
Title apvd - to Senate
02/22 Senate intro - 1st rdg - to Loc Gov
03/02 Rpt out - to 14th Ord
03/08 Rpt out amen - to 1st rdg as amen
03/09 1st rdg - to 2nd rdg as amen
03/10 2nd rdg - to 3rd rdg as amen
03/13 3rd rdg as amen - PASSED - 35-0-0
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce,
Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- None
Floor Sponsor - Hill
Title apvd - to House
03/14 House concurred in Senate amens - to engros
03/15 Rpt engros - 1st rdg - to 2nd rdg as amen
03/16 2nd rdg - to 3rd rdg as amen
03/21 3rd rdg as amen - PASSED - 64-0-6
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bell,
Black, Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon,
Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Henderson,
Jaquet, Kemp, Lake, LeFavour, Loertscher, Martinez, Mathews,
McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen, Nonini,
Pasley-Stuart, Pence, Raybould, Ring, Ringo, Rusche, Rydalch, Sali,
Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Smith(30),
Smith(24), Smylie, Stevenson, Trail, Wills, Wood
NAYS -- None
Absent and excused -- Bedke, Bilbao, Roberts, Skippen, Snodgrass, Mr.
Speaker
Floor Sponsor - McGeachin
Title apvd - to enrol
03/22 Rpt enrol - Sp signed
03/23 Pres signed - To Governor
03/24 Governor signed
Session Law Chapter 195
Effective: 01/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 443
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO THE INCOME TAX; AMENDING SECTION 63-3024, IDAHO CODE, TO PROVIDE
3 THAT SUBSEQUENT CHANGES TO THE CONSUMER PRICE INDEX SHALL NOT AFFECT
4 INCOME TAX BRACKETS; AMENDING SECTION 63-3029B, IDAHO CODE, TO REQUIRE
5 REPORTING OF RECAPTURE OF PROPERTY TAX ON QUALIFIED INVESTMENTS; AMENDING
6 SECTION 63-3035, IDAHO CODE, TO CONFORM THE DUE DATE OF ELECTRONICALLY
7 FILED WITHHOLDING REPORTS BY EMPLOYERS TO THE FEDERAL DUE DATE; AMENDING
8 SECTION 63-3044, IDAHO CODE, TO DELETE REFERENCES TO THE ASSESSMENT OF
9 TAX; AMENDING SECTION 63-3045A, IDAHO CODE, TO PROVIDE PROVISIONS RELATING
10 TO THE ASSESSMENT OF TAX, THE RECORD OF ASSESSMENT AND PENALTIES AND ADDI-
11 TIONS TO TAX; AMENDING SECTION 63-2906, IDAHO CODE, TO PROVIDE A CROSS-
12 REFERENCE TO THE IDAHO SMALL EMPLOYER INCENTIVE ACT; AMENDING SECTION
13 63-4406, IDAHO CODE, TO PROVIDE A CROSS-REFERENCE TO THE CORPORATE HEAD-
14 QUARTERS INCENTIVE ACT; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE
15 APPLICATION.
16 Be It Enacted by the Legislature of the State of Idaho:
17 SECTION 1. That Section 63-3024, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For taxable year
20 2001, and each taxable year thereafter, a tax measured by Idaho taxable income
21 as defined in this chapter is hereby imposed upon every individual, trust, or
22 estate required by this chapter to file a return.
23 (a) The tax imposed upon individuals, trusts and estates shall be com-
24 puted at the following rates:
25 When Idaho taxable income is: The rate is:
26 Less than $1,000 One and six-tenths percent (1.6%)
27 $1,000 but less than $2,000 $16, plus three and six-tenths
28 percent (3.6%) of the amount over $1,000
29 $2,000 but less than $3,000 $52, plus four and one-tenth
30 percent (4.1%) of the amount over $2,000
31 $3,000 but less than $4,000 $93, plus five and one-tenth
32 percent (5.1%) of the amount over $3,000
33 $4,000 but less than $5,000 $144, plus six and one-tenth
34 percent (6.1%) of the amount over $4,000
35 $5,000 but less than $7,500 $205, plus seven and one-tenth
36 percent (7.1%) of the amount over $5,000
37 $7,500 but less than $20,000 $383, plus seven and four-tenths
38 percent (7.4%) of the amount over $7,500
39 Over $20,000 $1,308, plus seven
40 and eight-tenths percent
41 (7.8%) of the amount over $20,000
42 For taxable year 2000 and each year thereafter, the state tax commission
43 shall prescribe a factor which shall be used to compute the Idaho income tax
2
1 brackets provided in subsection (a) of this section. The factor shall provide
2 an adjustment to the Idaho tax brackets so that inflation will not result in a
3 tax increase. The Idaho tax brackets shall be adjusted as follows: multiply
4 the bracket amounts by the percentage (the consumer price index for the calen-
5 dar year immediately preceding the calendar year to which the adjusted brack-
6 ets will apply divided by the consumer price index for calendar year 1998).
7 For the purpose of this computation, the consumer price index for any calendar
8 year is the average of the consumer price index as of the close of the twelve
9 (12) month period for the immediately preceding calendar year, without regard
10 to any subsequent adjustments, as adopted by the state tax commission. This
11 adoption shall be exempt from the provisions of chapter 52, title 67, Idaho
12 Code. The consumer price index shall mean the consumer price index for all
13 U.S. urban consumers published by the United States department of labor. The
14 state tax commission shall annually include the factor as provided in this
15 subsection to multiply against Idaho taxable income in the brackets above to
16 arrive at that year's Idaho taxable income for tax bracket purposes.
17 (b) In case a joint return is filed by husband and wife pursuant to the
18 provisions of section 63-3031, Idaho Code, the tax imposed by this section
19 shall be twice the tax which would be imposed on one-half (1/2) of the aggre-
20 gate Idaho taxable income. For the purposes of this section, a return of a
21 surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and
22 a head of household, as defined in section 2(b) of the Internal Revenue Code,
23 shall be treated as a joint return and the tax imposed shall be twice the tax
24 which would be imposed on one-half (1/2) of the Idaho taxable income.
25 (c) In the case of a trust that is an electing small business trust as
26 defined in section 1361 of the Internal Revenue Code, the special rules for
27 taxation of such trusts contained in section 641 of the Internal Revenue Code
28 shall apply except that the maximum individual rate provided in this section
29 shall apply in computing tax due under this chapter.
30 (d) The state tax commission shall compute and publish Idaho income tax
31 liability for taxpayers at the midpoint of each bracket of Idaho taxable
32 income in fifty dollar ($50.00) steps to fifty thousand dollars ($50,000),
33 rounding such calculations to the nearest dollar. Taxpayers having income
34 within such brackets shall file returns based upon and pay taxes according to
35 the schedule thus established. The state tax commission shall promulgate rules
36 defining the conditions upon which such returns shall be filed.
37 SECTION 2. That Section 63-3029B, Idaho Code, be, and the same is hereby
38 amended to read as follows:
39 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
40 of the taxpayer there shall be allowed, subject to the applicable limitations
41 provided herein as a credit against the income tax imposed by chapter 30,
42 title 63, Idaho Code, an amount equal to the sum of:
43 (a) The tax credit carryovers; and
44 (b) The tax credit for the taxable year.
45 (2) The maximum allowable amount of the credit for the current taxable
46 year shall be three percent (3%) of the amount of qualified investments made
47 during the taxable year.
48 (3) As used in this section "qualified investment" means certain property
49 which:
50 (a) (i) Is eligible for the federal investment tax credit, as defined
51 in sections 46(c) and 48 of the Internal Revenue Code subject to the
52 limitations provided for certain regulated companies in section 46(f)
53 of the Internal Revenue Code and is not a motor vehicle under eight
3
1 thousand (8,000) pounds gross weight; or
2 (ii) Is qualified broadband equipment as defined in section
3 63-3029I, Idaho Code; and
4 (b) Is acquired, constructed, reconstructed, erected or placed into ser-
5 vice after December 31, 1981; and
6 (c) Has a situs in Idaho.
7 (4) (a) For qualified investments placed in service in 2003 and thereaf-
8 ter, a taxpayer, other than a person whose rate of charge or rate of
9 return, or both, is regulated or limited according to federal or state
10 law, may elect, in lieu of the credit provided by this section, a two (2)
11 year exemption from all taxes on personal property on the qualified
12 investment. The exemption from personal property tax shall apply to the
13 year the election is filed as provided in this section and the immediately
14 following year. The election provided by this paragraph is available only
15 to a taxpayer whose Idaho taxable income, before application of net oper-
16 ating losses carried back or forward, in the second preceding taxable year
17 in which the investment is placed in service is negative.
18 (b) The election shall be made in the form prescribed by the state tax
19 commission and shall include a specific description and location of all
20 qualified investments placed into service and located in the jurisdiction
21 of the assessing authority, a designation of the specific assets for which
22 the exemption is claimed, and such other information as the state tax com-
23 mission may require. The election must be made by including the election
24 form with the listing of personal property required by section 63-302,
25 Idaho Code, or, in the case of operating property assessed under chapter
26 4, title 63, Idaho Code, with the operator's statement required by section
27 63-404, Idaho Code. Once made the election is irrevocable. If no election
28 is made, the election is not otherwise available. A copy of the election
29 form must also be attached to the original income tax return due for the
30 taxable year in which the claim was made.
31 (c) The state tax commission and the various county assessors are autho-
32 rized to exchange information as necessary to properly coordinate the
33 exemption provided in this subsection. Information disclosed to county
34 officials under this subsection may be used only to determine the validity
35 or amount of a taxpayer's entitlement to the exemption provided in this
36 section, and is not otherwise subject to public disclosure as provided in
37 section 9-340D, Idaho Code.
38 (d) In the event that an investment in regard to which the election under
39 this subsection was made is determined by the state tax commission:
40 (i) To not be a qualified investment, or
41 (ii) To have ceased to qualify during the recapture period, or
42 (iii) To be otherwise not qualified for the election,
43 the taxpayer shall be subject to recapture of the property tax benefit.
44 (e) The benefit to be recaptured in subsection (4)(d) of this section
45 shall be computed in the manner required in subsection (7) of this section
46 and such recapture amount shall be subject to assessment in the same man-
47 ner as a deficiency in tax under this chapter. For purposes of calculating
48 the recapture, the property tax benefit shall be:
49 (i) In the case of locally assessed property located in a single
50 county or nonapportioned centrally assessed property, the market
51 value of exempted property times the average property tax levy for
52 that county in the year or years for which the exemption was claimed.
53 (ii) In the case of other centrally assessed property and property
54 located in more than one (1) county, the market value of exempted
55 property times the average urban property tax levy of the state as
4
1 determined by the state tax commission in each of the years for which
2 the exemption was claimed.
3 (f) In the event that a recapture of the exemption is required under this
4 subsection (4), the person claiming the exemption shall report the event
5 to the state tax commission in the manner the state tax commission may by
6 rule require. The report shall be due no later than the due date of that
7 person's income tax return under this chapter for the taxable year in
8 which the event occurs. The recapture amount is due and payable with the
9 report. Any amount of recapture not paid on the due tax, is a deficiency
10 within the meaning of section 63-3044, Idaho Code.
11 (g) All moneys collected by the state tax commission pursuant to this
12 subsection, which amounts are continuously appropriated for this purpose,
13 shall be deposited with the state treasurer and placed in the state refund
14 account, as provided by section 63-3067, Idaho Code, to be remitted to the
15 county within which the property was located that was not a qualified
16 investment or ceased to qualify during the recapture period. The county
17 shall distribute this remittance to all appropriate taxing districts based
18 on the proportion each appropriate taxing district's levy is to the total
19 of all the levies of the taxing districts for the tax code area where the
20 property was located for each year the exemption was granted. If any tax-
21 ing district is dissolved or disincorporated, the proportionate share of
22 the remittance to be distributed to that taxing district shall be depos-
23 ited in the county current expense fund.
24 (gh) For purposes of the limitation provided by section 63-802, Idaho
25 Code, moneys received pursuant to this subsection shall be treated as
26 property tax revenue by taxing districts.
27 (5) Notwithstanding the provisions of subsections (1) and (2) of this
28 section, the amount of the credit allowed shall not exceed fifty percent (50%)
29 of the tax liability of the taxpayer. The tax liability of the taxpayer shall
30 be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
31 (6) If the sum of credit carryovers from the credit allowed by subsection
32 (2) of this section and the amount of credit for the taxable year from the
33 credit allowed by subsection (2) of this section exceed the limitation imposed
34 by subsection (5) of this section for the current taxable year, the excess
35 attributable to the current taxable year's credit shall be an investment
36 credit carryover to the fourteen (14) succeeding taxable years. In the case of
37 a group of corporations filing a combined report under section 63-3027, Idaho
38 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one
39 (1) member of the group but not used by that member may be used by another
40 member of the group, subject to the provisions of subsection (5) of this sec-
41 tion, instead of carried over. The entire amount of unused credit shall be
42 carried forward to the earliest of the succeeding years, wherein the oldest
43 available unused credit shall be used first, so long as the qualified invest-
44 ment property for which the unused credit was granted still maintains Idaho
45 situs. For a combined group of corporations, credit carried forward may be
46 claimed by any member of the group unless the member who earned the credit is
47 no longer included in the combined group.
48 (7) Any recapture of the credit allowed by subsection (2) of this section
49 on property disposed of or ceasing to qualify, prior to the close of the
50 recapture period, shall be determined according to the applicable recapture
51 provisions of the Internal Revenue Code. In the case of a unitary group of
52 corporations, the increase in tax due to the recapture of investment tax
53 credit must be reported by the member of the group who earned the credit
54 regardless of which member claimed the credit against tax.
55 (8) For the purpose of determining whether property placed in service is
5
1 a "qualified investment" as defined in subsection (3) of this section, the
2 provisions of section 49 of the Internal Revenue Code shall be disregarded.
3 "Qualified investment" shall not include any amount for which a deduction is
4 allowed under section 179 of the Internal Revenue Code in computing taxable
5 income.
6 (9) For purposes of this section, property has a situs in Idaho during a
7 taxable year if it is used in Idaho at any time during the taxable year. Prop-
8 erty not used in Idaho during a taxable year does not have a situs in Idaho in
9 the taxable year during which the property is not used in Idaho or in any sub-
10 sequent taxable year. No credit or carryover of credit is permitted under this
11 section if the credit or carryover relates to property that does not have a
12 situs in Idaho during the taxable year for which the credit or carryover is
13 claimed. The Idaho situs of property must be established by records maintained
14 by the taxpayer which are created reasonably contemporaneously with the use of
15 the property.
16 (10) In the case of property used both in and outside Idaho, the taxpayer,
17 electing to claim the credit provided in this section, must elect to compute
18 the qualified investment in property with a situs in Idaho for all such
19 investments first qualifying during that year in one (1), but only one (1), of
20 the following ways:
21 (a) The amount of each qualified investment in a specific asset shall be
22 separately computed based on the percentage of the actual use of the prop-
23 erty in Idaho by using a measure of the use, such as total miles or total
24 machine hours, that most accurately reflects the beneficial use during the
25 taxable year in which it is first acquired, constructed, reconstructed,
26 erected or placed into service; provided, that the asset is placed in ser-
27 vice more than ninety (90) days before the end of the taxable year. In the
28 case of assets acquired, constructed, reconstructed, erected or placed
29 into service within ninety (90) days prior to the end of the taxable year
30 in which the investment first qualifies, the measure of the use of that
31 asset within Idaho for that year shall be based upon the percentage of use
32 in Idaho during the first ninety (90) days of use of the asset;
33 (b) The investment in qualified property used both inside and outside
34 Idaho during the taxable year in which it is first acquired, constructed,
35 reconstructed, erected or placed into service shall be multiplied by the
36 percent of the investment that would be included in the numerator of the
37 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
38 for the same year.
39 (11) Only for the purposes of subsections (3)(a) and (8) of this section,
40 references to sections of the "Internal Revenue Code" mean the sections
41 referred to as they existed in the Internal Revenue Code of 1986 prior to
42 November 5, 1990.
43 SECTION 3. That Section 63-3035, Idaho Code, be, and the same is hereby
44 amended to read as follows:
45 63-3035. STATE WITHHOLDING TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL-
46 LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the pro-
47 visions of the Internal Revenue Code to withhold, collect and pay income tax
48 on wages or salaries paid by such employer to any employee (other than employ-
49 ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the time
50 of such payment of wages, salary, bonus or other emolument to such employee,
51 deduct and retain therefrom an amount substantially equivalent to the tax rea-
52 sonably calculated by the state tax commission to be due from the employee
53 under this chapter. The state tax commission shall prepare tables showing
6
1 amounts to be withheld, and shall supply same to each employer subject to this
2 section. In the event that an employer can demonstrate administrative inconve-
3 nience in complying with the exact requirements set forth in these tables, he
4 may, with the consent of the state tax commission and upon application to it,
5 use a different method which will produce substantially the same amount of
6 taxes withheld. Every employer making payments of wages or salaries earned in
7 Idaho, regardless of the place where such payment is made:
8 (1) shall be liable to the state of Idaho for the payment of the tax
9 required to be deducted and withheld under this section and shall not be
10 liable to any individual for the amount deducted from his wages and paid
11 over in compliance or intended compliance with this section;
12 (2) must pay to the state tax commission monthly on or before the 20th
13 day of the succeeding month, or at such other times as the state tax com-
14 mission may allow, an amount of tax which, under the provisions of this
15 chapter, he is required to deduct and withhold;
16 (3) shall register with the state tax commission, in the manner pre-
17 scribed by it, to establish an employer's withholding account number. The
18 account number will be used to report all amounts withheld, for the annual
19 reconciliation required in this section, and for such other purposes
20 relating to withholding as the state tax commission may require; and
21 (4) must, notwithstanding the provisions of paragraphs (1) and (2) of
22 this subsection, if the amount of withholding of such employer for the
23 preceding twelve (12) month period equals or exceeds two hundred forty
24 thousand dollars ($240,000) per annum or an average of twenty thousand
25 dollars ($20,000) per month per annum, pay to the state tax commission on
26 the basis of withholding periods which begin on the 16th day of the month
27 and end on the 15th day of the following month, and payment shall be made
28 not later than five (5) days after the end of the withholding period.
29 (5) If a payment required pursuant to subsection (a)(2) or (a)(4) of this
30 section is not made or is made delinquently or if made is not equal to the
31 withholding required under this section the state tax commission may treat
32 the failure as a failure to file a return and may take administrative and
33 judicial actions as authorized by this chapter in the case of a failure to
34 file a return. Interest, at the rate provided by section 63-3045, Idaho
35 Code, shall apply to any such underpayment.
36 (6) Commencing in 2006, the state tax commission shall determine whether
37 the threshold amounts established by subsection (a)(4) of this section
38 must be adjusted to reflect fluctuations in the cost of living. The com-
39 mission shall base its determination on the cumulative effect of the
40 annual cost-of-living percentage modifications determined by the United
41 States secretary of health and human services pursuant to 42 USC 415(i).
42 When the cumulative percentage applied to the monthly threshold amount
43 equals or exceeds five thousand dollars ($5,000), the commission shall
44 promulgate a rule adjusting the monthly threshold amount by five thousand
45 dollars ($5,000) and making the necessary proportional adjustment to the
46 annual threshold amount. The rule shall be effective for the next succeed-
47 ing calendar year and each year thereafter until again adjusted by the
48 commission. The tax commission shall determine subsequent adjustments in
49 the same manner, in each case using the year of the last adjustment as the
50 base year.
51 (b) (1) In addition to the payments required pursuant to subsections
52 (a)(2) and (a)(4) of this section, every employer shall file a return upon
53 such form as shall be prescribed by the state tax commission, but not more
54 frequently than annually, or as required pursuant to any agreement between
55 the state tax commission and the department of labor under section
7
1 63-3035B, Idaho Code, unless a shorter filing period and due date is pre-
2 scribed by the state tax commission. The return shall be due on the last
3 day of the month following the end of the period to which the return
4 relates. The return shall show, for the period to which it relates, the
5 total amount of wages, salary, bonus or other emolument paid to his
6 employees, the amount deducted therefrom in accordance with the provisions
7 of the Internal Revenue Code, the amount deducted therefrom in accordance
8 with the provisions of this section, the amount of any previous payments
9 made pursuant to this section, and such pertinent and necessary informa-
10 tion as the state tax commission may require.
11 (2) Every employer making a declaration of withholding as provided herein
12 shall furnish to the employees annually, but not later than thirty (30)
13 days after the end of the calendar year, a record of the amount of tax
14 withheld from such employee on forms to be prescribed, prepared and fur-
15 nished by the state tax commission and on or before the last day of Febru-
16 ary every employer shall file a copy thereof with the state tax commis-
17 sion. Every employer who is required, under Internal Revenue Code section
18 6011, to file returns on magnetic media, or in other machine readable form
19 or electronic means, as defined in the Idaho uniform electronic transac-
20 tion act, may be required by rules of the state tax commission to file
21 corresponding state returns on similar magnetic media, or other machine
22 readable form or electronic means. Such rules may provide a different due
23 date for such returns which shall be no later than the date employers are
24 required to file such returns with the internal revenue service or the
25 social security administration.
26 (c) All moneys deducted and withheld by every employer shall immediately
27 upon such deduction be state money and every employer who deducts and retains
28 any amount of money under the provisions of this chapter shall hold the same
29 in trust for the state of Idaho and for the payment thereof to the state tax
30 commission in the manner and at the times in this chapter provided. Any
31 employer who does not possess real property situated within the state of
32 Idaho, which, in the opinion of the state tax commission, is of sufficient
33 value to cover his probable tax liability, may be required to post a surety
34 bond in such sum as the state tax commission shall deem adequate to protect
35 the state.
36 (d) The provisions of this chapter relating to additions to tax in case
37 of delinquency, and penalties, shall apply to employers subject to the provi-
38 sions of this section and for these purposes any amount deducted, or required
39 to be deducted and remitted to the state tax commission under this section,
40 shall be considered to be the tax of the employer and with respect to such
41 amount he shall be considered the taxpayer.
42 (e) Amounts deducted from wages of an employee during any calendar year
43 in accordance with the provisions of this section shall be considered to be in
44 part payment of the tax imposed on such employee for his tax year which begins
45 within such calendar year and the return made by the employer under this sub-
46 section (e) shall be accepted by the state tax commission as evidence in favor
47 of the employee of the amount so deducted from his wages. Where the total
48 amount so deducted exceeds the amount of tax on the employee, based on his
49 Idaho taxable income, or where his income is not taxable under this chapter,
50 the state tax commission shall, after examining the annual return filed by the
51 employee in accordance with this chapter, but not later than sixty (60) days
52 after the filing of each return, refund the amount of the excess deducted.
53 (f) This section shall in no way relieve any taxpayer from his obligation
54 of filing a return at the time required under this chapter, and, should the
55 amount withheld under the provisions of this section be insufficient to pay
8
1 the total tax of such taxpayer, such unpaid tax shall be paid at the time pre-
2 scribed by section 63-3034, Idaho Code.
3 (g) An employee receiving wages shall on any day be entitled to not more
4 than, but may claim fewer than, the number of withholding exemptions to which
5 he is entitled under the Internal Revenue Code for federal income tax with-
6 holding purposes.
7 (h) An employer shall use the exemption certificate filed by the employee
8 with the employer under the withholding exemption provisions of the Internal
9 Revenue Code in determining the amount of tax to be withheld from the
10 employee's wages or salary under this chapter. The tax commission may redeter-
11 mine the number of withholding exemptions to which an employee is entitled
12 under subsection (g) of this section, and the state tax commission may require
13 such exemption certificate to be filed on a form prescribed by the commission
14 in any circumstance where the commission finds that the exemption certificate
15 filed for Internal Revenue Code purposes does not properly reflect the number
16 of withholding exemptions to which the employee is entitled under this chap-
17 ter. In no event shall any employee give an exemption certificate which claims
18 a higher number of withholding exemptions than the number to which the
19 employee is entitled by subsection (g) of this section.
20 SECTION 4. That Section 63-3044, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 63-3044. DEFICIENCY IN TAX. (1) As used in this act in respect of a tax
23 imposed by this act the term "deficiency" means:
24 (a1) The amount by which the tax imposed by this act exceeds the amount
25 shown as the tax by the taxpayer upon his return; but the amount so shown on
26 the return shall first be increased by the amounts previously assessed (or
27 collected without assessment) as a deficiency, and decreased by the amounts
28 previously abated, credited, refunded, or otherwise repaid in respect of such
29 tax; or,
30 (b2) If no amount is shown as the tax by the taxpayer upon his return, or
31 if no return is made by the taxpayer, then the amount by which the tax exceeds
32 the amounts previously assessed (or collected without assessment) as a defi-
33 ciency; but such amounts previously assessed, or collected without assessment,
34 shall first be decreased by the amounts previously abated, credited, refunded,
35 or otherwise repaid in respect of such tax; or,
36 (c3) Any amount of tax which is due and unpaid.
37 (2) A tax assessment shall be made by recording the liability of the tax-
38 payer along with an identification of the taxpayer, the character of the lia-
39 bility assessed, the taxable period, if applicable, and the amount of the
40 assessment. The assessment shall be kept and maintained in a record in the
41 office of the state tax commission in accordance with rules prescribed by the
42 tax commission. Upon request of the taxpayer, the tax commission shall furnish
43 the taxpayer a copy of the record of assessment. No tax commission activities
44 to enforce collection of tax may be conducted, nor may a proceeding to collect
45 a tax be instituted, until assessment of the tax has been made in accordance
46 with the provisions of this section. Taxes and related interest may be
47 assessed immediately upon receipt of a tax return, amended return or other
48 consent signed by the taxpayer or the taxpayer's authorized representative
49 showing the taxes due. The tax commission may presume that the signature is
50 the signature of the taxpayer or the taxpayer's authorized representative
51 until the contrary is established by a preponderance of the evidence.
52 (3) The making of an assessment is not required before the tax commission
53 may conduct audits and investigations or make inquiries of taxpayers or other
9
1 persons relating to matters within the tax commission's jurisdiction. The mak-
2 ing of an assessment is not required before the tax commission may file a
3 judicial action under section 63-3030A or 63-3064, Idaho Code, or actions for
4 injunctive or declaratory relief.
5 SECTION 5. That Section 63-3045A, Idaho Code, be, and the same is hereby
6 amended to read as follows:
7 63-3045A. MATHEMATICAL ERROR -- ASSESSMENT OF TAX. (1) Except as provided
8 in subsection (2) of this section, no tax commission activities to enforce
9 collection of tax may be conducted, nor may a proceeding to collect a tax be
10 instituted, until taxes are assessed in accordance with the provisions of this
11 section.
12 (a) Taxes and related interest, including revisions for mathematical
13 errors, are assessed immediately upon receipt of a tax return, amended
14 return or other consent signed by the taxpayer or the taxpayer's autho-
15 rized representative showing the taxes due. The tax commission may pre-
16 sume that the signature is the signature of the taxpayer or the taxpayer's
17 authorized representative until the contrary is established by a prepon-
18 derance of the evidence.
19 (ab) In the event that the amount of tax is understated on the taxpayer's
20 return due to a mathematical error, the state tax commission shall notify
21 the taxpayer that an amount of tax in excess of that shown on the return
22 is due and has been asserted. Such a notice of additional tax due shall
23 not be considered a notice of a deficiency nor shall the taxpayer have any
24 right of protest or appeal as in the case of a deficiency based on such
25 notice, and the assessment and collection of the amount of tax erroneously
26 omitted in the return is not prohibited by any provision of this chapter.
27 (bc) The amount of tax which is shown to be due on the return (including
28 revisions for mathematical errors) shall be deemed to be assessed on the
29 date of filing of the return including any amended returns showing an
30 increase of tax. In the case of a return properly filed without the compu-
31 tation of the tax, the tax computed by the state tax commission shall be
32 deemed to be assessed on the date when payment is due. Any amount paid as
33 a tax or in respect of a tax, other than amounts withheld at the source or
34 paid as estimated income tax, shall be deemed to be assessed upon the date
35 of receipt of payment, notwithstanding any other provisions of this chap-
36 ter.
37 (cd) For all other purposes of this chapter, a tax is deemed assessed
38 when:
39 (i) Aa taxpayer fails to file a protest with the state tax commis-
40 sion within the time prescribed in section 63-3045, Idaho Code, or an
41 action in district court or the board of tax appeals within the time
42 prescribed in subsection (a) of section 63-3049, Idaho Code; or
43 (ii) Upon conclusion of any such proceeding for any amount upheld at
44 that conclusion of such proceeding.
45 (2) An assessment is not required before the tax commission may conduct
46 audits and investigations or make inquiries of taxpayers or other persons
47 relating to matters within the tax commission's jurisdiction. The making of an
48 assessment is not required before the tax commission may file a judicial
49 action under section 63-3030A or 63-3064, Idaho Code, or actions for injunc-
50 tive or declaratory relief.
51 (3) When taxes and related interest have been assessed, the state tax
52 commission shall create a record of assessment by recording the liability of
53 the taxpayer along with an identification of the taxpayer, the character of
10
1 the liability assessed, the taxable period, if applicable, and the amount of
2 the assessment. The record of an assessment shall be kept and maintained in a
3 record in the office of the state tax commission in accordance with rules pre-
4 scribed by the state tax commission. Upon request of the taxpayer, the state
5 tax commission shall furnish the taxpayer a copy of the record of assessment.
6 (4) Penalties and additions to tax in the case of a deficiency shall be
7 assessed in the same manner as the taxes and related interest.
8 SECTION 6. That Section 63-2906, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 63-2906. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME
11 TAXES. (1) In addition to other needed rules, the state tax commission may
12 promulgate rules prescribing:
13 (a) In the case of S corporations, partnerships, trusts or estates, a
14 method of attributing a credit under this chapter to the shareholders,
15 partners or beneficiaries in proportion to their share of the income from
16 the S corporation, partnership, trust or estate; and
17 (b) The method by which the carryover of credits and the duty to recap-
18 ture credits shall survive and be transferred in the event of reorganiza-
19 tions, mergers or liquidations.
20 (2) In the case of a unitary group of corporations filing a combined
21 report under subsection (t) of section 63-3027, Idaho Code, credits against
22 income tax provided by sections 63-2903, 63-2904 and 63-2905, Idaho Code,
23 earned by one (1) member of the group but not used by that member may be used
24 by another member of the group, subject to the limitation in subsection (3) of
25 this section, instead of carried over. For a combined group of corporations,
26 credit carried forward may be claimed by any member of the group unless the
27 member or members who earned the credit are no longer included in the combined
28 group.
29 (3) The total of all credits allowed by sections 63-2903, 63-2904 and
30 63-2905, Idaho Code, together with any credits carried forward under subsec-
31 tion (4) of this section shall not exceed the amount of tax due under sections
32 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre-
33 dits permitted by this chapter, chapter 44, title 63, Idaho Code, and the
34 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 63-2903 and 63-2904, Idaho Code; or
40 (b) The next ten (10) taxable years in the case of credits allowed by
41 section 63-2905, Idaho Code.
42 SECTION 7. That Section 63-4406, Idaho Code, be, and the same is hereby
43 amended to read as follows:
44 63-4406. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME
45 TAXES. (1) In addition to other needed rules, the state tax commission may
46 promulgate rules prescribing:
47 (a) In the case of S corporations, partnerships, trusts or estates, a
48 method of attributing a credit under this chapter to the shareholders,
49 partners or beneficiaries in proportion to their share of the income from
50 the S corporation, partnership, trust or estate; and
51 (b) The method by which the carryover of credits and the duty to recap-
11
1 ture credits shall survive and be transferred in the event of reorganiza-
2 tions, mergers or liquidations.
3 (2) In the case of a unitary group of corporations filing a combined
4 report under subsection (t) of section 63-3027, Idaho Code, credits against
5 income tax provided by sections 63-4403, 63-4404 and 63-4405, Idaho Code,
6 earned by one (1) member of the group but not used by that member may be used
7 by another member of the group, subject to the limitation in subsection (3) of
8 this section, instead of carried over. For a combined group of corporations,
9 credit carried forward may be claimed by any member of the group unless the
10 member or members who earned the credit are no longer included in the combined
11 group.
12 (3) The total of all credits allowed by sections 63-4403, 63-4404 and
13 63-4405, Idaho Code, together with any credits carried forward under subsec-
14 tion (4) of this section shall not exceed the amount of tax due under sections
15 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre-
16 dits permitted by this chapter, chapter 29, title 63, Idaho Code, and the
17 Idaho income tax act.
18 (4) If the credits exceed the limitation under subsection (3) of this
19 section, the excess amount may be carried forward for a period that does not
20 exceed:
21 (a) The next fourteen (14) taxable years in the case of credits allowed
22 by sections 63-4403 and 63-4404, Idaho Code; or
23 (b) The next ten (10) taxable years in the case of credits allowed by
24 section 63-4405, Idaho Code.
25 SECTION 8. An emergency existing therefor, which emergency is hereby
26 declared to exist, this act shall be in full force and effect on and after its
27 passage and approval, and retroactively to January 1, 2006.
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
Moved by Hill
Seconded by Corder
IN THE SENATE
SENATE AMENDMENT TO H.B. NO. 443
1 AMENDMENT TO SECTION 2
2 On page 4 of the printed bill, in line 9, delete "on the due tax,".
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 443, As Amended in the Senate
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO THE INCOME TAX; AMENDING SECTION 63-3024, IDAHO CODE, TO PROVIDE
3 THAT SUBSEQUENT CHANGES TO THE CONSUMER PRICE INDEX SHALL NOT AFFECT
4 INCOME TAX BRACKETS; AMENDING SECTION 63-3029B, IDAHO CODE, TO REQUIRE
5 REPORTING OF RECAPTURE OF PROPERTY TAX ON QUALIFIED INVESTMENTS; AMENDING
6 SECTION 63-3035, IDAHO CODE, TO CONFORM THE DUE DATE OF ELECTRONICALLY
7 FILED WITHHOLDING REPORTS BY EMPLOYERS TO THE FEDERAL DUE DATE; AMENDING
8 SECTION 63-3044, IDAHO CODE, TO DELETE REFERENCES TO THE ASSESSMENT OF
9 TAX; AMENDING SECTION 63-3045A, IDAHO CODE, TO PROVIDE PROVISIONS RELATING
10 TO THE ASSESSMENT OF TAX, THE RECORD OF ASSESSMENT AND PENALTIES AND ADDI-
11 TIONS TO TAX; AMENDING SECTION 63-2906, IDAHO CODE, TO PROVIDE A CROSS-
12 REFERENCE TO THE IDAHO SMALL EMPLOYER INCENTIVE ACT; AMENDING SECTION
13 63-4406, IDAHO CODE, TO PROVIDE A CROSS-REFERENCE TO THE CORPORATE HEAD-
14 QUARTERS INCENTIVE ACT; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE
15 APPLICATION.
16 Be It Enacted by the Legislature of the State of Idaho:
17 SECTION 1. That Section 63-3024, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 63-3024. INDIVIDUALS' TAX AND TAX ON ESTATES AND TRUSTS. For taxable year
20 2001, and each taxable year thereafter, a tax measured by Idaho taxable income
21 as defined in this chapter is hereby imposed upon every individual, trust, or
22 estate required by this chapter to file a return.
23 (a) The tax imposed upon individuals, trusts and estates shall be com-
24 puted at the following rates:
25 When Idaho taxable income is: The rate is:
26 Less than $1,000 One and six-tenths percent (1.6%)
27 $1,000 but less than $2,000 $16, plus three and six-tenths
28 percent (3.6%) of the amount over $1,000
29 $2,000 but less than $3,000 $52, plus four and one-tenth
30 percent (4.1%) of the amount over $2,000
31 $3,000 but less than $4,000 $93, plus five and one-tenth
32 percent (5.1%) of the amount over $3,000
33 $4,000 but less than $5,000 $144, plus six and one-tenth
34 percent (6.1%) of the amount over $4,000
35 $5,000 but less than $7,500 $205, plus seven and one-tenth
36 percent (7.1%) of the amount over $5,000
37 $7,500 but less than $20,000 $383, plus seven and four-tenths
38 percent (7.4%) of the amount over $7,500
39 Over $20,000 $1,308, plus seven
40 and eight-tenths percent
41 (7.8%) of the amount over $20,000
42 For taxable year 2000 and each year thereafter, the state tax commission
43 shall prescribe a factor which shall be used to compute the Idaho income tax
2
1 brackets provided in subsection (a) of this section. The factor shall provide
2 an adjustment to the Idaho tax brackets so that inflation will not result in a
3 tax increase. The Idaho tax brackets shall be adjusted as follows: multiply
4 the bracket amounts by the percentage (the consumer price index for the calen-
5 dar year immediately preceding the calendar year to which the adjusted brack-
6 ets will apply divided by the consumer price index for calendar year 1998).
7 For the purpose of this computation, the consumer price index for any calendar
8 year is the average of the consumer price index as of the close of the twelve
9 (12) month period for the immediately preceding calendar year, without regard
10 to any subsequent adjustments, as adopted by the state tax commission. This
11 adoption shall be exempt from the provisions of chapter 52, title 67, Idaho
12 Code. The consumer price index shall mean the consumer price index for all
13 U.S. urban consumers published by the United States department of labor. The
14 state tax commission shall annually include the factor as provided in this
15 subsection to multiply against Idaho taxable income in the brackets above to
16 arrive at that year's Idaho taxable income for tax bracket purposes.
17 (b) In case a joint return is filed by husband and wife pursuant to the
18 provisions of section 63-3031, Idaho Code, the tax imposed by this section
19 shall be twice the tax which would be imposed on one-half (1/2) of the aggre-
20 gate Idaho taxable income. For the purposes of this section, a return of a
21 surviving spouse, as defined in section 2(a) of the Internal Revenue Code, and
22 a head of household, as defined in section 2(b) of the Internal Revenue Code,
23 shall be treated as a joint return and the tax imposed shall be twice the tax
24 which would be imposed on one-half (1/2) of the Idaho taxable income.
25 (c) In the case of a trust that is an electing small business trust as
26 defined in section 1361 of the Internal Revenue Code, the special rules for
27 taxation of such trusts contained in section 641 of the Internal Revenue Code
28 shall apply except that the maximum individual rate provided in this section
29 shall apply in computing tax due under this chapter.
30 (d) The state tax commission shall compute and publish Idaho income tax
31 liability for taxpayers at the midpoint of each bracket of Idaho taxable
32 income in fifty dollar ($50.00) steps to fifty thousand dollars ($50,000),
33 rounding such calculations to the nearest dollar. Taxpayers having income
34 within such brackets shall file returns based upon and pay taxes according to
35 the schedule thus established. The state tax commission shall promulgate rules
36 defining the conditions upon which such returns shall be filed.
37 SECTION 2. That Section 63-3029B, Idaho Code, be, and the same is hereby
38 amended to read as follows:
39 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election
40 of the taxpayer there shall be allowed, subject to the applicable limitations
41 provided herein as a credit against the income tax imposed by chapter 30,
42 title 63, Idaho Code, an amount equal to the sum of:
43 (a) The tax credit carryovers; and
44 (b) The tax credit for the taxable year.
45 (2) The maximum allowable amount of the credit for the current taxable
46 year shall be three percent (3%) of the amount of qualified investments made
47 during the taxable year.
48 (3) As used in this section "qualified investment" means certain property
49 which:
50 (a) (i) Is eligible for the federal investment tax credit, as defined
51 in sections 46(c) and 48 of the Internal Revenue Code subject to the
52 limitations provided for certain regulated companies in section 46(f)
53 of the Internal Revenue Code and is not a motor vehicle under eight
3
1 thousand (8,000) pounds gross weight; or
2 (ii) Is qualified broadband equipment as defined in section
3 63-3029I, Idaho Code; and
4 (b) Is acquired, constructed, reconstructed, erected or placed into ser-
5 vice after December 31, 1981; and
6 (c) Has a situs in Idaho.
7 (4) (a) For qualified investments placed in service in 2003 and thereaf-
8 ter, a taxpayer, other than a person whose rate of charge or rate of
9 return, or both, is regulated or limited according to federal or state
10 law, may elect, in lieu of the credit provided by this section, a two (2)
11 year exemption from all taxes on personal property on the qualified
12 investment. The exemption from personal property tax shall apply to the
13 year the election is filed as provided in this section and the immediately
14 following year. The election provided by this paragraph is available only
15 to a taxpayer whose Idaho taxable income, before application of net oper-
16 ating losses carried back or forward, in the second preceding taxable year
17 in which the investment is placed in service is negative.
18 (b) The election shall be made in the form prescribed by the state tax
19 commission and shall include a specific description and location of all
20 qualified investments placed into service and located in the jurisdiction
21 of the assessing authority, a designation of the specific assets for which
22 the exemption is claimed, and such other information as the state tax com-
23 mission may require. The election must be made by including the election
24 form with the listing of personal property required by section 63-302,
25 Idaho Code, or, in the case of operating property assessed under chapter
26 4, title 63, Idaho Code, with the operator's statement required by section
27 63-404, Idaho Code. Once made the election is irrevocable. If no election
28 is made, the election is not otherwise available. A copy of the election
29 form must also be attached to the original income tax return due for the
30 taxable year in which the claim was made.
31 (c) The state tax commission and the various county assessors are autho-
32 rized to exchange information as necessary to properly coordinate the
33 exemption provided in this subsection. Information disclosed to county
34 officials under this subsection may be used only to determine the validity
35 or amount of a taxpayer's entitlement to the exemption provided in this
36 section, and is not otherwise subject to public disclosure as provided in
37 section 9-340D, Idaho Code.
38 (d) In the event that an investment in regard to which the election under
39 this subsection was made is determined by the state tax commission:
40 (i) To not be a qualified investment, or
41 (ii) To have ceased to qualify during the recapture period, or
42 (iii) To be otherwise not qualified for the election,
43 the taxpayer shall be subject to recapture of the property tax benefit.
44 (e) The benefit to be recaptured in subsection (4)(d) of this section
45 shall be computed in the manner required in subsection (7) of this section
46 and such recapture amount shall be subject to assessment in the same man-
47 ner as a deficiency in tax under this chapter. For purposes of calculating
48 the recapture, the property tax benefit shall be:
49 (i) In the case of locally assessed property located in a single
50 county or nonapportioned centrally assessed property, the market
51 value of exempted property times the average property tax levy for
52 that county in the year or years for which the exemption was claimed.
53 (ii) In the case of other centrally assessed property and property
54 located in more than one (1) county, the market value of exempted
55 property times the average urban property tax levy of the state as
4
1 determined by the state tax commission in each of the years for which
2 the exemption was claimed.
3 (f) In the event that a recapture of the exemption is required under this
4 subsection (4), the person claiming the exemption shall report the event
5 to the state tax commission in the manner the state tax commission may by
6 rule require. The report shall be due no later than the due date of that
7 person's income tax return under this chapter for the taxable year in
8 which the event occurs. The recapture amount is due and payable with the
9 report. Any amount of recapture not paid is a deficiency within the mean-
10 ing of section 63-3044, Idaho Code.
11 (g) All moneys collected by the state tax commission pursuant to this
12 subsection, which amounts are continuously appropriated for this purpose,
13 shall be deposited with the state treasurer and placed in the state refund
14 account, as provided by section 63-3067, Idaho Code, to be remitted to the
15 county within which the property was located that was not a qualified
16 investment or ceased to qualify during the recapture period. The county
17 shall distribute this remittance to all appropriate taxing districts based
18 on the proportion each appropriate taxing district's levy is to the total
19 of all the levies of the taxing districts for the tax code area where the
20 property was located for each year the exemption was granted. If any tax-
21 ing district is dissolved or disincorporated, the proportionate share of
22 the remittance to be distributed to that taxing district shall be depos-
23 ited in the county current expense fund.
24 (gh) For purposes of the limitation provided by section 63-802, Idaho
25 Code, moneys received pursuant to this subsection shall be treated as
26 property tax revenue by taxing districts.
27 (5) Notwithstanding the provisions of subsections (1) and (2) of this
28 section, the amount of the credit allowed shall not exceed fifty percent (50%)
29 of the tax liability of the taxpayer. The tax liability of the taxpayer shall
30 be the tax after deducting the credit allowed by section 63-3029, Idaho Code.
31 (6) If the sum of credit carryovers from the credit allowed by subsection
32 (2) of this section and the amount of credit for the taxable year from the
33 credit allowed by subsection (2) of this section exceed the limitation imposed
34 by subsection (5) of this section for the current taxable year, the excess
35 attributable to the current taxable year's credit shall be an investment
36 credit carryover to the fourteen (14) succeeding taxable years. In the case of
37 a group of corporations filing a combined report under section 63-3027, Idaho
38 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one
39 (1) member of the group but not used by that member may be used by another
40 member of the group, subject to the provisions of subsection (5) of this sec-
41 tion, instead of carried over. The entire amount of unused credit shall be
42 carried forward to the earliest of the succeeding years, wherein the oldest
43 available unused credit shall be used first, so long as the qualified invest-
44 ment property for which the unused credit was granted still maintains Idaho
45 situs. For a combined group of corporations, credit carried forward may be
46 claimed by any member of the group unless the member who earned the credit is
47 no longer included in the combined group.
48 (7) Any recapture of the credit allowed by subsection (2) of this section
49 on property disposed of or ceasing to qualify, prior to the close of the
50 recapture period, shall be determined according to the applicable recapture
51 provisions of the Internal Revenue Code. In the case of a unitary group of
52 corporations, the increase in tax due to the recapture of investment tax
53 credit must be reported by the member of the group who earned the credit
54 regardless of which member claimed the credit against tax.
55 (8) For the purpose of determining whether property placed in service is
5
1 a "qualified investment" as defined in subsection (3) of this section, the
2 provisions of section 49 of the Internal Revenue Code shall be disregarded.
3 "Qualified investment" shall not include any amount for which a deduction is
4 allowed under section 179 of the Internal Revenue Code in computing taxable
5 income.
6 (9) For purposes of this section, property has a situs in Idaho during a
7 taxable year if it is used in Idaho at any time during the taxable year. Prop-
8 erty not used in Idaho during a taxable year does not have a situs in Idaho in
9 the taxable year during which the property is not used in Idaho or in any sub-
10 sequent taxable year. No credit or carryover of credit is permitted under this
11 section if the credit or carryover relates to property that does not have a
12 situs in Idaho during the taxable year for which the credit or carryover is
13 claimed. The Idaho situs of property must be established by records maintained
14 by the taxpayer which are created reasonably contemporaneously with the use of
15 the property.
16 (10) In the case of property used both in and outside Idaho, the taxpayer,
17 electing to claim the credit provided in this section, must elect to compute
18 the qualified investment in property with a situs in Idaho for all such
19 investments first qualifying during that year in one (1), but only one (1), of
20 the following ways:
21 (a) The amount of each qualified investment in a specific asset shall be
22 separately computed based on the percentage of the actual use of the prop-
23 erty in Idaho by using a measure of the use, such as total miles or total
24 machine hours, that most accurately reflects the beneficial use during the
25 taxable year in which it is first acquired, constructed, reconstructed,
26 erected or placed into service; provided, that the asset is placed in ser-
27 vice more than ninety (90) days before the end of the taxable year. In the
28 case of assets acquired, constructed, reconstructed, erected or placed
29 into service within ninety (90) days prior to the end of the taxable year
30 in which the investment first qualifies, the measure of the use of that
31 asset within Idaho for that year shall be based upon the percentage of use
32 in Idaho during the first ninety (90) days of use of the asset;
33 (b) The investment in qualified property used both inside and outside
34 Idaho during the taxable year in which it is first acquired, constructed,
35 reconstructed, erected or placed into service shall be multiplied by the
36 percent of the investment that would be included in the numerator of the
37 Idaho property factor determined pursuant to section 63-3027, Idaho Code,
38 for the same year.
39 (11) Only for the purposes of subsections (3)(a) and (8) of this section,
40 references to sections of the "Internal Revenue Code" mean the sections
41 referred to as they existed in the Internal Revenue Code of 1986 prior to
42 November 5, 1990.
43 SECTION 3. That Section 63-3035, Idaho Code, be, and the same is hereby
44 amended to read as follows:
45 63-3035. STATE WITHHOLDING TAX ON PERCENTAGE BASIS -- WITHHOLDING, COL-
46 LECTION AND PAYMENT OF TAX. (a) Every employer who is required under the pro-
47 visions of the Internal Revenue Code to withhold, collect and pay income tax
48 on wages or salaries paid by such employer to any employee (other than employ-
49 ees specified in Internal Revenue Code section 3401(a)(2)) shall, at the time
50 of such payment of wages, salary, bonus or other emolument to such employee,
51 deduct and retain therefrom an amount substantially equivalent to the tax rea-
52 sonably calculated by the state tax commission to be due from the employee
53 under this chapter. The state tax commission shall prepare tables showing
6
1 amounts to be withheld, and shall supply same to each employer subject to this
2 section. In the event that an employer can demonstrate administrative inconve-
3 nience in complying with the exact requirements set forth in these tables, he
4 may, with the consent of the state tax commission and upon application to it,
5 use a different method which will produce substantially the same amount of
6 taxes withheld. Every employer making payments of wages or salaries earned in
7 Idaho, regardless of the place where such payment is made:
8 (1) shall be liable to the state of Idaho for the payment of the tax
9 required to be deducted and withheld under this section and shall not be
10 liable to any individual for the amount deducted from his wages and paid
11 over in compliance or intended compliance with this section;
12 (2) must pay to the state tax commission monthly on or before the 20th
13 day of the succeeding month, or at such other times as the state tax com-
14 mission may allow, an amount of tax which, under the provisions of this
15 chapter, he is required to deduct and withhold;
16 (3) shall register with the state tax commission, in the manner pre-
17 scribed by it, to establish an employer's withholding account number. The
18 account number will be used to report all amounts withheld, for the annual
19 reconciliation required in this section, and for such other purposes
20 relating to withholding as the state tax commission may require; and
21 (4) must, notwithstanding the provisions of paragraphs (1) and (2) of
22 this subsection, if the amount of withholding of such employer for the
23 preceding twelve (12) month period equals or exceeds two hundred forty
24 thousand dollars ($240,000) per annum or an average of twenty thousand
25 dollars ($20,000) per month per annum, pay to the state tax commission on
26 the basis of withholding periods which begin on the 16th day of the month
27 and end on the 15th day of the following month, and payment shall be made
28 not later than five (5) days after the end of the withholding period.
29 (5) If a payment required pursuant to subsection (a)(2) or (a)(4) of this
30 section is not made or is made delinquently or if made is not equal to the
31 withholding required under this section the state tax commission may treat
32 the failure as a failure to file a return and may take administrative and
33 judicial actions as authorized by this chapter in the case of a failure to
34 file a return. Interest, at the rate provided by section 63-3045, Idaho
35 Code, shall apply to any such underpayment.
36 (6) Commencing in 2006, the state tax commission shall determine whether
37 the threshold amounts established by subsection (a)(4) of this section
38 must be adjusted to reflect fluctuations in the cost of living. The com-
39 mission shall base its determination on the cumulative effect of the
40 annual cost-of-living percentage modifications determined by the United
41 States secretary of health and human services pursuant to 42 USC 415(i).
42 When the cumulative percentage applied to the monthly threshold amount
43 equals or exceeds five thousand dollars ($5,000), the commission shall
44 promulgate a rule adjusting the monthly threshold amount by five thousand
45 dollars ($5,000) and making the necessary proportional adjustment to the
46 annual threshold amount. The rule shall be effective for the next succeed-
47 ing calendar year and each year thereafter until again adjusted by the
48 commission. The tax commission shall determine subsequent adjustments in
49 the same manner, in each case using the year of the last adjustment as the
50 base year.
51 (b) (1) In addition to the payments required pursuant to subsections
52 (a)(2) and (a)(4) of this section, every employer shall file a return upon
53 such form as shall be prescribed by the state tax commission, but not more
54 frequently than annually, or as required pursuant to any agreement between
55 the state tax commission and the department of labor under section
7
1 63-3035B, Idaho Code, unless a shorter filing period and due date is pre-
2 scribed by the state tax commission. The return shall be due on the last
3 day of the month following the end of the period to which the return
4 relates. The return shall show, for the period to which it relates, the
5 total amount of wages, salary, bonus or other emolument paid to his
6 employees, the amount deducted therefrom in accordance with the provisions
7 of the Internal Revenue Code, the amount deducted therefrom in accordance
8 with the provisions of this section, the amount of any previous payments
9 made pursuant to this section, and such pertinent and necessary informa-
10 tion as the state tax commission may require.
11 (2) Every employer making a declaration of withholding as provided herein
12 shall furnish to the employees annually, but not later than thirty (30)
13 days after the end of the calendar year, a record of the amount of tax
14 withheld from such employee on forms to be prescribed, prepared and fur-
15 nished by the state tax commission and on or before the last day of Febru-
16 ary every employer shall file a copy thereof with the state tax commis-
17 sion. Every employer who is required, under Internal Revenue Code section
18 6011, to file returns on magnetic media, or in other machine readable form
19 or electronic means, as defined in the Idaho uniform electronic transac-
20 tion act, may be required by rules of the state tax commission to file
21 corresponding state returns on similar magnetic media, or other machine
22 readable form or electronic means. Such rules may provide a different due
23 date for such returns which shall be no later than the date employers are
24 required to file such returns with the internal revenue service or the
25 social security administration.
26 (c) All moneys deducted and withheld by every employer shall immediately
27 upon such deduction be state money and every employer who deducts and retains
28 any amount of money under the provisions of this chapter shall hold the same
29 in trust for the state of Idaho and for the payment thereof to the state tax
30 commission in the manner and at the times in this chapter provided. Any
31 employer who does not possess real property situated within the state of
32 Idaho, which, in the opinion of the state tax commission, is of sufficient
33 value to cover his probable tax liability, may be required to post a surety
34 bond in such sum as the state tax commission shall deem adequate to protect
35 the state.
36 (d) The provisions of this chapter relating to additions to tax in case
37 of delinquency, and penalties, shall apply to employers subject to the provi-
38 sions of this section and for these purposes any amount deducted, or required
39 to be deducted and remitted to the state tax commission under this section,
40 shall be considered to be the tax of the employer and with respect to such
41 amount he shall be considered the taxpayer.
42 (e) Amounts deducted from wages of an employee during any calendar year
43 in accordance with the provisions of this section shall be considered to be in
44 part payment of the tax imposed on such employee for his tax year which begins
45 within such calendar year and the return made by the employer under this sub-
46 section (e) shall be accepted by the state tax commission as evidence in favor
47 of the employee of the amount so deducted from his wages. Where the total
48 amount so deducted exceeds the amount of tax on the employee, based on his
49 Idaho taxable income, or where his income is not taxable under this chapter,
50 the state tax commission shall, after examining the annual return filed by the
51 employee in accordance with this chapter, but not later than sixty (60) days
52 after the filing of each return, refund the amount of the excess deducted.
53 (f) This section shall in no way relieve any taxpayer from his obligation
54 of filing a return at the time required under this chapter, and, should the
55 amount withheld under the provisions of this section be insufficient to pay
8
1 the total tax of such taxpayer, such unpaid tax shall be paid at the time pre-
2 scribed by section 63-3034, Idaho Code.
3 (g) An employee receiving wages shall on any day be entitled to not more
4 than, but may claim fewer than, the number of withholding exemptions to which
5 he is entitled under the Internal Revenue Code for federal income tax with-
6 holding purposes.
7 (h) An employer shall use the exemption certificate filed by the employee
8 with the employer under the withholding exemption provisions of the Internal
9 Revenue Code in determining the amount of tax to be withheld from the
10 employee's wages or salary under this chapter. The tax commission may redeter-
11 mine the number of withholding exemptions to which an employee is entitled
12 under subsection (g) of this section, and the state tax commission may require
13 such exemption certificate to be filed on a form prescribed by the commission
14 in any circumstance where the commission finds that the exemption certificate
15 filed for Internal Revenue Code purposes does not properly reflect the number
16 of withholding exemptions to which the employee is entitled under this chap-
17 ter. In no event shall any employee give an exemption certificate which claims
18 a higher number of withholding exemptions than the number to which the
19 employee is entitled by subsection (g) of this section.
20 SECTION 4. That Section 63-3044, Idaho Code, be, and the same is hereby
21 amended to read as follows:
22 63-3044. DEFICIENCY IN TAX. (1) As used in this act in respect of a tax
23 imposed by this act the term "deficiency" means:
24 (a1) The amount by which the tax imposed by this act exceeds the amount
25 shown as the tax by the taxpayer upon his return; but the amount so shown on
26 the return shall first be increased by the amounts previously assessed (or
27 collected without assessment) as a deficiency, and decreased by the amounts
28 previously abated, credited, refunded, or otherwise repaid in respect of such
29 tax; or,
30 (b2) If no amount is shown as the tax by the taxpayer upon his return, or
31 if no return is made by the taxpayer, then the amount by which the tax exceeds
32 the amounts previously assessed (or collected without assessment) as a defi-
33 ciency; but such amounts previously assessed, or collected without assessment,
34 shall first be decreased by the amounts previously abated, credited, refunded,
35 or otherwise repaid in respect of such tax; or,
36 (c3) Any amount of tax which is due and unpaid.
37 (2) A tax assessment shall be made by recording the liability of the tax-
38 payer along with an identification of the taxpayer, the character of the lia-
39 bility assessed, the taxable period, if applicable, and the amount of the
40 assessment. The assessment shall be kept and maintained in a record in the
41 office of the state tax commission in accordance with rules prescribed by the
42 tax commission. Upon request of the taxpayer, the tax commission shall furnish
43 the taxpayer a copy of the record of assessment. No tax commission activities
44 to enforce collection of tax may be conducted, nor may a proceeding to collect
45 a tax be instituted, until assessment of the tax has been made in accordance
46 with the provisions of this section. Taxes and related interest may be
47 assessed immediately upon receipt of a tax return, amended return or other
48 consent signed by the taxpayer or the taxpayer's authorized representative
49 showing the taxes due. The tax commission may presume that the signature is
50 the signature of the taxpayer or the taxpayer's authorized representative
51 until the contrary is established by a preponderance of the evidence.
52 (3) The making of an assessment is not required before the tax commission
53 may conduct audits and investigations or make inquiries of taxpayers or other
9
1 persons relating to matters within the tax commission's jurisdiction. The mak-
2 ing of an assessment is not required before the tax commission may file a
3 judicial action under section 63-3030A or 63-3064, Idaho Code, or actions for
4 injunctive or declaratory relief.
5 SECTION 5. That Section 63-3045A, Idaho Code, be, and the same is hereby
6 amended to read as follows:
7 63-3045A. MATHEMATICAL ERROR -- ASSESSMENT OF TAX. (1) Except as provided
8 in subsection (2) of this section, no tax commission activities to enforce
9 collection of tax may be conducted, nor may a proceeding to collect a tax be
10 instituted, until taxes are assessed in accordance with the provisions of this
11 section.
12 (a) Taxes and related interest, including revisions for mathematical
13 errors, are assessed immediately upon receipt of a tax return, amended
14 return or other consent signed by the taxpayer or the taxpayer's autho-
15 rized representative showing the taxes due. The tax commission may pre-
16 sume that the signature is the signature of the taxpayer or the taxpayer's
17 authorized representative until the contrary is established by a prepon-
18 derance of the evidence.
19 (ab) In the event that the amount of tax is understated on the taxpayer's
20 return due to a mathematical error, the state tax commission shall notify
21 the taxpayer that an amount of tax in excess of that shown on the return
22 is due and has been asserted. Such a notice of additional tax due shall
23 not be considered a notice of a deficiency nor shall the taxpayer have any
24 right of protest or appeal as in the case of a deficiency based on such
25 notice, and the assessment and collection of the amount of tax erroneously
26 omitted in the return is not prohibited by any provision of this chapter.
27 (bc) The amount of tax which is shown to be due on the return (including
28 revisions for mathematical errors) shall be deemed to be assessed on the
29 date of filing of the return including any amended returns showing an
30 increase of tax. In the case of a return properly filed without the compu-
31 tation of the tax, the tax computed by the state tax commission shall be
32 deemed to be assessed on the date when payment is due. Any amount paid as
33 a tax or in respect of a tax, other than amounts withheld at the source or
34 paid as estimated income tax, shall be deemed to be assessed upon the date
35 of receipt of payment, notwithstanding any other provisions of this chap-
36 ter.
37 (cd) For all other purposes of this chapter, a tax is deemed assessed
38 when:
39 (i) Aa taxpayer fails to file a protest with the state tax commis-
40 sion within the time prescribed in section 63-3045, Idaho Code, or an
41 action in district court or the board of tax appeals within the time
42 prescribed in subsection (a) of section 63-3049, Idaho Code; or
43 (ii) Upon conclusion of any such proceeding for any amount upheld at
44 that conclusion of such proceeding.
45 (2) An assessment is not required before the tax commission may conduct
46 audits and investigations or make inquiries of taxpayers or other persons
47 relating to matters within the tax commission's jurisdiction. The making of an
48 assessment is not required before the tax commission may file a judicial
49 action under section 63-3030A or 63-3064, Idaho Code, or actions for injunc-
50 tive or declaratory relief.
51 (3) When taxes and related interest have been assessed, the state tax
52 commission shall create a record of assessment by recording the liability of
53 the taxpayer along with an identification of the taxpayer, the character of
10
1 the liability assessed, the taxable period, if applicable, and the amount of
2 the assessment. The record of an assessment shall be kept and maintained in a
3 record in the office of the state tax commission in accordance with rules pre-
4 scribed by the state tax commission. Upon request of the taxpayer, the state
5 tax commission shall furnish the taxpayer a copy of the record of assessment.
6 (4) Penalties and additions to tax in the case of a deficiency shall be
7 assessed in the same manner as the taxes and related interest.
8 SECTION 6. That Section 63-2906, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 63-2906. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME
11 TAXES. (1) In addition to other needed rules, the state tax commission may
12 promulgate rules prescribing:
13 (a) In the case of S corporations, partnerships, trusts or estates, a
14 method of attributing a credit under this chapter to the shareholders,
15 partners or beneficiaries in proportion to their share of the income from
16 the S corporation, partnership, trust or estate; and
17 (b) The method by which the carryover of credits and the duty to recap-
18 ture credits shall survive and be transferred in the event of reorganiza-
19 tions, mergers or liquidations.
20 (2) In the case of a unitary group of corporations filing a combined
21 report under subsection (t) of section 63-3027, Idaho Code, credits against
22 income tax provided by sections 63-2903, 63-2904 and 63-2905, Idaho Code,
23 earned by one (1) member of the group but not used by that member may be used
24 by another member of the group, subject to the limitation in subsection (3) of
25 this section, instead of carried over. For a combined group of corporations,
26 credit carried forward may be claimed by any member of the group unless the
27 member or members who earned the credit are no longer included in the combined
28 group.
29 (3) The total of all credits allowed by sections 63-2903, 63-2904 and
30 63-2905, Idaho Code, together with any credits carried forward under subsec-
31 tion (4) of this section shall not exceed the amount of tax due under sections
32 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre-
33 dits permitted by this chapter, chapter 44, title 63, Idaho Code, and the
34 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 63-2903 and 63-2904, Idaho Code; or
40 (b) The next ten (10) taxable years in the case of credits allowed by
41 section 63-2905, Idaho Code.
42 SECTION 7. That Section 63-4406, Idaho Code, be, and the same is hereby
43 amended to read as follows:
44 63-4406. LIMITATIONS, AND OTHER PROVISIONS ON CREDITS AGAINST INCOME
45 TAXES. (1) In addition to other needed rules, the state tax commission may
46 promulgate rules prescribing:
47 (a) In the case of S corporations, partnerships, trusts or estates, a
48 method of attributing a credit under this chapter to the shareholders,
49 partners or beneficiaries in proportion to their share of the income from
50 the S corporation, partnership, trust or estate; and
51 (b) The method by which the carryover of credits and the duty to recap-
11
1 ture credits shall survive and be transferred in the event of reorganiza-
2 tions, mergers or liquidations.
3 (2) In the case of a unitary group of corporations filing a combined
4 report under subsection (t) of section 63-3027, Idaho Code, credits against
5 income tax provided by sections 63-4403, 63-4404 and 63-4405, Idaho Code,
6 earned by one (1) member of the group but not used by that member may be used
7 by another member of the group, subject to the limitation in subsection (3) of
8 this section, instead of carried over. For a combined group of corporations,
9 credit carried forward may be claimed by any member of the group unless the
10 member or members who earned the credit are no longer included in the combined
11 group.
12 (3) The total of all credits allowed by sections 63-4403, 63-4404 and
13 63-4405, Idaho Code, together with any credits carried forward under subsec-
14 tion (4) of this section shall not exceed the amount of tax due under sections
15 63-3024, 63-3025 and 63-3025A, Idaho Code, after allowance for all other cre-
16 dits permitted by this chapter, chapter 29, title 63, Idaho Code, and the
17 Idaho income tax act.
18 (4) If the credits exceed the limitation under subsection (3) of this
19 section, the excess amount may be carried forward for a period that does not
20 exceed:
21 (a) The next fourteen (14) taxable years in the case of credits allowed
22 by sections 63-4403 and 63-4404, Idaho Code; or
23 (b) The next ten (10) taxable years in the case of credits allowed by
24 section 63-4405, Idaho Code.
25 SECTION 8. An emergency existing therefor, which emergency is hereby
26 declared to exist, this act shall be in full force and effect on and after its
27 passage and approval, and retroactively to January 1, 2006.
STATEMENT OF PURPOSE
RS 15387
This bill makes several technical corrections and updates to
the Idaho Income Tax Act:
Section 1 provides that once the income tax brackets are
adjusted for the Consumer Price Index, no subsequent adjustment
to the CPI will affect the brackets.
Section 2 provides a date by which a taxpayer who is
required to recapture the two-year property tax exemption is
required to report the recapture.
Section 3 extends the due date for filing employer
electronic copies of W-2's from the last day of February to March
31. This conforms to the federal due date.
Sections 4 & 5 harmonize inconsistencies between sections
63-3044(2) & (3) and 63-3045A(b), Idaho Code, as to the method by
which tax is "assessed." The amended sections provide a definite
date of assessment and a consistent method for recording the
assessment.
Sections 6 & 7. Amend 2005 legislation (the "Idaho
Headquarters Incentive Act" and the "Idaho Small Business
Incentive Act") to coordinate the maximum credit allowed to a
taxpayer claiming both credits.
FISCAL NOTE
None.
CONTACT
Name: Dan John
Agency: State Tax Commission
Phone: 334-7530
STATEMENT OF PURPOSE/FISCAL NOTE H 443