2006 Legislation
Print Friendly

HOUSE BILL NO. 443 – Income tax, misc. changes

HOUSE BILL NO. 443

View Bill Status

View Bill Text

View Amendment

View Engrossed Bill (Original Bill with Amendment(s) Incorporated)

View Statement of Purpose / Fiscal Impact



Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Bill Status



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

Bill Text


                                                                        
                                                                        
  ]]]]              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.

Amendment


                                                                        
                                                                        
  ]]]]              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,".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ]]]]              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 / Fiscal Impact


                      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