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H0506...............................................by REVENUE AND TAXATION
PROPERTY TAX - Amends existing law relating to property tax relief to
expand the definition of "claimant"; and to provide that recovery
procedures apply to persons falsely claiming the federal earned income
credit.
01/30 House intro - 1st rdg - to printing
01/31 Rpt prt - to Rev/Tax
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 506
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO THE CIRCUIT BREAKER PROPERTY TAX RELIEF; AMENDING SECTION 63-701,
3 IDAHO CODE, TO EXPAND THE DEFINITION OF "CLAIMANT"; AMENDING SECTION
4 63-708, IDAHO CODE, TO CLARIFY THAT RECOVERY PROCEDURES APPLY TO PERSONS
5 FALSELY CLAIMING THE FEDERAL EARNED INCOME CREDIT; DECLARING AN EMERGENCY
6 AND PROVIDING RETROACTIVE APPLICATION.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Section 63-701, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 63-701. DEFINITIONS. As used in this chapter:
11 (1) "Claimant" means a person who has filed a claim under the provisions
12 of sections 63-701 through 63-710, Idaho Code. Except as provided in section
13 63-702(2), Idaho Code, on January 1, or before April 15, of the year in which
14 the claimant first filed a claim on the homestead in question, a claimant must
15 be an owner of the homestead and on January 1 of said year a claimant must be:
16 (a) Not less than sixty-five (65) years old; or
17 (b) A child under the age of eighteen (18) years who is fatherless or
18 motherless or who has been abandoned by any surviving parent or parents;
19 or
20 (c) A widow or widower; or
21 (d) A disabled person who is recognized as disabled by the social secu-
22 rity administration pursuant to title 42 of the United States Code, or by
23 the railroad retirement board pursuant to title 45 of the United States
24 Code, or by the office of management and budget pursuant to title 5 of the
25 United States Code; or
26 (e) A disabled veteran of any war engaged in by the United States, whose
27 disability is recognized as a service-connected disability of a degree of
28 ten percent (10%) or more, or who has a pension for nonservice-connected
29 disabilities, in accordance with laws and regulations administered by the
30 United States department of veterans affairs; or
31 (f) A person, as specified in 42 U.S.C. 1701, who was or is entitled to
32 receive benefits because he is known to have been taken by a hostile force
33 as a prisoner, hostage or otherwise; or
34 (g) Blind; or
35 (h) Eligible for the federal earned income credit under section 32 of the
36 Internal Revenue Code and earned while a resident of Idaho and for whom
37 the total property tax due for the previous year will meet or exceed ten
38 percent (10%) of the claimant's annual adjusted gross income for that tax
39 year.
40 (2) "Homestead" means the dwelling, owner-occupied by the claimant as
41 described in this chapter and used as the primary dwelling place of the claim-
42 ant and may be occupied by any members of the household as their home, and so
43 much of the land surrounding it, not exceeding one (1) acre, as is reasonably
2
1 necessary for the use of the dwelling as a home. It may consist of a part of a
2 multidwelling or multipurpose building and part of the land upon which it is
3 built. "Homestead" does not include personal property such as furniture, fur-
4 nishings or appliances, but a manufactured home may be a homestead.
5 (3) "Household" means the claimant and the claimant's spouse. The term
6 does not include bona fide lessees, tenants, or roomers and boarders on con-
7 tract. "Household" includes persons described in subsection (8)(b) of this
8 section.
9 (4) "Household income" means all income received by the claimant and, if
10 married, all income received by the claimant's spouse, in a calendar year.
11 (5) "Income" means the sum of federal adjusted gross income as defined in
12 the Internal Revenue Code, as defined in section 63-3004, Idaho Code, and to
13 the extent not already included in federal adjusted gross income:
14 (a) Alimony;
15 (b) Support money;
16 (c) Nontaxable strike benefits;
17 (d) The nontaxable amount of any individual retirement account, pension
18 or annuity, (including railroad retirement benefits, all payments received
19 under the federal social security act except the social security death
20 benefit as specified in this subsection, state unemployment insurance
21 laws, and veterans disability pensions and compensation, excluding
22 rollovers as provided in section 402 or 403 of the Internal Revenue Code);
23 (e) Nontaxable interest received from the federal government or any of
24 its instrumentalities or a state government or any of its instrumentali-
25 ties;
26 (f) Worker's compensation; and
27 (g) The gross amount of loss of earnings insurance.
28 It does not include capital gains, gifts from nongovernmental sources or
29 inheritances. To the extent not reimbursed, the cost of medical care as
30 defined in section 213(d) of the Internal Revenue Code, incurred or paid by
31 the claimant and, if married, the claimant's spouse, may be deducted from
32 income. To the extent not reimbursed, personal funeral expenses, including
33 prepaid funeral expenses and premiums on funeral insurance, of the claimant
34 and claimant's spouse only, may be deducted from income up to an annual maxi-
35 mum of five thousand dollars ($5,000) per claim. "Income" does not include
36 veterans disability pensions received by a person described in subsection
37 (1)(e) who is a claimant or a claimant's spouse if the disability pension is
38 received pursuant to a service-connected disability of a degree of forty per-
39 cent (40%) or more. "Income" does not include dependency and indemnity compen-
40 sation or death benefits paid to a person described in subsection (1) of this
41 section by the United States department of veterans affairs and arising from a
42 service-connected death or disability. "Income" does not include lump sum
43 death benefits made by the social security administration pursuant to 42
44 U.S.C. section 402(i). Documentation of medical expenses may be required by
45 the county assessor, board of equalization and state tax commission in such
46 form as the county assessor, board of equalization or state tax commission
47 shall determine. "Income" shall be that received in the calendar year immedi-
48 ately preceding the year in which a claim is filed. Where a claimant and/or
49 the claimant's spouse does not file a federal tax return, the claimant's
50 and/or the claimant's spouse's federal adjusted gross income, for purposes of
51 this section, shall be an income equivalent to federal adjusted gross income
52 had the claimant and/or the claimant's spouse filed a federal tax return, as
53 determined by the county assessor. The county assessor, board of equalization
54 or state tax commission may require documentation of income in such form as
55 each shall determine, including, but not limited to: copies of federal or
3
1 state tax returns and any attachments thereto; and income reporting forms such
2 as the W-2 and 1099.
3 (6) "Occupied" means actual use and possession.
4 (7) "Owner" means a person holding title in fee simple or holding a cer-
5 tificate of motor vehicle title (either of which may be subject to mortgage,
6 deed of trust or other lien) or who has retained or been granted a life estate
7 or who is a person entitled to file a claim under section 63-702, Idaho Code.
8 "Owner" shall also include any person who:
9 (a) Is the beneficiary of a revocable or irrevocable trust which is the
10 owner of such homestead and under which the claimant or the claimant's
11 spouse has the primary right of occupancy of the homestead; or
12 (b) Is a partner of a limited partnership, member of a limited liability
13 company or shareholder of a corporation if such entity holds title in fee
14 simple or holds a certificate of motor vehicle title and if the person
15 holds at least a five percent (5%) ownership in such entity, as determined
16 by the county assessor; or
17 (c) Has retained or been granted a life estate.
18 "Owner" includes a vendee in possession under a land sale contract. Any par-
19 tial ownership shall be considered as ownership for determining initial quali-
20 fication for property tax reduction benefits; however, the amount of property
21 tax reduction under section 63-704, Idaho Code, and rules promulgated pursuant
22 to section 63-705, Idaho Code, shall be computed on the value of the
23 claimant's partial ownership. "Partial ownership," for the purposes of this
24 section, means any one (1) person's ownership when property is owned by more
25 than one (1) person or where the homestead is held by an entity, as set forth
26 in this subsection, but more than one (1) person has the right of occupancy of
27 such homestead. A person holding either partial title in fee simple or holding
28 a certificate of motor vehicle title together with another person but who does
29 not occupy the dwelling as his primary dwelling place, shall not be considered
30 an owner for purposes of this section, if such person is a cosignatory of a
31 note secured by the dwelling in question and at least one (1) of the other
32 cosignatories of the note occupies the dwelling as his primary dwelling place.
33 The combined community property interests of both spouses shall not be consid-
34 ered partial ownership so long as the combined community property interests
35 constitute the entire ownership of the homestead, including where the spouses
36 are occupying a homestead owned by an entity, as set forth in this subsection,
37 and the spouses have the primary right of occupancy of the homestead. The pro-
38 portional reduction required under this subsection shall not apply to commu-
39 nity property interests. Where title to property was held by a person who has
40 died without timely filing a claim for property tax reduction, the estate of
41 the deceased person shall be the "owner," provided that the time periods dur-
42 ing which the deceased person held such title shall be attributed to the
43 estate for the computation of any time periods under subsection (8)(a) or
44 (8)(b) of this section.
45 (8) (a) "Primary dwelling place" means the claimant's dwelling place on
46 January 1 or before April 15 of the year for which the claim is made. The
47 primary dwelling place is the single place where a claimant has his true,
48 fixed and permanent home and principal establishment, and to which when-
49 ever the individual is absent he has the intention of returning. A claim-
50 ant must establish the dwelling to which the claim relates to be his pri-
51 mary dwelling place by clear and convincing evidence or by establishing
52 that the dwelling is where the claimant resided on January 1 or before
53 April 15 and:
54 (i) At least six (6) months during the prior year; or
55 (ii) The majority of the time the claimant owned the dwelling if
4
1 owned by the claimant less than one (1) year; or
2 (iii) The majority of the time after the claimant first occupied the
3 dwelling if occupied by the claimant for less than one (1) year. The
4 county assessor may require written or other proof of the foregoing
5 in such form as the county assessor may determine.
6 (b) Notwithstanding the provisions of paragraph (a) of this subsection,
7 the property upon which the claimant makes application shall be deemed to
8 be the claimant's primary dwelling place if the claimant is otherwise
9 qualified and resides in a care facility and does not allow the property
10 upon which the claimant has made application to be occupied by persons
11 paying a consideration to occupy the dwelling. Payment of utilities shall
12 not be payment of a consideration to occupy the dwelling. A claimant's
13 spouse who resides in a care facility shall be deemed to reside at the
14 claimant's primary dwelling place and to be a part of the claimant's
15 household. A care facility is a hospital, nursing facility or intermediate
16 care facility for the mentally retarded as defined in section 39-1301,
17 Idaho Code, or a facility as defined in section 39-3302(14), Idaho Code,
18 or a dwelling other than the one upon which the applicant makes applica-
19 tion where a claimant who is unable to reside in the dwelling upon which
20 the application is made lives and receives help in daily living, protec-
21 tion and security.
22 SECTION 2. That Section 63-708, Idaho Code, be, and the same is hereby
23 amended to read as follows:
24 63-708. RECOVERY OF ERRONEOUS CLAIMS. Within three (3) years of payment,
25 the state tax commission may recover any erroneous or incorrect payment made
26 under sections 63-701 through 63-710, Idaho Code, from any "claimant" as
27 defined in section 63-701(1), Idaho Code. The deficiency determination, col-
28 lection, and enforcement procedures provided by the Idaho income tax act, sec-
29 tions 63-3039, 63-3042, 63-3043 through 63-3064, Idaho Code, shall apply and
30 be available to the commission for enforcement and collection under sections
31 63-701 through 63-710, Idaho Code, and such sections shall, for this purpose,
32 be considered part of sections 63-701 through 63-710, Idaho Code. Wherever
33 liens or any other proceedings are defined as income tax liens or proceedings,
34 they shall, when applied in enforcement or collection under sections 63-701
35 through 63-710, Idaho Code, be described as tax relief liens and proceedings.
36 In connection with such sections, a deficiency shall consist of any amount
37 erroneously claimed by or paid to a claimant under sections 63-701 through
38 63-710, Idaho Code. If a claimant is eligible solely or in part because he or
39 she is eligible for the federal earned income credit under section 32 of the
40 Internal Revenue Code and earned while a resident of Idaho and the person is
41 ineligible for the federal earned income credit under section 32 of the Inter-
42 nal Revenue Code for the tax year property tax relief is claimed, the recovery
43 procedures shall apply to such person.
44 SECTION 3. An emergency existing therefor, which emergency is hereby
45 declared to exist, this act shall be in full force and effect on and after its
46 passage and approval, and retroactively to January 1, 2006.
STATEMENT OF PURPOSE
RS 15788C1
The intent of this legislation is to add to the Idaho Circuit
Breaker property tax relief program a class of non-elderly,
working people whose total property tax meets or exceeds 10% of
their annual adjusted gross income from all sources.
Qualification for this program is intended to use the same income
brackets and ceiling as the existing Circuit Breaker but also
requiring qualification based on the Federal Earned Income Tax
Credit which provides income tax relief to 97,765 working
families in Idaho. By targeting this segment of the circuit
breaker at those whose property tax meets or exceeds 10% of their
income, this program will focus relief on households in those
areas where property tax is highest, particularly compared to
wages and earned income.
FISCAL NOTE
With 97,765 people qualifying for the Federal EITC in 2005,
weighting heavily toward those living in areas with high property
values, impact to the State general fund will be $16 million,
essentially doubling the size of the Circuit Breaker program.
Contact
Name: Rep. Nicole LeFavour
Phone: 724-0468
STATEMENT OF PURPOSE/FISCAL NOTE H 506