Print Friendly HOUSE BILL NO. 754 – Income tax credit/new plant facilty
HOUSE BILL NO. 754
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H0754...............................................by REVENUE AND TAXATION
INCOME TAX CREDIT - NEW PLANT FACILITIES - Amends existing law to provide
that the jobs credit, additional investment tax credit and a sales tax
rebate shall apply to new plant and building facilities instead of
headquarters or administrative facilities.
03/01 House intro - 1st rdg - to printing
03/02 Rpt prt - to Rev/Tax
03/08 Rpt out - rec d/p - to 2nd rdg
03/09 2nd rdg - to 3rd rdg
03/10 3rd rdg - PASSED - 63-3-4
AYES -- Anderson, Andrus, Barraclough, Bastian, Bayer, Bedke, Bell,
Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon,
Chadderdon, Clark, Collins, Denney, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Garrett, Hart, Henbest, Henderson, Jaquet,
Kemp, Lake, Loertscher, Martinez, Mathews, McGeachin, McKague,
Miller, Mitchell, Moyle, Nielsen, Nonini, Pasley-Stuart, Pence,
Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sali, Sayler,
Schaefer, Shepherd(2), Shirley, Skippen, Smith(30), Smith(24),
Smylie, Snodgrass, Stevenson, Trail, Wills, Mr. Speaker
NAYS -- Barrett, Harwood, LeFavour
Absent and excused -- Crow, Deal, Shepherd(8), Wood
Floor Sponsor - Moyle
Title apvd - to Senate
03/13 Senate intro - 1st rdg - to Loc Gov
03/22 Rpt out - rec d/p - to 2nd rdg
03/23 2nd rdg - to 3rd rdg
03/28 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett(Clark),
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
03/29 To enrol
03/30 Rpt enrol - Sp signed
03/31 Pres signed - To Governor
03/31 Governor signed
Session Law Chapter 314
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 754
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO STATE INCOME TAX CREDITS; AMENDING SECTION 63-4402, IDAHO CODE, TO
3 PROVIDE A DEFINITION OF "NEW PLANT AND BUILDING FACILITIES," TO REVISE THE
4 DEFINITION OF "INVESTMENT IN NEW PLANT," TO REVISE THE DEFINITION OF
5 "PROJECT PERIOD," TO REVISE THE DEFINITION OF "PROJECT SITE," AND TO
6 REVISE THE DEFINITION OF "TAX INCENTIVE CRITERIA"; AMENDING SECTION
7 63-4403, IDAHO CODE, TO REVISE DATES AND TO DECREASE THE MAXIMUM ALLOWABLE
8 CREDIT FOR ANY ONE TAXABLE YEAR; AMENDING SECTION 63-4404, IDAHO CODE, TO
9 REVISE DATES, TO PROVIDE THAT THE CREDIT ALLOWED SHALL BE RELATED TO NEW
10 PLANT AND BUILDING FACILITIES AND TO MAKE A TECHNICAL CORRECTION; AMENDING
11 SECTION 63-4405, IDAHO CODE, TO REVISE DATES FOR THE ADDITIONAL INCOME TAX
12 CREDIT FOR NEW JOBS; AMENDING SECTION 63-4408, IDAHO CODE, TO REVISE DATES
13 FOR THE SALES TAX REBATE FOR NEW JOBS AND TO PROVIDE THAT THE REBATE SHALL
14 BE RELATED TO NEW PLANT AND BUILDING FACILITIES; DECLARING AN EMERGENCY
15 AND PROVIDING RETROACTIVE APPLICATION.
16 Be It Enacted by the Legislature of the State of Idaho:
17 SECTION 1. That Section 63-4402, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 63-4402. DEFINITIONS. (1) The definitions contained in the Idaho income
20 tax act, shall apply to this chapter unless modified in this chapter or unless
21 the context clearly requires another definition.
22 (2) As used in this chapter:
23 (a) "Commission" means the Idaho state tax commission.
24 (b) " Headquarters or administrativeNew plant and building facilities"
25 means facility or facilities, including related parking facilities, where
26 corporate staff employees are physically employed , and where the majority
27 of the company's services are handled. Company services may include:
28 accounts receivable and payable, accounting, data processing, distribution
29 management, employee benefit plan, financial and securities accounting,
30 information technology, insurance, legal, merchandising, payroll, person-
31 nel, purchasing/procurement, planning, reporting and compliance, tax,
32 treasury, or other headquarters-related services.
33 (c) "Idaho income tax act" means chapter 30, title 63, Idaho Code.
34 (d) "Investment in new plant" means investment in headquarters or admin-
35 istrative new plant and building facilities that are:
36 (i) Qualified investments; or
37 (ii) Buildings or structural components of buildings.
38 (e) "New employee":
39 (i) Means an individual, employed primarily within the project site
40 by the taxpayer, subject to Idaho income tax withholding whether or
41 not any amounts are required to be withheld, covered for unemployment
42 insurance purposes under chapter 13, title 72, Idaho Code, and who
43 was eligible to receive employer provided coverage under a health
1 benefit plan as described in section 41-4703, Idaho Code, during the
2 taxable year. A person shall be deemed to be so employed if such per-
3 son performs duties on a regular full-time basis.
4 (ii) The number of employees employed primarily within the project
5 site by the taxpayer, during any taxable year for a taxpayer shall
6 be the mathematical average of the number of such employees reported
7 to the Idaho department of commerce and labor for employment security
8 purposes during the twelve (12) months of the taxable year which
9 qualified under paragraph (e)(i) of this subsection (2). In the event
10 the business is in operation for less than the entire taxable year,
11 the number of employees of the taxpayer for the year shall be the
12 average number actually employed during the months of operation, pro-
13 vided that the qualifications of paragraph (e)(i) of this subsection
14 (2) are met.
15 (iii) Existing employees of the taxpayer who obtain new qualifying
16 positions within the project site and employees transferred from a
17 related taxpayer or acquired as part of the acquisition of a trade or
18 business from another taxpayer within the prior twelve (12) months
19 are not included in this definition unless the new position or trans-
20 fer creates a net new job in Idaho.
21 (f) "Project period" means the period of time beginning at the earlier of
22 a physical change to the project site or the first employment of new
23 employees located in Idaho who are related to the activities at the proj-
24 ect site, but no earlier than January 1, 200 56, and ending when the facil-
25 ities constituting the project are placed in service, but no later than
26 December 31, 20 0910.
27 (g) "Project site" means an area or areas at which headquarters and head-
28 quarters new plant and building facilities are located and at which the
29 tax incentive criteria have been or will be met and which are either:
30 (i) A single geographic area located in this state at which the
31 headquarters or administrative new plant and building facilities
32 owned or leased by the taxpayer are located; or
33 (ii) One (1) or more geographic areas located in this state if
34 eighty percent (80%) or more of the investment required by subsection
35 (2)(j)(i) of this section is made at one (1) of the areas.
36 (iii) The project site must be identified and described to the com-
37 mission by a taxpayer subject to tax under the Idaho income tax act,
38 in the form and manner prescribed by the commission.
39 (h) "Qualified investment" shall be defined as in section 63-3029B, Idaho
41 (i) "Recapture period" means:
42 (i) In the case of credits described in sections 63-4403 and
43 63-4404, Idaho Code, the same period for which a recapture of invest-
44 ment tax credit under section 63-3029B, Idaho Code, is required; or
45 (ii) In the case of credits described in section 63-4405, Idaho
46 Code, five (5) years from the date the project period ends.
47 (j) "Tax incentive criteria" means a taxpayer meeting at a project site
48 the requirements of subparagraphs (i) , and (ii) and (iii) of this para-
49 graph (j).
50 (i) During the project period, making capital investments in new
51 plant of at least five hundred thousand dollars ($500,000) at the
52 project site.
53 (ii) During a period of time beginning on January 1, 200 56, and end-
54 ing at the conclusion of the project period:
55 1. Increasing employment at the project site by at least ten
1 (10) new employees each of whom must earn at least nineteen dol-
2 lars and twenty-three cents ($19.23) per hour worked during the
3 taxpayer's taxable year.
4 (A) Earnings calculated pursuant to subparagraph (ii) of
5 this paragraph (j) shall include income upon which Idaho
6 income tax withholding is required under section 63-3035,
7 Idaho Code, but shall not include income such as stock
8 options or restricted stock grants.
9 (B) For purposes of determining whether the increased
10 employment threshold has been met, employment at the proj-
11 ect site shall be determined by calculating the increase of
12 such new employees reported to the Idaho department of com-
13 merce and labor for employment security purposes over the
14 employees so reported as of the beginning of the project
15 period or no earlier than January 1, 2005, whichever is
16 larger; and
17 2. Employment increases above the ten (10) new employees
18 described in subparagraph (ii)1. of this paragraph (j) at the
19 project site shall on average earn at least fifteen dollars and
20 fifty cents ($15.50) per hour worked during the taxpayer's tax-
21 able year. Calculation of the group average earnings shall not
22 include amounts paid to any employee earning more than forty-
23 eight dollars and eight cents ($48.08) per hour or less than
24 twelve dollars ($12.00) per hour worked during the taxpayer's
25 taxable year. The denominator of this calculation shall be the
26 number of new job positions filled that pay less than forty-
27 eight dollars and eight cents ($48.08) per hour worked during
28 the taxpayer's taxable year.
29 3. Earnings calculated pursuant to subparagraph (ii) of this
30 paragraph (j) shall include income upon which Idaho income tax
31 withholding is required under section 63-3035, Idaho Code, but
32 shall not include income such as stock options or restricted
33 stock grants.
34 4. For purposes of determining whether the increased employment
35 threshold has been met, employment at the project site shall be
36 determined by calculating the increase of such new employees
37 reported to the Idaho department of commerce and labor for
38 employment security purposes over the employees so reported as
39 of the beginning of the project period or no earlier than Janu-
40 ary 1, 2006, whichever is larger; and
41 5. Maintaining net increased employment in Idaho required by
42 subparagraph (ii) 1. of this paragraph (j) during the remainder
43 of the project period.
44 (iii) No person meets the tax incentive criteria unless the ratio of
45 new employees qualified under subparagraph (ii) of this section to
46 investment in new plant under subparagraph (i) of this section
47 exceeds one (1) employee for each fifty thousand dollars ($50,000) of
48 investment in new plant.
49 (k) "Taxpayer," for purposes of paragraphs (j) and (e) of this subsection
50 (2), means either:
51 (i) A single taxpayer; or
52 (ii) In the context of a unitary group filing a combined report
53 under section 63-3027(t), Idaho Code, all members of a unitary group
54 includable in a combined report for the tax years in which the credit
55 provided for by this chapter may be claimed. For all other purposes,
1 the terms of section 63-3009, Idaho Code, and section 63-3027(t)(1),
2 Idaho Code, apply to the meaning of "taxpayer."
3 SECTION 2. That Section 63-4403, Idaho Code, be, and the same is hereby
4 amended to read as follows:
5 63-4403. ADDITIONAL INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) For
6 taxable years beginning on or after January 1, 200 56, and before December 31,
7 20 0910, and subject to the limitations of this chapter, a taxpayer who has
8 certified that the tax incentive criteria will be met within a project site
9 during a project period shall, in regard to qualified investments made after
10 the beginning of the project period and before December 31, 20 0910, in lieu of
11 the investment tax credit provided in section 63-3029B, Idaho Code, be allowed
12 a nonrefundable credit against taxes imposed by sections 63-3024, 63-3025 and
13 63-3025A, Idaho Code, in the amount of three and seventy-five one hundredths
14 percent (3.75%) of the amount of qualified investment made during a taxable
15 year, wherever located within this state.
16 (2) The credit allowed by this section shall not exceed sixty-two and
17 five-tenths percent (62.5%) of the tax liability of the taxpayer.
18 (3) The credit allowed by this section shall not exceed one million two
19 seven hundred fifty thousand dollars ($ 1,2750,000) in any one (1) taxable
21 SECTION 3. That Section 63-4404, Idaho Code, be, and the same is hereby
22 amended to read as follows:
23 63-4404. REAL PROPERTY IMPROVEMENT TAX CREDIT. (1) For taxable years
24 beginning on or after January 1, 200 56, and before December 31, 20 0910, sub-
25 ject to the limitations of this chapter, a taxpayer who has certified that the
26 tax incentive criteria will be met within a project site during a project
27 period shall be allowed a nonrefundable credit against taxes imposed by sec-
28 tions 63-3024, 63-3025 and 63-3025A, Idaho Code, in the amount of two and
29 five-tenths percent (2.5%) of the investment in new plant which is incurred
30 during the project period applicable to the project site in which the invest-
31 ment is made.
32 (2) The credit allowed by this section shall not exceed one hundred and
33 twenty-five thousand dollars ($125,000) in any one (1) taxable year.
34 (3) No credit is allowable under this section for a qualified investment
35 in regard to which a credit under section 63-4403, Idaho Code, is available.
36 (4) The credit allowed by this section is limited to buildings and struc-
37 tural components of buildings related to headquarters or administrative new
38 plant and building facilities.
39 SECTION 4. That Section 63-4405, Idaho Code, be, and the same is hereby
40 amended to read as follows:
41 63-4405. ADDITIONAL INCOME TAX CREDIT FOR NEW JOBS. (1) Subject to the
42 limitations of this chapter, for taxable years beginning on or after January
43 1, 200 56, and before December 31, 20 0910, a taxpayer who has certified that
44 the tax incentive criteria will be met within a project site during a project
45 period shall, for the number of new employees earning more than a rate of
46 twenty-four dollars and four cents ($24.04) per hour worked, in lieu of the
47 credit amount in subsection (2)(a) of section 63-3029F, Idaho Code, be allowed
48 the credit provided by this section. The number of new employees is the
49 increase in the number of employees for the current taxable year over the
1 greater of the following:
2 (a) The number of employees for the prior taxable year; or
3 (b) The average of the number of employees for the three (3) prior tax-
4 able years.
5 (2) The credit provided by this section shall be:
6 (a) One thousand five hundred dollars ($1,500) for each new employee
7 whose annual salary during the taxable year for which the credit is earned
8 is greater than twenty-four dollars and four cents ($24.04) per hour
9 worked but equal to or less than an average rate of twenty-eight dollars
10 and eighty-five cents ($28.85) per hour worked;
11 (b) Two thousand dollars ($2,000) for each new employee whose annual sal-
12 ary during the taxable year for which the credit is earned is greater than
13 an average rate of twenty-eight dollars and eighty-five cents ($28.85) per
14 hour worked but equal to or less than an average rate of thirty-six dol-
15 lars and six cents ($36.06) per hour worked;
16 (c) Two thousand five hundred dollars ($2,500) for each new employee
17 whose annual salary during the taxable year for which the credit is earned
18 is greater than an average rate of thirty-six dollars and six cents
19 ($36.06) per hour worked but equal to or less than an average rate of for-
20 ty-three dollars and twenty-seven cents ($43.27) per hour worked;
21 (d) Three thousand dollars ($3,000) for each new employee whose annual
22 salary during the taxable year for which the credit is earned is greater
23 than an average rate of forty-three dollars and twenty-seven cents
24 ($43.27) per hour worked.
25 (3) The credit allowed by subsection (1) of this section shall apply only
26 to employment primarily within the project site. No credit shall be earned
27 unless such employee shall have performed such duties for the taxpayer for a
28 minimum of nine (9) months during the taxable year for which the credit is
30 (4) The credit allowed by this section shall not exceed sixty-two and
31 five-tenths percent (62.5%) of the tax liability of the taxpayer.
32 (5) Employees transferred from a related taxpayer or acquired from
33 another taxpayer within the prior twelve (12) months shall not be included in
34 the computation of the credit unless the transfer creates a net new job in
36 SECTION 5. That Section 63-4408, Idaho Code, be, and the same is hereby
37 amended to read as follows:
38 63-4408. SALES AND USE TAX INCENTIVES -- REBATES -- RECAPTURE. (1) For
39 calendar years beginning on January 1, 200 56, and ending on December 31,
40 20 0910, subject to the limitations of this chapter, a taxpayer who has certi-
41 fied that the tax incentive criteria will be met within the project site shall
42 be entitled to receive a rebate of twenty-five percent (25%) of all sales and
43 use taxes imposed by chapter 36, title 63, Idaho Code, and that the taxpayer
44 or its contractors actually paid in regard to any property constructed,
45 located or installed within the project site during the project period for
46 that site.
47 (2) Upon filing of a written refund claim by the taxpayer entitled to the
48 rebate, and subject to such reasonable documentation and verification as the
49 commission may require, the rebate shall be paid by the commission as a refund
50 allowable under section 63-3626, Idaho Code. A claim for rebate under this
51 section must be filed on or before the last day of the third calendar year
52 following the year in which the taxes sought to be rebated were paid or the
53 right to the rebate is lost.
1 (3) Any rebate paid shall be subject to recapture by the commission:
2 (a) At one hundred percent (100%) in the event that the tax incentive
3 criteria are not met at the project site during the project period, or
4 (b) In the event that the property is not used, stored or otherwise con-
5 sumed within the project site for a period of sixty (60) consecutive full
6 months after the property was placed in service, or
7 (c) In the event that the employment required in section 63-4402(2)(j),
8 Idaho Code, is not maintained for sixty (60) consecutive full months from
9 the date the project period ends.
10 (d) Any recapture required by subsection (3)(b) or (3)(c) of this section
11 shall be in the same proportion as an amount of credit required to be
12 recaptured under section 63-3029B, Idaho Code.
13 (4) Any recapture amount due under this section shall be a deficiency in
14 tax for the period in which the disqualification first occurs for purposes of
15 section 63-3629, Idaho Code, and may be enforced and collected in the manner
16 provided by the Idaho sales tax act, provided however, that in lieu of the
17 provisions of section 63-3633, Idaho Code, the period of time within which the
18 commission may issue a notice under section 63-3629, Idaho Code, in regard to
19 an amount subject to recapture, shall be the later of five (5) years after the
20 end of the taxable year, for income tax purposes, in which the project period
22 (5) The rebate allowed by this section is limited to sales and use taxes
23 actually paid by the taxpayer or its contractors for taxable property related
24 to headquarters or administrative new plant and building facilities.
25 SECTION 6. 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
This legislation revises the Idaho Small Employer Incentive Act
by expanding eligible projects and replacing the existing
employee-capital expenditure ratio for investment over $500,000.
It also requires that all additional employees average $15.50 an
hour plus benefits using only wages ranging from $12.00 an hour
to $48.08 an hour to determine the average.
Impact on General Fund
New New New Net
For Fiscal Year 2007- New Rev. Local State Costs Impact
If 10 new employees @$40,000 $87,561 $15,776 $71,785 $17,188 $54,597
Impact on General Fund
New New New New
For Life of Tax Credits- New Rev. Local State Costs Impact
If 10 new employees @$40,000 $827,060 $289,726 $537,334 $91,250 $446,084
Name: Rep. Mike Moyle
Phone: (208) 332-1000
Roger Madsen, Idaho Commerce & Labor
Bob Fick, Idaho Commerce & Labor
Phone: (208) 332-3570
STATEMENT OF PURPOSE/FISCAL NOTE H 754