2006 Legislation
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HOUSE BILL NO. 506 – Property tax relief/earned income


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Bill Status

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
01/30    House intro - 1st rdg - to printing
01/31    Rpt prt - to Rev/Tax

Bill Text

  ]]]]              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
  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
  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
  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
  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 / Fiscal Impact

                       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.

Name:  Rep. Nicole LeFavour 
Phone: 724-0468

STATEMENT OF PURPOSE/FISCAL NOTE                         H 506