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H0017...............................................by REVENUE AND TAXATION
INCOME TAX - S CORPORATIONS - Amends existing law to provide that S
corporations shall be subject to tax on the amount of net recognized
built-in gain attributable to this state and excess net passive income
attributable to this state for income tax purposes.
01/16 House intro - 1st rdg - to printing
01/17 Rpt prt - to Rev/Tax
01/18 Rpt out - rec d/p - to 2nd rdg
01/19 2nd rdg - to 3rd rdg
01/23 3rd rdg - PASSED - 68-0-2
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
Collins, Crane, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
Henbest(Wallace), Henderson, Jaquet, Killen, King, Kren, Labrador,
Lake, LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin,
Mortimer, Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence,
Raybould, Ring, Ringo, Roberts, Ruchti, Rusche, Sayler, Schaefer,
Shepherd(2), Shepherd(8), Shirley, Shively, Smith(30), Smith(24),
Snodgrass, Stevenson, Thayn, Trail, Vander Woude, Wills, Wood(27),
Wood(35)
NAYS -- None
Absent and excused -- Clark, Mr. Speaker
Floor Sponsor - Lake
Title apvd - to Senate
01/24 Senate intro - 1st rdg - to Loc Gov
02/02 Rpt out - rec d/p - to 2nd rdg
02/05 2nd rdg - to 3rd rdg
02/06 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai, McGee, McKague, McKenzie, Pearce,
Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
NAYS -- None
Absent and excused -- None
Floor Sponsor - McKenzie
Title apvd - to House
02/07 To enrol
02/08 Rpt enrol - Sp signed
02/09 Pres signed
02/12 To Governor
02/14 Governor signed
Session Law Chapter 14
Effective: 01/01/07
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 17
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAX; AMENDING SECTION 63-3025, IDAHO CODE, TO PROVIDE THAT
3 S CORPORATIONS SHALL BE SUBJECT TO TAX ON THE AMOUNT OF NET RECOGNIZED
4 BUILT-IN GAIN ATTRIBUTABLE TO THIS STATE AND EXCESS NET PASSIVE INCOME
5 ATTRIBUTABLE TO THIS STATE; AMENDING SECTION 63-3025A, IDAHO CODE, TO PRO-
6 VIDE THAT S CORPORATIONS SHALL BE SUBJECT TO TAX ON THE AMOUNT OF NET REC-
7 OGNIZED BUILT-IN GAIN ATTRIBUTABLE TO THIS STATE AND EXCESS NET PASSIVE
8 INCOME ATTRIBUTABLE TO THIS STATE AND TO MAKE A TECHNICAL CORRECTION;
9 DECLARING AN EMERGENCY AND PROVIDING A RETROACTIVE EFFECTIVE DATE.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Section 63-3025, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 63-3025. TAX ON CORPORATE INCOME. (1) For taxable years commencing on and
14 after January 1, 2001, a tax is hereby imposed on the Idaho taxable income of
15 a corporation, other than an S corporation, which transacts or is authorized
16 to transact business in this state or which has income attributable to this
17 state. The tax shall be equal to seven and six-tenths percent (7.6%) of Idaho
18 taxable income.; provided, however, that the
19 (2) In the case of an S corporation that is required to file a return
20 under section 63-3030, Idaho Code, a tax is hereby imposed at the rate pro-
21 vided in subsection (1) of this section upon both:
22 (a) Net recognized built-in gain attributable to this state. The amount
23 of net recognized built-in gain attributable to this state shall be com-
24 puted in accordance with section 1374 of the Internal Revenue Code subject
25 to the apportionment and allocation provisions of section 63-3027, Idaho
26 Code.
27 (b) Excess net passive income attributable to this state. The amount of
28 excess net passive income attributable to this state shall be computed in
29 accordance with section 1375 of the Internal Revenue Code subject to the
30 apportionment and allocation provisions of section 63-3027, Idaho Code.
31 (3) The tax imposed by subsection (1) or (2) of this section shall not be
32 less than twenty dollars ($20.00); provided further that the twenty dollar
33 ($20.00) minimum payment shall not be collected from nonproductive mining cor-
34 porations.
35 (4) The tax imposed by this section shall not apply to corporations taxed
36 pursuant to the provisions of section 63-3025A, Idaho Code.
37 SECTION 2. That Section 63-3025A, Idaho Code, be, and the same is hereby
38 amended to read as follows:
39 63-3025A. FRANCHISE TAX. (1) For taxable years commencing on and after
40 January 1, 2001, a franchise tax shall be imposed upon any corporation, other
41 than an S corporation, for the privilege of exercising its corporate franchise
2
1 within the state during such taxable year including, but not limited to, cor-
2 porations engaged in business in Idaho for the exclusive purpose of performing
3 contracts with the United States department of energy at the Idaho national
4 engineering and environmental laboratory, which tax shall be measured by
5 income which is attributable to this state under the provisions of this chap-
6 ter and which tax shall be at the rate provided in section 63-3025, Idaho
7 Code.; provided, however, that the
8 (2) In the case of an S corporation that is required to file a return
9 under section 63-3030, Idaho Code, a tax is hereby imposed at the rate pro-
10 vided in subsection (1) of this section upon both:
11 (a) Net recognized built-in gain attributable to this state. The amount
12 of net recognized built-in gain attributable to this state shall be com-
13 puted in accordance with section 1374 of the Internal Revenue Code subject
14 to the apportionment and allocation provisions of section 63-3027, Idaho
15 Code.
16 (b) Excess net passive income attributable to this state. The amount of
17 excess net passive income attributable to this state shall be computed in
18 accordance with section 1375 of the Internal Revenue Code subject to the
19 apportionment and allocation provisions of section 63-3027, Idaho Code.
20 (3) The tax imposed by subsection (1) or (2) of this section shall not be
21 less than twenty dollars ($20.00); provided further that the twenty dollar
22 ($20.00) minimum payment shall not be collected from nonproductive mining cor-
23 porations; but the twenty dollar ($20.00) minimum tax shall apply to corpora-
24 tions qualified to file returns and actually filing returns under the provi-
25 sions of subchapter "S" of the Internal Revenue Code.
26 SECTION 3. An emergency existing therefor, which emergency is hereby
27 declared to exist, this act shall be in full force and effect on and after its
28 passage and approval, and retroactively to January 1, 2007.
STATEMENT OF PURPOSE
RS 16534C1
The Internal Revenue Code imposes a separate federal tax on
certain net recognized built-in gain and excess net passive
income of S corporations that are not subject to the normal
income tax. These taxes were imposed as part of the Tax Reform
Act of 1986. Based on the Idaho Income Tax Act’s recognition of
federal S corporation status and its conformity to federal
definitions of taxable income, it has been, since 1986, the
state’s policy to similarly tax the portion of the net
recognized built-in gain and excess net passive income
attributable to Idaho. Because of some question about the
technical adequacy of the Idaho statutes to accomplish the
policy of conforming the Idaho Income Tax Act to these separate
federal taxes, this bill clarifies that the Idaho portion of
these two items of federally recognized income are also subject
to tax in Idaho.
FISCAL NOTE
None
CONTACT
Name: Dan John/Ted Spangler
Agency: State Tax Commission
Phone: (208) 334-7500
STATEMENT OF PURPOSE/FISCAL NOTE H 17