2007 Legislation
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HOUSE BILL NO. 206 – Tax, personal property, reduction

HOUSE BILL NO. 206

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H0206...............................................by REVENUE AND TAXATION
PERSONAL PROPERTY TAX - Amends and adds to existing law to provide a
partial exemption from taxation for personal property; to provide a
phased-in reduction for personal property taxation; to provide for
modification of the phase-in by the Legislature under certain
circumstances; to provide that certain taxes are not affected by personal
property exemptions and reductions; to provide for reimbursement to local
governments of personal property tax; and to provide for delay of
reimbursement by the Legislature under certain circumstances.
                                                                        
02/16    House intro - 1st rdg - to printing
02/19    Rpt prt - to Rev/Tax

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 206
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO TAXATION OF PERSONAL PROPERTY; AMENDING CHAPTER 6, TITLE 63, IDAHO
  3        CODE, BY THE ADDITION OF NEW SECTIONS 63-607, 63-608, 63-609,  63-610  AND
  4        63-611,  IDAHO CODE, TO PROVIDE A PARTIAL EXEMPTION FROM TAXATION FOR PER-
  5        SONAL PROPERTY, TO PROVIDE A PHASED-IN  REDUCTION  FOR  PERSONAL  PROPERTY
  6        TAXATION,  TO  PROVIDE FOR MODIFICATION OF THE PHASE-IN BY THE LEGISLATURE
  7        UNDER CERTAIN CIRCUMSTANCES, TO PROVIDE TAXES THAT  ARE  NOT  AFFECTED  BY
  8        PERSONAL  PROPERTY EXEMPTIONS AND REDUCTIONS, TO PROVIDE FOR REIMBURSEMENT
  9        TO LOCAL GOVERNMENTS OF PERSONAL PROPERTY TAX, TO  PROVIDE  FOR  DELAY  OF
 10        REIMBURSEMENT  BY  THE LEGISLATURE UNDER CERTAIN CIRCUMSTANCES, TO PROVIDE
 11        PROCEDURES AND TO PROVIDE ADMINISTRATIVE RULES; AMENDING  SECTION  63-201,
 12        IDAHO  CODE,  TO REVISE  DEFINITIONS; AMENDING SECTION 63-304, IDAHO CODE,
 13        TO PROVIDE FOR COLLECTION OF DELINQUENT PROPERTY TAXES FOR A  MANUFACTURED
 14        HOME, MOBILE HOME OR MODULAR BUILDING THAT MAY CONSTITUTE REAL PROPERTY IF
 15        CERTAIN  CIRCUMSTANCES OCCUR; AMENDING SECTION 63-309, IDAHO CODE, TO PRO-
 16        VIDE THAT IMPROVEMENTS ON CERTAIN PROPERTY SHALL BE ASSESSED AND TAXED  AS
 17        REAL PROPERTY AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 63-313,
 18        IDAHO CODE, TO PROVIDE THAT FOR TRANSIENT PERSONAL PROPERTY VALUED AT OVER
 19        FIFTY  THOUSAND  DOLLARS, ANY EXEMPTION TO THE TAXPAYER SHALL BE ALLOCATED
 20        BETWEEN COUNTIES BASED ON THE PRORATED  VALUE;  AMENDING  SECTION  63-316,
 21        IDAHO  CODE, TO PROVIDE CORRECT CODE REFERENCES; AMENDING CHAPTER 4, TITLE
 22        63, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 63-412,  IDAHO  CODE,  TO
 23        PROVIDE  FOR SUBMISSION TO THE STATE TAX COMMISSION OF A STATEMENT IDENTI-
 24        FYING PERSONAL PROPERTY UPON  WHICH  THE  TAXPAYER  CLAIMS  AN  EXEMPTION;
 25        AMENDING SECTION 63-3638, IDAHO CODE, TO PROVIDE FOR DISTRIBUTION OF SALES
 26        TAX MONEYS TO COUNTIES AND OTHER TAXING DISTRICTS FOR REPLACEMENT OF PROP-
 27        ERTY  TAX  ON PERSONAL PROPERTY TAX REDUCTIONS AND TO PROVIDE CORRECT CODE
 28        REFERENCES; PROVIDING SEVERABILITY; DECLARING AN EMERGENCY, PROVIDING RET-
 29        ROACTIVE APPLICATION AND PROVIDING EFFECTIVE DATES.
                                                                        
 30    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 31        SECTION 1.  That Chapter 6, Title 63, Idaho Code,  be,  and  the  same  is
 32    hereby amended by the addition thereto of NEW SECTIONS, to be known and desig-
 33    nated  as  Sections 63-607, 63-608, 63-609, 63-610 and 63-611, Idaho Code, and
 34    to read as follows:
                                                                        
 35        63-607.  PARTIAL EXEMPTION FOR PERSONAL PROPERTY. On and after January  1,
 36    2007,  each  taxpayer's  personal  property, located in a county, which is not
 37    otherwise exempt shall be exempt to  the  extent  of  fifty  thousand  dollars
 38    ($50,000).  For  purposes of this section, a taxpayer includes two (2) or more
 39    individuals using the property in a common enterprise or a  related  group  of
 40    two (2) or more organizations when the individuals or organizations are within
 41    a  relationship  described  in  section  267  of the Internal Revenue Code, as
 42    defined in section 63-3004, Idaho Code.
                                                                        
                                       2
                                                                        
  1        63-608. PERSONAL PROPERTY TAX REDUCTION. (1)  During  each  calendar  year
  2    provided  in  this section, the amount of property tax on each taxpayer's per-
  3    sonal property subject to taxation shall be uniformly reduced by the following
  4    amounts:
  5             2008      12.5%
  6             2009      25.0%
  7             2010      37.5%
  8             2011      50.0%
  9             2012      62.5%
 10             2013      75.0%
 11             2014      87.5%
 12             2015       100%
 13        (2)  The legislature may, by adoption of a concurrent resolution,  provide
 14    that the amount of property tax reduction under subsection (1) of this section
 15    shall  be  the  same  percentage  for  the year during which the resolution is
 16    adopted as it was in the immediately preceding year. In the event such a reso-
 17    lution is adopted, the schedule of tax reduction in  subsection  (1)  of  this
 18    section  shall  be  delayed  by  one  (1)  year  for each year a resolution is
 19    adopted.
 20        (3)  Beginning on January 1 of the year following the final year of  prop-
 21    erty  tax  reduction provided in subsection (1) of this section, including any
 22    delays resulting from the provisions of subsection (2) of  this  section,  all
 23    personal  property  shall be exempt from taxation. However, this section shall
 24    not prohibit the collection of any taxes levied prior to January 1 of the year
 25    after the final year of property tax reduction provided in subsection  (1)  of
 26    this  section  on  personal property subject to assessment and taxation before
 27    that date.
                                                                        
 28        63-609.  TAXES NOT AFFECTED BY PERSONAL  PROPERTY  EXEMPTIONS  AND  REDUC-
 29    TIONS. Nothing in section 63-607 or 63-608, Idaho Code, shall affect the taxa-
 30    tion  of  forest  lands  or  forest products pursuant to chapter 17, title 63,
 31    Idaho Code, or the taxation of net profits of mines pursuant  to  chapter  28,
 32    title 63, Idaho Code.
                                                                        
 33        63-610.  REIMBURSEMENT  TO LOCAL GOVERNMENTS OF PERSONAL PROPERTY TAX. (1)
 34    No later than the third Monday of November of each year, the county  clerk  of
 35    each  county shall certify to the state tax commission the amount of reduction
 36    in property taxes under subsection (1) of section 63-608, Idaho Code, in  that
 37    county  for that year. The certification shall identify the property receiving
 38    tax reductions, the value of the property, the property's location, the amount
 39    of the tax levy applicable to personal property in the location, and  the  tax
 40    before  and  after  the reduction allowed in subsection (1) of section 63-608,
 41    Idaho Code. The certification shall be in the form prescribed by the state tax
 42    commission and shall include such additional information as the commission may
 43    require by rule as needed to implement the purpose of this section. The certi-
 44    fication shall be reviewed and, if necessary, corrected by the state tax  com-
 45    mission.
 46        (2)  (a) Subject to the limitations of this section, the state tax commis-
 47        sion  shall  reimburse  from the amount appropriated for personal property
 48        tax replacement in section 63-3638, Idaho Code, the  county  treasurer  of
 49        each  county for the reduction shown on the certification provided in sub-
 50        section (1) of this section. The county treasurer shall reimburse from the
 51        amount received each taxing district within the county  in  proportion  to
 52        the  amount  of  reduction shown on the certification in subsection (1) of
 53        this section as corrected. For each year after the final year of  property
                                                                        
                                       3
                                                                        
  1        tax  reduction  provided  in subsection (1) of section 63-608, Idaho Code,
  2        including any delays resulting from the provisions of  subsection  (2)  of
  3        section 63-608, Idaho Code, the amount distributed to each taxing district
  4        under this section shall equal the amount distributed in the final year.
  5        (b)  The  state  tax commission shall pay one-half (1/2) of the reimburse-
  6        ment provided in this section no later than December 20 of each year,  and
  7        the  second  one-half  (1/2) shall be paid by no later than June 20 of the
  8        following year. The money received by the county tax collector  under  the
  9        provisions  of  this  section  may be considered by the counties and other
 10        taxing districts and budgeted against at the same time, and  in  the  same
 11        manner, and in the same year as revenues from taxation.
 12        (c)  (i)   The total reimbursement paid to all counties under this section
 13             in  any  year shall not exceed the amounts shown below, unless a dif-
 14             ferent amount is appropriated by the legislature.
 15             Fiscal Year               Maximum Reimbursement by State
 16                 2009                           $12 million
 17                 2010                           $24 million
 18                 2011                           $36 million
 19                 2012                           $48 million
 20                 2013                           $60 million
 21                 2014                           $72 million
 22                 2015                           $84 million
 23                 2016 and each                  $96 million
 24                 year thereafter
 25             (ii)  Should the legislature adopt a concurrent  resolution  pursuant
 26             to  subsection (2) of section 63-608, Idaho Code, then the percentage
 27             under subsection (2)(c)(i) of this section shall be  delayed  by  one
 28             (1) year for each year a resolution is adopted.
 29             (iii) If  the limitation in this subsection results in an amount that
 30             is insufficient, the reimbursement  paid  to  each  county  treasurer
 31             shall  be reduced proportionally. The total amount paid to the county
 32             treasurers shall not exceed the amount certified  to  the  state  tax
 33             commission under subsection (1) of this section.
 34        (d)  For each year following the final year of property tax reduction pro-
 35        vided  in  subsection  (1)  of  section  63-608, Idaho Code, including any
 36        delays resulting from the provisions of subsection (2) of that section:
 37             (i)   If taxing districts are consolidated, the resulting district is
 38             entitled to an amount equal to the sum  of  the  amounts  which  were
 39             received  by  each  district pursuant to this subsection prior to the
 40             consolidation.
 41             (ii)  If a taxing district is dissolved or disincorporated, the state
 42             tax commission shall continuously  distribute to the board of  county
 43             commissioners  an amount equal to the last distribution prior to dis-
 44             solution or disincorporation. The board of county commissioners shall
 45             determine any redistribution of moneys so received.
 46             (iii) If a taxing district annexes  territory,  the  distribution  of
 47             moneys received pursuant to this subsection shall be unaffected.
 48        (e)  Taxing  districts formed after January 1, 2007, are not entitled to a
 49        payment under the provisions of this section. For purposes of the  limita-
 50        tion  provided  by section 63-802, Idaho Code, moneys received pursuant to
 51        this section shall be treated as property tax revenues.
                                                                        
 52        63-611.  ADMINISTRATIVE RULES. (1) The state tax  commission  shall  adopt
 53    rules,  including  temporary  rules, further implementing subsections (14) and
 54    (18) of section 63-201, Idaho Code, relating to real  and  personal  property.
                                                                        
                                       4
                                                                        
  1    The commission shall afford all interested persons a reasonable opportunity to
  2    submit  data,  views  and  arguments, orally or in writing, and shall consider
  3    existing appraisal practices and all matters which the  law  defines,  or  the
  4    courts  may interpret, declare and hold, to be real or personal property under
  5    the letter, spirit, intent and meaning of the law, for the purposes  of  prop-
  6    erty taxation. The rules shall consider:
  7        (a)  The intent of the placement on the land;
  8        (b)  The method of attachment;
  9        (c)  The adaptation of the item to the real property;
 10        (d)  The relationship of the parties; and
 11        (e)  The existence of an agreement.
 12        (2)  Administrative  rules  adopted in accordance with this section, after
 13    review and approval by the legislature in  accordance  with  section  67-5291,
 14    Idaho Code, shall be presumed to be consistent with legislative intent.
                                                                        
 15        SECTION  2.  That  Section  63-201, Idaho Code, be, and the same is hereby
 16    amended to read as follows:
                                                                        
 17        63-201.  DEFINITIONS. As used for property tax purposes in title 63, chap-
 18    ters 1 through 23, Idaho Code, the terms defined in this  section  shall  have
 19    the following meanings, unless the context clearly indicates another meaning:
 20        (1)  "Appraisal" means an estimate of property value for property tax pur-
 21    poses.
 22        (a)  For the purpose of estimated property value to place the value on any
 23        assessment  roll,  the  value estimation must be made by the assessor or a
 24        certified property tax appraiser.
 25        (b)  For the purpose of estimating property value to present for an appeal
 26        filed pursuant to sections 63-501A, 63-407 and  63-409,  Idaho  Code,  the
 27        value  estimation  may  be  made by the assessor, a certified property tax
 28        appraiser, a licensed appraiser, or a certified appraiser or any party  as
 29        specified by law.
 30        (2)  "Bargeline"  means  those  water  transportation tugs, boats, barges,
 31    lighters and other equipment and property used in conjunction  with  waterways
 32    for bulk transportation of freight or ship assist.
 33        (3)  "Cogenerators"  means  facilities  which produce electric energy, and
 34    steam or forms of useful energy which are  used  for  industrial,  commercial,
 35    heating or cooling purposes.
 36        (4)  "Collection  costs"  are  amounts authorized by law to be added after
 37    the date of delinquency and collected in the same manner as property tax.
 38        (5)  "Delinquency" means any property tax, special assessment,  fee,  col-
 39    lection cost, or charge collected in the same manner as property tax, that has
 40    not been paid in the manner and within the time limits provided by law.
 41        (6)  "Improvements"  means  all buildings, structures, fixtures and fences
 42    erected upon or affixed to the land, and all fruit, nut-bearing and ornamental
 43    trees or vines not of natural growth, growing upon the  land,  except  nursery
 44    stock.
 45        (7)  "Late charge" means a charge of two percent (2%) of the delinquency.
 46        (8)  "Lawful  money  of  the United States" means currency and coin of the
 47    United States at par value and checks and drafts which are payable in  dollars
 48    of the United States at par value, payable upon demand or presentment.
 49        (9)  "Manufactured  home,"  means  a structure "mobile home," and "modular
 50    building," shall be as defined as a  manufactured  home  in  section  39-4105,
 51    Idaho Code.
 52        (10) "Market  value"  means the amount of United States dollars or equiva-
 53    lent for which, in all probability, a property would exchange hands between  a
                                                                        
                                       5
                                                                        
  1    willing  seller,  under no compulsion to sell, and an informed, capable buyer,
  2    with a reasonable time allowed to consummate the sale, substantiated by a rea-
  3    sonable down or full cash payment.
  4        (11) "Operating property" means all rights-of-way  accompanied  by  title;
  5    roadbeds;  tracks;  pipelines;  bargelines;  equipment  and  docks; terminals;
  6    rolling stock; equipment;  power stations;  power  sites;  lands;  reservoirs,
  7    generating plants, transmission lines, distribution lines and substations; and
  8    all immovable or movable property operated in connection with any public util-
  9    ity,  railroad  or  private railcar fleet, wholly or partly within this state,
 10    and necessary to the maintenance and operation of such road  or  line,  or  in
 11    conducting  its  business,  and  shall  include all title and interest in such
 12    property, as owner, lessee or otherwise. The term includes electrical  genera-
 13    tion plants under construction, whether or not owned by or operated in connec-
 14    tion  with  any  public utility. The term does not shall include both real and
 15    personal property exempt from taxation pursuant to section 63-602L, Idaho Code
 16    as determined by rules promulgated pursuant to section 63-611, Idaho Code.
 17        (12) "Party in interest" means a person  who  holds  a  properly  recorded
 18    mortgage, deed of trust or security interest.
 19        (13) "Person"  means  any  entity,  individual,  corporation, partnership,
 20    firm, association, limited liability company, limited liability partnership or
 21    other such entities as recognized by the state of Idaho.
 22        (14) "Personal property" includes all goods, chattels, stocks  and  bonds,
 23    equities  in  state  lands, easements, reservations, leasehold real properties
 24    and other articles of value that are capable of manual or physical possession,
 25    and machinery and equipment, separate and apart from any  real  property,  and
 26    the  value of which is intrinsic to the article itself, that is not classified
 27    as real property and all other property which the law defines, or  the  courts
 28    may  interpret,  declare  and  hold  to be personal property under the letter,
 29    spirit, intent and meaning of the law, for the purposes of property taxation.
 30        Only fFor the purposes of payment and collection of property taxes  pursu-
 31    ant  to chapter 9, title 63, Idaho Code, collection of delinquency pursuant to
 32    chapter 10, title 63, Idaho Code, and seizure and sale  of  personal  property
 33    for  taxes  pursuant  to  chapter  11, title 63, Idaho Code, personal property
 34    includes manufactured homes not declared as real property pursuant to  section
 35    63-304, Idaho Code.
 36        (15) "Private  railcar fleet" means railroad cars or locomotives owned by,
 37    leased to, occupied by or franchised to any person other than a railroad  com-
 38    pany  operating  a  line  of  railroad in Idaho or any company classified as a
 39    railroad by the interstate commerce commission and entitled  to  possess  such
 40    railroad cars and locomotives except those possessed solely for the purpose of
 41    repair,  rehabilitation  or  remanufacturing  of  such locomotives or railroad
 42    cars.
 43        (16) "Public utility" means electrical companies, pipeline companies, nat-
 44    ural gas distribution companies, or power producers  included  within  federal
 45    law,  bargelines,  and water companies which are under the jurisdiction of the
 46    Idaho public utilities commission. The term also includes  telephone  corpora-
 47    tions,  as that term is defined in section 62-603, Idaho Code, except as here-
 48    inafter provided, whether or not such telephone corporation has been issued  a
 49    certificate of convenience and necessity by the Idaho public utilities commis-
 50    sion.
 51        This  term does not include cogenerators, mobile telephone service or com-
 52    panies, nor does it include pager service or companies, except when such  ser-
 53    vices are an integral part of services provided by a certificated utility com-
 54    pany  nor  does the term "public utility" include companies or persons engaged
 55    in the business of providing solely on a resale basis, any telephone or  tele-
                                                                        
                                       6
                                                                        
  1    communication  service which is purchased from a telephone corporation or com-
  2    pany.
  3        (17) "Railroad" means every kind of railway, whether its line of rails  or
  4    tracks  be  at, above or below the surface of the earth, and without regard to
  5    the kind of power used in moving its rolling stock, and shall be considered to
  6    include every kind of street  railway, suburban railway or interurban  railway
  7    excepting  facilities  established  solely  for  maintenance and rebuilding of
  8    railroad cars or locomotives.
  9        (18) "Real property" means land, and all standing timber thereon,  includ-
 10    ing  standing  timber  owned  separately  from the ownership of  the land upon
 11    which the same may stand, except as modified in chapter 17,  title  63,  Idaho
 12    Code,  and  all  buildings,  structures and improvements, or other fixtures of
 13    whatsoever kind on land, including water ditches constructed for mining, manu-
 14    facturing or irrigation purposes, water and gas mains, wagon and turnpike toll
 15    roads, and toll bridges, and all rights and privileges thereto  belonging,  or
 16    any  way appertaining, all quarries and fossils in and under the land, and all
 17    other property which the law defines, or the courts may interpret, declare and
 18    hold to be real property under the letter, spirit, intent and meaning  of  the
 19    law,   for   the   purposes  of  property  taxation.  Real  property  includes
 20    mManufactured homes, constitute real property when located  on  taxable  land,
 21    and after a statement of intent to declare as real property has been recorded,
 22    provided said statement has not been revoked. mobile homes, modular buildings,
 23    tTimber, forest, forest land, and forest products shall be defined as provided
 24    in  subject  to chapter 17, title 63, Idaho Code, taxable improvements on gov-
 25    ernment, Indian, state, county, municipal or other lands exempt from taxation,
 26    and all improvements on all railroad rights-of-way owned separately  from  the
 27    ownership  of  the  rights-of-way upon which the same stands, or in which non-
 28    exempt persons have possessory interests, railroad tracks and ties, pipelines,
 29    underground utilities fixtures, electrical generation plants,  and  all  other
 30    property  not  defined as personal property under subsection (14) of this sec-
 31    tion.
 32        (19) "Record owner" means the person or persons in whose name or names the
 33    property stands upon the records of the county recorder's  office.  Where  the
 34    record  owners  are husband and wife at the time of notice of pending issue of
 35    tax deed, notice to one (1) shall be deemed and imputed as notice to the other
 36    spouse.
 37        (20) "Special assessment" means a charge imposed upon property for a  spe-
 38    cific purpose, collected and enforced in the same manner as property taxes.
 39        (21) "System  value" means the market value for assessment purposes of the
 40    operating property when considered as a unit.
 41        (22) "Tax code area" means a geographical area made up of one (1) or  more
 42    taxing districts with one (1) total levy within the geographic area, except as
 43    otherwise provided by law.
 44        (23) "Taxing district" means any entity or unit with the statutory author-
 45    ity to levy a property tax.
 46        (24) "Taxable  value"  means  market  value  for assessment purposes, less
 47    applicable exemptions or other statutory provisions.
 48        (25) "Transient personal property" is personal property, specifically such
 49    construction, logging or mining machinery and equipment  which is kept, moved,
 50    transported, shipped, hauled into or remaining for periods of  not  less  than
 51    thirty  (30)  days,  in  more than one (1) county in the state during the same
 52    year.
 53        (26) "Warrant of distraint" means a warrant ordering the seizure  of  per-
 54    sonal  property  to  enforce  payment  of  property  tax,  special assessment,
 55    expense, fee, collection cost or charge collected in the same manner  as  per-
                                                                        
                                       7
                                                                        
  1    sonal property tax.
                                                                        
  2        SECTION  3.  That  Section  63-304, Idaho Code, be, and the same is hereby
  3    amended to read as follows:
                                                                        
  4        63-304.  MANUFACTURED HOMES, MOBILE HOME OR MODULAR BUILDING TO CONSTITUTE
  5    REAL PROPERTY. (1) A For purposes of chapters 10 and 11, title 63, relating to
  6    the collection of delinquent property taxes, a manufactured home, mobile  home
  7    or  modular  building,  may  constitute  real  property if the running gear is
  8    removed and:
  9        (a)  If the manufactured home, mobile home  or  modular  building  becomes
 10        permanently affixed to a foundation:
 11             (i)   On  land which is owned or being purchased by the owner or pur-
 12             chaser of said manufactured home, mobile home or modular building; or
 13             (ii)  On land which is being leased by the owner or purchaser of  the
 14             manufactured  home,  mobile  home or modular building if such home is
 15             being financed in accordance with the guidelines of the federal  home
 16             loan mortgage corporation, the federal national mortgage association,
 17             the  United  States  department of agriculture or any other entity or
 18             agency that requires, as  part  of  its  financing  program,  similar
 19             restrictions on ownership and actions affecting title and possession,
 20             provided  that if a county takes a tax deed to the manufactured home,
 21             mobile home or modular building the county shall not  be  liable  for
 22             any delinquent or ongoing leases, rents or any other liabilities owed
 23             due to the placement of such property; and
 24        (b)  If the owner or purchaser of a manufactured home, mobile home or mod-
 25        ular  building records with the county recorder in the county in which the
 26        manufactured home, mobile home or modular  building  will  be  situated  a
 27        statement of intent to declare the manufactured home, mobile home or modu-
 28        lar building as real property.
 29        (2)  The  exercise  of  said  option shall require all county assessors to
 30    treat those manufactured homes, mobile homes or modular buildings whose owners
 31    or purchasers have exercised said option as any other site-built residence and
 32    shall permit lending institutions to treat  said  manufactured  homes,  mobile
 33    homes or modular buildings as real property or as any other residence.
 34        (3)  The form of the declaration shall be prescribed by the state tax com-
 35    mission.  Any form used shall have attached to it the certificate of origin or
 36    the original title to the manufactured home, mobile home or  modular  building
 37    to  allow  a  reversal of the declaration as provided in section 63-305, Idaho
 38    Code.
 39        (4)  If a manufactured home, mobile home or modular building that  is  not
 40    subject to a declaration under subsection (1)(b) of this section, then any tax
 41    delinquency in regard to such manufactured home, mobile home or modular build-
 42    ing shall be collected as delinquent personal property taxes under chapters 10
 43    and 11, title 63, Idaho Code.
                                                                        
 44        SECTION  4.  That  Section  63-309, Idaho Code, be, and the same is hereby
 45    amended to read as follows:
                                                                        
 46        63-309.  IMPROVEMENTS ON EXEMPT AND RAILROAD RIGHTS-OF-WAY LANDS -- EQUITY
 47    IN STATE PROPERTY. (1) All taxable improvements on government, Indian,  state,
 48    county, municipal or other lands exempt from taxation, and all improvements on
 49    all  railroad rights-of-way owned separately from the ownership of the rights-
 50    of-way upon which  the  same  stands,  or  in  which  nonexempt  persons  have
 51    possessory interests, shall be assessed and taxed as personal real property.
                                                                        
                                       8
                                                                        
  1        (2)  Property  of the state of Idaho or any department, agency or subdivi-
  2    sion thereof, or any other property not subject to property  taxation  to  the
  3    owner  thereof by reason of the legal status of the owner, held under contract
  4    of sale or lease with option to purchase, with lease moneys applicable to  the
  5    purchase price, by any person, corporation or other association for his or its
  6    exclusive  use, shall be subject to the purchaser or lessee for property taxa-
  7    tion. When such property is held under a contract of sale or  other  agreement
  8    whereby  on certain  payment or payments the legal title is or may be acquired
  9    by such person, firm, corporation  or  association,  such  property  shall  be
 10    assessed  to  such  person, firm, corporation or association and taxed without
 11    deduction on account of the whole or any part of the purchase price  or  other
 12    sum  due on such property remaining unpaid. The lien for any such property tax
 13    shall neither attach to, impair or be enforced against  any  interest  of  the
 14    state of Idaho or any department, agency or subdivision thereof.
 15        (3)  Refusal to pay the property tax levied upon any equity in state prop-
 16    erty by the owner upon demand by the tax collector shall operate as forfeiture
 17    of such equity.
                                                                        
 18        SECTION  5.  That  Section  63-313, Idaho Code, be, and the same is hereby
 19    amended to read as follows:
                                                                        
 20        63-313.  SPECIAL PROVISIONS FOR TRANSIENT PERSONAL PROPERTY. (1) All tran-
 21    sient personal property shall be listed by the owner and shall show the  quan-
 22    tity,  name,  model,  serial number, if any, year of manufacture, date of pur-
 23    chase, cost, whether new or used and other identifying information required by
 24    the county assessor. The list of transient personal  property  shall  identify
 25    the  owner of the property and shall be filed with the home county assessor on
 26    or before the first day of November of each year. The owner of transient  per-
 27    sonal  property  may elect to treat as his home county that county in which he
 28    maintains his residence or usual place of business or in which  the  transient
 29    personal  property  is  usually  kept.  The report shall be made on forms pre-
 30    scribed by the state tax commission and shall identify periods of thirty  (30)
 31    days or more during which the personal property is located in a county, speci-
 32    fying  the  location  of the transient personal property for each month of the
 33    current calendar year with a projection of  the  location  for  the  remaining
 34    months of November and December.
 35        (2)  The county assessor of the home county or the receiving county of the
 36    listing  shall file within ten (10) days with the county assessor of all coun-
 37    ties identified on the report a copy of the report. Each county so  identified
 38    shall then place a prorated assessment on such personal property on the subse-
 39    quent  or  missed  property roll only for the length of time that the personal
 40    property was located in their county.
 41        (3)  In the event that any transient personal property has been or will be
 42    taxed for the current year in another state, the property shall be  taxed  for
 43    only that portion of the year that the transient personal property is kept and
 44    does remain in the state of Idaho.
 45        (4)  The  provisions of this section shall not apply to transient personal
 46    property in transit through this state, or to transient personal property sold
 47    by the owner thereof in the home county upon which the taxes for the full year
 48    have been paid or secured, which said transient  personal  property  is  kept,
 49    moved,  transported,  shipped  or hauled into and remaining in another county,
 50    and there kept or remaining either for the purpose of use or sale  within  the
 51    current year.
 52        (5)  For transient personal property valued at over fifty thousand dollars
 53    ($50,000),  any exemption in section 63-607, Idaho Code, available to the tax-
                                                                        
                                       9
                                                                        
  1    payer shall be allocated between counties based on the prorated value provided
  2    in subsection (2) of this section.
                                                                        
  3        SECTION 6.  That Section 63-316, Idaho Code, be, and the  same  is  hereby
  4    amended to read as follows:
                                                                        
  5        63-316.  ADJUSTMENT  OF ASSESSED VALUE -- COMPLETION OF ASSESSMENT PROGRAM
  6    BY STATE TAX COMMISSION -- PAYMENT OF COSTS. (1) Whenever the state  tax  com-
  7    mission,  after  a  hearing, determines that any county assessor or the county
  8    commissioners in assessing property in the county  subject  to  taxation  have
  9    failed  to abide by, adhere to and conform with the laws of the state of Idaho
 10    and the rules of the state tax commission  in  determining  market  value  for
 11    assessment  purposes, the state tax commission shall order the county assessor
 12    and county commissioners of such county to make the necessary changes or  cor-
 13    rections in such assessments and if the county assessor and the county commis-
 14    sioners  refuse or neglect to comply with such order, the state tax commission
 15    is authorized to and shall forthwith adjust or change  the  property  roll  in
 16    such county.
 17        (2)  In  lieu  of  the hearings and actions permitted in subsection (1) of
 18    this section, the state tax commission shall monitor each county's implementa-
 19    tion of the continuing appraisal required in section 63-314, Idaho  Code,  and
 20    may require each county to file such reports of its progress at implementation
 21    of  such  continuing  appraisals  as the commission may find necessary. In the
 22    event that the commission finds  that  any  county  is  failing  to  meet  the
 23    requirements  of  section  63-314,  Idaho  Code, the commission may order that
 24    county's indexing or appraisal or reappraisal programs be conducted under  the
 25    exclusive  and complete control of the state tax commission and the results of
 26    such programs shall be binding upon the county  officers  of  the  county  for
 27    which  ordered.  Payments  for  the actual cost of such programs shall be made
 28    from the sales tax distribution created in section 63-3638,  Idaho  Code,  and
 29    the amount of such payments shall be withheld from the payments otherwise made
 30    under  the  provisions of section 63-3638(910)(c) and (910)(d), Idaho Code, to
 31    the county for which indexing, appraisal or reappraisal has been ordered,  and
 32    this  subsection  shall  constitute  the necessary appropriation to accomplish
 33    such payments, any other provision of law notwithstanding.
                                                                        
 34        SECTION 7.  That Chapter 4, Title 63, Idaho Code,  be,  and  the  same  is
 35    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 36    ignated as Section 63-412, Idaho Code, and to read as follows:
                                                                        
 37        63-412.  PERSONAL PROPERTY EXEMPT FROM TAXATION. (1) No later than  August
 38    1,  2007,  taxpayers subject to this chapter must submit to the state tax com-
 39    mission a statement identifying personal  property  upon  which  the  taxpayer
 40    claims the exemption in section 63-607, Idaho Code, for the year 2007. Failure
 41    to  submit  the  statement  will result in forfeiture of the exemption. Within
 42    thirty (30) days after enactment of this section,  the  state  tax  commission
 43    shall notify all affected taxpayers of the provisions of this subsection.
 44        (2)  For  calendar  years  2008  and  thereafter, the taxpayer's statement
 45    required by this chapter must identify personal property located in this state
 46    that is not subject to assessment by a county assessor.
                                                                        
 47        SECTION 8.  That Section 63-3638, Idaho Code, be, and the same  is  hereby
 48    amended to read as follows:
                                                                        
 49        63-3638.  SALES TAX -- DISTRIBUTION. All moneys collected under this chap-
                                                                        
                                       10
                                                                        
  1    ter,  except  as  may  otherwise  be required in sections 63-3203 and 63-3709,
  2    Idaho Code, shall be distributed by the tax commission as follows:
  3        (1)  An amount of money shall be distributed to the state  refund  account
  4    sufficient  to  pay  current  refund claims. All refunds authorized under this
  5    chapter by the commission shall be paid through the state refund account,  and
  6    those moneys are continuously appropriated.
  7        (2)  Five  million dollars ($5,000,000) per year is continuously appropri-
  8    ated and shall be distributed to the permanent building fund, provided by sec-
  9    tion 57-1108, Idaho Code.
 10        (3)  Four million eight hundred thousand dollars ($4,800,000) per year  is
 11    continuously appropriated and shall be distributed to the water pollution con-
 12    trol account established by section 39-3605, Idaho Code.
 13        (4)  An  amount  equal to the sum required to be certified by the chairman
 14    of the Idaho housing and finance association to the state tax commission  pur-
 15    suant  to  section 67-6211, Idaho Code, in each year is continuously appropri-
 16    ated and shall be paid to any capital reserve fund, established by  the  Idaho
 17    housing  and finance association pursuant to section 67-6211, Idaho Code. Such
 18    amounts, if any, as may be appropriated hereunder to the capital reserve  fund
 19    of  the Idaho housing and finance association shall be repaid for distribution
 20    under the provisions of this section, subject to  the  provisions  of  section
 21    67-6215,  Idaho Code, by the Idaho housing and finance association, as soon as
 22    possible, from any moneys available therefor and  in  excess  of  the  amounts
 23    which the association determines will keep it self-supporting.
 24        (5)  An  amount  equal  to  the sum required by the provisions of sections
 25    63-709 and 63-717, Idaho Code, after allowance for the amount appropriated  by
 26    section  63-718(3), Idaho Code, is continuously appropriated and shall be paid
 27    as provided by sections 63-709 and 63-717, Idaho Code.
 28        (6)  An  amount  required by the provisions of chapter 53, title 33, Idaho
 29    Code.
 30        (7)  An amount required by the provisions of chapter 87, title  67,  Idaho
 31    Code.
 32        (8)  One  dollar  ($1.00)  on each application for certificate of title or
 33    initial application for registration of  a  motor  vehicle,  snowmobile,  all-
 34    terrain vehicle or other vehicle processed by the county assessor or the Idaho
 35    transportation  department  excepting those applications in which any sales or
 36    use taxes due have been previously collected by a retailer, shall be a fee for
 37    the services of the assessor of the county or the Idaho transportation depart-
 38    ment in collecting such taxes, and shall be paid into the current expense fund
 39    of the county or state highway account established in  section  40-702,  Idaho
 40    Code.
 41        (9)  Amounts  calculated  in  accordance  with section 63-610, Idaho Code,
 42    for annual distribution to counties and other taxing districts for replacement
 43    of property tax on personal  property  tax  reductions  pursuant  to  sections
 44    63-607  and  63-608,  Idaho  Code, which amounts are continuously appropriated
 45    unless the legislature enacts a different appropriation for a particular  fis-
 46    cal year.
 47        (10) Eleven  and  five-tenths percent (11.5%) is continuously appropriated
 48    and shall be distributed to the revenue sharing account which  is  created  in
 49    the state treasury, and the moneys in the revenue sharing account will be paid
 50    in installments each calendar quarter by the tax commission as follows:
 51        (a)  Twenty-eight and two-tenths percent (28.2%) shall be paid to the var-
 52        ious cities as follows:
 53             (i)   Fifty percent (50%) of such amount shall be paid to the various
 54             cities,  and  each city shall be entitled to an amount in the propor-
 55             tion that the population of that city bears to the population of  all
                                                                        
                                       11
                                                                        
  1             cities within the state; and
  2             (ii)  Fifty percent (50%) of such amount shall be paid to the various
  3             cities,  and  each city shall be entitled to an amount in the propor-
  4             tion that the preceding year's market value for  assessment  purposes
  5             for  that city bears to the preceding year's market value for assess-
  6             ment purposes for all cities within the state.
  7        (b)  Twenty-eight and two-tenths percent (28.2%) shall be paid to the var-
  8        ious counties as follows:
  9             (i)   One million three hundred twenty thousand dollars  ($1,320,000)
 10             annually  shall be distributed one forty-fourth (1/44) to each of the
 11             various counties; and
 12             (ii)  The balance of such amount shall be paid to the  various  coun-
 13             ties,  and  each county shall be entitled to an amount in the propor-
 14             tion that the population of that county bears to  the  population  of
 15             the state;
 16        (c)  Thirty-five  and  nine-tenths percent (35.9%) of the amount appropri-
 17        ated in this subsection (910) shall be paid to the  several  counties  for
 18        distribution to the cities and counties as follows:
 19             (i)   Each  city and county which received a payment under the provi-
 20             sions of section 63-3638(e), Idaho Code, during the fourth quarter of
 21             calendar year 1999, shall be entitled to a like  amount  during  suc-
 22             ceeding calendar quarters.
 23             (ii)  If  the  dollar amount of money available under this subsection
 24             (910)(c) in any quarter does not equal the amount paid in the  fourth
 25             quarter of calendar year 1999, each city's and county's payment shall
 26             be reduced proportionately.
 27             (iii) If  the  dollar amount of money available under this subsection
 28             (910)(c) in any quarter exceeds the amount paid in the fourth quarter
 29             of calendar year 1999, each city and county shall be  entitled  to  a
 30             proportionately increased payment, but such increase shall not exceed
 31             one  hundred  five  percent  (105%)  of the total payment made in the
 32             fourth quarter of calendar year 1999.
 33             (iv)  If the dollar amount of money available under  this  subsection
 34             (910)(c)  in  any  quarter exceeds one hundred five percent (105%) of
 35             the total payment made in the fourth quarter of calendar  year  1999,
 36             any  amount over and above such one hundred five percent (105%) shall
 37             be paid fifty percent (50%) to the various cities in  the  proportion
 38             that the population of the city bears to the population of all cities
 39             within  the state, and fifty percent (50%) to the various counties in
 40             the proportion that the population of a county bears to  the  popula-
 41             tion of the state; and
 42        (d)  Seven  and  seven-tenths percent (7.7%) of the amount appropriated in
 43        this subsection (910) shall be paid to the several counties for  distribu-
 44        tion to special purpose taxing districts as follows:
 45             (i)   Each  such  district  which received a payment under the provi-
 46             sions of section 63-3638(e), Idaho Code, during the fourth quarter of
 47             calendar year 1999, shall be entitled to a like  amount  during  suc-
 48             ceeding calendar quarters.
 49             (ii)  If  the  dollar amount of money available under this subsection
 50             (910)(d) in any quarter does not equal the amount paid in the  fourth
 51             quarter of calendar year 1999, each special purpose taxing district's
 52             payment shall be reduced proportionately.
 53             (iii) If  the  dollar amount of money available under this subsection
 54             (910)(d) in any quarter exceeds the amount  distributed  under  para-
 55             graph  (i)  of  this subsection (910)(d), each special purpose taxing
                                                                        
                                       12
                                                                        
  1             district shall be entitled to a share of the excess based on the pro-
  2             portion each such district's current property tax budget bears to the
  3             sum of the current property tax budgets of all such districts in  the
  4             state.  The  state  tax  commission  shall calculate district current
  5             property tax budgets to include any unrecovered foregone  amounts  as
  6             determined  under  section  63-802(1)(e),  Idaho Code. When a special
  7             purpose taxing district is situated in more than one (1) county,  the
  8             tax  commission  shall determine the portion attributable to the spe-
  9             cial purpose taxing district from each county in which  it  is  situ-
 10             ated.
 11             (iv)  If  special  purpose  taxing  districts  are  consolidated, the
 12             resulting district is entitled to a base amount equal to the  sum  of
 13             the  base amounts which were received in the last calendar quarter by
 14             each district prior to the consolidation.
 15             (v)   If  a  special  purpose  taxing  district   is   dissolved   or
 16             disincorporated, the state tax commission shall continuously distrib-
 17             ute  to the board of county commissioners an amount equal to the last
 18             quarter's distribution prior to dissolution or disincorporation.  The
 19             board  of  county commissioners shall determine any redistribution of
 20             moneys so received.
 21             (vi)  Taxing districts formed after January 1, 2001, are not entitled
 22             to a payment under the provisions of this subsection (910)(d).
 23             (vii) For purposes of this subsection  (910)(d),  a  special  purpose
 24             taxing  district is any taxing district which is not a city, a county
 25             or a school district.
 26        (101) Amounts calculated in accordance with section 2, chapter  356,  laws
 27    of 2001, for annual distribution to counties and other taxing districts begin-
 28    ning  in  October  2001  for replacement of property tax on farm machinery and
 29    equipment exempted pursuant to section 63-602EE,  Idaho  Code.  For  nonschool
 30    districts,  the state tax commission shall distribute one-fourth (1/4) of this
 31    amount certified quarterly to each county. For school districts, the state tax
 32    commission shall distribute one-fourth (1/4) of the amount certified quarterly
 33    to each school district. For nonschool districts,  the  county  auditor  shall
 34    distribute  to  each district within thirty (30) calendar days from receipt of
 35    moneys from the tax commission. Moneys received by each  taxing  district  for
 36    replacement  shall  be utilized in the same manner and in the same proportions
 37    as revenues from property taxation. The moneys remitted to  the  county  trea-
 38    surer  for  replacement  of  property exempt from taxation pursuant to section
 39    63-602EE, Idaho Code, may be considered by the counties and other taxing  dis-
 40    tricts  and budgeted at the same time, in the same manner and in the same year
 41    as revenues from taxation on personal property which these moneys replace.  If
 42    taxing  districts  are  consolidated, the resulting district is entitled to an
 43    amount equal to the sum of the amounts which were received in the last  calen-
 44    dar quarter by each district pursuant to this subsection prior to the consoli-
 45    dation.  If  a  taxing district is dissolved or disincorporated, the state tax
 46    commission shall continuously distribute to the board of county  commissioners
 47    an  amount  equal  to  the last quarter's distribution prior to dissolution or
 48    disincorporation. The board of county commissioners shall determine any redis-
 49    tribution of moneys so received.  If a taxing district annexes territory,  the
 50    distribution  of  moneys  received  pursuant to this subsection shall be unaf-
 51    fected. Taxing districts formed after January 1, 2001, are not entitled  to  a
 52    payment  under  the  provisions  of  this  subsection.  School districts shall
 53    receive an amount determined by multiplying the sum of the  year  2000  school
 54    district  levy  minus .004 times the market value on December 31, 2000, in the
 55    district of the property exempt from taxation pursuant  to  section  63-602EE,
                                                                        
                                       13
                                                                        
  1    Idaho  Code,  provided that the result of these calculations shall not be less
  2    than zero (0). The result of these school district calculations shall be  fur-
  3    ther increased by six percent (6%). For purposes of the limitation provided by
  4    section  63-802, Idaho Code, moneys received pursuant to this section as prop-
  5    erty tax replacement for property exempt from  taxation  pursuant  to  section
  6    63-602EE, Idaho Code, shall be treated as property tax revenues.
  7        (112) Any  moneys  remaining  over  and  above those necessary to meet and
  8    reserve for payments under other subsections of this section shall be distrib-
  9    uted to the general fund.
                                                                        
 10        SECTION 9.  SEVERABILITY. The provisions of this act are  hereby  declared
 11    to  be  severable  and if any provision of this act or the application of such
 12    provision to any person or circumstance is declared invalid  for  any  reason,
 13    such  declaration  shall  not affect the validity of the remaining portions of
 14    this act.
                                                                        
 15        SECTION 10.  An emergency existing therefor,  which  emergency  is  hereby
 16    declared  to exist, Sections 1 through 7 and Section 9 of this act shall be in
 17    full force and effect on and after passage and approval, and retroactively  to
 18    January  1,  2007.  Section 8 of this act shall be in full force and effect on
 19    and after August 1, 2007.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE

                             RS 17043


    The personal property tax applies to business machinery, tools,
furnishings, equipment and some fixtures. It is one of the most difficult to
administer and comply with for government and business alike.  It is a
barrier to economic development and studies indicate that the elimination of
the tax not only benefits business, but will increase the personal income of
Idaho citizens.

    The purpose of this legislation is to phase out the tax over a set period
of time.  Elements of the legislation include an immediate and retroactive to
January 1, 2007 exemption of personal property in the amount of $50,000
taxable value.  This exemption will eliminate the need for a majority of
businesses in Idaho from having to comply with the tax.  

    The remaining Idaho Business with personal property in excess of $50,000
taxable value will be phased out starting January 1, 2008.  The legislation
guides interested parties to utilize the five tests used by private
appraisers and well-vetted by the courts to determine what property would be
considered real and what would be considered personal in the process of
rulemaking. 

    The phase out process would create an annually increased exemption that
would be applied to the personal property. Local governments will be
reimbursed by the state general fund ensuring the exemptions allowed for in
the phase out will not create any shift to other classes of property. 
Additionally, this bill provides that the Legislature can delay
implementation of any phase-out increase, in the event of adverse financial
conditions.


                            FISCAL NOTE

     The $50,000 immediate exemption would shift between $4 - $7 million in
tax liability to other classifications of property.  This translates to a
negligible .48% based on the current personal property tax paid.  There should
be an immediate savings to counties that will no longer have to track and
assess many of these depreciating assets of the businesses in the state.

     The remaining amount of personal property tax to be reimbursed to local
government will be phased in.  The fiscal notes are a "worst case scenario." 
Studies indicate that the state will see at least half of the fiscal notes
indicated returning to the state coffers in the form of economic expansion of
both business and personal income as a result of the change in Idaho policy to
eliminate the tax.  The static fiscal notes are as follows:


Fiscal Year                       Maximum Reimbursement by State
FY-2009                           $12 million
FY-2010                           $24 million
FY-2011                           $36 million
FY-2012                           $48 million
FY-2013                           $60 million
FY-2014                           $72 million
FY-2015                           $84 million
FY-2016 and each year thereafter  $96 million




Contact
Name:   Rep. Mike Moyle           Sen. Dean Cameron
        Rep. Dennis Lake          Sen. Brent Hill
        Rep. Ken. Roberts         Rep. Maxine Bell

Phone: 332-1000


STATEMENT OF PURPOSE/FISCAL NOTE                                       H 206