2007 Legislation
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HOUSE BILL NO. 239 – College saving prog, withdrawals

HOUSE BILL NO. 239

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Bill Status



H0239...............................................by REVENUE AND TAXATION
COLLEGE SAVINGS PROGRAM - Amends existing law relating to income tax to
provide that withdrawals from the Idaho College Savings Program that are
transferred to a qualified program operated by another state shall be
included as taxable income in Idaho.
                                                                        
02/26    House intro - 1st rdg - to printing
02/27    Rpt prt - to Rev/Tax
02/28    Rpt out - rec d/p - to 2nd rdg
03/01    2nd rdg - to 3rd rdg
03/02    3rd rdg - PASSED - 64-1-5
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
      Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Henbest,
      Jaquet, Killen, King, Kren, Labrador, Lake, LeFavour, Loertscher,
      Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle, Nielsen,
      Pasley-Stuart, Patrick, Pence, Raybould, Ring, Ringo, Ruchti, Rusche,
      Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley, Shively,
      Smith(30), Smith(24), Snodgrass, Stevenson, Thayn, Trail, Vander
      Woude, Wills, Wood(35), Mr. Speaker
      NAYS -- Wood(27)
      Absent and excused -- Edmunson, Harwood, Henderson, Nonini, Roberts
    Floor Sponsor - Wood(35)
    Title apvd - to Senate
03/05    Senate intro - 1st rdg - to Loc Gov
03/09    Rpt out - rec d/p - to 2nd rdg
03/12    2nd rdg - to 3rd rdg
03/16    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 - Heinrich
    Title apvd - to House
03/19    To enrol - Rpt enrol - Sp signed
03/20    Pres signed - To Governor
03/26    Governor signed
         Session Law Chapter 190
         Effective: 07/01/07

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 239
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO INCOME TAX; AMENDING SECTION 63-3022, IDAHO CODE, TO PROVIDE  THAT
  3        WITHDRAWALS FROM THE IDAHO COLLEGE SAVINGS PROGRAM THAT ARE TRANSFERRED TO
  4        A QUALIFIED PROGRAM OPERATED BY ANOTHER STATE SHALL BE INCLUDED AS TAXABLE
  5        INCOME IN IDAHO.
                                                                        
  6    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  7        SECTION  1.  That  Section 63-3022, Idaho Code, be, and the same is hereby
  8    amended to read as follows:
                                                                        
  9        63-3022.  ADJUSTMENTS TO TAXABLE INCOME. The  additions  and  subtractions
 10    set  forth  in  this section, and in sections 63-3022A through 63-3022Q, Idaho
 11    Code, are to be applied to the  extent  allowed  in  computing  Idaho  taxable
 12    income:
 13        (a)  Add  any  state  and  local  taxes,  as defined in section 164 of the
 14    Internal Revenue Code and, measured by net income, paid or accrued during  the
 15    taxable  year adjusted for state or local tax refunds used in arriving at tax-
 16    able income.
 17        (b)  Add the net operating loss deduction  used  in  arriving  at  taxable
 18    income.
 19        (c)  (1) A net operating loss for any taxable year commencing on and after
 20        January  1,  2000, shall be a net operating loss carryback not to exceed a
 21        total of one hundred thousand dollars ($100,000) to the  two  (2)  immedi-
 22        ately  preceding  taxable years. Any portion of the net operating loss not
 23        subtracted in the two (2) preceding years may be subtracted  in  the  next
 24        twenty  (20) years succeeding the taxable year in which the loss arises in
 25        order until exhausted. The sum of the deductions may not exceed the amount
 26        of the net operating loss deduction incurred. At the election of the  tax-
 27        payer,  the two (2) year carryback may be foregone and the loss subtracted
 28        from income received in taxable years arising  in  the  next  twenty  (20)
 29        years  succeeding the taxable year in which the loss arises in order until
 30        exhausted. The election shall be made as under section  172(b)(3)  of  the
 31        Internal  Revenue  Code.  An election under this subsection must be in the
 32        manner prescribed in the rules of the state tax commission and  once  made
 33        is irrevocable for the year in which it is made. The term "income" as used
 34        in this subsection (c) means Idaho taxable income as defined in this chap-
 35        ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code.
 36        (2)  Net operating losses incurred by a corporation during a year in which
 37        such corporation did not transact business in Idaho or was not included in
 38        a  group of corporations combined under subsection (t) of section 63-3027,
 39        Idaho Code, may not be subtracted. However, if at least one  (1)  corpora-
 40        tion  within a group of corporations combined under subsection (t) of sec-
 41        tion 63-3027, Idaho Code, was transacting business  in  Idaho  during  the
 42        taxable  year  in which the loss was incurred, then the net operating loss
 43        may be subtracted. Net operating losses incurred by a person, other than a
                                                                        
                                       2
                                                                        
  1        corporation, in activities not taxable by Idaho may not be subtracted.
  2        (d)  In the case of a corporation, add the amount deducted under the  pro-
  3    visions  of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue
  4    Code (relating to dividends received by corporations) as  limited  by  section
  5    246(b)(1) of said code.
  6        (e)  In  the  case  of  a corporation, subtract an amount determined under
  7    section 78 of the Internal Revenue Code to be taxable as dividends.
  8        (f)  Subtract the amount of any income received or accrued during the tax-
  9    able year which is exempt from taxation by this state, under the provisions of
 10    any other law of this state or a law of the United States, if  not  previously
 11    subtracted in arriving at taxable income.
 12        (g)  For  the purpose of determining the Idaho taxable income of the bene-
 13    ficiary of a trust or of an estate:
 14        (1)  Distributable net income as defined for federal tax purposes shall be
 15        corrected for the other adjustments required by this section.
 16        (2)  Net operating losses attributable to a  beneficiary  of  a  trust  or
 17        estate under section 642 of the Internal Revenue Code shall be a deduction
 18        for  the  beneficiary  to  the extent that income from the trust or estate
 19        would be attributable to this state under the provisions of this chapter.
 20        (h)  In the case of an individual who is on active  duty  as  a  full-time
 21    officer,  enlistee  or  draftee,  with  the armed forces of the United States,
 22    which full-time duty is or will be continuous and uninterrupted for  one  hun-
 23    dred  twenty  (120)  consecutive days or more, deduct compensation paid by the
 24    armed forces of the United States for services performed outside  this  state.
 25    The deduction is allowed only to the extent such income is included in taxable
 26    income.
 27        (i)  In the case of a corporation, including any corporation included in a
 28    group  of corporations combined under subsection (t) of section 63-3027, Idaho
 29    Code, add any capital loss deducted which loss was incurred during any year in
 30    which such corporation did not transact business in Idaho. However, do not add
 31    any capital loss deducted if a corporation, including  any  corporation  in  a
 32    group  of corporations combined under subsection (t) of section 63-3027, Idaho
 33    Code, was transacting business in Idaho during the taxable year in  which  the
 34    loss  was  incurred.  In the case of persons, other than corporations, add any
 35    capital loss deducted which was incurred in activities not taxable by Idaho at
 36    the time such loss was incurred. In computing the income taxable to an S  cor-
 37    poration or partnership under this section, deduction shall not be allowed for
 38    a  carryover  or  carryback of a net operating loss provided for in subsection
 39    (c) of this section or a capital loss provided for  in  section  1212  of  the
 40    Internal Revenue Code.
 41        (j)  In  the  case of an individual, there shall be allowed as a deduction
 42    from gross income either (1) or (2) at the option of the taxpayer:
 43        (1)  The standard deduction as defined in  section  63,  Internal  Revenue
 44        Code.
 45        (2)  Itemized  deductions as defined in section 63 of the Internal Revenue
 46        Code except state or local taxes measured by net income and general  sales
 47        taxes as either is defined in section 164 of the Internal Revenue Code.
 48        (k)  Add  the  taxable  amount  of any lump sum distribution excluded from
 49    gross income for federal income tax purposes under the ten (10) year averaging
 50    method. The taxable amount will include the ordinary income  portion  and  the
 51    amount eligible for the capital gain election.
 52        (l)  Deduct  any  amounts included in gross income under the provisions of
 53    section 86 of the Internal Revenue Code relating to  certain  social  security
 54    and railroad benefits.
 55        (m)  In  the case of a self-employed individual, deduct the actual cost of
                                                                        
                                       3
                                                                        
  1    premiums paid to secure worker's compensation insurance for coverage in Idaho,
  2    if such cost has not been deducted in arriving at taxable income.
  3        (n)  In the case of an individual, deduct the amount contributed to a col-
  4    lege savings program pursuant to chapter 54, title 33,  Idaho  Code,  but  not
  5    more  than four thousand dollars ($4,000) per tax year. If the contribution is
  6    made on or before April 15, 2001, it may be deducted for tax year 2000 and  an
  7    individual can make another contribution and claim  the deduction according to
  8    the  limits provided in this subsection during 2001 for tax year 2001, as long
  9    as the contribution is made on or before December 31, 2001.
 10        (o)  In the case of an individual, add the amount of a nonqualified  with-
 11    drawal  from an individual trust account or savings account established pursu-
 12    ant to chapter 54, title 33, Idaho Code, less any amount of such  nonqualified
 13    withdrawal  included in the individual's federal gross income pursuant to sec-
 14    tion 529 of the Internal Revenue Code.
 15        (p)  In the case of an individual, add the amount of a withdrawal from  an
 16    individual  trust  account  or savings account established pursuant to chapter
 17    54, title 33, Idaho Code, transferred  to  a  qualified  tuition  program,  as
 18    defined  in  section  529  of the Internal Revenue Code, that is operated by a
 19    state other than Idaho.

Statement of Purpose / Fiscal Impact


                    STATEMENT OF PURPOSE
  
                             RS 16910
  
This legislation closes a loophole in the tax deduction allowed for accounts
opened under the Idaho College Savings Plan, where the funds are transferred 
to another state's college savings program.  Currently, Idaho taxpayers can
deposit funds into an Idaho College Savings Plan account, receive the tax 
deduction and immediately transfer the funds to another program from another 
state without penalty.  Rollovers from the Idaho program to plans from other
states increased from 316 in 2005 to 877 in 2006.  The intent of the tax 
deduction is to encourage participation in the Idaho College Savings Plan.  
This bill closes that unintended loophole.
  
                              
                       FISCAL IMPACT
                              
There will be a positive impact on the general fund from the recapture of 
funds using the loophole but hard to quantify.
  
  
  
Contact:
Ron Crane, State Treasurer   334-3200
Liza Carberry, Investment Manager   332-2997                      H 239