2008 Legislation
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HOUSE BILL NO. 344<br /> – Income tax withholding, revised


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Bill Status

H0344...............................................by REVENUE AND TAXATION
INCOME TAX WITHHOLDING - Amends existing law to revise the date for filing
employer returns for state income tax purposes; to require the return to
show the amount of any deficiency or refund due; and to require copies of
the declaration of withholding provided to employees to be filed with the

01/16    House intro - 1st rdg - to printing
01/17    Rpt prt - to Rev/Tax
01/21    Rpt out - rec d/p - to 2nd rdg
01/22    2nd rdg - to 3rd rdg
01/24    3rd rdg - PASSED - 70-0-0
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
      Chavez, Chew, Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart,
      Harwood, Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador,
      Lake, LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin,
      Mortimer, Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence,
      Raybould, Ringo, Roberts, Ruchti, Rusche, Sayler, Schaefer,
      Shepherd(02), Shepherd(08), Shirley, Shively, Smith(30), Smith(24),
      Snodgrass, Stevenson, Thayn, Thomas, Trail, Vander Woude, Wills,
      Wood(27), Wood(35), Mr. Speaker
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Barrett
    Title apvd - to Senate
01/25    Senate intro - 1st rdg - to Loc Gov
01/31    Rpt out - rec d/p - to 2nd rdg
02/01    2nd rdg - to 3rd rdg
02/05    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Geddes, Goedde,
      Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai(Sagness), McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett(Thorson), Werk
      NAYS -- None
      Absent and excused -- Gannon
    Floor Sponsor - Corder
    Title apvd - to House
02/06    To enrol
02/07    Rpt enrol - Sp signed
02/08    Pres signed
02/11    To Governor
02/13    Governor signed
         Session Law Chapter 9
         Effective: 01/01/09

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008


                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 344

                             BY REVENUE AND TAXATION COMMITTEE

  1                                        AN ACT
  7        DATE.

  8    Be It Enacted by the Legislature of the State of Idaho:

  9        SECTION  1.  That  Section 63-3035, Idaho Code, be, and the same is hereby
 10    amended to read as follows:

 12    LECTION  AND PAYMENT OF TAX. (a) Every employer who is required under the pro-
 13    visions of the Internal Revenue Code to withhold, collect and pay  income  tax
 14    on wages or salaries paid by such employer to any employee (other than employ-
 15    ees  specified in Internal Revenue Code section 3401(a)(2)) shall, at the time
 16    of such payment of wages, salary, bonus or other emolument to  such  employee,
 17    deduct and retain therefrom an amount substantially equivalent to the tax rea-
 18    sonably  calculated  by  the  state tax commission to be due from the employee
 19    under this chapter. The state tax  commission  shall  prepare  tables  showing
 20    amounts to be withheld, and shall supply same to each employer subject to this
 21    section. In the event that an employer can demonstrate administrative inconve-
 22    nience  in complying with the exact requirements set forth in these tables, he
 23    may, with the consent of the state tax commission and upon application to  it,
 24    use  a  different  method  which will produce substantially the same amount of
 25    taxes withheld. Every employer making payments of wages or salaries earned  in
 26    Idaho, regardless of the place where such payment is made:
 27        (1)  sShall  be  liable  to  the state of Idaho for the payment of the tax
 28        required to be deducted and withheld under this section and shall  not  be
 29        liable  to  any individual for the amount deducted from his wages and paid
 30        over in compliance or intended compliance with this section;
 31        (2)  mMust pay to the state tax commission monthly on or before  the  20th
 32        day  of the succeeding month, or at such other times as the state tax com-
 33        mission may allow, an amount of tax which, under the  provisions  of  this
 34        chapter, he is required to deduct and withhold;
 35        (3)  sShall  register  with  the  state tax commission, in the manner pre-
 36        scribed by it, to establish an employer's withholding account number.  The
 37        account number will be used to report all amounts withheld, for the annual
 38        reconciliation  required  in  this  section,  and  for such other purposes
 39        relating to withholding as the state tax commission may require; and
 40        (4)  mMust, notwithstanding the provisions of paragraphs (1)  and  (2)  of
 41        this  subsection,  if  the  amount of withholding of such employer for the
 42        preceding twelve (12) month period equals or  exceeds  two  hundred  forty
 43        thousand  dollars  ($240,000)  per  annum or an average of twenty thousand


  1        dollars ($20,000) per month per annum, pay to the state tax commission  on
  2        the  basis of withholding periods which begin on the 16th day of the month
  3        and end on the 15th day of the following month, and payment shall be  made
  4        not later than five (5) days after the end of the withholding period.
  5        (5)  If a payment required pursuant to subsection (a)(2) or (a)(4) of this
  6        section is not made or is made delinquently or if made is not equal to the
  7        withholding  required    under  this  section the state tax commission may
  8        treat the failure as a failure to file a return and may  take  administra-
  9        tive  and  judicial actions as authorized by this chapter in the case of a
 10        failure to file a return.  Interest,  at  the  rate  provided  by  section
 11        63-3045, Idaho Code, shall apply to any such underpayment.
 12        (6)  Commencing  in 2006, the state tax commission shall determine whether
 13        the threshold amounts established by subsection  (a)(4)  of  this  section
 14        must  be  adjusted to reflect fluctuations in the cost of living. The com-
 15        mission shall base its determination  on  the  cumulative  effect  of  the
 16        annual  cost-of-living  percentage  modifications determined by the United
 17        States secretary of health and human services pursuant to 42  USC  415(i).
 18        When  the  cumulative  percentage  applied to the monthly threshold amount
 19        equals or exceeds five thousand dollars  ($5,000),  the  commission  shall
 20        promulgate  a rule adjusting the monthly threshold amount by five thousand
 21        dollars ($5,000) and making the necessary proportional adjustment  to  the
 22        annual threshold amount. The rule shall be effective for the next succeed-
 23        ing  calendar  year  and  each year thereafter until again adjusted by the
 24        commission. The tax commission shall determine subsequent  adjustments  in
 25        the same manner, in each case using the year of the last adjustment as the
 26        base year.
 27        (b)  (1) In  addition  to  the  payments  required pursuant to subsections
 28        (a)(2) and (a)(4) of this section, every employer shall file a return upon
 29        such form as shall be prescribed by the state tax commission, but not more
 30        frequently than annually, or as required pursuant to any agreement between
 31        the state tax  commission  and  the  department  of  labor  under  section
 32        63-3035B,  Idaho Code, unless a shorter filing period and due date is pre-
 33        scribed by the state tax commission. The return shall be due on  the  last
 34        day  of  the  second  month  following  the end of the period to which the
 35        return relates. The return shall:
 36             (i)   Sshow, for the period to which it relates, the total amount  of
 37             wages,  salary,  bonus  or other emolument paid to his employees, the
 38             amount deducted therefrom in accordance with the  provisions  of  the
 39             Internal  Revenue  Code,  the amount deducted therefrom in accordance
 40             with the provisions of this section, the amount of any previous  pay-
 41             ments made pursuant to this section, the amount of any deficiency due
 42             from  the  employer or refund payable by the state tax commission and
 43             such pertinent and necessary information as the state tax  commission
 44             may require.
 45             (ii)  Include  a  copy  of the declaration of withholding provided to
 46             employees pursuant to subsection (b)(2) of this section.
 47        (2)  Every employer making a declaration of withholding as provided herein
 48        shall furnish to the employees annually, but not later  than  thirty  (30)
 49        days  after  the  end  of the calendar year, a record of the amount of tax
 50        withheld from such employee on forms to be prescribed, prepared  and  fur-
 51        nished  by the state tax commission. and on or before the last day of Feb-
 52        ruary every employer shall file a copy thereof with the state tax  commis-
 53        sion.
 54        (3)  Every  employer  who is required, under Internal Revenue Code section
 55        6011, to file returns on magnetic media, machine readable  form  or  elec-


  1        tronic  means, as defined in the Idaho uniform electronic transaction act,
  2        may be required by rules of the state tax commission to file corresponding
  3        state returns on similar magnetic media, machine readable  form  or  elec-
  4        tronic means. Such rules may provide a different due date for such returns
  5        which  shall be no later than the date employers are required to file such
  6        returns with the internal revenue service or the social security  adminis-
  7        tration.
  8        (c)  All moneys deducted and withheld by every employer shall immediately
  9    upon  such deduction be state money and every employer who deducts and retains
 10    any amount of money under the provisions of this chapter shall hold  the  same
 11    in  trust  for the state of Idaho and for the payment thereof to the state tax
 12    commission in the manner and at  the  times  in  this  chapter  provided.  Any
 13    employer  who  does  not  possess  real  property situated within the state of
 14    Idaho, which, in the opinion of the state tax  commission,  is  of  sufficient
 15    value  to  cover  his probable tax liability, may be required to post a surety
 16    bond in such sum as the state tax commission shall deem  adequate  to  protect
 17    the state.
 18        (d)  The  provisions  of this chapter relating to additions to tax in case
 19    of delinquency, and penalties, shall apply to employers subject to the  provi-
 20    sions  of this section and for these purposes any amount deducted, or required
 21    to be deducted and remitted to the state tax commission  under  this  section,
 22    shall  be  considered  to  be the tax of the employer and with respect to such
 23    amount he shall be considered the taxpayer.
 24        (e)  Amounts deducted from wages of an employee during any  calendar  year
 25    in accordance with the provisions of this section shall be considered to be in
 26    part payment of the tax imposed on such employee for his tax year which begins
 27    within  such calendar year and the return made by the employer under this sub-
 28    section (e) shall be accepted by the state tax commission as evidence in favor
 29    of the employee of the amount so deducted from  his  wages.  Where  the  total
 30    amount  so  deducted  exceeds  the amount of tax on the employee, based on his
 31    Idaho taxable income, or where his income is not taxable under  this  chapter,
 32    the state tax commission shall, after examining the annual return filed by the
 33    employee  in  accordance with this chapter, but not later than sixty (60) days
 34    after the filing of each return, refund the amount of the excess deducted.
 35        (f)  This section shall in no way relieve any taxpayer from his obligation
 36    of filing a return at the time required under this chapter,  and,  should  the
 37    amount  withheld  under  the provisions of this section be insufficient to pay
 38    the total tax of such taxpayer, such unpaid tax shall be paid at the time pre-
 39    scribed by section 63-3034, Idaho Code.
 40        (g)  An employee receiving wages shall on any day be entitled to not  more
 41    than,  but may claim fewer than, the number of withholding exemptions to which
 42    he is entitled under the Internal Revenue Code for federal  income  tax  with-
 43    holding purposes.
 44        (h)  An employer shall use the exemption certificate filed by the employee
 45    with  the  employer under the withholding exemption provisions of the Internal
 46    Revenue Code in determining  the  amount  of  tax  to  be  withheld  from  the
 47    employee's wages or salary under this chapter. The tax commission may redeter-
 48    mine  the  number  of  withholding exemptions to which an employee is entitled
 49    under subsection (g) of this section, and the state tax commission may require
 50    such exemption certificate to be filed on a form prescribed by the  commission
 51    in  any circumstance where the commission finds that the exemption certificate
 52    filed for Internal Revenue Code purposes does not properly reflect the  number
 53    of  withholding  exemptions to which the employee is entitled under this chap-
 54    ter. In no event shall any employee give an exemption certificate which claims
 55    a higher number of  withholding  exemptions  than  the  number  to  which  the


  1    employee is entitled by subsection (g) of this section.

  2        SECTION  2.  This act shall be in full force and effect on and after Janu-
  3    ary  1, 2009.

Statement of Purpose / Fiscal Impact

                   STATEMENT OF PURPOSE

                         RS 17343

This bill simplifies the year-end income tax withholding reports 
employers now must file with the State Tax Commission.  Current 
law requires employers to transmit to the Tax Commission copies 
of the wage and tax statements (Form W-2) provided to employees.  
This transmittal must be filed by January 31st of each year.  
Employers must then file an annual reconciliation of the amounts 
of Idaho withholding reported on the W-2s and the amount 
remitted on monthly or quarterly withholding returns filed 
during the year.  This second report is due by the last day of 
February.  This bill combines the two filings into a single 
return which will be due on the last day of February.

The change will be effective for filings in 2009 and later.

                         FISCAL NOTE

No fiscal impact.

Name:	Ted Spangler
Agency:	State Tax Commission
Phone:	(208) 334-7530

STATEMENT OF PURPOSE/FISCAL NOTE                         H 344