2008 Legislation
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HOUSE BILL NO. 360<br /> – Sales tax/retailr/substantial nexus

HOUSE BILL NO. 360

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Bill Status



H0360...............................................by REVENUE AND TAXATION
SALES TAX - Adds to and amends existing law to revise the definition of
"retailer engaged in business in this state"; to provide conditions when a
retailer has substantial nexus with the state of Idaho; and to provide
application of the definition of "Internal Revenue Code."

01/17    House intro - 1st rdg - to printing
01/18    Rpt prt - to Rev/Tax
01/28    Rpt out - rec d/p - to 2nd rdg
01/29    2nd rdg - to 3rd rdg
02/04    3rd rdg - PASSED - 67-0-3
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chavez, Chew,
      Clark, Collins, Crane, Durst, Hagedorn, Hart, Harwood, Henbest,
      Henderson, Jaquet, Killen, King, Kren, Labrador, Lake, LeFavour,
      Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer, 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 -- Chadderdon, Eskridge, Moyle
    Floor Sponsor - Ruchti
    Title apvd - to Senate
02/05    Senate intro - 1st rdg - to Loc Gov
02/13    Rpt out - rec d/p - to 2nd rdg
02/14    2nd rdg - to 3rd rdg
02/25    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, 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, Werk
      NAYS -- None
      Absent and excused -- Coiner, Gannon
    Floor Sponsor - Little
    Title apvd - to House
02/26    To enrol
02/27    Rpt enrol - Sp signed
02/28    Pres signed
02/29    To Governor
03/03    Governor signed
         Session Law Chapter 49
         Effective: 07/01/08

Bill Text




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

                                                                       

                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 360

                             BY REVENUE AND TAXATION COMMITTEE

  1                                        AN ACT
  2    RELATING TO SALES AND USE TAXES; AMENDING  SECTION  63-3611,  IDAHO  CODE,  TO
  3        REVISE  THE  DEFINITION OF A "RETAILER ENGAGED IN BUSINESS IN THIS STATE";
  4        AMENDING CHAPTER 36, TITLE 63, IDAHO CODE, BY THE ADDITION OF A  NEW  SEC-
  5        TION  63-3615A, IDAHO CODE, TO PROVIDE CONDITIONS WHEN A RETAILER HAS SUB-
  6        STANTIAL NEXUS WITH THE STATE OF IDAHO, WITH EXCEPTIONS,  AND  TO  PROVIDE
  7        APPLICATION OF THE DEFINITION OF "INTERNAL REVENUE CODE."

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

  9        SECTION  1.  That  Section 63-3611, Idaho Code, be, and the same is hereby
 10    amended to read as follows:

 11        63-3611.  RETAILER ENGAGED IN BUSINESS IN THIS STATE. "Retailer engaged in
 12    business in this state" as used in this chapter means any retailer who:
 13        (1)  Engages in recurring solicitation of purchases from residents of this
 14    state or otherwise purposefully directs its business activities  at  residents
 15    of this state; and
 16        (2)  Has  sufficient  contact with this state, in accordance with the con-
 17    stitution of the United States, to allow the state to require  the  seller  to
 18    collect  and  remit use tax on sales of tangible personal property or services
 19    made to customers in this state.
 20        (3)  The term includes any of the following:
 21        (a)  Any retailer maintaining, occupying or using, permanently  or  tempo-
 22        rarily, directly or indirectly, or through a subsidiary or agent, by what-
 23        ever  name  called, an office, place of distribution, sales or sample room
 24        or place, warehouse or storage place, or other place of business or  main-
 25        taining a stock of goods.
 26        (b)  Any retailer having any representative, agent, salesman, canvasser or
 27        solicitor  operating  in this state under the authority of the retailer or
 28        its subsidiary for the purpose of selling, delivering, installing  or  the
 29        taking of orders for any tangible personal property.
 30        (c)  Any  retailer,  with  respect  to a lease or rental, deriving rentals
 31        from a lease or rental of tangible  personal  property  situated  in  this
 32        state.
 33        (d)  Any retailer engaging in any activity in connection with servicing or
 34        installing tangible personal property in this state.
 35        (e)  Any  retailer  owned or controlled by the same interests which own or
 36        control any retailer engaged in business in the same or a similar line  of
 37        business  in  this  state  with substantial nexus in this state within the
 38        meaning of section 63-3615A, Idaho Code.
 39        (f)  Any retailer having a franchisee  or  licensee  operating  under  its
 40        trade  name  if  the franchisee or licensee is required to collect the tax
 41        under the provisions of this section.

                                       2

  1        SECTION 2.  That Chapter 36, Title 63, Idaho Code, be,  and  the  same  is
  2    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
  3    ignated as Section 63-3615A, Idaho Code, and to read as follows:

  4        63-3615A.  SUBSTANTIAL NEXUS. (1) Subject to the limitation in  subsection
  5    (2) of section 63-3611, Idaho Code, a retailer has substantial nexus with this
  6    state if both of the following apply:
  7        (a)  The  retailer  and  an  in-state business maintaining one (1) or more
  8        locations within this state are related parties; and
  9        (b)  The retailer and the in-state business use an identical  or  substan-
 10        tially similar name, trade name, trademark or goodwill to develop, promote
 11        or  maintain sales, or the in-state business provides services to, or that
 12        inure to the benefit of, the out-of-state business related to  developing,
 13        promoting or maintaining the in-state market.
 14        (2)  Two  (2) entities are related parties under this section if they meet
 15    any one (1) of the following tests:
 16        (a)  Both entities are component members of the same controlled  group  of
 17        corporations under section 1563 of the Internal Revenue Code;
 18        (b)  One  (1)  entity  is a related taxpayer to the other entity under the
 19        provisions of section 267 of the Internal Revenue Code;
 20        (c)  One (1) entity is a corporation and the other entity and  any  party,
 21        for which section 318 of the Internal Revenue Code requires an attribution
 22        of  ownership  of stock from that party to the entity, own directly, indi-
 23        rectly, beneficially, or constructively at least fifty  percent  (50%)  of
 24        the value of the outstanding stock of the corporation; or
 25        (d)  One (1) or both entities is a limited liability company, partnership,
 26        estate  or  trust,  none  of which is treated as a corporation for federal
 27        income tax purposes, and  such  limited  liability  company,  partnership,
 28        estate  or  trust  and  its  members, partners or beneficiaries own in the
 29        aggregate directly, indirectly, beneficially, or constructively  at  least
 30        fifty  percent  (50%) of the profits, capital, stock or value of the other
 31        entity or both entities.
 32        (3)  The provisions of this section shall not apply to a retailer that had
 33    sales in this state in the previous year in an amount of less than one hundred
 34    thousand dollars ($100,000).
 35        (4)  The definition of "Internal Revenue Code" in section  63-3004,  Idaho
 36    Code, shall apply to this section.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE

                             RS 17521

     This legislation amends Section 63-3611 of the Idaho Code to
provide that a "retailer engaged in business in this state" be
defined as any retailer with substantial nexus in this state, and
creates a new Section 63-3615A of the Idaho Code, to define
substantial nexus for any retailer having a franchisee or
licensee operating under its tradename or owned by the same
entity or corporation in the State of Idaho be required to
collect taxes from its customers.  


                           FISCAL NOTE

     The State Tax Commission's best estimate of the current
revenue gain from passage of RS 17521 is $500,000.




Contact
Name: Senator Brad Little 
Phone: 332-1303


STATEMENT OF PURPOSE/FISCAL NOTE                         H 360