2008 Legislation
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HOUSE BILL NO. 431<br /> – Small employer, tax incentive


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Bill Status

H0431...............................................by REVENUE AND TAXATION
SMALL EMPLOYER INCENTIVE ACT - Amends existing law to revise the definition
of "tax incentive criteria" in the Small Employer Incentive Act of 2005.

01/30    House intro - 1st rdg - to printing
01/31    Rpt prt - to Rev/Tax
02/12    Rpt out - rec d/p - to 2nd rdg
02/13    2nd rdg - to 3rd rdg
02/14    3rd rdg - PASSED - 58-9-3
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Block,
      Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon, Chavez, Clark,
      Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Harwood, Henderson,
      Jaquet, Killen, King, Kren, Labrador, Lake, Loertscher, Mathews,
      McGeachin, Mortimer, Moyle, Nonini, Pasley-Stuart, Patrick, Pence,
      Raybould, Roberts, Ruchti, Rusche, Sayler, Schaefer, Shepherd(02),
      Shepherd(08), Shirley, Smith(30), Smith(24), Snodgrass, Thayn,
      Thomas, Vander Woude, Wills, Wood(27), Wood(35), Mr. Speaker
      NAYS -- Bock, Chew, Henbest, LeFavour, Luker, Marriott, Ringo(Cooke),
      Shively, Trail
      Absent and excused -- Black, Nielsen, Stevenson
    Floor Sponsor - Moyle
    Title apvd - to Senate
02/15    Senate intro - 1st rdg - to Loc Gov
02/22    Rpt out - rec d/p - to 2nd rdg
02/25    2nd rdg - to 3rd rdg
03/04    3rd rdg - PASSED - 31-0-4
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Geddes, Hammond,
      Heinrich, Hill, Kelly, Keough, Little, Lodge, Malepeai(Sagness),
      McGee, McKague, McKenzie, Pearce, Richardson, Schroeder, Siddoway,
      Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- Gannon, Goedde, Jorgenson, Langhorst
    Floor Sponsors - Corder & Stegner
    Title apvd - to House
03/05    To enrol
03/06    Rpt enrol - Sp signed
03/07    Pres signed
03/10    To Governor
03/14    Governor signed
         Session Law Chapter 90
         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. 431

                             BY REVENUE AND TAXATION COMMITTEE

  1                                        AN ACT

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

  5        SECTION  1.  That  Section 63-4402, Idaho Code, be, and the same is hereby
  6    amended to read as follows:

  7        63-4402.  DEFINITIONS. (1) The definitions contained in the  Idaho  income
  8    tax act, shall apply to this chapter unless modified in this chapter or unless
  9    the context clearly requires another definition.
 10        (2)  As used in this chapter:
 11        (a)  "Commission" means the Idaho state tax commission.
 12        (b)  "New  plant  and  building  facilities" means facility or facilities,
 13        including related  parking  facilities,  where  employees  are  physically
 14        employed.
 15        (c)  "Idaho income tax act" means chapter 30, title 63, Idaho Code.
 16        (d)  "Investment  in new plant" means investment in new plant and building
 17        facilities that are:
 18             (i)   Qualified investments; or
 19             (ii)  Buildings or structural components of buildings.
 20        (e)  "New employee":
 21             (i)   Means an individual, employed primarily within the project site
 22             by the taxpayer, subject to Idaho income tax withholding  whether  or
 23             not any amounts are required to be withheld, covered for unemployment
 24             insurance  purposes  under  chapter 13, title 72, Idaho Code, and who
 25             was eligible to receive employer provided  coverage  under  a  health
 26             benefit  plan as described in section 41-4703, Idaho Code, during the
 27             taxable year. A person shall be deemed to be so employed if such per-
 28             son performs duties on a regular full-time basis.
 29             (ii)  The number of employees employed primarily within  the  project
 30             site by the taxpayer, during any taxable year for a taxpayer shall be
 31             the  mathematical average of the number of such employees reported to
 32             the Idaho department of labor for employment security purposes during
 33             the twelve (12) months of the  taxable  year  which  qualified  under
 34             paragraph (e)(i) of this subsection (2). In the event the business is
 35             in  operation  for  less  than the entire taxable year, the number of
 36             employees of the taxpayer for the year shall be  the  average  number
 37             actually  employed  during the months of operation, provided that the
 38             qualifications of paragraph (e)(i) of this subsection (2) are met.
 39             (iii) Existing employees of the taxpayer who  obtain  new  qualifying
 40             positions  within  the  project site and employees transferred from a
 41             related taxpayer or acquired as part of the acquisition of a trade or
 42             business from another taxpayer within the prior  twelve  (12)  months
 43             are not included in this definition unless the new position or trans-


  1             fer creates a net new job in Idaho.
  2        (f)  "Project period" means the period of time beginning at the earlier of
  3        a  physical  change  to  the  project  site or the first employment of new
  4        employees located in Idaho who are related to the activities at the  proj-
  5        ect site, but no earlier than January 1, 2006, and ending when the facili-
  6        ties  constituting  the  project  are placed in service, but no later than
  7        December 31, 2010.
  8        (g)  "Project site" means an area or areas at which new plant and building
  9        facilities are located and at which the tax incentive criteria  have  been
 10        or will be met and which are either:
 11             (i)   A single geographic area located in this state at which the new
 12             plant  and  building  facilities  owned or leased by the taxpayer are
 13             located; or
 14             (ii)  One (1) or more geographic  areas  located  in  this  state  if
 15             eighty percent (80%) or more of the investment required by subsection
 16             (2)(j)(i) of this section is made at one (1) of the areas.
 17             (iii) The  project  site must be identified and described to the com-
 18             mission by a taxpayer subject to tax under the Idaho income tax  act,
 19             in the form and manner prescribed by the commission.
 20        (h)  "Qualified investment" shall be defined as in section 63-3029B, Idaho
 21        Code.
 22        (i)  "Recapture period" means:
 23             (i)   In  the  case  of  credits  described  in  sections 63-4403 and
 24             63-4404, Idaho Code, the same period for which a recapture of invest-
 25             ment tax credit under section 63-3029B, Idaho Code, is required; or
 26             (ii)  In the case of credits  described  in  section  63-4405,  Idaho
 27             Code, five (5) years from the date the project period ends.
 28        (j)  "Tax  incentive  criteria" means a taxpayer meeting at a project site
 29        the requirements of subparagraphs (i) and (ii) of this paragraph (j).
 30             (i)   During the project period, making capital  investments  in  new
 31             plant  of  at  least  five hundred thousand dollars ($500,000) at the
 32             project site.
 33             (ii)  During a period of time beginning on January 1, 2006, and  end-
 34             ing at the conclusion of the project period:
 35                  1.  Increasing  employment  at  the project site by at least ten
 36                  (10) new employees each of whom must earn at least nineteen dol-
 37                  lars and twenty-three cents ($19.23) per hour worked during  the
 38                  taxpayer's taxable year.
 39                  2.  Employment  increases  above  the  ten  (10)  new  employees
 40                  described  in  subparagraph  (ii)1. of this paragraph (j) at the
 41                  project site shall on average earn at least fifteen dollars  and
 42                  fifty  cents ($15.50) per hour worked during the taxpayer's tax-
 43                  able year. Calculation of the group average earnings  shall  not
 44                  include  amounts  paid  to any employee earning more than forty-
 45                  eight dollars and eight cents ($48.08) per hour.  or  less  than
 46                  twelve  dollars  ($12.00)  per hour worked during the taxpayer's
 47                  taxable year. The denominator of this calculation shall  be  the
 48                  number  of  new  job  positions filled that pay less than forty-
 49                  eight dollars and eight cents ($48.08) per  hour  worked  during
 50                  the taxpayer's taxable year.
 51                  3.  Earnings  calculated  pursuant  to subparagraph (ii) of this
 52                  paragraph (j) shall include income upon which Idaho  income  tax
 53                  withholding  is  required under section 63-3035, Idaho Code, but
 54                  shall not include income such as  stock  options  or  restricted
 55                  stock grants.


  1                  4.  For purposes of determining whether the increased employment
  2                  threshold  has been met, employment at the project site shall be
  3                  determined by calculating the increase  of  such  new  employees
  4                  reported  to  the Idaho department of labor for employment secu-
  5                  rity purposes over the employees so reported as of the beginning
  6                  of the project period or no earlier than January 1, 2006, which-
  7                  ever is larger; and
  8                  5.  Maintaining net increased employment in  Idaho  required  by
  9                  subparagraph  (ii) of this paragraph (j) during the remainder of
 10                  the project period.
 11        (k)  "Taxpayer," for purposes of paragraphs (j) and (e) of this subsection
 12        (2), means either:
 13             (i)   A single taxpayer; or
 14             (ii)  In  the  context  of  a  unitary group filing a combined report
 15             under section 63-3027(t), Idaho Code, all members of a unitary  group
 16             includable in a combined report for the tax years in which the credit
 17             provided  for by this chapter may be claimed. For all other purposes,
 18             the terms of section 63-3009, Idaho Code, and section  63-3027(t)(1),
 19             Idaho Code, apply to the meaning of "taxpayer."

Statement of Purpose / Fiscal Impact

                  STATEMENT OF PURPOSE

                         RS 17614

This legislation simplifies one of the restrictions for 
qualifying to claim the incentives contained in the Small 
Employer Incentive Act.  The current computation used to 
determine the average wage of new employees in excess of ten is 
overly restrictive.  The current formula excludes from the 
computation, wages earned that are less that $12/hour. while 
including the employee in the computation.  To offset one 
employee earning less than $12/hour the employer must have the 
equivalent of one employee earning more than $31/hour.  This 
provision eliminates most companies from qualifying for the 
incentives.  All other restrictions remain in place.

                       FISCAL NOTE

This proposed legislation will have an estimated fiscal impact 
of $50,000 to $100,000 to the general fund.

Name:	Donald Dietrich
Agency:	Commerce, Dept. of
Phone:	334-2650