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H0549......................................................by STATE AFFAIRS
COLLEGE SAVINGS PLANS - Amends existing law relating to college savings
plans to provide that the addition to taxable income when transferring
moneys from Idaho's college savings plan to a qualified tuition program
that is operated in another state is limited to the amount of the total
contributions to the Idaho Individual Trust Account or savings account by
the account owner in the twelve months preceding the date of the transfer.
02/21 House intro - 1st rdg - to printing
02/22 Rpt prt - to Rev/Tax
03/06 Rpt out - rec d/p - to 2nd rdg
03/07 2nd rdg - to 3rd rdg
03/10 3rd rdg - PASSED - 66-0-4
AYES -- Anderson, Andrus, Barrett, Bayer, Bell, Bilbao, Block, Bock,
Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon, Chavez, Chew,
Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Harwood,
Henbest, Henderson, Jaquet, Killen, King, Kren, Lake, LeFavour,
Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle,
Nielsen, Nonini, 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 -- Bedke, Black, Labrador, Pasley-Stuart
Floor Sponsor - Lake
Title apvd - to Senate
03/11 Senate intro - 1st rdg - to Loc Gov
03/14 Rpt out - rec d/p - to 2nd rdg
03/17 2nd rdg - to 3rd rdg
03/19 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, Werk
NAYS -- None
Absent and excused -- Gannon
Floor Sponsor - Langhorst
Title apvd - to House
03/20 To enrol - Rpt enrol - Sp/Pres signed
03/21 To Governor
03/25 Governor signed
Session Law Chapter 261
Effective: 01/01/08
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 549 BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO ADJUSTMENTS TO TAXABLE INCOME; AMENDING SECTION 63-3022, IDAHO 3 CODE, TO PROVIDE THAT THE ADDITION TO TAXABLE INCOME WHEN TRANSFERRING 4 MONEYS FROM IDAHO'S COLLEGE SAVINGS PLAN TO A QUALIFIED TUITION PROGRAM 5 THAT IS OPERATED BY ANOTHER STATE IS LIMITED TO THE AMOUNT OF THE TOTAL 6 CONTRIBUTIONS TO THE IDAHO INDIVIDUAL TRUST ACCOUNT OR SAVINGS ACCOUNT BY 7 THE ACCOUNT OWNER IN THE TWELVE MONTHS PRECEDING THE DATE OF THE TRANSFER; 8 DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICATION. 9 Be It Enacted by the Legislature of the State of Idaho: 10 SECTION 1. That Section 63-3022, Idaho Code, be, and the same is hereby 11 amended to read as follows: 12 63-3022. ADJUSTMENTS TO TAXABLE INCOME. The additions and subtractions 13 set forth in this section, and in sections 63-3022A through 63-3022Q, Idaho 14 Code, are to be applied to the extent allowed in computing Idaho taxable 15 income: 16 (a) Add any state and local taxes, as defined in section 164 of the 17 Internal Revenue Code and, measured by net income, paid or accrued during the 18 taxable year adjusted for state or local tax refunds used in arriving at tax- 19 able income. 20 (b) Add the net operating loss deduction used in arriving at taxable 21 income. 22 (c) (1) A net operating loss for any taxable year commencing on and after 23 January 1, 2000, shall be a net operating loss carryback not to exceed a 24 total of one hundred thousand dollars ($100,000) to the two (2) immedi- 25 ately preceding taxable years. Any portion of the net operating loss not 26 subtracted in the two (2) preceding years may be subtracted in the next 27 twenty (20) years succeeding the taxable year in which the loss arises in 28 order until exhausted. The sum of the deductions may not exceed the amount 29 of the net operating loss deduction incurred. At the election of the tax- 30 payer, the two (2) year carryback may be foregone and the loss subtracted 31 from income received in taxable years arising in the next twenty (20) 32 years succeeding the taxable year in which the loss arises in order until 33 exhausted. The election shall be made as under section 172(b)(3) of the 34 Internal Revenue Code. An election under this subsection must be in the 35 manner prescribed in the rules of the state tax commission and once made 36 is irrevocable for the year in which it is made. The term "income" as used 37 in this subsection (c) means Idaho taxable income as defined in this chap- 38 ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code. 39 (2) Net operating losses incurred by a corporation during a year in which 40 such corporation did not transact business in Idaho or was not included in 41 a group of corporations combined under subsection (t) of section 63-3027, 42 Idaho Code, may not be subtracted. However, if at least one (1) corpora- 43 tion within a group of corporations combined under subsection (t) of sec- 2 1 tion 63-3027, Idaho Code, was transacting business in Idaho during the 2 taxable year in which the loss was incurred, then the net operating loss 3 may be subtracted. Net operating losses incurred by a person, other than a 4 corporation, in activities not taxable by Idaho may not be subtracted. 5 (d) In the case of a corporation, add the amount deducted under the pro- 6 visions of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue 7 Code (relating to dividends received by corporations) as limited by section 8 246(b)(1) of said code. 9 (e) In the case of a corporation, subtract an amount determined under 10 section 78 of the Internal Revenue Code to be taxable as dividends. 11 (f) Subtract the amount of any income received or accrued during the tax- 12 able year which is exempt from taxation by this state, under the provisions of 13 any other law of this state or a law of the United States, if not previously 14 subtracted in arriving at taxable income. 15 (g) For the purpose of determining the Idaho taxable income of the bene- 16 ficiary of a trust or of an estate: 17 (1) Distributable net income as defined for federal tax purposes shall be 18 corrected for the other adjustments required by this section. 19 (2) Net operating losses attributable to a beneficiary of a trust or 20 estate under section 642 of the Internal Revenue Code shall be a deduction 21 for the beneficiary to the extent that income from the trust or estate 22 would be attributable to this state under the provisions of this chapter. 23 (h) In the case of an individual who is on active duty as a full-time 24 officer, enlistee or draftee, with the armed forces of the United States, 25 which full-time duty is or will be continuous and uninterrupted for one hun- 26 dred twenty (120) consecutive days or more, deduct compensation paid by the 27 armed forces of the United States for services performed outside this state. 28 The deduction is allowed only to the extent such income is included in taxable 29 income. 30 (i) In the case of a corporation, including any corporation included in a 31 group of corporations combined under subsection (t) of section 63-3027, Idaho 32 Code, add any capital loss deducted which loss was incurred during any year in 33 which such corporation did not transact business in Idaho. However, do not add 34 any capital loss deducted if a corporation, including any corporation in a 35 group of corporations combined under subsection (t) of section 63-3027, Idaho 36 Code, was transacting business in Idaho during the taxable year in which the 37 loss was incurred. In the case of persons, other than corporations, add any 38 capital loss deducted which was incurred in activities not taxable by Idaho at 39 the time such loss was incurred. In computing the income taxable to an S cor- 40 poration or partnership under this section, deduction shall not be allowed for 41 a carryover or carryback of a net operating loss provided for in subsection 42 (c) of this section or a capital loss provided for in section 1212 of the 43 Internal Revenue Code. 44 (j) In the case of an individual, there shall be allowed as a deduction 45 from gross income either (1) or (2) at the option of the taxpayer: 46 (1) The standard deduction as defined in section 63, Internal Revenue 47 Code. 48 (2) Itemized deductions as defined in section 63 of the Internal Revenue 49 Code except state or local taxes measured by net income and general sales 50 taxes as either is defined in section 164 of the Internal Revenue Code. 51 (k) Add the taxable amount of any lump sum distribution excluded from 52 gross income for federal income tax purposes under the ten (10) year averaging 53 method. The taxable amount will include the ordinary income portion and the 54 amount eligible for the capital gain election. 55 (l) Deduct any amounts included in gross income under the provisions of 3 1 section 86 of the Internal Revenue Code relating to certain social security 2 and railroad benefits. 3 (m) In the case of a self-employed individual, deduct the actual cost of 4 premiums paid to secure worker's compensation insurance for coverage in Idaho, 5 if such cost has not been deducted in arriving at taxable income. 6 (n) In the case of an individual, deduct the amount contributed to a col- 7 lege savings program pursuant to chapter 54, title 33, Idaho Code, but not 8 more than four thousand dollars ($4,000) per tax year. If the contribution is 9 made on or before April 15, 2001, it may be deducted for tax year 2000 and an 10 individual can make another contribution and claim the deduction according to 11 the limits provided in this subsection during 2001 for tax year 2001, as long 12 as the contribution is made on or before December 31, 2001. 13 (o) In the case of an individual, add the amount of a nonqualified with- 14 drawal from an individual trust account or savings account established pursu- 15 ant to chapter 54, title 33, Idaho Code, less any amount of such nonqualified 16 withdrawal included in the individual's federal gross income pursuant to sec- 17 tion 529 of the Internal Revenue Code. 18 (p) In the case of an individual, add the amount of a withdrawal from an 19 individual trust account or savings account established pursuant to chapter 20 54, title 33, Idaho Code, transferred to a qualified tuition program, as 21 defined in section 529 of the Internal Revenue Code, that is operated by a 22 state other than Idaho. The addition provided in this subsection is limited to 23 the amount of the total contributions to the Idaho individual trust account or 24 savings account by the account owner in the twelve (12) months preceding the 25 date of the transfer. 26 SECTION 2. An emergency existing therefor, which emergency is hereby 27 declared to exist, this act shall be in full force and effect on and after its 28 passage and approval, and retroactively to January 1, 2008.
STATEMENT OF PURPOSE
RS 17928
The College Savings Program Board noted that there has been an
increase in account owners making a deposit to their account,
taking the generous Idaho tax deduction, and then quickly rolling
the funds into another state's program. This process is
inconsistent with the tax deduction's purpose of encouraging
participation in the Idaho College Savings Program. In response,
the Legislature enacted Idaho Code 63-3022(p), which requires
that rollovers be taxed. This provision had the unintended
consequence of taxing all rollovers, even if the funds had been
in the account for a long period of time or if a grandparent or
other party had taken the tax deduction for the deposit. This
bill limits the period in which a rollover is taxed to twelve
(12) months after the funds are deposited and provides that an
account owner is only taxed on deposits made by the account
owner.
FISCAL NOTE
Taxation of rollovers may be reduced. The College savings Program
Board expects the reduction in tax revenue to be minor.
Contact
Name: Liza Carberry, Investment Manager, State Treasurer's Office
Phone: (208) 332-2997
STATEMENT OF PURPOSE/FISCAL NOTE H 549