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H0615...............................................by REVENUE AND TAXATION
INTERNAL REVENUE CODE - Amends existing law to update references to the
Internal Revenue Code; to provide that in computing Idaho taxable income
the adjusted basis of depreciable property, depreciation and gains and
losses from sale, exchange or other disposition of depreciable property
acquired after September 10, 2001, and before December 31, 2007, shall be
computed without regard to Subsection (k) of Section 168 of the Internal
Revenue Code; and to provide that a qualified investment shall not include
any amount for which a deduction is allowed under Section 168(k) of the
Internal Revenue Code in computing taxable income.
03/11 House intro - 1st rdg - to printing
03/12 Rpt prt - to Rev/Tax
03/13 Rpt out - rec d/p - to 2nd rdg
03/14 2nd rdg - to 3rd rdg
03/17 3rd rdg - PASSED - 68-0-2
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Bowers, Brackett, 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, 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 -- Bradford, Labrador
Floor Sponsor - Lake
Title apvd - to Senate
03/17 Senate intro - 1st rdg - to Loc Gov
03/19 Rpt out - rec d/p - to 2nd rdg
03/20 2nd rdg - to 3rd rdg
Rls susp - 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 - Hill
Title apvd - to House
03/21 To enrol - Rpt enrol - Sp signed
03/24 Pres signed
03/25 To Governor
03/31 Governor signed
Session Law Chapter 319
Effective: 01/01/08
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 615 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO INCOME TAXES; AMENDING SECTION 63-3004, IDAHO CODE, AS AMENDED BY 3 SECTION 1, CHAPTER 6, LAWS OF 2008, TO UPDATE REFERENCES TO THE INTERNAL 4 REVENUE CODE; AMENDING SECTION 63-3022O, IDAHO CODE, TO PROVIDE THAT IN 5 COMPUTING IDAHO TAXABLE INCOME THE ADJUSTED BASIS OF DEPRECIABLE PROPERTY, 6 DEPRECIATION AND GAINS AND LOSSES FROM SALE, EXCHANGE OR OTHER DISPOSITION 7 OF DEPRECIABLE PROPERTY ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE 8 DECEMBER 31, 2007, SHALL BE COMPUTED WITHOUT REGARD TO SUBSECTION (k) OF 9 SECTION 168 OF THE INTERNAL REVENUE CODE; AMENDING SECTION 63-3029B, IDAHO 10 CODE, TO PROVIDE THAT A QUALIFIED INVESTMENT SHALL NOT INCLUDE ANY AMOUNT 11 FOR WHICH A DEDUCTION IS ALLOWED UNDER SECTION 168(k) OR SECTION 179 OF 12 THE INTERNAL REVENUE CODE IN COMPUTING TAXABLE INCOME; DECLARING AN EMER- 13 GENCY AND PROVIDING A RETROACTIVE EFFECTIVE DATE. 14 Be It Enacted by the Legislature of the State of Idaho: 15 SECTION 1. That Section 63-3004, Idaho Code, as amended by Section 1, 16 Chapter 6, Laws of 2008, be, and the same is hereby amended to read as fol- 17 lows: 18 63-3004. INTERNAL REVENUE CODE. (a) The term "Internal Revenue Code" 19 means the Internal Revenue Code of 1986 of the United States, as amended, and 20 in effect on thefirstfourteenth day ofJanuaryFebruary, 2008. 21 (b) Provisions of the Internal Revenue Code amended, deleted, or added 22 prior to the effective date of the latest amendment to this section shall be 23 applicable for Idaho income tax purposes on the effective date provided for 24 such amendments, deletions, or additions, including retroactive provisions. 25 SECTION 2. That Section 63-3022O, Idaho Code, be, and the same is hereby 26 amended to read as follows: 27 63-3022O. ADJUSTMENT -- PROPERTY ACQUIRED AFTER SEPTEMBER 10, 2001, AND 28 BEFORE DECEMBER 31, 2007 -- EXPENSES OF ELEMENTARY AND SECONDARY TEACHERS -- 29 SMALL BUSINESS EXPENSES -- LIMITATIONS ON ASSESSMENTS AND REFUNDS. For taxable 30 years commencing on and after January 1, 2001, in computing Idaho taxable 31 income: 32 (1) The adjusted basis of depreciable property, depreciation and gains 33 and losses from sale, exchange or other disposition of depreciable property 34 acquired after September 10, 2001, and before December 31, 2007, shall be com- 35 puted without regard to subsection (k) of section 168 of the Internal Revenue 36 Code; and 37 (2) No deduction shall be allowed relating to expenses of elementary and 38 secondary teachers otherwise allowable under section 62(a)(2)(D) of the Inter- 39 nal Revenue Code; and 40 (3) Adjustments in computing Idaho taxable income required by subsection 41 (1) of this section shall be made without regard to loss limitations imposed 2 1 by sections 465, 469, 704(d) and 1366(d) of the Internal Revenue Code; and 2 (4) A taxpayer's basis in an interest in a pass-through entity, amount at 3 risk, and passive activity loss carryover shall be the same amount for pur- 4 poses of the Idaho income tax act as the amount determined under the Internal 5 Revenue Code; and 6 (5) Each partner, shareholder, member or beneficiary, shall include in 7 Idaho taxable income his share of the adjustments required by this section in 8 computing Idaho taxable income of any pass-through entity; and 9 (6) Notwithstanding the provisions of sections 63-3068 and 63-3072, Idaho 10 Code, the period of limitations for issuing a notice of deficiency determina- 11 tion or filing a claim for refund for any year for which an adjustment is 12 required by this section shall not expire before three (3) years from the 13 later of: (a) the due date of the return for the last taxable year an adjust- 14 ment was required by this section, or (b) the date the return was filed for 15 the last taxable year an adjustment was required by this section. Upon the 16 expiration of the period of limitations as provided in subsections (a) and (m) 17 of section 63-3068, Idaho Code, and subsections (b) and (h) of section 18 63-3072, Idaho Code, only those specific items of basis, deductions, gains or 19 losses that are computed, without regard to subsection (k) of section 168 of 20 the Internal Revenue Code, as required by this section shall be subject to 21 adjustment. 22 SECTION 3. That Section 63-3029B, Idaho Code, be, and the same is hereby 23 amended to read as follows: 24 63-3029B. INCOME TAX CREDIT FOR CAPITAL INVESTMENT. (1) At the election 25 of the taxpayer there shall be allowed, subject to the applicable limitations 26 provided herein as a credit against the income tax imposed by chapter 30, 27 title 63, Idaho Code, an amount equal to the sum of: 28 (a) The tax credit carryovers; and 29 (b) The tax credit for the taxable year. 30 (2) The maximum allowable amount of the credit for the current taxable 31 year shall be three percent (3%) of the amount of qualified investments made 32 during the taxable year. 33 (3) As used in this section "qualified investment" means certain property 34 which: 35 (a) (i) Is eligible for the federal investment tax credit, as defined 36 in sections 46(c) and 48 of the Internal Revenue Code subject to the 37 limitations provided for certain regulated companies in section 46(f) 38 of the Internal Revenue Code and is not a motor vehicle under eight 39 thousand (8,000) pounds gross weight; or 40 (ii) Is qualified broadband equipment as defined in section 41 63-3029I, Idaho Code; and 42 (b) Is acquired, constructed, reconstructed, erected or placed into ser- 43 vice after December 31, 1981; and 44 (c) Has a situs in Idaho. 45 (4) (a) For qualified investments placed in service in 2003 and thereaf- 46 ter, a taxpayer, other than a person whose rate of charge or rate of 47 return, or both, is regulated or limited according to federal or state 48 law, may elect, in lieu of the credit provided by this section, a two (2) 49 year exemption from all taxes on personal property on the qualified 50 investment. The exemption from personal property tax shall apply to the 51 year the election is filed as provided in this section and the immediately 52 following year. The election provided by this paragraph is available only 53 to a taxpayer whose Idaho taxable income, before application of net oper- 3 1 ating losses carried back or forward, in the second preceding taxable year 2 in which the investment is placed in service is negative. 3 (b) The election shall be made in the form prescribed by the state tax 4 commission and shall include a specific description and location of all 5 qualified investments placed into service and located in the jurisdiction 6 of the assessing authority, a designation of the specific assets for which 7 the exemption is claimed, and such other information as the state tax com- 8 mission may require. The election must be made by including the election 9 form with the listing of personal property required by section 63-302, 10 Idaho Code, or, in the case of operating property assessed under chapter 11 4, title 63, Idaho Code, with the operator's statement required by section 12 63-404, Idaho Code. Once made the election is irrevocable. If no election 13 is made, the election is not otherwise available. A copy of the election 14 form must also be attached to the original income tax return due for the 15 taxable year in which the claim was made. 16 (c) The state tax commission and the various county assessors are author- 17 ized to exchange information as necessary to properly coordinate the 18 exemption provided in this subsection. Information disclosed to county 19 officials under this subsection may be used only to determine the validity 20 or amount of a taxpayer's entitlement to the exemption provided in this 21 section, and is not otherwise subject to public disclosure as provided in 22 section 9-340D, Idaho Code. 23 (d) In the event that an investment in regard to which the election under 24 this subsection was made is determined by the state tax commission: 25 (i) To not be a qualified investment, or 26 (ii) To have ceased to qualify during the recapture period, or 27 (iii) To be otherwise not qualified for the election, 28 the taxpayer shall be subject to recapture of the property tax benefit. 29 (e) The benefit to be recaptured in subsection (4)(d) of this section 30 shall be computed in the manner required in subsection (7) of this section 31 and such recapture amount shall be subject to assessment in the same man- 32 ner as a deficiency in tax under this chapter. For purposes of calculating 33 the recapture, the property tax benefit shall be: 34 (i) In the case of locally assessed property located in a single 35 county or nonapportioned centrally assessed property, the market 36 value of exempted property times the average property tax levy for 37 that county in the year or years for which the exemption was claimed. 38 (ii) In the case of other centrally assessed property and property 39 located in more than one (1) county, the market value of exempted 40 property times the average urban property tax levy of the state as 41 determined by the state tax commission in each of the years for which 42 the exemption was claimed. 43 (f) In the event that a recapture of the exemption is required under this 44 subsection (4), the person claiming the exemption shall report the event 45 to the state tax commission in the manner the state tax commission may by 46 rule require. The report shall be due no later than the due date of that 47 person's income tax return under this chapter for the taxable year in 48 which the event occurs. The recapture amount is due and payable with the 49 report. Any amount of recapture not paid is a deficiency within the mean- 50 ing of section 63-3044, Idaho Code. 51 (g) All moneys collected by the state tax commission pursuant to this 52 subsection, which amounts are continuously appropriated for this purpose, 53 shall be deposited with the state treasurer and placed in the state refund 54 account, as provided by section 63-3067, Idaho Code, to be remitted to 55 the county within which the property was located that was not a qualified 4 1 investment or ceased to qualify during the recapture period. The county 2 shall distribute this remittance to all appropriate taxing districts based 3 on the proportion each appropriate taxing district's levy is to the total 4 of all the levies of the taxing districts for the tax code area where the 5 property was located for each year the exemption was granted. If any tax- 6 ing district is dissolved or disincorporated, the proportionate share of 7 the remittance to be distributed to that taxing district shall be depos- 8 ited in the county current expense fund. 9 (h) For purposes of the limitation provided by section 63-802, Idaho 10 Code, moneys received pursuant to this subsection shall be treated as 11 property tax revenue by taxing districts. 12 (5) Notwithstanding the provisions of subsections (1) and (2) of this 13 section, the amount of the credit allowed shall not exceed fifty percent (50%) 14 of the tax liability of the taxpayer. The tax liability of the taxpayer shall 15 be the tax after deducting the credit allowed by section 63-3029, Idaho Code. 16 (6) If the sum of credit carryovers from the credit allowed by subsection 17 (2) of this section and the amount of credit for the taxable year from the 18 credit allowed by subsection (2) of this section exceed the limitation imposed 19 by subsection (5) of this section for the current taxable year, the excess 20 attributable to the current taxable year's credit shall be an investment 21 credit carryover to the fourteen (14) succeeding taxable years. In the case of 22 a group of corporations filing a combined report under section 63-3027, Idaho 23 Code, or sections 63-3027B through 63-3027E, Idaho Code, credit earned by one 24 (1) member of the group but not used by that member may be used by another 25 member of the group, subject to the provisions of subsection (5) of this sec- 26 tion, instead of carried over. The entire amount of unused credit shall be 27 carried forward to the earliest of the succeeding years, wherein the oldest 28 available unused credit shall be used first, so long as the qualified invest- 29 ment property for which the unused credit was granted still maintains Idaho 30 situs. For a combined group of corporations, credit carried forward may be 31 claimed by any member of the group unless the member who earned the credit is 32 no longer included in the combined group. 33 (7) Any recapture of the credit allowed by subsection (2) of this section 34 on property disposed of or ceasing to qualify, prior to the close of the 35 recapture period, shall be determined according to the applicable recapture 36 provisions of the Internal Revenue Code. In the case of a unitary group of 37 corporations, the increase in tax due to the recapture of investment tax 38 credit must be reported by the member of the group who earned the credit 39 regardless of which member claimed the credit against tax. 40 (8) For the purpose of determining whether property placed in service is 41 a "qualified investment" as defined in subsection (3) of this section, the 42 provisions of section 49 of the Internal Revenue Code shall be disregarded. 43 "Qualified investment" shall not include any amount for which a deduction is 44 allowed under section 168(k) or section 179 of the Internal Revenue Code in 45 computing taxable income. 46 (9) For purposes of this section, property has a situs in Idaho during a 47 taxable year if it is used in Idaho at any time during the taxable year. Prop- 48 erty not used in Idaho during a taxable year does not have a situs in Idaho in 49 the taxable year during which the property is not used in Idaho or in any sub- 50 sequent taxable year. No credit or carryover of credit is permitted under this 51 section if the credit or carryover relates to property that does not have a 52 situs in Idaho during the taxable year for which the credit or carryover is 53 claimed. The Idaho situs of property must be established by records maintained 54 by the taxpayer which are created reasonably contemporaneously with the use of 55 the property. 5 1 (10) In the case of property used both in and outside Idaho, the taxpayer, 2 electing to claim the credit provided in this section, must elect to compute 3 the qualified investment in property with a situs in Idaho for all such 4 investments first qualifying during that year in one (1), but only one (1), of 5 the following ways: 6 (a) The amount of each qualified investment in a specific asset shall be 7 separately computed based on the percentage of the actual use of the prop- 8 erty in Idaho by using a measure of the use, such as total miles or total 9 machine hours, that most accurately reflects the beneficial use during the 10 taxable year in which it is first acquired, constructed, reconstructed, 11 erected or placed into service; provided, that the asset is placed in ser- 12 vice more than ninety (90) days before the end of the taxable year. In the 13 case of assets acquired, constructed, reconstructed, erected or placed 14 into service within ninety (90) days prior to the end of the taxable year 15 in which the investment first qualifies, the measure of the use of that 16 asset within Idaho for that year shall be based upon the percentage of use 17 in Idaho during the first ninety (90) days of use of the asset; 18 (b) The investment in qualified property used both inside and outside 19 Idaho during the taxable year in which it is first acquired, constructed, 20 reconstructed, erected or placed into service shall be multiplied by the 21 percent of the investment that would be included in the numerator of the 22 Idaho property factor determined pursuant to section 63-3027, Idaho Code, 23 for the same year. 24 (11) Only for the purposes of subsections (3)(a) and (8) of this section, 25 references to sections of the "Internal Revenue Code" mean the sections 26 referred to as they existed in the Internal Revenue Code of 1986 prior to 27 November 5, 1990. 28 SECTION 4. An emergency existing therefor, which emergency is hereby 29 declared to exist, this act shall be in full force and effect on and after its 30 passage and approval, and retroactively to January 1, 2008.
STATEMENT OF PURPOSE
RS 18001
This bill is to update references to the Internal Revenue Code (IRC) .
The bill will conform the Idaho income tax law to changes made to the
IRC after January 1, 2008, including "The Economic Stimulus Act of
2008". Conformity with "The Economic Stimulus Act of 2008" accelerates
the deduction for depreciable assets by increasing the election to
expense and providing for bonus depreciation. In addition, the bill
exempts the amounts of property deducted as bonus depreciation from
Idaho investment tax credit.
FISCAL IMPACT
The provisions of "The Economic Stimulus Act of 2008" establish the
timing of depreciation deductions for assets acquired in calendar year
2008. It would reduce income tax revenues in FY 2009 and 2010. Such
reductions would be offset by revenue increases (due to less
depreciation deductions) in FY 2011-2015. Because the tax reductions
due to bonus depreciation and the increase in the election to expense
certain property under the Economic Stimulus Act would be partially
offset by a reduction in the Idaho investment tax credit, the net
effect is an increase of revenues to the state.
FY 2009: $38.0 million less revenue
FY 2010: $1.5 million less revenue
FY 2011-2015: $59.5 million additional revenue
NET INCREASE IN REVENUES: $20.0 million additional revenue
Contact
Name: Sen. Brent Hill
Phone: 332 1316
STATEMENT OF PURPOSE/FISCAL NOTE H615