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Idaho Statutes
Idaho Statutes are updated to the website July 1 following the legislative session.
REVENUE AND TAXATION
CHAPTER 30
INCOME TAX
63-3045. Notice of redetermination or deficiency — Interest.
(1)(a) If, in the case of any taxpayer, the state tax commission determines that there is a deficiency in respect of the tax imposed by this title, the state tax commission shall, immediately upon discovery thereof, send notice of such deficiency to the taxpayer by first class mail or by other commercial delivery service providing proof of delivery, whichever is the most cost-efficient. The notice shall be sent to the taxpayer’s last address known to the state tax commission. The notice of deficiency shall be accompanied by an explanation of the specific reason for the determination and an explanation of the taxpayer’s right to appeal. Within sixty-three (63) days after such notice is mailed, the taxpayer may, at his option, file a protest in writing with the state tax commission and obtain redetermination of the deficiency.
(b) If the taxpayer files a protest with the state tax commission within the period set forth in paragraph (a) of this subsection, and such protest does not comply with the rules of the state tax commission and is therefore inadequate to perfect the taxpayer’s right to a redetermination of the deficiency determination, then the state tax commission shall notify the taxpayer, in the same manner as set forth in paragraph (a) of this subsection, of such inadequacies, setting forth in said notice the corrective action to be taken by the taxpayer to perfect his protest. The taxpayer shall thereafter have twenty-eight (28) days from the date of said notice to perfect his protest.
(c) No assessment of a deficiency in respect to the tax imposed by this chapter, and no distraint or proceedings in court for its collection, shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer, nor until all appeal rights relating to the deficiency have become final.
(2)(a) Following a perfected protest, the taxpayer has the right to an independent administrative redetermination of the originating division’s determination before the state tax commission, including a hearing. The purpose of the hearing is to discuss the deficiency determination and the taxpayer’s protest with a commissioner or duly authorized representative of the commission. The meeting shall be held informally and evidence shall be freely admitted regardless of the rules of evidence.
(b) Tax commission staff assigned to the administrative redetermination may not engage in communications relating to the taxpayer’s protest with employees of the originating division without first providing the taxpayer the opportunity to participate, except for questions that involve ministerial, administrative or procedural matters that do not address the substance of the issues or positions taken in the case or as otherwise allowed under title 63, Idaho Code, and the rules promulgated thereunder. The state tax commission shall promulgate rules governing communications with the originating division to ensure an independent review process. The provisions of this subsection do not create a substantive right affecting the taxpayer’s tax liability or the state tax commission’s ability to determine, assess or collect that tax liability, including statutory interest and any penalties, if applicable.
(3) Any hearing conducted under the provisions of this section may be conducted, in whole or in part, by telephone, television, or other electronic means if each participant in the hearing has an opportunity to participate in the entire proceeding while it is taking place.
(4) A taxpayer has the right to be represented by, or be accompanied by, any person of his choice in any proceeding before the tax commission. If the taxpayer is not present at a proceeding, the representative of that taxpayer must be designated in writing by the taxpayer as shall be prescribed in administrative rules or in any manner acceptable to the tax commission.
(5) Following a perfected protest, the taxpayer may submit additional evidence or documentation during the redetermination process subject to the provisions of section 63-3045B(3)(a), Idaho Code.
(6) If the taxpayer does not file a protest with the state tax commission within the time prescribed in subsection (1)(a) of this section, the deficiency shall be assessed and shall become due and payable upon notice and demand from the state tax commission.
(7)(a) Interest shall apply to deficiencies in tax and refunds of tax. Interest shall not apply to any penalty or to unpaid accrued interest. Interest relating to deficiencies or refunds accruing after the original due date of the return, but not including extensions of the due date, shall be computed on the net of any underpayments and overpayments of a tax liability required to be shown as due on the same return. Interest on deficiencies shall not accrue for any period beginning on the date on which the state tax commission sends written notice that an audit is being initiated until the date of the issuance of a notice of deficiency determination. Nor shall interest on deficiencies accrue for any period between the issuance of a notice of deficiency determination that is subject to a perfected protest and the final determination of the deficiency by the state tax commission following the state tax commission’s disposition of the protest.
(b) Interest upon any deficiency shall be assessed at the same time as the deficiency, shall be due and payable upon notice and demand from the state tax commission and shall be collected as a part of the tax at the rate per annum determined under the provisions of paragraph (c) of this subsection from the date prescribed for the payment of the tax. In the event any of the deficiency is reduced by reason of a carryback of a net operating loss or a capital loss carryback, such reduction in deficiency shall not affect the computation of interest under this subsection for the period ending with the last day of the taxable year in which the net operating loss or capital loss arises.
(c) The rate of interest accruing during any calendar year, or portion thereof, upon any deficiency, or payable upon an overpayment or refund, shall be two percent (2%) plus the rate determined under section 1274(d), Internal Revenue Code, by the secretary of the treasury of the United States as the midterm federal rate as it applies on September 15 of the immediately preceding calendar year rounded to the nearest whole number.
(8) When the time provisions contained in this section conflict with the provisions of section 63-4208, Idaho Code, relating to the assessment of taxes on illegal possession of controlled substances, the provisions of section 63-4208, Idaho Code, shall prevail.
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