New version of tax conformity bill clears Rev & Tax, 12-4

A new version of the annual IRS tax conformity bill has cleared the House Revenue & Taxation Committee this morning – this one co-sponsored by House Speaker Scott Bedke, Majority Leader Mike Moyle, Assistant Majority Leader Brent Crane and GOP Caucus Chairman John Vanderwoude. It takes a different approach to the issue of same-sex married couples’ tax filings; it passed on a 12-4 vote, with two Republicans and two Democrats dissenting.

Unlike the previous version of the bill, which struck a now-voided paragraph added to the law in 2014 requiring same-sex couples who file joint federal tax returns to recalculate their taxes and file separately in Idaho, the new version leaves that clause on the books. But it adds another sentence after it, saying, “Notwithstanding subsection C of this section, marriages recognized and permitted by the United States Supreme Court and the 9 ^th Circuit Court of Appeals shall also be recognized for purposes of the Idaho Income Tax Act.”

Rep. Greg Chaney, R-Caldwell, who voted against the earlier version because of concerns about same-sex marriage, voted in favor of the new one. “I do see a differentiation between being asked to play an affirmative role in redefining a definition, and acknowledging that there’s been a federal ruling in a federal court and acknowledging what the inevitable outcome of any litigation might be, so I’m happy to support the motion,” he said.

Those voting no were Reps. Heather Scott, R-Blanchard; Ron Nate, R-Rexburg; Mat Erpelding, D-Boise; and Mark Nye, D-Pocatello.

Scott questioned state Tax Commission Chairman Ken Roberts about what part of the U.S. Constitution allows the state’s constitutional ban on same-sex marriage to be overruled; it was invalidated in court.

Roberts referred to the Idaho Constitution, Article 1, Section 3, “that states the state of Idaho is an inseparable part of the American union, and the Constitution of the United States is the supreme law of the land. In the Constitution of the United States, it sets out three branches of government, the judicial, the legislative and the executive branches of government. And the judicial branch of government has the responsibility to interpret the Constitution of the United States and the applicable laws.”

He said, “So it lays out a hierarchy.” First is the U.S. Constitution, he said, as interpreted by the U.S. Supreme Court. “And then we come down to state constitutions, which fall below that, as recognized by the Idaho Constitution, and below that are the Idaho statutes. So there is a hierarchy. So in this case, what we’re depending on, and what the United States citizens depend on for an organized and balanced level of government, is that hierarchy. That is the foundation for the United States. That’s what I think the United States citizens believe.”

Nye, an attorney, cited the same section of the Idaho Constitution. “Really, in my humble view, the decisions by the federal district judge and the 9 ^th Circuit trump this wording,” he said. He cited the long-ago provision of the Idaho Constitution banning members of the LDS church from voting. Even after it was invalidated, he said, “That constitutional provision, Mr. Chairman, stayed on the books for, I can’t remember, 30, 40, 50 years. Likewise our constitutional provision on the definition of marriage in a sense is now obsolete, if you will, based on the Supreme Court decision.”

Nye said, “I’m forced to vote against the motion, because in a sense, it would be passing along what is believed to be unconstitutional matters.”

Rep. Dell Raybould’s motion not only introduced the new version of the bill, but sent it directly to the 2 ^nd Reading Calendar in the House, which means there’s no further hearing in the committee – the measure now goes to the full House for a vote.

Idahoans began being able to file their 2015 tax returns on Jan. 19, but Roberts said any filers who have business activity can’t file yet – they have to wait until the conformity bill passes and is signed into law, because it affects the calculation of federal adjusted gross income that is the starting point for all Idaho income tax returns. This year’s conformity bill includes some big changes in Section 179 depreciation rules; if they aren’t adopted by Idaho, small businesses would face significantly higher taxes next year.

“The fiscal notes do not change,” Roberts told the committee. “This legislation is required to provide a basis for the Idaho income tax, so the filing may proceed within the state of Idaho. Tax preparers are waiting for this legislation.”