Posts tagged: idaho state tax commission
The Tax Commission has a message for all those holiday shoppers making their purchases online: You still owe Idaho tax. If the online retailer doesn't charge the tax, Idahoans are required by law to pay the 6 percent tax, in this case called “use tax” rather than sales tax, when they filed their next income tax return. More than 9,600 Idahoans paid the tax on their 2012 state income tax returns, the Tax Commission reports, paying more than $544,000. “But that number is estimated to be a fraction of what is owed,” the commission said today in a news release.
As the holiday shopping season gears up, Randy Tilley, audit division administrator, said, “We encourage folks to keep track of their untaxed purchases, total them up at the end of the year, and make a payment when they file their income taxes next year.” He noted that the tax has been around since 1965; it applies to purchases that Idahoans make, whether they're on the Internet, by telephone or from a mail-order catalog, “if the goods are used, given away, stored or consumed in Idaho.” Click below for the Tax Commission's full news release.
Here’s a link to my full story at spokesman.com on how the state Tax Commission today refused to extend a big property tax break to operators of railroad tracks, pipelines, cell towers and underground tanks, despite the urging of a roomful of officials from those firms. Had the commission acceded to the request from the companies, all other taxpayers in the counties where their property is located would have had to pay more to make up for the break. “Realize, as we play with those pieces, we start moving who pays what,” said Tax Commissioner Rich Jackson.
Idaho lawmakers this year passed a $20 million partial exemption of business personal property from local property taxes, by exempting the first $100,000 of each taxpayer’s personal property in each Idaho county from the tax. But the Legislature didn’t specify where the line fell dividing personal from real property. So the Tax Commission, working through a committee that met all summer, drafted two rules to draw that line – and the railroads, pipelines and cell towers were classified as real property, ineligible for the new break.
The Legislature authorized state funds to reimburse counties and other local governments for the lost revenue from the new tax break, but only at 2013 levels. If the new rules, which take effect in 2014, had exempted the additional classes of property, that wouldn’t have generated any additional state reimbursement. Instead, it would have forced a tax shift, requiring all other local taxpayers in the county to pay more to make up the difference.
The Tax Commission has voted unanimously in favor of its two proposed rules to define real and personal property for purposes of property tax, despite objections from railroads, utilities and similar interests. Commissioner Ken Roberts said, “There’s a lot of water under the bridge over the last several years in this. I used to wear a different hat (as a legislator), and was involved in those discussions as well. What’s interesting is until the $100,000 exemption took place, it really didn’t matter – and now all of a sudden it matters what’s real and what’s personal.”
Legislation passed this year exempts from taxation the first $100,000 worth of personal property for each taxpayer, in each county.
Roberts said the question of where the line lies between the two should have been answered by the Legislature, but it wasn’t. “Void of that direction … somebody has to make a decision about what and where that line is,” he said. “I’m sad to say that this decision has kind of found its way to the Tax Commission. … If we get it wrong, the Legislature, who are the policy setters in the state of Idaho when it comes to tax policy, can change it.”
Commissioner Rich Jackson noted that the definition affects an overall tax system, and who pays more and who pays less. “I think sometimes we have to back up and say, what should this structure do, and what should be assessed to the different players?” he said. “But realize, as we play with those pieces, we start moving who pays what.”
Commissioner David Langhorst, who like Roberts is a former state legislator, said, “I think they made good arguments, the taxpayers today.” But he said the rule takes a conservative approach. “And if the Legislature really did intend for this to be more liberally applied or a broader exemption created, then they can affirm that.”
Idaho’s state Tax Commission has a full house today at a hearing on two proposed rules setting definitions for personal property, now that the Legislature has enacted a new partial property tax exemption for personal property. Canyon County Assessor Gene Kuehn was the only person to testify in favor of the proposed rules; the room is packed with representatives of railroads, utilities and other interests opposing the rules. The big sticking point: The new rules define things like railroad tracks and pipelines as real property, not personal propertly. That means they wouldn’t be eligible for the new break.
Kuehn told the state’s four tax commissioners, “It will provide consistency. Assessors are always accused of being 44 different ways of valuations. This will keep us in line, as far as valuing personal and real property.” He said county assessors back the rule as-is. “To tell you the truth, I think we all think there needs to be some legislative direction on this, of what’s personal and what’s real,” he said. “As it stands right now, we stand by it.”
Rick Smith, an attorney with Hawley troxell representing Northwest Pipeline, Century Link, and AT&T, gesturing to the crowded room, said, “Maybe … we can take a count of how many are against it.” But a few minutes later, Commissioner Tom Katsilometes noted, “When Gene made his comment, he was representing 44 assessors.” Amid laughter, Smith said he’d withdraw his suggestion of a count.
Smith told the commission he disagrees with treating railroad tracks and pipelines as real property. “Some states take a very restrictive view,” Smith said. “New York, for example, considers all this type of property as real property. But I would submit that Idaho is not New York.” He said, “Real property includes improvements, structures and fixtures. I just don’t believe that railroad tracks is an improvement to real property. And it’s not a structure.” That would make it a fixture, he said, but it’s not a fixture that’s integral to the main purpose of the real estate, like an irrigation system for a farm.
Tax Commissioner Rich Jackson countered, “The railroad has a railroad system to function as a railroad. The telephone company has a series of assets to function as a telephone company. Cell towers are the same thing. … So I can’t quite make the distinction that you are.”
Jackson said, “Frankly, we got charged with looking at this, and we’re taking our best shot. But we aren’t the decision makers – that’s the Legislature.” Over the past 10 years, Jackson said, “Industry, the assessors and our staff tried to come to some common ground. I don’t think that will be without controversy, ever. I think controversy will continue. But I have a basic concept – here’s what’s within the boundary of a county, and how do you tax ‘em?” Smith responded, “I know everybody’s trying to do the right thing here. I appreciate all that.”
Six items in the new Tax Commission rules regarding real and personal property are drawing the brunt of the objections at today’s hearing: Cell towers, underground storage tanks, poles and towers, signposts, pipelines and conduit, and railroad track. All six are declared to be real property, not personal property, and therefore not eligible for a new partial tax break for personal property enacted by state lawmakers this year.
Gerry White of Union Pacific Railroad called the proposed new rules “discriminatory” toward railroads like Union Pacific. An Idaho Power representative called on the commission to reject the rule, prompting commissioners to note that some rule must be enacted to implement the new law.
Idaho’s tax burden per capita is 49th lowest in the nation, according to the latest results from an annual study by the Idaho State Tax Commission, and it’s the lowest among 11 western states. The study found that Idaho’s per-capita tax burden is $2,975, compared to $4,296 for the national average and a $3,648 median among western states. It compared individual and corporate income taxes, property taxes, sales taxes, and motor vehicle taxes, including fuel taxes and license and registration fees. Click below for the full announcement from the Tax Commission; you can see the full 50-page study here.
The study focuses on fiscal year 2011, the latest year for which census figures are available. It found that Idaho’s overall tax burden was 30.7 percent below the national average. The state’s property taxes ranked 41st, at 39.3 percent below the national average; sales taxes were 38th, at 22.5 percent below average; individual income taxes, 33rd, 19.3 percent below average; and corporate income taxes 29th, 31 percent below average.
Here's a news item from the Associated Press: BOISE, Idaho (AP) — A state lawmaker contends Idaho's tax collectors risk violating the U.S. Constitution by requiring same-sex couples who are legally married elsewhere to do extra work when filing state income taxes. Boise Democratic Rep. John Gannon, a lawyer, says litigation in Ohio suggests Idaho's new rules requiring married gay couples to recalculate state taxes as singles after filing joint federal returns could be vulnerable. Recently, an Ohio federal judge ordered the state to recognize a gay couple's marriage in New York despite Ohio's constitutional ban. The judge's rationale was Ohio recognizes opposite-sex marriages contracted elsewhere but otherwise illegal in Ohio. Idaho follows a similar policy, Gannon says, making it potentially discriminatory now to single out gay couples on their taxes returns. The Idaho Tax Commission contends its new rules are legal.
Idaho state Tax Commission David Langhorst says the commission wasn’t taking any policy stand when it adopted new rules this week that will have the effect of forcing Idaho same-sex couples legally married elsewhere to recalculate their federal income taxes from joint returns, in order to file separately in Idaho. That’s because Idaho’s state income tax returns, like those in many states, are based on the taxpayer’s federal returns. Idaho’s previous rules required taxpayers to use the same filing status on their Idaho returns that they used on their federal returns. But now that the IRS has ruled that same-sex couples who were legally married in states that permit such marriages can file jointly, there was a conflict between that rule and Idaho’s constitutional provision banning state recognition of same-sex marriage.
According to the Tax Foundation, 24 states both ban same-sex marriage and have state income tax systems that are tied to the taxpayer’s federal returns. “Every one of them is struggling with this,” Langhorst said. “The CPAs were really the ones calling us and saying, ‘You guys have to do something about this.’”
Gale Garriott, executive director of the Federation of Tax Administrators, said, “For those that recognize same-sex marriage, I don’t think it’s going to be much of an issue at all. For those that don’t, and have to tell each of the taxpayers how to identify their share of the joint income and how that affects their forms, that could be a little bit of a challenge.”
However, that same challenge previously was in place for states that recognized same-sex marriage when the IRS didn’t, like Massachusetts and Connecticut. In those states, if their state income tax was tied to the federal system, same-sex couples had to re-calculate between their state and federal returns in order to file jointly with the state, but separately with the IRS.
It’s not an issue in Washington state for two reasons: Washington recognizes same-sex marriage, and it doesn’t have a state income tax.
The Idaho Tax Commission’s new rules say the only taxpayers who can file joint state income tax returns are those whose marriages are recognized under Idaho law. New tax form instructions for 2013 direct those who file federal joint returns as a same-sex couple to file their state returns as single or head of household. They can either re-do their federal tax forms to figure out the differences, or submit the calculations on a worksheet.
“It is a lot of work,” Langhorst said. But, he said, “It is the only way that we could avoid the real headache of rejecting their returns. That would be the alternative. Then they would not have legally filed.”
Garriott praised Idaho officials for establishing their new rules early. “If people are given good instructions and plenty of notice, and even some examples, then it shouldn’t be that big of a problem,” he said.
Idaho has changed its 2013 state income tax forms to require same-sex married couples who now will be filing joint returns at the federal level to recalculate their taxes and file separately for their state returns, the AP reports. “Your Idaho filing status must be the same as the filing status used on your federal return,” according to draft instructions posted on the Idaho Tax Commission's website. “This requirement does not apply to same sex couples who file a joint federal return; the State of Idaho does not recognize same sex marriages.” Click below for a report from AP reporter John Miller.
Gov. Butch Otter today named Rich Jackson chairman of the Idaho State Tax Commission, replacing David Langhorst, who will continue to serve on the commission. Langhorst is a Democrat; Jackson a Republican. “David has done a great job of calming the waters, restoring public trust in the Tax Commission’s processes, improving the morale of employees and ensuring the quality and integrity of the work they do,” Otter said. “I appreciate what he’s done and what he’s continuing to do as a commissioner. Rich has been a big part of that process. He knows Idaho, and he knows Idaho’s tax policy, our history and our priorities. I look forward to seeing continued progress during his tenure as chairman.” Click below for Otter's full announcement.
With the business lobby IACI pushing hard for elimination of the personal property tax on business property and many lawmakers talking about it as the 2013 legislative session approaches, the Idaho State Tax Commission has released its first-ever comprehensive analysis of the tax in Idaho. The 51-page analysis concludes that total personal property tax collected in Idaho in 2012 was $140.9 million; that’s then broken down into great detail, by type of taxing district, operating property and more. “The percentages and categories identified as personal property in this analysis should not be construed as any type of policy statement,” wrote Alan Dornfest, property tax policy supervisor for the Tax Commission.
Instead, the analysis, developed with “a lot of cooperation and help from the counties,” Dornfest said, is being made available as a tool for policy makers as they consider related issues. You can see the full study here.
Idaho needs to invest $5.2 million for a major computer upgrade in its tax collection system, state tax officials say, and it'll pay off big not far down the road. The upgrade, which state tax commissioners plan to pitch to lawmakers in January, could pay for itself within its first full year of operation, officials estimate, by allowing the state to better pursue fraudulent returns and tax lien debt.
The proposal comes as the state's four-member Tax Commission has been working to boost public confidence and employee morale, two years after a former director resigned amid scandal and charges that the commission was cutting secret deals with influential taxpayers. Current Chairman David Langhorst, a Democrat, said the commission is working toward “a more open and transparent way of doing business, and better communication within our own ranks.” The Tax Commission assessed its status and outlook at its annual meeting today; you can read my full story here at spokesman.com.
Ken Roberts, a farmer and former school board member from Donnelly, says he's “willing to dig in and learn” as a new full-time state tax commissioner. He'll be one of four members of the Tax Commission; the others are former state Sen. David Langhorst, D-Boise, the current acting chairman; CPA Rich Jackson, a Republican; and former Bannock County Commissioner Tom Katsilometes, a Democrat. By law the commission must be bipartisan. Tax commissioners must work full-time, and are paid $87,156 a year.
“I look forward to the new challenges in the Tax Commission, learning that job, and really seeing tax policy from an implementation side instead of a policy side,” Roberts said. “And seeing where I can offer assistance to maybe make some changes. … I think I have a good perspective from which to jump into that job. I've seen tax policy for 12 years in the tax committee in the legislative branch, and now this is a little bit different hat to wear, and I'm looking forward to the challenge.”
Roberts was one of the sponsors of the 2006 law proposed in a special session by then-Gov. Jim Risch to shift school funding off the property tax and onto state sales taxes, a move that many today blame for the recent years' unprecedented cuts in school funding. Roberts stands by the change. “It was the right thing to do, because it took what was an automatic escalator of property values and taxes that were being paid and it more defined people's property taxes based on the budget system that they have today, vs. something that was based on market values,” he said. “And that provides stability on people's property taxes.”
He added, “We've got to remember that the taxpayers, the property taxpayers were paying that bill, and it was without regard of their ability to pay the tax.”
Roberts, who is completing his sixth term in the House, has had a difficult year; his wife, Mary Jo, drowned in the Payette River in 2011, and he faced tough legislative fights during the session on such issues as a bill to help Boise County cope with a crippling financial judgment; a rift in House leadership led to unsuccessful efforts to defeat him in the primary in May.
Said Roberts, “You know, I just, I feel really honored and blessed to be given the opportunity to continue to serve the citizens of the state in a little different capacity. … It's going to be an adventure. I'm looking forward to it.”
Idaho Gov. Butch Otter has named state Rep. Ken Roberts, R-Donnelly, to the Idaho State Tax Commission, a full-time post; Roberts is currently the House majority caucus chairman. Roberts will resign from the House and begin his new job on Monday.
Roberts will fill out the unexpired term of former Commission Chairman Royce Chigbrow, who later was replaced by former Senate President Pro-Tem Bob Geddes; the term is up April 1, 2013. Otter said, “I chose him from a very talented and qualified group of candidates. I could not have gone wrong by selecting any of them.” Roberts said, “I am looking forward to the challenge and to continuing to serve the citizens of Idaho in this new capacity.”
The appointment will have ripple effects in the pending House majority leadership battle, where Roberts was expected to make a bid to move up, possibly challenging Majority Leader Mike Moyle, who worked unsuccessfully to defeat Roberts in the May GOP primary. Click below for Otter's full announcement.
For the past three months, one of Republican Idaho Gov. Butch Otter's departments has been headed by a Democrat and overseen by a majority-Democrat commission. It's the state Tax Commission, which is constitutionally required to have four commissioners, with not more than two of them from the same party. But since GOP commission Chairman Bob Geddes resigned in February, Democratic Commissioner David Langhorst has been the interim chairman, and the fourth commission seat remains vacant. That leaves the commission with two Democrats and one Republican.
“David Langhorst is doing a great job right now,” said Otter's spokesman, Jon Hanian. “We have not named anybody else at the moment; he's continuing to serve in that capacity.” Langhorst, a former Democratic state senator from Boise whom Otter first appointed to the commission in 2009, said, “These positions are public trust positions - they're not political.” You can read my full story here at spokesman.com.
Former Idaho state Senate President Pro-Tem Bob Geddes has gotten high marks since he took over as head of the Idaho State Tax Commission, but AP reporter John Miller reports that after a year, Geddes is looking to move on. Click below for his full report.
Idaho's newest state tax commissioner, longtime CPA and prominent Republican Rich Jackson, says he's going above and beyond legal requirements to step away from professional and political involvements as he moves into his new role. Among the positions he's resigning: He's withdrawing from his CPA partnership, Jackson and Coles in Boise, and said he'll recuse himself from any issues involving former clients, partners or employees of the firm. He's resigning as chairman of the Idaho Legislative Compensation Committee, treasurer of the Boise Metro Chamber PAC, a member of the Idaho Manufactured Housing Board, and treasurer of the Idaho House of Representatives Republican Caucus.
“How can a tax commissioner write checks and make decisions on who gets political funds and really be independent? Even if it's not there, it's implied,” Jackson said. “I just didn't even want to embarrass the governor or the Tax Commission or anybody, so I stepped aside.” He added, “I'm trying to be very methodical and complete, and if I miss something I'm going to fix it. … These economic times are too tough, and I'm fully aware of all the criticism.”
The Tax Commission has come in for much criticism in recent years, from whistleblowers' allegations that it was cutting secret deals with politically connected taxpayers to the resignation of former Chairman Royce Chigbrow in January amid a criminal investigation. Last week, the Ada County prosecutor announced he wouldn't bring charges against Chigbrow despite having found evidence of wrongdoing on at least one count involving mishandling of checks, because a statute of limitations had expired on that charge. Chigbrow had been accused by commission employees of intervening on behalf of his son's accounting firm and attempting to use his position to help a friend embroiled in a dispute with a former business partner.
Jackson is blunt about the impact of the Chigbrow scandal. “I think it tarnished not only the Tax Commission, but CPAs,” he said; Chigbrow, like Jackson, is a longtime certified public accountant. “I'm hurt over it, it's unfortunate,” he said. “But I will tell you the governor's office was very methodical and we've taken lots of additional steps so that can't happen again.” You can read my full Sunday column here at spokesman.com.
Idaho Gov. Butch Otter has appointed CPA Rich Jackson to the Idaho State Tax Commission, filling the vacancy created by Otter's appointment in June of Commissioner Sam Haws to head the Idaho Commission on Aging (replacing Kim Toryanski, now deputy administrator of the Idaho Division of Human Resources). Jackson, a prominent Republican and former chairman of the Gem County Republican Central Committee, said he'll withdraw from numerous other positions he holds - including chairman of the Idaho Legislative Compensation Committee, treasurer of the Boise Metro Chamber PAC, and treasurer of the Idaho House of Representatives Republican Caucus - to avoid any conflicts with his new role as a state tax commissioner. He's also withdrawing from his CPA partnership, Jackson and Coles in Boise, and said he'll recuse himself from any issues involving former clients, partners or employees of the firm.
“Rich Jackson is the model of an engaged citizen,” Otter said. “He and his wife Trudy have tirelessly stepped up time and again to express their civic virtue and to meet the needs of their community and our state. I’m grateful that Rich will be bringing his CPA skills and deep understanding of Idaho’s people and system of government to the Tax Commission. We all will be the beneficiaries.”
Jackson joins GOP Tax Commission Chair Bob Geddes and Democratic commissioners Tom Katsilometes and David Langhorst; click below for Otter's full announcement.
Ada County Prosecutor Greg Bower's office announced Friday it won't prosecute the former chairman of the Idaho State Tax Commission, the Associated Press reports, saying a statute of limitations expired on one complaint despite evidence of wrongdoing and that admissible evidence of illegal activity in other complaints was insufficient. Former Chairman Royce Chigbrow was investigated over several months by an Ada County Sheriff's Office detective on suspicion of failing to appropriately deposit checks from a taxpayer in 2010, providing confidential information to a friend and allegedly receiving stolen checks totaling more than $30,000; Chigbrow resigned in January as agency employees' complaints about these issues became public. Click below for the full report from AP reporter John Miller.
Tax-protesting Idaho state Rep. Phil Hart is taking his fight against paying his back state income taxes to the Idaho Supreme Court, despite already having lost four appeals. Hart lost his fourth round in March, when 1st District Judge John Mitchell rejected Hart's request that the judge reconsider his December 2010 decision tossing out the appeal. In a 13-page decision, the judge twice termed Hart's arguments “simply wrong,” and called his central argument – that he'd actually filed his appeal one day earlier than the state says - “patently wrong.”
Hart, whose first court appeal in November of 2010 charged that the state income tax is unconstitutional, also is arguing that he should have months longer to appeal his taxes than other citizens because of his status as a state legislator. Plus, he's claimed a requirement that he submit a 20 percent bond when filing his appeal is unconstitutional. You can read my full story here at spokesman.com, and see the latest court decision and Hart's notice of appeal here.
When new state Tax Commission Chairman Bob Geddes was appointed, he was in Boise serving as a ninth-term state senator; two years earlier, he'd sold his house in Soda Springs and bought a home in Meridian, but he was still renting a home in Soda Springs. Under state policies, Geddes was entitled to reimbursement for his moving expenses for the job, including one-way transport of two vehicles.
But since he was in Boise, he had to go back to Soda Springs in eastern Idaho each time he packed up and moved household items from there to Boise; as a result, the $1,861.66 in moving expenses he submitted violated the state's rules for two reasons: It included trips that weren't from the old to the new location (because they were round trips from Boise), and Geddes wanted to bill the state for another trip this spring to pick up and trailer back his antique car, a 1930 Model A Ford. The other vehicle he moved was his pickup; that's not counting his car, in which he and his wife drove to Soda Springs twice for the move and she drove back each time while he drove a rented U-Haul van one time and the pickup the other time.
Variances from the state's moving-expense policy for top workers can be approved by the state Board of Examiners; in submissions to the board, Geddes noted that he made his move affordable by packing and moving himself in a U-Haul, and said, “The timeliness of this move allowed me to save at least two months of home rental payments in Soda Springs.” The appointment came up unexpectedly in the midst of the legislative session, he said.
“I know that this entire process seems like the old riddle of how to get a goat, fox, chicken and a rattle snake across the river in a canoe by making the least number of crossings and with nobody being eaten,” Geddes wrote. “My riddle was to go to Soda Springs, rent a moving van, move household belonging to Boise and two vehicles in the least number of trips. I believe I solved the riddle in the most cost-effective manner for the state of Idaho.” However, a subcommittee of the Board of Examiners determined that the antique car didn't qualify for a $526.20 moving expense reimbursement, “because it is for the move of a non-household item.”
So Geddes submitted a revised request, and today, the Board of Examiners voted unanimously to approve reimbursement for the extra trip legs between Boise and Soda Springs, for a total of $436.80. That means Geddes' total state-reimbursed moving expenses came to $1,335.46, since the antique-car portion was removed. Idaho Attorney General Lawrence Wasden, who serves on the board, said, “There are some extenuating circumstances that justify the expenses,” including the “very short time frame” Geddes was given to switch jobs while required by his previous post to be in Boise for the legislative session. “So there is good justification for the exception from the standard policy.” Secretary of State Ben Ysursa, who also serves on the board, noted the exclusion of the other $526.20. “I think we've made the frugal choice and the wise choice on these exceptions,” he said.