Tax Update for December 2013
- Split-monthly changes to semimonthly for withholding
- Some retailers must collect new E911 prepaid wireless fee
- You may owe use tax!
- Tax Commission to administer City of Ketchum local option sales tax
- Redesigned website friendly to mobile devices and taxpayers
- Income tax return filing for same-sex couples
- Income tax filing tidbits
- Choose your social media to stay updated
Here's the December 2013 issue of Tax Update — our newsletter for the business community. This edition features articles on changes for split-monthly withholding accounts, the new E911 prepaid wireless fee, use tax, the City of Ketchum local option sales tax, income tax filing for same-sex couples, and more!
Thanks to a law change, the unpopular split-monthly filing cycle is going away! As of Jan. 1, 2014, employers with annual income tax withholding of $240,000, or an average of $20,000 per month will now pay income tax withholding on a semimonthly basis instead of split-monthly and make payments twice a month. The new filing requirement aligns the filing periods on a calendar-year basis, which should simplify the annual reconciliation process.
We’ve notified split-monthly filers of their new filing cycle and updated the Form 910 instructions, Form 967 and instructions, and A Guide to Idaho Income Tax Withholding to include the filing change. For more information, visit our Semimonthly Withholding Accounts Web page.
Retailers who sell prepaid wireless service will be required to collect an enhanced 911 (E911) fee on the sale starting Jan. 1, 2014, and pay the fee to the Tax Commission. The fee is 2.5% of the purchase price, and retailers can keep 3% of the collected fee to offset administration costs. The remainder will go to the Idaho Emergency Communications Fund.
Prepaid wireless is a mobile device where network access is purchased without a contract before use. For example, a customer can prepay for an hour of access to the wireless network. Once the hour of use has been consumed, the mobile device will no longer have access to the wireless network. This type of service is often referred to as pay-as-you-go, pay-as-you-talk, or prepay.
The Tax Commission has sent information to potential retailers of prepaid wireless service about registering to collect the fee.
The Idaho State Tax Commission is reminding online and catalog shoppers that they may owe use tax to the state if the seller doesn’t charge them sales tax.
When shoppers buy goods on the Internet, by telephone, or from a mail-order catalog, sellers won’t charge sales tax if they’re not Idaho retailers. In that case, Idaho shoppers owe use tax if the goods are delivered into Idaho (unless an Idaho exemption applies). The shoppers are responsible for paying the tax directly to the Tax Commission.
The use tax has been around since 1965 and is the same rate as the sales tax (6 percent). “There’s a general lack of understanding about use tax,” said Randy Tilley, the Tax Commission’s Audit Division Administrator. “But it’s an important tool to ensure that Idaho retailers can compete fairly with out-of-state companies that don’t charge tax.” The tax also helps fund state and local services throughout Idaho.
Tilley said individuals can report and pay use tax on their Idaho income tax returns. “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 said. They can also fill out Form 850-U, (Idaho Self-Assessed Use Tax Worksheet and Return), available at tax.idaho.gov, and pay use tax at any time during the year.
Businesses that make retail sales pay use tax with their sales tax return. Businesses that don’t make retail sales can either pay use tax with their Idaho income tax return or a use tax return, or they can submit the tax directly to the Tax Commission using Form 850-U.
As of Jan. 1, 2014, the Tax Commission will administer the City of Ketchum local option sales tax, which is a tax that’s charged only on sales in the City of Ketchum and on sales where delivery takes place in the City of Ketchum.
All businesses with a retail location in the Ketchum city limits must collect the tax. Other retailers who must collect the tax include those who own property or a stock of goods in the City of Ketchum, businesses that have in-city agents or employees who take orders and make sales, and those who make deliveries into the city with their vehicles or staff.
We’ve automatically registered retailers who are currently registered with the City to collect the tax and have sent them a permit for each business location. We’ll also send registration materials to new retailers with out-of-city and out-of-state mailing addresses so they can register if they determine they’re required to collect the tax.
Our updated website is now adaptable for use with mobile devices like smartphones and tablets and offers improved organization and navigation. We’ve also responded to customer feedback by making things easier to find on the site—especially forms and publications. The site includes single-topic pages with information and links to resources about that topic, a calendar of tax events (including due dates), and a subscription service that sends tax due date reminders. Check it out!
The IRS recently ruled that same-sex couples who were legally married in a jurisdiction that recognizes same-sex marriage can file federal tax returns as a married couple. However, since Idaho law doesn’t recognize same-sex marriage, different provisions apply for filing Idaho income tax returns.
For couples in a same-sex marriage recognized in a different jurisdiction, each spouse must:
- File a separate Idaho income tax return, either as single or head of household (if qualified), and
- Recompute their federal income tax return as if they had used either the single or head of household (if qualified) filing status, and
- Include those computations or their recomputed federal return with their Idaho Form 40 (resident) or Form 43 (nonresident or part-year resident) tax return.
The Tax Commission is working with software developers to enable same-sex couples to e-file their taxes using software that automatically recomputes their federal income tax return for Idaho purposes.
- The 2013 Idaho income tax return deadline is Tuesday, April 15, 2014.
- The best way to file your return is electronically. The software does the math for you, and you get an email acknowledgement that your return was received.
Because the filing season will start later than normal in 2014 due to the recent federal shutdown, efiling your return is your best option for getting the quickest refund.
- Follow us on Twitter @idahotax to stay informed about our services and publications, tax events and new laws, and other topics of interest.
- Visit us on YouTube – Idaho State Tax to watch videos about claiming a net operating loss, an introduction to temporary seller’s permits, applying tax payments correctly, and more!