Tax Update for June 2016
Here's the June 2016 issue of Tax Update — our newsletter for the business community. This edition features articles about new tax laws, our Taxpayer Access Point (TAP) system, successors' liability, and identity verification.
The 2016 Idaho Legislature passed tax laws affecting the homeowner's exemption, employer W-2s, hand tools, and more. Below are some of the highlights. For more details about the legislation, see the Legislature's webpage.
Employer Form 967, W-2s now due by Jan. 31
The date employers must file their annual withholding report (Form 967) and W-2s with the Tax Commission will move from the last day in February to the last day in January.
(H.B. 352 – Effective July 1, 2016)
Some employers may see withholding filing cycle changes
Employers that meet the requirement to pay withholding twice a month but only pay employees once a month may report and pay withholding on a monthly basis on approval from the Tax Commission.
(H.B. 353 – Effective: Jan. 1, 2017)
Capital gains changes for livestock sales
To qualify for a capital gains deduction on the sale of livestock, taxpayers no longer need to meet the 50 percent gross income requirement relating to farming and ranching.
(H.B. 535 – Effective Jan. 1, 2016)
Idaho law conforms to Internal Revenue Code (IRC)
Idaho law conforms to the IRC as of Jan. 1, 2016.
(H.B. 425 – Effective Jan. 1, 2016)
More sales tax exemptions allowed
- Hand tools costing $100 or less will be exempt from sales tax when used directly and primarily in the production process by loggers, broadcasters, and publishers of free newspapers, as well as when they're sold as irrigation tools used for agricultural production.
(H.B. 347 – Effective July 1, 2016)
- The sale, lease, purchase, or use of a fixed-wing aircraft will be exempt from tax when the aircraft is primarily used as an air tactical group supervisor platform, under contract with a government entity for wildfire activity.
(H.B. 540 – Effective June 30, 2016)
Expiration date removed from aircraft exemption
There's no longer an expiration date on the sales tax exemption of aircraft parts installed on aircraft owned by nonresidents.
(H.B. 361 – Effective Feb. 19, 2016)
Contact lenses exempt from tax
A law passed by the 2015 Idaho Legislature is going into effect. Purchases of prescription contact lenses will be exempt from sales tax as of July 1, 2016.
(H.B. 75, passed by the 2015 Idaho Legislature)
Maximum homeowner's exemption changes
The maximum homeowner's exemption will become $100,000 or 50 percent of the assessed value of a home, whichever is less, as of July 1, 2016. However, the maximum for most homeowners in 2016 will be $94,745. In the future, the maximum amount will no longer be tied to the Idaho Housing Price Index and will remain at $100,000.
(H.B. 431 – Effective July 1, 2016)
New due date for hardship exemption
The deadline for applying for a hardship exemption for property tax relief will change from June 20 to the fourth Monday of June.
(H.B. 344 – Effective July 1, 2016)
New appeal rights for forest land owners
Taxpayers can appeal to the county board of equalization (BOE) when an assessor decides that their land no longer meets the definition of "forest land" in Idaho Code section 63-1701. Taxpayers must file the appeal within 30 days of the assessor's notice about the status change, and they must receive 10 days' notice of the BOE meeting discussing the appeal.
(H.B. 345 – Effective Feb. 19, 2016)
Solar energy loses property tax, gains earnings tax
Certain solar energy-producing property will be exempt from property tax. However, gross solar earnings will now be taxed at 3.5 percent.
(H.B. 534 – Effective July 1, 2016)
New limitations on taxing district property tax levies
- Taxing districts wishing to certify previously foregone amounts of property tax for budgets will have to provide notice, have public hearings, and prepare resolutions beginning with their September 2016 certification.
(H.B. 474 – Effective July 1, 2016)
- New taxing districts won't be able to levy property tax until the year following the year of formation.
(H.B. 360 – Effective Jan. 1, 2017)
To help you know in advance when you'll be able to file and pay your taxes through our online Taxpayer Access Point (TAP) system, we've launched a new webpage called "TAP Availability for Return Filing and Payments." This new page provides the dates of when filing periods will be available, which eliminates the guesswork and allows you to plan your time more efficiently when e-filing a tax return or making an e-payment.
It's simple to use. Tax types are listed alphabetically, followed by the corresponding form you'd use, and dates are provided according to filing frequency (monthly, quarterly, semiannually, or annually). It's that easy.
TAP has more than 92,400 active accounts and continues to grow. In fact, more than 19,000 accounts have been created in the last six months. Businesses can use TAP to pay their taxes and file most permit-based returns, as well as keep their account information updated, upload W-2s and 1099s, validate certain information, and much more.
As part of our efforts to protect your TAP account and meet national password standards, all TAP passwords expire after 90 days. For more information on how to manage your password or to see the requirements for a secure password, please visit our TAP Help (FAQs) webpage under the "My account" section.
Are you buying an existing business? If so, you could be liable for that business's sales/use tax debt. To find out whether the business you're buying is up to date on its taxes, request a Successors' Liability clearance letter from the Tax Commission. The letter will let you know if the business has a sales or use tax debt and the amount of any debt. For more information, please visit our Successors' Liability Clearance Letter webpage.
Earlier this year, the Tax Commission launched an identity verification program to combat tax fraud from identity theft and help protect taxpayer information. Tax fraud from identity theft is when criminals use someone else's personal data to file a fraudulent tax return to get a refund. Some taxpayers who filed individual income tax returns received letters from us asking them to verify their identity or verify that they filed a return before we would issue their refund. To date, we've sent more than 22,000 letters.
We'd like to thank the taxpayers who've responded to our letters and provided the requested information. Because of these efforts, the Tax Commission has identified nearly 300 fraudulent returns from identity theft and stopped more than $500,000 from going to criminals.
We've revised A Guide to Idaho Income Tax Withholding to include:
- Updated withholding tables. Although the figures are effective for 2016, employers don't need to adjust withholding for the months before receiving the tables.
- The new Jan. 31 due date for Form 967 and W-2s.