Tax Update for July 2017
Here's the July 2017 issue of Tax Update — our newsletter for the business community. This edition features articles about new tax laws, a W-2 fraud scheme targeting employers, taxes you may owe during the August solar eclipse, sales suppression software, and our new Urban Renewal Registry.
The 2017 Idaho Legislature passed tax laws affecting the college savings program deduction, short-term lodging providers, the vehicle exemption for nonresidents, and more. Below are some of the highlights. For more details about the legislation, see the Legislature's webpage.
Idaho law conforms to Internal Revenue Code (IRC)
Idaho law conforms to the IRC as of Jan. 1, 2017.
(House Bill 026 – Effective Jan. 1, 2017)
College savings program deduction increased
The maximum annual deduction for contributions to college savings accounts will increase from $4,000 to $6,000. For married taxpayers filing a joint return, the maximum will increase to $12,000.
(House Bill 185 – Effective July 1, 2017)
Vehicle exemption changed for nonresidents
Nonresidents who buy a vehicle in Idaho can now use it in the state for up to 90 days in any 12-month period before they must remove it from Idaho. If the vehicle remains in Idaho for more than 90 days, it's subject to tax.
(House Bill 032 – Effective July 1, 2017)
Short-term lodging marketplaces required to collect tax
Short-term lodging marketplaces must collect and remit any sales and lodging taxes that are owed by Idaho property owners who use the marketplaces' services.
(House Bill 216 – Effective Jan. 1, 2018)
Property tax reduction calculation revised
Roth IRA distributions will no longer be included as income when calculating the eligibility for property tax reduction (circuit breaker).
(House Bill 031 – Effective Jan. 1, 2017)
Former discretionary exemption changed
County commissioners have more leeway in determining an exemption for investment in certain nonretail property.
(House Bill 235 – Occupancy tax effective July 1, 2017; property tax effective beginning 2018)
Administrative - All tax types
Perfected protest clarified
When a taxpayer protests a determination from the Tax Commission, the protest must be perfected (valid) or the determination will become final. The protest must also be perfected before the taxpayer can request an informal hearing. After a protest is perfected, the taxpayer can submit more information.
A protest is considered perfected when it's made in writing 63 days from the determination's mailing date and includes the following:
- The taxpayer's name, address, and identification number
- The period the deficiency relates to
- The specific item or items in the determination the taxpayer objects to
- The factual or legal basis for the objections made
(House Bill 023 – Effective Feb. 16, 2017)
Independent appeals process outlined
When a taxpayer appeals a Tax Commission determination, the appeal will be handled by agency employees who are independent from the employees who issued the determination.
(House Bill 024 – Effective July 1, 2017)
Criminals are targeting human resources and financial professionals across Idaho with a new W-2 phishing scheme. Don't fall for this scam.
If you get an email asking you to send employee W-2 or other private/sensitive information, stop to confirm that the request is legitimate before you send the info. Criminals have perfected techniques to trick you into thinking an email is coming from a person you work with.
Connect with the person who sent you the email request by phone or face-to-face. Don't respond to the email to confirm the sender's request. The sender could be a criminal in disguise using a fake email address.
- If you confirm the request is legitimate, take steps to protect the info before you send it.
- If the request isn't legitimate or you send confidential information to an unauthorized party, please follow the steps in our W-2 scam flyer.
For more information about the scam, see the W-2 scam flyer. You can also print it as a reminder to use at your workplace.
The August 21 total solar eclipse will bring many visitors to Idaho. If you're thinking of selling or renting to them during the festivities, you'll need to collect and remit the Idaho sales and lodging taxes that apply. You may also need to collect a local sales tax charged by some resort cities and auditorium districts. Here are some examples:
- Selling food, T-shirts, souvenirs, etc.: You must collect Idaho sales tax even if you're selling for only one day or a few days.
- Renting out your home, vacation home, cabin, trailer, a room in your home, etc. for temporary lodging: You'll need to collect Idaho sales tax, the travel and convention (lodging) tax, and any other local sales tax that applies, including the Greater Boise Auditorium District tax (for rentals within the district).
- Renting out your yard, driveway, parking lot, or other space for overnight camping: You'll need to collect Idaho sales tax, the travel and convention (lodging) tax, and any other local sales tax may apply.
How to register to collect and remit taxes
If you're only selling or renting out during a one-time event or a few times a year, you can use one application to easily apply for temporary permits for:
- Idaho sales tax
- Travel and convention tax
- Greater Boise Auditorium District (GBAD) tax
For more information, see our "Solar Eclipse" webpage.
Underhanded software vendors may try to convince you that using sales suppression software is good for business and will give you a competitive advantage. Don't Be Fooled. It's a felony to use this illegal software or train someone to use it.
Sales suppression software deletes sales transactions from a retailer's books and records with the purpose of underreporting sales and income taxes. It also enables dishonest retailers to keep for their own benefit the sales taxes their customers pay — essentially stealing from the customers and defrauding the state.
Sales suppression software comes in different forms but includes any software that falsifies the sales records of a point-of-sale (POS) system or electronic cash register (ECR). Examples include:
- Zappers. Typically an external device (like a thumb drive) containing software that is periodically used to modify sales records.
- Phantom-ware. Used similarly to zappers but is embedded in the operating system of the POS system or ECR.
- Sales Suppression as a Service. Maintains a modified set of books at the user's business location while maintaining a correct set of books at a location that only the user has access to. This could include an out-of-state server or a file on a cloud drive.
Using any type of sales suppression device in Idaho is against the law. If someone tries to convince you to use illegal software, decline the invitation and report it to the Tax Commission through our online fraud referral form.
If you're interested in the plans for urban renewal agencies throughout the state, check out the new Urban Renewal Registry on our website. Urban renewal agencies help improve and rehabilitate an area or neighborhood. The Tax Commission maintains the central registry for their renewal plans, including the administrative and financial information. Urban renewal agencies must submit updated plans at least once a year.