Idaho Administrative Code › Title IDAPA 35 - Tax Commission, State › Rule 35.01.01 - INCOME TAX ADMINISTRATIVE RULES › Section 35.01.01.390 - TAXABLE IN ANOTHER STATE: WHEN A TAXPAYER IS SUBJECT TO TAX

Current through August 31, 2023
Section
				63-3027(4)(a),
				Idaho Code
01.
Subject to
			 Tax
. A taxpayer is subject to one of the taxes specified in Section
			 63-3027(4)(a),
			 Idaho Code, if it carries on business activity in a state and that state
			 imposes one of those taxes on it. A taxpayer that claims it is subject to one
			 (1) of the taxes specified in Section
			 63-3027(4)(a),
			 Idaho Code, is to furnish the Tax Commission, at its request, evidence to
			 support this claim. The Tax Commission may request that evidence include proof
			 the taxpayer has filed the required tax return in the other state and has paid
			 any taxes imposed by the law of that state. The taxpayer's failure to provide
			 proof may be considered in determining whether the taxpayer is subject to one
			 of the taxes specified in Section
			 63-3027(4)(a),
			 Idaho Code. (4-6-23)
02.
Concept of Taxability
. The concept of taxability in another state
			 is based on the premise that every state in which the taxpayer transacts
			 business may impose an income tax even though every state does not do so. A
			 state may impose other types of taxes as a substitute for an income tax. Only
			 those taxes specified in Section
			 63-3027(4)(a),
			 Idaho Code, that are revenue producing rather than regulatory in nature is to
			 be considered in determining taxability in another state. (4-6-23)
03.
Examples of Taxability
.
			 (4-6-23)
a. State A requires each corporation
			 that qualifies or registers in State A to pay the Secretary of State an annual
			 license fee or tax for the privilege of doing business in the state, regardless
			 of whether it exercises the privilege. The amount paid is determined according
			 to the total authorized capital stock of the corporation; the rates
			 progressively increase. The statute sets a minimum fee of fifty dollars ($50)
			 and a maximum fee of five hundred dollars ($500). Failure to pay the tax bars a
			 corporation from using the state courts to enforce its rights. State A also
			 imposes a corporation income tax. Corporation X is qualified in State A and
			 pays the required fee to the Secretary of State, but does not transact business
			 in State A, although it may use the courts of State A. Corporation X is not
			 taxable in State A. (4-6-23)
b.
			 Assume the same facts as in Subsection
			 390.03.a., except that
			 Corporation X is subject to and pays the corporation income tax. Payment is
			 prima facie evidence that Corporation X is subject to the net income tax of
			 State A and is taxable in State A. (4-6-23)
c. State B requires all corporations
			 qualified or registered in State B to pay the Secretary of State an annual
			 permit fee or tax for doing business in the state. The base of the fee or tax
			 is the sum of: outstanding capital stock, and surplus and undivided profits.
			 The fee or tax base attributable to State B is determined by a three (3) factor
			 apportionment formula. Corporation X, which operates a plant in State B, pays
			 the required fee or tax to the Secretary of State. Corporation X is taxable in
			 State B. (4-6-23)
d. State A has a
			 corporation franchise tax measured by net income for the privilege of doing
			 business in that state. Corporation X files a return based on its business
			 activity in the state, but the amount of computed liability is less than the
			 minimum tax. Corporation X pays the minimum tax. Corporation X is subject to
			 State A's corporation franchise tax. (4-6-23)