STATEMENT OF PURPOSE
RS29298 / H0563
This bill relates to the taxation of multistate business income in Idaho. Over the past few decades, most states
have moved towards taxing multistate income based on both market-based and single-sales factor approaches.
Idaho currently taxes multistate income for sales other than tangible property (ie., intangible property and
services) using a "cost-of-performance" method. Cost-of-performance assigns the sales revenue to the location
having the greater proportion of services performed. Market-based sourcing assigns the sales revenue to the
location receiving or benefiting from the services. Changing to "market-based" sourcing for these activities
will create uniformity with other states. Note that Idaho currently applies market-based sourcing to the sale of
tangible property which is already uniform to other states.
Idaho currently taxes multistate income using a three-factor method to apportion business income, which
includes: 1) Property; 2) Payroll; and 3) Double-weighted sales. Changing to a single-sales factor to apportion
income will simplify the process and also create uniformity with other states.
As other states have moved away from cost-of-performance as well as three-factor apportionment
methodologies, instances of double taxation for Idaho-based companies, and instances of out-of-state
companies doing business in Idaho without paying income taxes have become more and more prevalent. This
bill resolves these two problems, provides for a more-favorable tax environment for Idaho, and simplifies the
taxation of multistate income for both taxpayers and the State Tax Commission.
FISCAL NOTE
Approximately neutral. Generally, Idaho-based businesses with multistate operations will have a reduced tax
liability and out-of-state businesses selling into Idaho will have an increased tax liability.
Contact:
Senator C. Scott Grow
(208) 332-1000
Representative Dustin Manwaring
(208) 332-1000
DISCLAIMER: This statement of purpose and fiscal note are a mere attachment to this bill and prepared by a proponent
of the bill. It is neither intended as an expression of legislative intent nor intended for any use outside of the legislative
process, including judicial review (Joint Rule 18).
Statement of Purpose / Fiscal Note Bill SOP/FN INTRODUCED: 02/08/2022, 9:58 AM


Statutes affected:
Bill Text: 63-3027, 63-3022, 63-3029G, 63-3029I, 63-4406