Idaho Admin. Code r. 35.01.01.272 - IDAHO COMPENSATION: SEVERANCE PAY

Section 63-3026A(3), Idaho Code

01. In General. In accordance with federal Treasury Regulation Section 1.61 -2, termination or severance pay is treated as compensation for services. The amount of termination or severance pay received by a nonresident that is subject to Idaho income tax is determined pursuant to this rule. (4-6-23)

02. Definitions. For purposes of this rule workdays, Idaho workdays and total workdays are defined in Rule 270 of these rules. (4-6-23)

03. Calculation of Idaho Source Severance Pay. The amount of severance pay that is Idaho source income is to be equal to the severance pay received during the taxable year multiplied by the ratio of Idaho workdays to total workdays during either of the following: (4-6-23)

a. The employee's entire period of employment with such employer; or (4-6-23)

b. The employee's last twelve (12) months of employment with such employer. (4-6-23)

04. Alternative Method. If the Idaho compensation percentage computed in Subsection 272.03 does not fairly represent the extent of the taxpayer's personal service activities in Idaho, the taxpayer may propose or the Tax Commission may require an alternative method. For example, working hours may be a more appropriate measure than workdays in some cases. (4-6-23)

a. The taxpayer will fully explain the alternative method in a statement attached to his Idaho individual income tax return. (4-6-23)

b. The alternative method may be used in lieu of the method in Subsection 272.03 unless the Tax Commission expressly denies its use. (4-6-23)

Notes

Idaho Admin. Code r. 35.01.01.272