WAFD, Inc. v. Idaho State Tax Commission

CourtIdaho Supreme Court
DecidedApril 23, 2026
Docket52584
StatusPublished

This text of WAFD, Inc. v. Idaho State Tax Commission (WAFD, Inc. v. Idaho State Tax Commission) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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WAFD, Inc. v. Idaho State Tax Commission, (Idaho 2026).

Opinion

IN THE SUPREME COURT OF THE STATE OF IDAHO

Docket No. 52584

WAFD, INC., (formerly known as ) WASHINGTON FEDERAL, INC.), ) ) Boise, February 2026 Term Plaintiff-Respondent, ) ) Opinion filed: April 23, 2026 v. ) ) Melanie Gagnepain, Clerk IDAHO STATE TAX COMMISSION, ) ) Defendant-Appellant. ) )

Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Lynn G. Norton, District Judge.

The judgment of the district court is affirmed.

Raúl R. Labrador, Idaho Attorney General, Boise, for Appellant. Eric Mahler argued.

Hawley Troxell Ennis & Hawley LLP, for Respondent. Richard G. Smith argued. _____________________________________________

MOELLER, Justice.

In 2021, the Idaho Legislature passed an amendment to Idaho Code section 63-3025, lowering the corporate tax rate. The amended statute stated that the new reduced rate was applicable to all “taxable years commencing on and after January 1, 2001.” The bill also contained an emergency clause, which set the effective date of the new rate as January 1, 2021. Based on the new law, WAFD, Inc., formerly known as Washington Federal, Inc. (“WAFD”), was faced with uncertainty when filing its 2021 income tax return. WAFD’s fiscal year—October 1, 2020, to September 30, 2021—straddled the effective date for the reduced rate: January 1, 2021. WAFD ultimately filed its 2021 tax return, claiming a refund using a blended tax rate that prorated the two different rates over the corresponding months of its fiscal year. The Revenue Operations Division (“Division”) of the Idaho State Tax Commission (“Tax

1 Commission” or “Commission”) rejected WAFD’s calculation of the refund, asserting that blended rates were not allowed under Idaho law and applied the higher rate to the entire fiscal year. WAFD filed a Written Petition for Redetermination with the Tax Commission, which upheld the Division’s determination. WAFD subsequently filed a complaint seeking relief in Ada County district court. The district court granted summary judgment in favor of WAFD and applied the lower tax rate to its entire fiscal year because Idaho Code section 63-3025, as amended, expressly stated that the lower tax rate applied to all “taxable years commencing on and after January 1, 2001.” The Tax Commission appealed to the Idaho Supreme Court. For the reasons set forth below, we affirm the district court’s decision. I. FACTUAL AND PROCEDURAL BACKGROUND WAFD is a Washington corporation that operates as a holding company for multiple corporate entities. It files a combined corporate tax return in Idaho each year and utilizes a fiscal year for financial reporting and filing corporate income taxes, which commences on October 1 and ends on September 30. Idaho’s corporate tax rate is set forth in Idaho Code section 63-3025. The Idaho Legislature amended section 63-3025(1) in 2021, reducing the corporate income tax rate from 6.925% to 6.5% “[f]or all taxable years commencing on and after January 1, 2001.” Pursuant to an emergency clause, the amendment became effective as of January 1, 2021. Act of May 10, 2021, ch. 342, §§ 3, 5, 2021 Idaho Sess. Laws 1039, 1042. Since then, the legislature has twice amended section 63- 3025(1), in 2022 and 2025, further reducing the corporate tax rate. Act of Feb. 4, 2022, ch. 1, § 3, 2022 Idaho Sess. Laws 3, 5; Act of Apr. 4, 2025, ch. 302, § 2, 2025 Idaho Sess. Laws 1279, 1281– 82. On July 14, 2022, WAFD filed its corporate income tax return for its fiscal year beginning on October 1, 2020, and ending on September 31, 2021 (“2021 fiscal year”). The 2021 amendment caused some confusion for WAFD since the effective date of the new rate fell in the middle of its fiscal year. When calculating its income tax for the 2021 fiscal year, WAFD ultimately opted to apply a “blended rate” of 6.607%. It calculated this blended rate by prorating the prior tax rate of 6.925% for the 92 days in calendar year 2020 and the amended tax rate of 6.5% for the 273 days in calendar year 2021 as follows: (6.925% x 92 days/365 days) + (6.5% x 273 days/365 days) = 6.607%.

2 Applying the prorated 6.607% tax rate to its net business income, WAFD calculated its income tax at $1,456,720 and claimed a refund of $593,271 for its 2021 taxes. On June 21, 2023, the Division sent WAFD a Notice of Refund Determination, which stated: We’ve made the following change to your refund according to Idaho Code section 63-3045. We’ve included the reasons and computations for the determination in this letter. We’ll issue any refund separately. Refund Claimed Refund Allowed Protestable Change $593,271.00 $523,187.00 $70,084.00 The notice explained that the adjustment to the refund resulted from WAFD’s error in computing its income tax liability. The Division increased WAFD’s income tax from $1,456,720 to $1,526,803, which is 6.925% of WAFD’s taxable income for the 2021 fiscal year. In other words, the Division determined that the higher 6.925% tax rate would be applied to the entire fiscal year, not just the last 92 days of calendar year 2020. On August 4, 2023, WAFD filed a “Written Petition for Re-Determination,” asserting that the blended rate was the correct calculation for its 2021 fiscal year tax return. The Tax Commission held a hearing on the petition and then entered a final decision on December 13, 2023. It concluded that “[n]o section of the Idaho Code allows a taxpayer to prorate its tax rate for any taxable year,” and determined that the 6.925% rate was applicable to WAFD’s entire 2021 fiscal year. On February 2, 2024, WAFD filed a complaint for relief against the Tax Commission, seeking to set aside the reduction of its refund and requesting that it receive the full refund to which it was entitled. On August 23, 2024, WAFD and the Tax Commission filed cross-motions for summary judgment. A hearing was held on October 22, 2024, and on December 20, 2024, the district court granted WAFD’s motion for summary judgment and denied the Tax Commission’s motion for summary judgment. The district court concluded that the 6.5% rate applied to the entire 2021 fiscal year because of the plain language of the statute: In reading these sections together, for taxable years commencing on and after January 1, 2001, the Idaho taxable income of a corporation is 6.5% and, because the legislature declared there was an emergency, the 6.5% applied retroactively to January 1, 2021. The Court finds the taxable year at issue for WAFD commenced on October 1, 2020 which was on or after January 1, 2001 as defined in the statute. The 2021 amendment did not include language to limit the applicability to those taxable years commencing on or after January 1, 2021. So, this [c]ourt finds the plain language of the statute provides that the taxable rate for the 2021 fiscal year for WAFD, that commenced October 30, 2020, was 6.5%.

3 The Tax Commission timely appealed. II. STANDARDS OF REVIEW Under Idaho Code section 63-3049, a taxpayer may seek review of the Tax Commission’s decision on redetermination by filing a complaint in district court. Chandler’s-Boise LLC v. Idaho State Tax Comm’n, 162 Idaho 447, 451, 398 P.3d 180, 184 (2017). “This Court reviews the district court’s decision directly, and utilizes the Tax Commission’s administrative determination as merely an articulation of the position of the Tax Commission as a party to the action.” In reviewing an order granting summary judgment, this Court applies the same standard of review as the district court applied when considering the motion for summary judgment. Idaho State Tax Comm’n v. James, 169 Idaho 884, 887, 505 P.3d 670, 673 (2022). Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Summerfield v.

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WAFD, Inc. v. Idaho State Tax Commission, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wafd-inc-v-idaho-state-tax-commission-idaho-2026.