Bill Text: IA HF2624 | 2023-2024 | 90th General Assembly | Introduced

Iowa House Bill 2624

Introduced

Bill Title: A bill for an act creating the railroad reconstruction or replacement tax credit available against the individual and corporate income taxes, the franchise tax, the insurance premiums tax, and the moneys and credits tax, and including effective date and retroactive applicability provisions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-03-12 - Subcommittee recommends passage. Vote Total: 2-0. [HF2624 Detail]

Download: Iowa-2023-HF2624-Introduced.html

House File 2624 - Introduced HOUSE FILE 2624 BY JONES A BILL FOR An Act creating the railroad reconstruction or replacement tax 1 credit available against the individual and corporate income 2 taxes, the franchise tax, the insurance premiums tax, and 3 the moneys and credits tax, and including effective date and 4 retroactive applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 6108YH (2) 90 jm/jh

H.F. 2624 Section 1. NEW SECTION . 327I.1 Railroad reconstruction or 1 replacement tax credit. 2 1. As used in this section: 3 a. “Department” means the department of revenue. 4 b. “Qualified expenditures” means gross expenditures in the 5 taxable year for maintenance, reconstruction, or replacement 6 of railroad infrastructure, including track, roadbed, bridges, 7 industrial leads and sidings, and track-related structures 8 owned or leased by a class II or class III railroad in this 9 state as of January 1, 2021. “Qualified expenditures” also 10 includes new construction of industrial leads, switches, spurs, 11 and sidings and extensions of existing sidings in this state by 12 a class II or class III railroad. 13 c. “Taxpayer” means any railroad that is classified by 14 the surface transportation board as a class II or class III 15 railroad. 16 2. A railroad reconstruction or replacement tax credit 17 shall be allowed against the taxes imposed in chapter 422, 18 subchapters II, III, and V, and in chapter 432, and against 19 the moneys and credits tax imposed in section 533.329, for 20 qualified expenditures. 21 3. A taxpayer who is an individual may claim a tax credit 22 under this subsection of a partnership, limited liability 23 company, S corporation, estate, or trust electing to have 24 income taxed directly to the individual. The amount claimed 25 by the individual shall be based upon the pro rata share of the 26 individual’s earnings from the partnership, limited liability 27 company, S corporation, estate, or trust. 28 4. Any credit in excess of the tax liability is not 29 refundable but the excess for the tax year may be credited 30 to the tax liability for the following five years or until 31 depleted, whichever is earlier. 32 5. For tax years beginning on or after January 1, 2024, 33 but before January 1, 2032, a tax credit may be claimed that 34 shall equal fifty percent of qualified expenditures made by 35 -1- LSB 6108YH (2) 90 jm/jh 1/ 5

H.F. 2624 the taxpayer, not to exceed three thousand dollars per mile, 1 multiplied by the number of miles of railroad track owned or 2 leased within the state by the taxpayer for which the taxpayer 3 made qualified expenditures upon during the applicable tax 4 year. 5 6. a. To claim a tax credit, a taxpayer shall include one 6 or more tax credit certificates with the taxpayer’s return. 7 b. The tax credit certificate shall contain the taxpayer’s 8 name, address, tax identification number, the amount of the 9 credit, any other information required by the department, 10 and a place for the name and tax identification number of a 11 transferee and the amount of the tax credit being transferred. 12 7. a. Tax credit certificates issued under this section may 13 be transferred to any person. Within ninety days of transfer, 14 the transferee shall submit the transferred tax credit 15 certificate to the department of revenue along with a statement 16 containing the transferee’s name, tax identification number, 17 address, the denomination that each replacement tax credit 18 certificate is to carry, and any other information required by 19 the department of revenue. However, tax credit certificate 20 amounts of less than the minimum amount established by rule by 21 the department of revenue shall not be transferable. 22 b. Within thirty days of receiving the transferred tax 23 credit certificate and the transferee’s statement, the 24 department of revenue shall issue one or more replacement tax 25 credit certificates to the transferee. Each replacement tax 26 credit certificate must contain the information required for 27 the original tax credit certificate and must have the same 28 expiration date that appeared on the transferred tax credit 29 certificate. 30 c. A tax credit shall not be claimed by a transferee 31 under this section until a replacement tax credit certificate 32 identifying the transferee as the proper holder has been 33 issued. The transferee may use the amount of the tax credit 34 transferred against the taxes imposed in chapter 422, 35 -2- LSB 6108YH (2) 90 jm/jh 2/ 5

H.F. 2624 subchapters II, III, and V, and in chapter 432, and against the 1 moneys and credits tax imposed in section 533.329 for any tax 2 year the original transferor could have claimed the tax credit. 3 Any consideration received for the transfer of the tax credit 4 shall not be included as income under chapter 422, subchapters 5 II, III, and V. Any consideration paid for the transfer of the 6 tax credit shall not be deducted from income under chapter 422, 7 subchapters II, III, and V. 8 8. This section is repealed January 1, 2037. 9 Sec. 2. NEW SECTION . 422.10C Railroad reconstruction or 10 replacement tax credit. 11 1. The taxes imposed under this subchapter, less the credits 12 allowed under section 422.12, shall be reduced by a railroad 13 reconstruction or replacement tax credit allowed pursuant to 14 section 327I.1. 15 2. This section is repealed January 1, 2037. 16 Sec. 3. Section 422.33, Code 2024, is amended by adding the 17 following new subsection: 18 NEW SUBSECTION . 11. a. The taxes imposed under this 19 subchapter shall be reduced by a railroad reconstruction or 20 replacement tax credit allowed pursuant to section 327I.1. 21 b. This subsection is repealed January 1, 2037. 22 Sec. 4. Section 422.60, Code 2024, is amended by adding the 23 following new subsection: 24 NEW SUBSECTION . 16. a. The taxes imposed under this 25 subchapter shall be reduced by a railroad reconstruction or 26 replacement tax credit allowed pursuant to section 327I.1. 27 b. This subsection is repealed January 1, 2037. 28 Sec. 5. NEW SECTION . 432.12P Railroad reconstruction or 29 replacement tax credit. 30 1. The taxes imposed under this chapter shall be reduced 31 by a railroad reconstruction or replacement tax credit allowed 32 pursuant to section 327I.1. 33 2. This section is repealed January 1, 2037. 34 Sec. 6. Section 533.329, subsection 2, Code 2024, is amended 35 -3- LSB 6108YH (2) 90 jm/jh 3/ 5

H.F. 2624 by adding the following new paragraph: 1 NEW PARAGRAPH . n. (1) The moneys and credits tax 2 imposed under this section shall be reduced by a railroad 3 reconstruction or replacement tax credit allowed pursuant to 4 section 327I.1. 5 (2) This paragraph is repealed January 1, 2037. 6 Sec. 7. EFFECTIVE DATE. This Act, being deemed of immediate 7 importance, takes effect upon enactment. 8 Sec. 8. RETROACTIVE APPLICABILITY. This Act applies 9 retroactively to January 1, 2024, for tax years beginning on 10 or after that date. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill creates the railroad reconstruction or replacement 15 tax credit available against the individual and corporate 16 income taxes, the franchise tax, the insurance premiums tax, 17 and the moneys and credits tax. 18 Under the bill, for tax years beginning on or after January 19 1, 2024, but before January 1, 2032, a tax credit may be 20 claimed equaling 50 percent of qualified expenditures made by 21 a railroad classified as class I or class II, not to exceed 22 $3,000 per mile, multiplied by the number of miles of railroad 23 track owned or leased within the state by the taxpayer for 24 which the taxpayer made qualified expenditures upon during the 25 applicable tax year. 26 The bill defines “qualified expenditures” to mean the 27 maintenance, reconstruction, or replacement of railroad 28 infrastructure, including track, roadbed, bridges, and 29 industrial leads and sidings, owned or leased by a class II 30 or class III railroad in this state as of January 1, 2021. 31 “Qualified expenditures” also includes new construction of 32 industrial leads, switches, spurs, and sidings and extensions 33 of existing sidings. 34 Any credit in excess of the tax liability is not refundable 35 -4- LSB 6108YH (2) 90 jm/jh 4/ 5

H.F. 2624 under the bill, but the excess may be credited to the tax 1 liability for up to the next five tax years. 2 The bill repeals the tax credit from the Code on January 1, 3 2037, to account for a taxpayer crediting excess tax liability 4 for up to five additional tax years or until depleted, 5 whichever is earlier. 6 The bill takes effect upon enactment and applies 7 retroactively to tax years beginning on or after January 1, 8 2024. 9 -5- LSB 6108YH (2) 90 jm/jh 5/ 5