Bill Text: IA HF221 | 2021-2022 | 89th General Assembly | Introduced


Bill Title: A bill for an act relating to the solar energy system tax credit available against the individual and corporate income tax, the franchise tax, the moneys and credits tax, and including effective date and retroactive applicability provisions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2021-02-02 - Subcommittee recommends amendment and passage. Vote Total: 3-0 [HF221 Detail]

Download: Iowa-2021-HF221-Introduced.html
House File 221 - Introduced HOUSE FILE 221 BY KLEIN A BILL FOR An Act relating to the solar energy system tax credit available 1 against the individual and corporate income tax, the 2 franchise tax, the moneys and credits tax, and including 3 effective date and retroactive applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1704YH (3) 89 jm/jh
H.F. 221 DIVISION I 1 SOLAR ENERGY SYSTEM TAX CREDIT 2 Section 1. Section 422.11L, Code 2021, is amended by 3 striking the section and inserting in lieu thereof the 4 following: 5 422.11L Solar energy system tax credits. 6 1. As used in this section: 7 a. “Commercial solar energy system” means a solar energy 8 system on nonresidential property. 9 b. “Residential solar energy system” means a solar energy 10 system on residential property or multiresidential property. 11 c. “Solar energy system” means a system of equipment capable 12 of collecting and converting incident solar radiation into 13 thermal, mechanical, or electrical energy and transporting the 14 energy by a separate apparatus to storage or to a point of use. 15 2. Beginning with installations completed on or after 16 January 1, 2021, but before December 31, 2030, the taxes 17 imposed under this subchapter, less the credits allowed under 18 section 422.12, shall be reduced by a solar energy system tax 19 credit equal to fifteen percent of the gross cost of the solar 20 energy system, not to exceed the following amounts: 21 a. For a residential solar energy system, five thousand 22 dollars. 23 b. For a commercial solar energy system, twenty thousand 24 dollars. 25 3. Any credit in excess of the tax liability is not 26 refundable but the excess for the tax year may be credited 27 to the tax liability for the following ten years or until 28 depleted, whichever is earlier. 29 4. a. An individual may claim the tax credit allowed a 30 partnership, limited liability company, S corporation, estate, 31 or trust electing to have the income taxed directly to the 32 individual. The amount claimed by the individual shall be 33 based upon the pro rata share of the individual’s earnings of 34 the partnership, limited liability company, S corporation, 35 -1- LSB 1704YH (3) 89 jm/jh 1/ 7
H.F. 221 estate, or trust. 1 b. A taxpayer who is eligible to claim a credit under this 2 section shall not be eligible to claim a renewable energy tax 3 credit under chapter 476C. 4 c. A taxpayer may claim more than one credit under this 5 section, but may claim only one credit per separate and 6 distinct solar energy system installation. The department 7 shall establish criteria, by rule, for determining what 8 constitutes a separate and distinct installation. 9 d. (1) A taxpayer must submit an application to the 10 department for each separate and distinct solar energy 11 system installation. The application must be approved by the 12 department in order to claim the tax credit. The application 13 must be filed by May 1 following the year of the installation 14 of the solar energy system. 15 (2) The department shall accept and approve applications 16 on a first-come, first-served basis until the maximum amount 17 of tax credits that may be claimed pursuant to subsection 5 18 is reached. If for a tax year the aggregate amount of tax 19 credits applied for exceeds the amount specified in subsection 20 5, the department shall establish a wait list for tax credits. 21 Valid applications filed by the taxpayer by May 1 following the 22 year of the installation but not approved by the department 23 shall be placed on a wait list in the order the applications 24 were received and those applicants shall be given priority 25 for having their applications approved in succeeding years. 26 Placement on a wait list pursuant to this subparagraph shall 27 not constitute a promise binding the state. The availability 28 of a tax credit and approval of a tax credit application 29 pursuant to this section in a future year is contingent upon 30 the availability of tax credits in that particular year. 31 5. a. The cumulative value of tax credits claimed annually 32 by applicants pursuant to this section shall not exceed ten 33 million dollars. 34 b. If an amount of tax credits available for a tax year 35 -2- LSB 1704YH (3) 89 jm/jh 2/ 7
H.F. 221 pursuant to paragraph “a” goes unclaimed, the amount of the 1 unclaimed tax credits shall be made available for the following 2 tax year in addition to, and cumulated with, the amount 3 available pursuant to paragraph “a” for the following tax year. 4 6. On or before January 1, annually, the department shall 5 submit a written report to the governor and the general 6 assembly regarding the number and value of tax credits claimed 7 under this section, and any other information the department 8 may deem relevant and appropriate. 9 7. This section is repealed January 1, 2041. 10 8. The director shall adopt rules pursuant to chapter 17A to 11 administer this section. 12 Sec. 2. Section 422.33, subsection 29, paragraph a, Code 13 2021, is amended to read as follows: 14 a. The Beginning with installations completed on or after 15 January 1, 2021, but before December 31, 2030, the taxes 16 imposed under this subchapter shall be reduced by a solar 17 energy system tax credit equal to sixty percent of the federal 18 energy credit related to solar energy systems provided in 19 section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III) 20 of the Internal Revenue Code , not to exceed twenty thousand 21 dollars. For installations occurring on or after January 1, 22 2016, the applicable percentage of the federal energy credit 23 related to solar energy systems shall be fifty percent allowed 24 under section 422.11L . 25 Sec. 3. Section 422.60, subsection 12, paragraph a, Code 26 2021, is amended to read as follows: 27 a. The Beginning with the installations completed on or 28 after January 1, 2021, but before December 31, 2030, the taxes 29 imposed under this subchapter shall be reduced by a solar 30 energy system tax credit equal to sixty percent of the federal 31 energy credit related to solar energy systems provided in 32 section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III) 33 of the Internal Revenue Code , not to exceed twenty thousand 34 dollars. For installations occurring on or after January 1, 35 -3- LSB 1704YH (3) 89 jm/jh 3/ 7
H.F. 221 2016, the applicable percentage of the federal energy credit 1 related to solar energy systems shall be fifty percent allowed 2 under section 422.11L . 3 Sec. 4. Section 533.329, subsection 2, paragraph k, Code 4 2021, is amended to read as follows: 5 k. The Beginning with the installations completed on or 6 after January 1, 2021, but before December 31, 2030, the moneys 7 and credits tax imposed under this section shall be reduced by 8 a solar energy system tax credit allowed under section 422.11L . 9 Sec. 5. CUMULATIVE VALUE OF SOLAR ENERGY SYSTEM TAX CREDIT 10 FOR YEAR 2021 —— RESERVED CLAIMS. Notwithstanding section 11 422.11L, subsection 5, as enacted by this division of this Act, 12 the maximum cumulative value of tax credits that may be claimed 13 during the 2021 calendar year shall not exceed seventeen 14 million dollars. Of this amount, at least seven million 15 dollars shall be reserved for claims placed on the wait list 16 pursuant to section 422.11L, subsection 3, Code 2021, prior to 17 January 1, 2021. The reserved claims shall be approved using 18 the same priority of approval established for the wait list. 19 In the event claims from the wait list exceed the reserved 20 amount, an applicant from the wait list shall be given priority 21 to make a claim for amounts not reserved for the year 2021, to 22 the extent such claims have not been claimed. In the event the 23 maximum cumulative amount of tax credits have been claimed for 24 the year 2021, an applicant from the wait list shall be given 25 priority on any wait list based upon the date the application 26 for the credit was received by the department. 27 Sec. 6. EFFECTIVE DATE. This division of this Act, being 28 deemed of immediate importance, takes effect upon enactment. 29 Sec. 7. RETROACTIVE APPLICABILITY. This division of this 30 Act applies retroactively to January 1, 2021, for tax years 31 ending on or after that date. 32 DIVISION II 33 CORRESPONDING CHANGES DUE TO FUTURE REPEAL OF SOLAR ENERGY 34 SYSTEM TAX CREDIT 35 -4- LSB 1704YH (3) 89 jm/jh 4/ 7
H.F. 221 Sec. 8. Section 422.33, subsection 29, Code 2021, is amended 1 by adding the following new paragraph: 2 NEW PARAGRAPH . c. This subsection is repealed on January 3 1, 2041. 4 Sec. 9. Section 422.60, subsection 12, Code 2021, is amended 5 by adding the following new paragraph: 6 NEW PARAGRAPH . c. This subsection is repealed on January 7 1, 2041. 8 Sec. 10. Section 476C.2, subsection 3, Code 2021, is amended 9 to read as follows: 10 3. a. A taxpayer who is eligible to claim a renewable 11 energy tax credit under this chapter shall not be eligible to 12 claim a solar energy system tax credit under section 422.11L 13 or 422.33 . 14 b. This subsection is repealed on January 1, 2041. 15 Sec. 11. Section 533.329, subsection 2, paragraph k, Code 16 2021, is amended to read as follows: 17 k. (1) The moneys and credits tax imposed under this 18 section shall be reduced by a solar energy system tax credit 19 allowed under section 422.11L . 20 (2) This paragraph is repealed on January 1, 2041. 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 DIVISION I —— SOLAR ENERGY SYSTEM TAX CREDIT —— REPEAL. This 25 bill relates to the solar energy system tax credit. Under 26 existing law, the Iowa solar energy system tax credit available 27 against the individual or corporate income tax, the franchise 28 tax, or the moneys and credits tax equals the sum of 50 percent 29 of the federal residential energy efficient property credit, 30 not to exceed $5,000, plus 50 percent of the federal energy 31 credit related to solar energy systems, not to exceed $20,000. 32 The bill strikes provisions basing the Iowa solar energy 33 system tax credit as a percentage of federal energy tax credits 34 and creates a new Iowa solar energy system tax credit for 35 -5- LSB 1704YH (3) 89 jm/jh 5/ 7
H.F. 221 installations completed on or after January 1, 2021, but before 1 December 31, 2030. The bill creates a residential solar energy 2 system tax credit equal to 15 percent of the gross cost of the 3 system, up to $5,000. The bill creates a separate commercial 4 solar energy system tax credit not to exceed 15 percent of the 5 gross cost of the system, up to $20,000. The tax credit is 6 available against the individual and corporate income taxes, 7 the franchise tax, and the moneys and credits tax. 8 The bill defines “residential solar energy system” to 9 mean a solar energy project on residential property or 10 multiresidential property. The bill defines “commercial 11 solar energy system” to mean a solar energy system on a 12 nonresidential property. 13 Any tax credit approved under the bill is not refundable 14 but the excess for the tax year may be credited to the tax 15 liability for the following 10 years or until depleted, 16 whichever is earlier. 17 A taxpayer eligible to claim a credit under the bill is not 18 eligible to claim a renewable energy tax credit under Code 19 chapter 476C. 20 The bill provides that a taxpayer may claim more than one tax 21 credit, but may claim only one credit per separate and distinct 22 solar energy system installation. 23 For the 2021 calendar year, the bill increases the maximum 24 cumulative value of tax credits that may be claimed during 25 the calendar year from $4 million to $17 million. Of this 26 increased maximum tax credit amount for the 2021 calendar year, 27 $7 million is reserved for claims placed on the wait list prior 28 to January 1, 2021. The reserved claims shall be approved 29 using the same priority of approval established for the wait 30 list. An applicant placed on the wait list prior to January 31 2021 shall be given priority to make a claim for amounts not 32 reserved for the year 2021, to the extent such claims have not 33 been claimed. In the event the maximum cumulative amount of 34 tax credits have been claimed for the year 2021 under the bill, 35 -6- LSB 1704YH (3) 89 jm/jh 6/ 7
H.F. 221 the applicant shall have priority on any wait list based upon 1 the date the application for the credit was received by the 2 department of revenue. 3 Beginning in the 2022 calendar year through the 2030 4 calendar year, the bill establishes the maximum cumulative 5 value of tax credits that may be claimed during the year at $10 6 million. 7 The bill repeals the solar energy tax credit on January 8 1, 2041, which is 10 years after the tax year the credit may 9 be claimed for completed installations in order to allow any 10 credit in excess of tax liability for installations completed 11 prior to December 31, 2030, to be credited to future tax 12 liability for up to 10 years. 13 Division I takes effect upon enactment and applies 14 retroactively to January 1, 2021, for tax years ending on or 15 after that date. 16 DIVISION II —— CORRESPONDING CHANGES DUE TO REPEAL OF THE 17 SOLAR ENERGY SYSTEM TAX CREDIT. The bill makes corresponding 18 changes in the Code due to the repeal of the solar energy 19 system tax credit on January 1, 2041. 20 -7- LSB 1704YH (3) 89 jm/jh 7/ 7
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