House
Study
Bill
70
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
KAUFMANN)
A
BILL
FOR
An
Act
concerning
the
apportionment
of
certain
business
1
income
of
an
airline
or
a
qualified
air
freight
forwarder
2
for
purposes
of
Iowa
corporate
income
tax,
and
including
3
retroactive
applicability
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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Section
1.
Section
422.33,
subsection
2,
paragraph
a,
1
subparagraph
(2),
Code
2023,
is
amended
by
adding
the
following
2
new
subparagraph
divisions:
3
NEW
SUBPARAGRAPH
DIVISION
.
(0f)
Notwithstanding
4
subparagraph
division
(c),
where
income
is
derived
by
an
5
airline
from
transportation
operations,
the
part
attributable
6
to
business
within
the
state
shall
be
in
the
proportion
that
7
the
miles
of
the
airline
traveled
in
this
state
bears
to
the
8
total
miles
of
such
airline
traveled
everywhere.
9
NEW
SUBPARAGRAPH
DIVISION
.
(00f)
(i)
Notwithstanding
10
subparagraph
division
(c),
where
income
is
derived
by
a
11
qualified
air
freight
forwarder
from
transportation
operations
12
through
an
affiliated
airline,
such
income
shall
be
apportioned
13
as
follows:
14
(A)
For
tax
years
beginning
during
the
2023
calendar
year,
15
ninety
percent
of
such
income
shall
be
equitably
apportioned
16
as
provided
in
subparagraph
division
(c),
and
of
the
remaining
17
ten
percent
of
such
income,
the
part
attributable
to
business
18
within
the
state
shall
be
in
the
proportion
that
the
miles
19
of
the
qualified
air
freight
forwarder’s
affiliated
airline
20
traveled
in
this
state
bears
to
the
total
miles
of
the
21
affiliated
airline
traveled
everywhere.
22
(B)
For
tax
years
beginning
during
the
2024
calendar
year,
23
eighty
percent
of
such
income
shall
be
equitably
apportioned
24
as
provided
in
subparagraph
division
(c),
and
of
the
remaining
25
twenty
percent
of
such
income,
the
part
attributable
to
26
business
within
the
state
shall
be
in
the
proportion
that
the
27
miles
of
the
qualified
air
freight
forwarder’s
affiliated
28
airline
traveled
in
this
state
bears
to
the
total
miles
of
the
29
affiliated
airline
traveled
everywhere.
30
(C)
For
tax
years
beginning
during
the
2025
calendar
year,
31
seventy
percent
of
such
income
shall
be
equitably
apportioned
32
as
provided
in
subparagraph
division
(c),
and
of
the
remaining
33
thirty
percent
of
such
income,
the
part
attributable
to
34
business
within
the
state
shall
be
in
the
proportion
that
the
35
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miles
of
the
qualified
air
freight
forwarder’s
affiliated
1
airline
traveled
in
this
state
bears
to
the
total
miles
of
the
2
affiliated
airline
traveled
everywhere.
3
(D)
For
tax
years
beginning
during
the
2026
calendar
year,
4
sixty
percent
of
such
income
shall
be
equitably
apportioned
as
5
provided
in
subparagraph
division
(c),
and
of
the
remaining
6
forty
percent
of
such
income,
the
part
attributable
to
business
7
within
the
state
shall
be
in
the
proportion
that
the
miles
8
of
the
qualified
air
freight
forwarder’s
affiliated
airline
9
traveled
in
this
state
bears
to
the
total
miles
of
the
10
affiliated
airline
traveled
everywhere.
11
(E)
For
tax
years
beginning
during
the
2027
calendar
year,
12
fifty
percent
of
such
income
shall
be
equitably
apportioned
as
13
provided
in
subparagraph
division
(c),
and
of
the
remaining
14
fifty
percent
of
such
income,
the
part
attributable
to
business
15
within
the
state
shall
be
in
the
proportion
that
the
miles
16
of
the
qualified
air
freight
forwarder’s
affiliated
airline
17
traveled
in
this
state
bears
to
the
total
miles
of
the
18
affiliated
airline
traveled
everywhere.
19
(F)
For
tax
years
beginning
during
the
2028
calendar
year,
20
forty
percent
of
such
income
shall
be
equitably
apportioned
as
21
provided
in
subparagraph
division
(c),
and
of
the
remaining
22
sixty
percent
of
such
income,
the
part
attributable
to
business
23
within
the
state
shall
be
in
the
proportion
that
the
miles
24
of
the
qualified
air
freight
forwarder’s
affiliated
airline
25
traveled
in
this
state
bears
to
the
total
miles
of
the
26
affiliated
airline
traveled
everywhere.
27
(G)
For
tax
years
beginning
during
the
2029
calendar
year,
28
thirty
percent
of
such
income
shall
be
equitably
apportioned
29
as
provided
in
subparagraph
division
(c),
and
of
the
remaining
30
seventy
percent
of
such
income,
the
part
attributable
to
31
business
within
the
state
shall
be
in
the
proportion
that
the
32
miles
of
the
qualified
air
freight
forwarder’s
affiliated
33
airline
traveled
in
this
state
bears
to
the
total
miles
of
the
34
affiliated
airline
traveled
everywhere.
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(H)
For
tax
years
beginning
during
the
2030
calendar
year,
1
twenty
percent
of
such
income
shall
be
equitably
apportioned
2
as
provided
in
subparagraph
division
(c),
and
of
the
remaining
3
eighty
percent
of
such
income,
the
part
attributable
to
4
business
within
the
state
shall
be
in
the
proportion
that
the
5
miles
of
the
qualified
air
freight
forwarder’s
affiliated
6
airline
traveled
in
this
state
bears
to
the
total
miles
of
the
7
affiliated
airline
traveled
everywhere.
8
(I)
For
tax
years
beginning
during
the
2031
calendar
year,
9
ten
percent
of
such
income
shall
be
equitably
apportioned
as
10
provided
in
subparagraph
division
(c),
and
of
the
remaining
11
ninety
percent
of
such
income,
the
part
attributable
to
12
business
within
the
state
shall
be
in
the
proportion
that
the
13
miles
of
the
qualified
air
freight
forwarder’s
affiliated
14
airline
traveled
in
this
state
bears
to
the
total
miles
of
the
15
affiliated
airline
traveled
everywhere.
16
(J)
For
tax
years
beginning
on
or
after
January
1,
2032,
17
the
part
attributable
to
business
within
the
state
shall
be
18
in
the
proportion
that
the
miles
of
the
qualified
air
freight
19
forwarder’s
affiliated
airline
traveled
in
this
state
bears
to
20
the
total
miles
of
the
affiliated
airline
traveled
everywhere.
21
(ii)
For
purposes
of
this
subparagraph
division
(00f),
22
“qualified
air
freight
forwarder”
means
a
taxpayer
who
meets
all
23
of
the
following
requirements:
24
(A)
The
taxpayer
is
primarily
engaged
in
the
facilitation
of
25
the
transportation
of
property
by
air.
26
(B)
The
taxpayer
does
not
itself
operate
aircraft.
27
(C)
The
taxpayer
is
in
the
same
affiliated
group
as
an
28
airline.
29
Sec.
2.
Section
422.33,
subsection
2,
paragraph
a,
30
subparagraph
(2),
subparagraph
division
(g),
Code
2023,
is
31
amended
to
read
as
follows:
32
(g)
Where
income
consists
of
more
than
one
class
of
income
33
as
provided
in
subparagraph
divisions
(a)
through
(e)
(00f)
34
of
this
subparagraph,
it
shall
be
reasonably
apportioned
by
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the
business
activity
ratio
provided
in
rules
adopted
by
the
1
director.
2
Sec.
3.
RETROACTIVE
APPLICABILITY.
This
Act
applies
3
retroactively
to
January
1,
2023,
for
tax
years
beginning
on
4
or
after
that
date.
5
EXPLANATION
6
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
7
the
explanation’s
substance
by
the
members
of
the
general
assembly.
8
This
bill
relates
to
the
apportionment
of
income
of
an
9
airline
and
of
a
qualified
air
freight
forwarder
for
purposes
10
of
the
Iowa
corporate
income
tax.
11
A
corporation
doing
business
both
within
and
without
Iowa
is
12
required
to
apportion
its
business
income
among
Iowa
and
the
13
other
states
in
which
it
does
business.
The
amount
of
business
14
income
apportioned
to
Iowa
is
generally
in
the
same
percentage
15
as
the
business’s
gross
sales
made
within
Iowa
if
the
business
16
involves
the
manufacture
or
sale
of
goods
and
products,
or
in
17
the
same
percentage
as
the
business’s
gross
receipts
earned
18
within
Iowa
if
the
business
involves
something
other
than
the
19
manufacture
or
sale
of
goods
and
products.
However,
airlines
20
and
other
specified
industries
have
special
rules
provided
21
by
administrative
rule
for
apportioning
the
income
of
those
22
industries.
23
Under
current
law
pursuant
to
701
Iowa
administrative
code,
24
rule
503.7(2),
an
airline
deriving
income
from
transportation
25
operations
is
required
to
apportion
its
business
income
to
26
Iowa
in
the
same
proportion
that
its
mileage
traveled
in
Iowa
27
bears
to
its
total
mileage
traveled
everywhere.
The
bill
28
specifies
that
an
airline
shall
apportion
this
business
income
29
in
the
same
manner
described
above
as
required
under
701
Iowa
30
administrative
code,
rule
503.7(2).
31
The
bill
also
provides
rules
for
apportioning
income
derived
32
by
a
qualified
air
freight
forwarder
from
transportation
33
operations
through
an
affiliated
airline.
The
bill
defines
34
“qualified
air
freight
forwarder”
to
be
a
taxpayer
that
is
35
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primarily
engaged
in
the
facilitation
of
the
transportation
of
1
property
by
air,
and
that
does
not
itself
operate
aircraft
but
2
that
is
in
the
same
affiliated
group
as
an
airline.
3
The
bill
states
that
the
qualified
air
freight
forwarder
4
income
derived
from
transportation
operations
shall
be
5
apportioned
to
Iowa
either
under
the
current
rules
of
the
6
director
of
revenue
(current
statutory
rules),
or
in
the
7
same
proportion
that
the
miles
of
the
qualified
air
freight
8
forwarder’s
affiliated
airline
traveled
in
this
state
bears
to
9
the
total
miles
of
the
affiliated
airline
traveled
everywhere
10
(affiliated
airline
mileage
rules),
based
on
increasing
11
percentages
as
enumerated
in
the
bill
over
a
number
of
tax
12
years.
13
The
bill
applies
retroactively
to
tax
years
beginning
on
or
14
after
January
1,
2023.
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