Senate File 107 - Introduced SENATE FILE 107 BY ZAUN A BILL FOR An Act relating to the taxpayers trust fund by modifying the 1 transfer of moneys from the Iowa economic emergency fund 2 to the taxpayers trust fund, creating an Iowa tax rebate 3 payable from the taxpayers trust fund, creating a related 4 individual income tax exemption, and making appropriations, 5 and including effective date and retroactive applicability 6 provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 1910XS (2) 85 mm/sc

S.F. 107 DIVISION I 1 TAXPAYERS TRUST FUND 2 Section 1. Section 8.54, subsection 5, Code 2013, is amended 3 by striking the subsection. 4 Sec. 2. Section 8.55, subsection 2, Code 2013, is amended 5 to read as follows: 6 2. The maximum balance of the fund is the amount equal to 7 two and one-half percent of the adjusted revenue estimate for 8 the fiscal year. If the amount of moneys in the Iowa economic 9 emergency fund is equal to the maximum balance, moneys in 10 excess of this amount shall be distributed as follows: 11 a. The first sixty million dollars of the difference between 12 the actual net revenue for the general fund of the state for 13 the fiscal year and the adjusted revenue estimate for the 14 fiscal year shall be transferred to the taxpayers trust fund. 15 b. The remainder of the excess, if any, shall be transferred 16 to the general fund of the state. 17 Sec. 3. Section 8.58, Code 2013, is amended to read as 18 follows: 19 8.58 Exemption from automatic application. 20 1. To the extent that moneys appropriated under section 21 8.57 do not result in moneys being credited to the general fund 22 under section 8.55, subsection 2 , moneys Moneys appropriated 23 under in section 8.57 and moneys contained in the cash reserve 24 fund, rebuild Iowa infrastructure fund, environment first 25 fund, Iowa economic emergency fund, and taxpayers trust fund 26 shall not be considered in the application of any formula, 27 index, or other statutory triggering mechanism which would 28 affect appropriations, payments, or taxation rates, contrary 29 provisions of the Code notwithstanding. 30 2. To the extent that moneys appropriated under section 31 8.57 do not result in moneys being credited to the general fund 32 under section 8.55, subsection 2 , moneys Moneys appropriated 33 under in section 8.57 and moneys contained in the cash reserve 34 fund, rebuild Iowa infrastructure fund, environment first fund, 35 -1- LSB 1910XS (2) 85 mm/sc 1/ 5

S.F. 107 Iowa economic emergency fund, and taxpayers trust fund shall 1 not be considered by an arbitrator or in negotiations under 2 chapter 20 . 3 Sec. 4. EFFECTIVE UPON ENACTMENT. This division of this 4 Act, being deemed of immediate importance, takes effect upon 5 enactment. 6 Sec. 5. RETROACTIVE APPLICABILITY. This division of this 7 Act applies retroactively to July 1, 2012, to moneys attributed 8 to fiscal years beginning on or after July 1, 2012. 9 DIVISION II 10 IOWA TAX REBATE 11 Sec. 6. Section 422.7, Code 2013, is amended by adding the 12 following new subsection: 13 NEW SUBSECTION . 6. a. Subtract the refund received from 14 the Iowa tax rebate pursuant to the section of this division of 15 this Act providing for the Iowa tax rebate, to the extent that 16 the refund increased federal adjusted gross income. 17 b. This subsection is repealed on June 30, 2018. 18 Sec. 7. TAXPAYERS TRUST FUND —— IOWA TAX REBATE 19 APPROPRIATION. The balance of the taxpayers trust fund 20 as determined after the close of the fiscal year beginning 21 July 1, 2012, and ending June 30, 2013, including the amount 22 transferred for that fiscal year to the taxpayers trust fund 23 from the Iowa economic emergency fund created in section 8.55 24 in the fiscal year beginning July 1, 2013, and ending June 30, 25 2014, is appropriated from the taxpayers trust fund to the 26 department of revenue for the fiscal year beginning July 1, 27 2013, and ending June 30, 2014, to be used for payment of the 28 Iowa tax rebate in accordance with the section of this division 29 of this Act providing for the Iowa tax rebate. 30 Sec. 8. IOWA TAX REBATE. 31 1. For purposes of this section: 32 a. “Eligible individual” means an individual who makes 33 and files an individual income tax return pursuant to section 34 422.13 for the tax year beginning in 2012, and who has a state 35 -2- LSB 1910XS (2) 85 mm/sc 2/ 5

S.F. 107 income tax liability for the tax year beginning in 2012. An 1 eligible individual does not include an estate or trust, or an 2 individual for whom a 2012 individual income tax return was not 3 timely filed, including extensions. 4 b. “State income tax liability” means the taxes computed 5 under section 422.5, less the amounts of refundable and 6 nonrefundable credits allowed under chapter 422, division II, 7 except the credits for withheld tax and estimated tax paid 8 under section 422.16. 9 2. An eligible individual shall be treated as having made an 10 additional payment against the taxes imposed in chapter 422, 11 division II, for the tax year beginning in 2012, in an amount 12 as determined in subsection 3. 13 3. The payment amount treated as made by the eligible 14 individual shall be equal to the quotient of the amount 15 appropriated to the department of revenue by this division of 16 this Act for purposes of the Iowa tax rebate divided by the 17 number of eligible individuals, as determined by the director 18 of revenue in accordance with this section, rounded down to the 19 nearest whole dollar. 20 4. The payment of tax deemed made under subsection 2 by 21 an eligible individual shall be considered an overpayment and 22 shall be credited by the department of revenue against any 23 tax due under chapter 422, division II, from the eligible 24 individual who is deemed to have made the overpayment. If an 25 overpayment remains after the credit is applied to the amount 26 of tax due, the remaining amount shall be refunded by the 27 department of revenue no later than June 30, 2014. 28 5. Notwithstanding any other provision of this division of 29 this Act or chapter 422, interest shall not be allowed on any 30 overpayment attributable to this section. 31 Sec. 9. EFFECTIVE UPON ENACTMENT. This division of this 32 Act, being deemed of immediate importance, takes effect upon 33 enactment. 34 EXPLANATION 35 -3- LSB 1910XS (2) 85 mm/sc 3/ 5

S.F. 107 This bill relates to the taxpayers trust fund by modifying 1 the transfer of moneys from the Iowa economic emergency fund to 2 the taxpayers trust fund, creating an Iowa tax rebate payable 3 from the taxpayers trust fund, creating a related individual 4 income tax exemption, and making an appropriation from the 5 fund. 6 Division I of the bill relates to the transfer of moneys from 7 the Iowa economic emergency fund to the taxpayers trust fund. 8 Under current law in Code section 8.55, when the balance of 9 the Iowa economic emergency fund is equal to the fund’s maximum 10 balance, the excess is first distributed to the taxpayers trust 11 fund up to a formula amount and the remainder is transferred to 12 the general fund of the state. The division provides that the 13 entire excess is transferred to the taxpayers trust fund and 14 moneys would no longer be transferred to the general fund of 15 the state. 16 Code section 8.54, relating to the state general fund 17 expenditure limitation, is amended to delete a subsection that 18 provides for readjustment of the expenditure limitation to 19 reflect moneys anticipated to be transferred to the general 20 fund of the state from the Iowa economic emergency fund. 21 Code section 8.58, providing an exemption from statutory 22 triggering mechanisms and consideration by an arbitrator or in 23 a collective bargaining negotiation under Code chapter 20 for 24 moneys in various funds, is amended to eliminate a reference 25 to the transfer from the Iowa economic emergency fund to the 26 general fund of the state. 27 The division takes effect upon enactment and applies 28 retroactively to July 1, 2012, to moneys attributed to fiscal 29 years beginning on or after July 1, 2012. 30 Division II relates to an Iowa tax rebate payable from an 31 appropriation from the taxpayers trust fund, and an Iowa income 32 tax exemption for the Iowa tax rebate. 33 The bill appropriates the balance of the taxpayers trust 34 fund, as determined after the close of fiscal year 2012-2013, 35 -4- LSB 1910XS (2) 85 mm/sc 4/ 5

S.F. 107 including the amount transferred for that fiscal year from the 1 Iowa economic emergency fund to the taxpayers trust fund in 2 fiscal year 2013-2014, to the department of revenue for the 3 purpose of providing an Iowa tax rebate. 4 The bill provides a one-time individual income tax rebate 5 to eligible individuals using the moneys appropriated from the 6 taxpayers trust fund to the department of revenue. “Eligible 7 individual” is defined as an individual who timely filed an 8 Iowa individual income tax return for 2012, and who had a state 9 income tax liability for 2012. An eligible individual does not 10 include an estate or trust. “State income tax liability” is 11 defined as the tax computed under Code section 422.5, less the 12 amounts of refundable and nonrefundable credits allowed under 13 Code chapter 422, division II, except the credits for withheld 14 tax and estimated tax paid in Code section 422.16. 15 Each eligible individual is treated as having made an 16 additional payment against the individual’s 2012 income tax 17 liability in an amount equal to the quotient of the total 18 appropriation for the Iowa tax rebate divided by the number 19 of eligible individuals, rounded down to the nearest whole 20 dollar. The director is required to refund no later than June 21 30, 2014, any amount attributable to this payment that exceeds 22 the individual’s tax liability. 23 The bill also provides an exemption from the state 24 individual income tax for the amount received from the Iowa 25 tax rebate to the extent the rebate increased federal adjusted 26 gross income. The income tax exemption is automatically 27 repealed on June 30, 2018. 28 -5- LSB 1910XS (2) 85 mm/sc 5/ 5