Bill Text: IA SF2327 | 2015-2016 | 86th General Assembly | Introduced

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Bill Title: A bill for an act relating to the administration of the tax and related laws by the department of revenue, including the renewable energy tax credit, the solar energy system tax credit, appeal procedures for certain centrally assessed property, an extension of the utility replacement tax task force, requiring background checks for job applicants and persons performing work for the department of revenue, a sales and use tax exemption for certain items used in performance of a construction contract with designated exempt entities, and including effective date and retroactive and other applicability provisions. (Formerly SSB 3190.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2016-04-28 - Withdrawn. S.J. 813. [SF2327 Detail]

Download: Iowa-2015-SF2327-Introduced.html

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Senate File 2327 - Introduced




                                 SENATE FILE       
                                 BY  COMMITTEE ON WAYS AND
                                     MEANS

                                 (SUCCESSOR TO SSB
                                     3190)

                                      A BILL FOR

  1 An Act relating to the administration of the tax and related
  2    laws by the department of revenue, including the renewable
  3    energy tax credit, the solar energy system tax credit,
  4    appeal procedures for certain centrally assessed property,
  5    an extension of the utility replacement tax task force,
  6    requiring background checks for job applicants and persons
  7    performing work for the department of revenue, a sales and
  8    use tax exemption for certain items used in performance of
  9    a construction contract with designated exempt entities,
 10    and including effective date and retroactive and other
 11    applicability provisions.
 12 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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  1  1    Section 1.  NEW SECTION.  421.48  Background checks.
  1  2    An applicant for employment with the department of revenue
  1  3 shall be subject to a national criminal history check through
  1  4 the federal bureau of investigation. A contractor, vendor,
  1  5 employee, or any other individual performing work for the
  1  6 department of revenue, shall be subject to a national criminal
  1  7 history check through the federal bureau of investigation
  1  8 at least once every ten years.  The department of revenue
  1  9 shall request the national criminal history check and shall
  1 10 provide the individual's fingerprints to the department
  1 11 of public safety for submission through the state criminal
  1 12 history repository to the federal bureau of investigation.
  1 13 The individual shall authorize release of the results of the
  1 14 national criminal history check to the department of revenue.
  1 15 The department of revenue shall pay the actual cost of the
  1 16 fingerprinting and national criminal history check, if any.
  1 17 The results of a criminal history check conducted pursuant to
  1 18 this section shall not be considered a public record under
  1 19 chapter 22.
  1 20    Sec. 2.  Section 422.11L, subsection 3, paragraph d, Code
  1 21 2016, is amended to read as follows:
  1 22    d.  (1)  A taxpayer must submit an application to the
  1 23 department for each separate and distinct solar installation.
  1 24 The application must be approved by the department in order to
  1 25 claim the tax credit. The application must be filed by May
  1 26 1 following the year of the installation of the solar energy
  1 27 system.
  1 28    (2)  The department shall accept and approve applications
  1 29 on a first=come, first=served basis until the maximum amount
  1 30 of tax credits that may be claimed pursuant to subsection 4
  1 31 is reached.  If for a tax year the aggregate amount of tax
  1 32 credits applied for exceeds the amount specified in subsection
  1 33 4, the department shall establish a wait list for tax credits.
  1 34 Valid applications filed by the taxpayer by May 1 following the
  1 35 year of the installation but not approved by the department
  2  1 shall be placed on a wait list in the order the applications
  2  2 were received and those applicants shall be given priority
  2  3 for having their applications approved in succeeding years.
  2  4 Placement on a wait list pursuant to this subparagraph shall
  2  5 not constitute a promise binding the state.  The availability
  2  6 of a tax credit and approval of a tax credit application
  2  7 pursuant to this section in a future year is contingent upon
  2  8 the availability of tax credits in that particular year.
  2  9    Sec. 3.  Section 422.11L, Code 2016, is amended by adding the
  2 10 following new subsection:
  2 11    NEW SUBSECTION.  6.  For purposes of this section, "Internal
  2 12 Revenue Code" means the Internal Revenue Code of 1954, prior
  2 13 to the date of its redesignation as the Internal Revenue Code
  2 14 of 1986 by the Tax Reform Act of 1986, or means the Internal
  2 15 Revenue Code of 1986 as amended to and including January 1,
  2 16 2016.
  2 17    Sec. 4.  Section 423.3, subsection 80, Code 2016, is amended
  2 18 to read as follows:
  2 19    80.  a.  For purposes of this subsection, "designated exempt
  2 20 entity" means an any of the following:
  2 21    (1)  An entity which is designated in section 423.4,
  2 22 subsection 1 or 6.
  2 23    (2)  An entity which is an instrumentality of a county or
  2 24 municipal government, including an agent of such entity, if
  2 25 the entity was created for the purpose of owning, including
  2 26 pursuant to a lease=purchase agreement, real property located
  2 27 within a reinvestment district established under chapter 15J. 
  2 28    b.  If Subject to the limitations in paragraph "c", if
  2 29  a contractor, subcontractor, or builder is to use building
  2 30 materials, supplies, and equipment in the performance of a
  2 31 construction contract with a designated exempt entity, the
  2 32 person shall purchase such items of tangible personal property
  2 33 without liability for the tax if such property will be used in
  2 34 the performance of the construction contract and a purchasing
  2 35 agent authorization letter and an exemption certificate, issued
  3  1 by the designated exempt entity, are presented to the retailer.
  3  2    c.  (1)  The With regard to a construction contract with
  3  3 a designated exempt entity described in paragraph "a",
  3  4 subparagraph (1), the sales price of building materials,
  3  5 supplies, or equipment is exempt from tax by this subsection
  3  6 only to the extent the building materials, supplies, or
  3  7 equipment are completely consumed in the performance of the
  3  8 construction contract with the designated exempt entity.
  3  9    (2)  With regard to a construction contract with a designated
  3 10 exempt entity described in paragraph "a", subparagraph (2),
  3 11 the sales price of building materials, supplies, or equipment
  3 12 is exempt from tax by this subsection only to the extent the
  3 13 building materials, supplies, or equipment are completely
  3 14 consumed in the performance of a construction contract to
  3 15 construct a project, as defined in section 15J.2, subsection
  3 16 10, which project has been approved by the economic development
  3 17 authority board in accordance with chapter 15J.
  3 18    c.  d.  Where Subject to the limitations in paragraph "c",
  3 19 where the owner, contractor, subcontractor, or builder is also
  3 20 a retailer holding a retail sales tax permit and transacting
  3 21 retail sales of building materials, supplies, and equipment,
  3 22 the tax shall not be due when materials are withdrawn from
  3 23 inventory for use in construction performed for a designated
  3 24 exempt entity if an exemption certificate is received from such
  3 25 entity.
  3 26    d.  e.  Tax Subject to the limitations in paragraph "c", tax
  3 27  shall not apply to tangible personal property purchased and
  3 28 consumed by a manufacturer as building materials, supplies, or
  3 29 equipment in the performance of a construction contract for a
  3 30 designated exempt entity, if a purchasing agent authorization
  3 31 letter and an exemption certificate are received from such
  3 32 entity and presented to a retailer.
  3 33    Sec. 5.  Section 429.2, subsection 2, paragraph c, Code 2016,
  3 34 is amended to read as follows:
  3 35    c.  The director of revenue shall consider all evidence and
  4  1 witnesses offered by the taxpayer and the department, including
  4  2 but not limited to evidence relating to the proper valuation of
  4  3 the property involved.
  4  4    Sec. 6.  Section 437A.15, subsection 7, paragraph b, Code
  4  5 2016, is amended to read as follows:
  4  6    b.  The task force shall study the effects of the replacement
  4  7 taxes under this chapter and chapter 437B on local taxing
  4  8 authorities, local taxing districts, consumers, and taxpayers
  4  9 through January 1, 2016 2019. If the task force recommends
  4 10 modifications to the replacement tax that will further the
  4 11 purposes of tax neutrality for local taxing authorities, local
  4 12 taxing districts, taxpayers, and consumers, consistent with the
  4 13 stated purposes of this chapter, the department of management
  4 14 shall transmit those recommendations to the general assembly.
  4 15    Sec. 7.  Section 437B.11, subsection 7, Code 2016, is amended
  4 16 to read as follows:
  4 17    7.  The utility replacement tax task force created in section
  4 18 437A.15 shall study the effects of the replacement tax on
  4 19 local taxing authorities, local taxing districts, consumers,
  4 20 and taxpayers through January 1, 2016 2019. If the task
  4 21 force recommends modifications to the replacement tax that
  4 22 will further the purposes of tax neutrality for local taxing
  4 23 authorities, local taxing districts, taxpayers, and consumers,
  4 24 consistent with the stated purposes of this chapter, the
  4 25 department of management shall transmit those recommendations
  4 26 to the general assembly.
  4 27    Sec. 8.  Section 476C.1, subsection 6, paragraph d, Code
  4 28 2016, is amended to read as follows:
  4 29    d.  Was initially placed into service on or after July 1,
  4 30 2005, and before January 1, 2017 2018.
  4 31    Sec. 9.  Section 476C.3, subsection 4, paragraph b,
  4 32 subparagraph (3), Code 2016, is amended to read as follows:
  4 33    (3)  (a)  Of the maximum amount of energy production capacity
  4 34 equivalent of all other facilities found eligible under this
  4 35 chapter, ten megawatts of nameplate generating capacity or
  5  1 energy production equivalent shall be reserved for solar energy
  5  2 conversion facilities with that meet all of the following
  5  3 requirements:
  5  4    (i)  The facility has a generating capacity of one and
  5  5 one=half megawatts or less.
  5  6    (ii)  The facility is owned, in whole or in part, directly
  5  7 or indirectly, or is contracted for, by utilities described in
  5  8 section 476C.1, subsection 6, paragraph "b", subparagraphs (4)
  5  9 and (5).
  5 10    (iii)  The facility is located in this state.
  5 11    (iv)  The facility meets the requirements of section 476C.1,
  5 12 subsection 6, paragraphs "d" through "f".
  5 13    (b)  A solar energy conversion facility that meets the
  5 14 requirements of and is found eligible under subparagraph
  5 15 division (a) shall be considered an "eligible renewable energy
  5 16 facility" for purposes of this chapter, notwithstanding any
  5 17 contrary provisions of section 476C.1, subsection 6.
  5 18    Sec. 10.  Section 476C.3, subsection 7, Code 2016, is amended
  5 19 to read as follows:
  5 20    7.  a. An owner meeting the requirements of section 476C.1,
  5 21 subsection 6, paragraph "b", shall not be an owner of more than
  5 22 two eligible renewable energy facilities. A person that has
  5 23 an equity interest equal to or greater than fifty=one percent
  5 24 in an eligible renewable energy facility shall not have an
  5 25 equity interest greater than ten percent in any other eligible
  5 26 renewable energy facility.  This paragraph "a" shall not apply
  5 27 to facilities described in section 476C.3, subsection 4,
  5 28 paragraph "b", subparagraph (3).
  5 29    b.  An entity described in section 476C.1, subsection 6,
  5 30 paragraph "b", subparagraphs (4) or (5), shall not have an
  5 31 ownership interest in more than four facilities described in
  5 32 section 476C.3, subsection 4, paragraph "b", subparagraph (3).
  5 33    Sec. 11.  Section 476C.5, Code 2016, is amended to read as
  5 34 follows:
  5 35    476C.5  Certificate issuance period.
  6  1 A producer or purchaser of renewable energy shall receive
  6  2 renewable energy tax credit certificates for a ten=year period
  6  3 for each eligible renewable energy facility under this chapter.
  6  4 The ten=year period for issuance of the tax credit certificates
  6  5 begins with the date the purchaser of renewable energy first
  6  6 purchases electricity, hydrogen fuel, methane gas or other
  6  7 biogas used to generate electricity, or heat for commercial
  6  8 purposes from the eligible renewable energy facility for
  6  9 which a tax credit is issued under this chapter, or the date
  6 10 the producer of the renewable energy first uses the energy
  6 11 produced by the eligible renewable energy facility for on=site
  6 12 consumption. Renewable energy tax credit certificates shall
  6 13 not be issued for renewable energy purchased or produced for
  6 14 on=site consumption after December 31, 2026 2027.
  6 15    Sec. 12.  SOLAR ENERGY SYSTEM TAX CREDIT
  6 16 APPLICATIONS.  Notwithstanding the provision in section
  6 17 422.11L, subsection 3, paragraph "d", which requires
  6 18 applications for the solar energy system tax credit to be
  6 19 filed by May 1 following the year of the installation, all the
  6 20 following shall apply:
  6 21    1.  Applications for the solar energy system tax credit
  6 22 filed after May 1, 2015, for solar energy systems installed
  6 23 during the 2014 calendar year, shall be eligible for approval
  6 24 under section 422.11L.  Such applications shall be accepted and
  6 25 approved on a first=come, first=served basis and shall first
  6 26 be eligible for approval for the tax year during which the
  6 27 application is received, but not before the tax year beginning
  6 28 January 1, 2016.
  6 29    2.  Applications for the solar energy system tax credit
  6 30 filed after May 1, 2016, for solar energy systems installed
  6 31 during the 2015 calendar year, shall be eligible for approval
  6 32 under section 422.11L.  Such applications shall be accepted and
  6 33 approved on a first=come, first=served basis and shall first
  6 34 be eligible for approval for the tax year during which the
  6 35 application is received, but not before the tax year beginning
  7  1 January 1, 2017.
  7  2    Sec. 13.  EFFECTIVE UPON ENACTMENT.  The section of this
  7  3 Act providing for the approval of solar energy tax credit
  7  4 applications filed after May 1 following the year of the
  7  5 installation for solar energy systems installed during the 2014
  7  6 and 2015 calendar years, being deemed of immediate importance,
  7  7 takes effect upon enactment.
  7  8    Sec. 14.  EFFECTIVE UPON ENACTMENT.  The following
  7  9 provision or provisions of this Act, being deemed of immediate
  7 10 importance, take effect upon enactment:
  7 11    1.  The section of this Act enacting section 421.48.
  7 12    2.  The section of this Act amending section 423.3,
  7 13 subsection 80.
  7 14    3.  The section of this Act amending section 429.2.
  7 15    4.  The section of this Act amending section 437A.15.
  7 16    5.  The section of this Act amending section 437B.11.
  7 17    6.  The section of this Act amending section 476C.1.
  7 18    7.  The sections of this Act amending section 476C.3.
  7 19    8.  The section of this Act amending section 476C.5.
  7 20    Sec. 15.  RETROACTIVE APPLICABILITY.  The following
  7 21 provision or provisions of this Act apply retroactively to
  7 22 January 1, 2015, for construction contracts entered into on or
  7 23 after that date.
  7 24    1.  The section of this Act amending section 423.3,
  7 25 subsection 80.
  7 26    Sec. 16.  RETROACTIVE APPLICABILITY.  The following
  7 27 provision or provisions of this Act apply retroactively to
  7 28 January 1, 2016:
  7 29    1.  The section of this Act amending section 437A.15.
  7 30    2.  The section of this Act amending section 437B.11.
  7 31    Sec. 17.  RETROACTIVE APPLICABILITY.  The following
  7 32 provision or provisions of this Act apply retroactively to
  7 33 January 1, 2015, for tax years beginning on or after that date:
  7 34    1.  The section of this Act enacting section 422.11L,
  7 35 subsection 6.
  8  1    Sec. 18.  RETROACTIVE APPLICABILITY.  The following
  8  2 provision or provisions of this Act apply retroactively to
  8  3 January 1, 2016, for tax years beginning on or after that date:
  8  4    1.  The section of this Act amending section 476C.1.
  8  5    2.  The section of this Act amending section 476C.5.
  8  6    Sec. 19.  RETROACTIVE APPLICABILITY.  The following
  8  7 provision or provisions of this Act apply retroactively to
  8  8 January 1, 2015, for tax years beginning on or after that date:
  8  9    1.  The sections of this Act amending section 476C.3.
  8 10    Sec. 20.  RETROACTIVE APPLICABILITY.  The following
  8 11 provision or provisions of this Act apply retroactively to
  8 12 applications for the renewable energy tax credit made on or
  8 13 after June 26, 2015:
  8 14    1.  The sections of this Act amending section 476C.3.
  8 15    Sec. 21.  RETROACTIVE APPLICABILITY.  The following
  8 16 provision or provisions of this Act apply retroactively to May
  8 17 22, 2015:
  8 18    1.  The section of this Act amending section 429.2.
  8 19    Sec. 22.  APPLICABILITY.  The section of this Act amending
  8 20 section 423.3, subsection 80, applies to purchases  made on or
  8 21 after the effective date of the section of this Act amending
  8 22 section 423.3, subsection 80.
  8 23                           EXPLANATION
  8 24 The inclusion of this explanation does not constitute agreement with
  8 25 the explanation's substance by the members of the general assembly.
  8 26    This bill relates to the administration of the tax and
  8 27 related laws by the department of revenue.
  8 28    BACKGROUND CHECKS.  The bill requires an applicant for
  8 29 employment with the department of revenue (department) at
  8 30 the time of application, or a contractor, vendor, employee,
  8 31 or any other individual performing work for the department
  8 32 to be subject to a national criminal history check through
  8 33 the federal bureau of investigation (FBI) at least once
  8 34 every 10 years.  The bill directs the department to provide
  8 35 fingerprints to the department of public safety for submission
  9  1 through the state criminal history repository to the FBI, and
  9  2 requires individuals to authorize release of the results to
  9  3 the department.  The department is required to pay the actual
  9  4 costs of the fingerprinting and the criminal history check.
  9  5 The bill provides that the results of a criminal history check
  9  6 are not considered a public record under Code chapter 22 (open
  9  7 records). This provision takes effect upon enactment.
  9  8    SOLAR ENERGY SYSTEM TAX CREDIT.  The bill amends the Iowa
  9  9 solar energy system tax credit in Code section 422.11L, which
  9 10 is provided for the installation of a solar energy system in
  9 11 an amount equal to certain percentages of related federal
  9 12 solar energy tax credits.  The bill requires that tax credit
  9 13 applications be accepted and approved by the department on a
  9 14 first=come, first=served basis until the maximum tax credit
  9 15 amount that may be claimed each tax year is reached.  If
  9 16 tax credit applications exceed that maximum amount for a tax
  9 17 year, the bill requires the department to establish a tax
  9 18 credit wait list, and applications that were filed by the
  9 19 May 1 deadline but not approved will be placed on the wait
  9 20 list and given priority for having their application approved
  9 21 in succeeding years.  The bill states that placement on the
  9 22 wait list does not constitute a promise binding the state,
  9 23 and the availability of a tax credit and approval of a tax
  9 24 credit application in a future year is contingent upon the
  9 25 availability of tax credits in that particular year.
  9 26    Notwithstanding the requirement under current law that
  9 27 solar energy system tax credit applications be filed by May
  9 28 1 following the year of the installation, the bill provides
  9 29 that applications filed after that deadline for solar energy
  9 30 systems installed during the 2014 or 2015 calendar years shall
  9 31 be eligible for approval.  Such applications are eligible for
  9 32 approval for the tax year during which the application is
  9 33 received, but not before tax year 2016 for installations made
  9 34 in 2014, and not before tax year 2017 for installations made in
  9 35 2015.  This provision takes effect upon enactment.
 10  1 The bill also defines "Internal Revenue Code" (IRC) for
 10  2 purposes of the Iowa solar energy system tax credit to mean
 10  3 the IRC in effect on January 1, 2016.  Under current law for
 10  4 purposes of the Iowa tax credit, IRC means that in effect on
 10  5 January 1, 2015.  This change has the effect of incorporating
 10  6 into the Iowa tax credit changes made by Congress in 2015
 10  7 to the related federal energy system credits for tax years
 10  8 beginning in 2017 or later.  In 2015, Congress extended the
 10  9 expiration date for several of the federal energy system
 10 10 tax credits upon which the Iowa tax credit is calculated
 10 11 (IRC {25D(a)(1), {25D(a)(2), and {48(a)(2)(A)(i)(II)) to
 10 12 January 1, 2022, from January 1, 2017.  This provision applies
 10 13 retroactively to January 1, 2015, for tax years beginning on
 10 14 or after that date.
 10 15    SALES AND USE TAXES.  A sales tax exemption is provided under
 10 16 current law to contractors, subcontractors, and builders for
 10 17 the purchase of building materials, supplies, and equipment
 10 18 completely consumed in the performance of a construction
 10 19 contract with a designated exempt entity.  The bill amends
 10 20 the definition of "designated exempt entity" to include an
 10 21 instrumentality of a county or municipal government, including
 10 22 an agent of such entity, if the entity was created for the
 10 23 purpose of owning, including pursuant to a lease=purchase
 10 24 agreement, real property located within a reinvestment district
 10 25 established under the Iowa Reinvestment Act in Code chapter
 10 26 15J.  The bill also provides that the purchase of building
 10 27 materials, supplies, and equipment by such designated exempt
 10 28 entities will only be exempt from the sales tax to the extent
 10 29 such property is completely consumed in the performance of a
 10 30 construction contract to construct a project that has been
 10 31 approved by the economic development board under the Iowa
 10 32 Reinvestment Act. The Iowa Reinvestment Act, in general,
 10 33 authorizes municipalities to establish reinvestment districts
 10 34 and receive remittances of specified amounts of state sales
 10 35 tax and state hotel and motel tax revenues collected in those
 11  1 districts for use in undertaking projects within the district.
 11  2    By operation of Code section 423.6, an item exempt from the
 11  3 imposition of the sales tax is also exempt from the use tax
 11  4 imposed in Code section 423.5.
 11  5    The sales and use tax provisions take effect upon enactment
 11  6 and apply to purchases made on or after that date, and apply
 11  7 retroactively to January 1, 2015, for construction contracts
 11  8 entered into on or after that date.
 11  9    CENTRALLY ASSESSED PROPERTY.  The bill adds the department
 11 10 of revenue to the list of parties for which the director of
 11 11 revenue shall consider all offered evidence and witnesses
 11 12 during an appeal of an assessment of certain property centrally
 11 13 assessed by the department of revenue for purposes of property
 11 14 taxation. This provision takes effect upon enactment and
 11 15 applies retroactively to May 22, 2015.
 11 16    UTILITY REPLACEMENT TAX TASK FORCE.  The bill extends the
 11 17 utility replacement tax task force to January 1, 2019, from
 11 18 January 1, 2016.  This task force was created to study the
 11 19 effects of the replacement taxes on electricity and natural gas
 11 20 providers and rate=regulated water utilities.  This provision
 11 21 takes effect upon enactment and applies retroactively to
 11 22 January 1, 2016.
 11 23    RENEWABLE ENERGY TAX CREDIT.  The bill extends to January
 11 24 1, 2018, from January 1, 2017, the date upon which a renewable
 11 25 energy facility must be placed in service in order to qualify
 11 26 for the renewable energy tax credit under Code chapter 476C,
 11 27 and extends to December 31, 2027, from December 31, 2026, the
 11 28 date on which renewable energy tax credit certificates shall no
 11 29 longer be issued. These renewable energy tax credit provisions
 11 30 take effect upon enactment and apply retroactively to January
 11 31 1, 2016, for tax years beginning on or after that date.
 11 32    For solar facilities with a generating capacity of 1.5
 11 33 megawatts or less (small solar facilities) that are owned
 11 34 or contracted for by electric cooperative associations,
 11 35 municipally owned utilities, public utilities subject to rate
 12  1 regulation, or electric cooperative associations (specified
 12  2 utilities), the bill removes the requirement that the specified
 12  3 utility must own at least 51 percent of the facility and
 12  4 instead provides that the specified utility must own the
 12  5 facility in whole or in part, directly or indirectly. Also
 12  6 under current law for purposes of qualifying for the tax
 12  7 credit, an owner of an eligible renewable energy facility shall
 12  8 not own more than two eligible renewable energy facilities,
 12  9 and a person that has an equity interest of at least 51
 12 10 percent in an eligible renewable energy facility shall not
 12 11 have an equity interest greater than 10 percent in any other
 12 12 eligible renewable energy facility.  The bill provides that
 12 13 these restrictions shall not apply to small solar facilities,
 12 14 but does provide that a specified utility shall not have an
 12 15 ownership interest in more than four small solar facilities.
 12 16 These renewable energy tax credit provisions take effect upon
 12 17 enactment and apply retroactively to January 1, 2015, for tax
 12 18 years beginning on or after that date, and apply retroactively
 12 19 to applications for the renewable energy tax credit made on or
 12 20 after June 26, 2015.
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