Bill Text: IA SF38 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act relating to state taxes by eliminating the individual income tax, increasing the sales and use tax rates, making conforming changes, and including effective date and applicability provisions.

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced - Dead) 2018-01-08 - Subcommittee reassigned: Feenstra, Bolkcom, and Carlin. S.J. 42. [SF38 Detail]

Download: Iowa-2017-SF38-Introduced.html

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Senate File 38 - Introduced




                                 SENATE FILE       
                                 BY  ZAUN

                                      A BILL FOR

  1 An Act relating to state taxes by eliminating the individual
  2    income tax, increasing the sales and use tax rates, making
  3    conforming changes, and including effective date and
  4    applicability provisions.
  5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
    TLSB 1216XS (5) 87
    mm/sc

PAG LIN



  1  1                           DIVISION I
  1  2               REPEAL OF THE INDIVIDUAL INCOME TAX
  1  3    Section 1.  Section 8.57E, subsection 2, Code 2017, is
  1  4 amended to read as follows:
  1  5    2.  Moneys in the taxpayers trust fund shall only be used
  1  6 pursuant to appropriations or transfers made by the general
  1  7 assembly for tax relief. During each fiscal year beginning on
  1  8 or after July 1, 2014, in which the balance of the taxpayers
  1  9 trust fund equals or exceeds thirty million dollars, there is
  1 10 transferred from the taxpayers trust fund to the Iowa taxpayers
  1 11 trust fund tax credit fund created in section 422.11E, the
  1 12 entire balance of the taxpayers trust fund to be used for the
  1 13 Iowa taxpayers trust fund tax credit in accordance with section
  1 14 422.11E, subsection 5.
  1 15    Sec. 2.  Section 15.293A, subsection 1, paragraph a, Code
  1 16 2017, is amended to read as follows:
  1 17    a.  A redevelopment tax credit shall be allowed against
  1 18 the taxes imposed in chapter 422, divisions II, III, and V,
  1 19 and in chapter 432, and against the moneys and credits tax
  1 20 imposed in section 533.329, for a portion of a taxpayer's
  1 21 equity investment, as provided in subsection 3, in a qualifying
  1 22 redevelopment project.
  1 23    Sec. 3.  Section 15.293A, subsection 1, paragraph b, Code
  1 24 2017, is amended by striking the paragraph.
  1 25    Sec. 4.  Section 15.293A, subsection 2, paragraphs c and f,
  1 26 Code 2017, are amended to read as follows:
  1 27    c.  The tax credit certificate, unless rescinded by the
  1 28 authority, shall be accepted by the department of revenue as
  1 29 payment for taxes imposed pursuant to chapter 422, divisions
  1 30 II, III, and V, and in chapter 432, and for the moneys and
  1 31 credits tax imposed in section 533.329, subject to any
  1 32 conditions or restrictions placed by the authority upon
  1 33 the face of the tax credit certificate and subject to the
  1 34 limitations of this section.
  1 35    f.  A tax credit shall not be claimed by a transferee
  2  1 under this section until a replacement tax credit certificate
  2  2 identifying the transferee as the proper holder has been
  2  3 issued. The transferee may use the amount of the tax credit
  2  4 transferred against the taxes imposed in chapter 422, divisions
  2  5 II, III, and V, and in chapter 432, and against the moneys and
  2  6 credits tax imposed in section 533.329, for any tax year the
  2  7 original transferor could have claimed the tax credit. Any
  2  8 consideration received for the transfer of the tax credit shall
  2  9 not be included as income under chapter 422, divisions II, III,
  2 10  and V.  Any consideration paid for the transfer of the tax
  2 11 credit shall not be deducted from income under chapter 422,
  2 12 divisions II, III, and V.
  2 13    Sec. 5.  Section 15.293A, subsection 4, Code 2017, is amended
  2 14 to read as follows:
  2 15    4.  For purposes of individual and corporate income taxes and
  2 16 the franchise tax, the increase in the basis of the redeveloped
  2 17 property that would otherwise result from the qualified
  2 18 redevelopment costs shall be reduced by the amount of the
  2 19 credit computed under this part.
  2 20    Sec. 6.  Section 15.319, subsection 2, Code 2017, is amended
  2 21 to read as follows:
  2 22    2.  The tax credit shall be allowed against taxes imposed
  2 23 under chapter 422, division II or III.
  2 24    Sec. 7.  Section 15.319, subsection 4, Code 2017, is amended
  2 25 by striking the subsection.
  2 26    Sec. 8.  Section 15.319, subsection 6, paragraph c, Code
  2 27 2017, is amended to read as follows:
  2 28    c.  The tax credit certificate, unless rescinded by the
  2 29 authority, shall be accepted by the department of revenue as
  2 30 payment for taxes imposed pursuant to chapter 422, divisions
  2 31 II and division III, subject to any conditions or restrictions
  2 32 placed by the authority upon the face of the tax credit
  2 33 certificate and subject to the limitations of the program.
  2 34    Sec. 9.  Section 15.333, subsection 1, Code 2017, is amended
  2 35 to read as follows:
  3  1    1.  An eligible business may claim a tax credit equal to a
  3  2 percentage of the new investment directly related to new jobs
  3  3 created or retained by the project. The tax credit shall be
  3  4 amortized equally over five calendar years. The tax credit
  3  5 shall be allowed against taxes imposed under chapter 422,
  3  6 division II, III, or V, and against the moneys and credits tax
  3  7 imposed in section 533.329. If the business is a partnership,
  3  8 S corporation, limited liability company, cooperative organized
  3  9 under chapter 501 and filing as a partnership for federal tax
  3 10 purposes, or estate or trust electing to have the income taxed
  3 11 directly to the individual, an individual may claim the tax
  3 12 credit allowed. The amount claimed by the individual shall
  3 13 be based upon the pro rata share of the individual's earnings
  3 14 of the partnership, S corporation, limited liability company,
  3 15 cooperative organized under chapter 501 and filing as a
  3 16 partnership for federal tax purposes, or estate or trust. The
  3 17 percentage shall be determined as provided in section 15.335A.
  3 18  Any tax credit in excess of the tax liability for the tax year
  3 19 may be credited to the tax liability for the following seven
  3 20 years or until depleted, whichever occurs first.
  3 21    Sec. 10.  Section 15.335, subsection 6, Code 2017, is amended
  3 22 by striking the subsection.
  3 23    Sec. 11.  Section 15.355, subsection 3, paragraph b, Code
  3 24 2017, is amended to read as follows:
  3 25    b.  The tax credit shall be allowed against the taxes imposed
  3 26 in chapter 422, divisions II, III, and V, and in chapter 432,
  3 27 and against the moneys and credits tax imposed in section
  3 28 533.329.
  3 29    Sec. 12.  Section 15.355, subsection 3, paragraph c, Code
  3 30 2017, is amended by striking the paragraph.
  3 31    Sec. 13.  Section 15.355, subsection 3, paragraph e,
  3 32 subparagraphs (3) and (6), Code 2017, are amended to read as
  3 33 follows:
  3 34    (3)  The tax credit certificate, unless rescinded by the
  3 35 authority, shall be accepted by the department of revenue as
  4  1 payment for taxes imposed pursuant to chapter 422, divisions
  4  2 II, III, and V, and in chapter 432, and for the moneys and
  4  3 credits tax imposed in section 533.329, subject to any
  4  4 conditions or restrictions placed by the authority upon
  4  5 the face of the tax credit certificate and subject to the
  4  6 limitations of this program.
  4  7    (6)  A tax credit shall not be claimed by a transferee
  4  8 under this section until a replacement tax credit certificate
  4  9 identifying the transferee as the proper holder has been
  4 10 issued. The transferee may use the amount of the tax credit
  4 11 transferred against the taxes imposed in chapter 422, divisions
  4 12 II, III, and V, and in chapter 432, and against the moneys and
  4 13 credits tax imposed in section 533.329, for any tax year the
  4 14 original transferor could have claimed the tax credit. Any
  4 15 consideration received for the transfer of the tax credit shall
  4 16 not be included as income under chapter 422, divisions II, III,
  4 17  and V.  Any consideration paid for the transfer of the tax
  4 18 credit shall not be deducted from income under chapter 422,
  4 19 divisions II, III, and V.
  4 20    Sec. 14.  Section 15.355, subsection 3, paragraph f, Code
  4 21 2017, is amended to read as follows:
  4 22    f.  For purposes of the individual and corporate income
  4 23 taxes and the franchise tax, the increase in the basis of the
  4 24 property that would otherwise result from the qualifying new
  4 25 investment shall be reduced by the amount of the tax credit
  4 26 computed under this subsection.
  4 27    Sec. 15.  Section 15A.7, subsection 1, Code 2017, is amended
  4 28 to read as follows:
  4 29    1.  That the project shall be administered in the same
  4 30 manner as a project under chapter 260E and that a supplemental
  4 31 new jobs credit from withholding in an amount equal to one
  4 32 and one=half percent of the gross wages paid by the employer
  4 33 pursuant to section 422.16, Code 2017, is authorized to fund
  4 34 the program services for the additional project.
  4 35    Sec. 16.  Section 15E.43, subsection 1, Code 2017, is amended
  5  1 to read as follows:
  5  2    1.  a.  For tax years beginning on or after January 1, 2015,
  5  3 a tax credit shall be allowed against the taxes imposed in
  5  4 chapter 422, divisions II, III, and V, and in chapter 432, and
  5  5 against the moneys and credits tax imposed in section 533.329,
  5  6 for a portion of a taxpayer's equity investment, as provided in
  5  7 subsection 2, in a qualifying business.
  5  8    b.  An individual may claim a tax credit under this section
  5  9  of a partnership, limited liability company, S corporation,
  5 10 estate, or trust electing to have income taxed directly to
  5 11 the individual. The amount claimed by the individual shall
  5 12 be based upon the pro rata share of the individual's earnings
  5 13 from the partnership, limited liability company, S corporation,
  5 14 estate, or trust.
  5 15    c.  b.  A tax credit shall be allowed only for an investment
  5 16 made in the form of cash to purchase equity in a qualifying
  5 17 business.
  5 18    d.  c.  For a tax credit claimed against the taxes imposed
  5 19 in chapter 422, division II, any tax credit in excess of the
  5 20 tax liability is refundable. In lieu of claiming a refund,
  5 21 the taxpayer may elect to have the overpayment shown on
  5 22 the taxpayer's final, completed return credited to the tax
  5 23 liability for the following tax year. For a tax credit claimed
  5 24 against the taxes imposed in chapter 422, divisions III and
  5 25 V, and in chapter 432, and against the moneys and credits tax
  5 26 imposed in section 533.329, any Any tax credit in excess of the
  5 27 taxpayer's liability for the tax year may be credited to the
  5 28 tax liability for the following three years or until depleted,
  5 29 whichever is earlier. A tax credit shall not be carried back
  5 30 to a tax year prior to the tax year in which the taxpayer
  5 31 redeems the tax credit.
  5 32    Sec. 17.  Section 15E.43, subsection 2, paragraph b, Code
  5 33 2017, is amended by striking the paragraph.
  5 34    Sec. 18.  Section 15E.44, subsection 4, Code 2017, is amended
  5 35 to read as follows:
  6  1    4.  After verifying the eligibility of a qualifying
  6  2 business, the authority shall issue a tax credit certificate
  6  3 to be included with the equity investor's tax return. The tax
  6  4 credit certificate shall contain the taxpayer's name, address,
  6  5 tax identification number, the amount of credit, the name of
  6  6 the qualifying business, and other information required by the
  6  7 department of revenue. The tax credit certificate, unless
  6  8 rescinded by the authority, shall be accepted by the department
  6  9 of revenue as payment for taxes imposed pursuant to chapter
  6 10 422, divisions II, III, and V, and in chapter 432, and for the
  6 11 moneys and credits tax imposed in section 533.329, subject to
  6 12 any conditions or restrictions placed by the authority upon
  6 13 the face of the tax credit certificate and subject to the
  6 14 limitations of section 15E.43.
  6 15    Sec. 19.  Section 15E.52, subsection 2, paragraph a, Code
  6 16 2017, is amended to read as follows:
  6 17    a.  A tax credit shall be allowed against the taxes imposed
  6 18 in chapter 422, divisions II, III, and V, and in chapter 432,
  6 19 and against the moneys and credits tax imposed in section
  6 20 533.329, for a portion of a taxpayer's equity investment in the
  6 21 form of cash in an innovation fund.
  6 22    Sec. 20.  Section 15E.52, subsection 2, paragraph b, Code
  6 23 2017, is amended by striking the paragraph.
  6 24    Sec. 21.  Section 15E.52, subsection 13, Code 2017, is
  6 25 amended to read as follows:
  6 26    13.  The transferee may use the amount of the tax credit
  6 27 transferred against the taxes imposed in chapter 422, divisions
  6 28 II, III, and V, and in chapter 432, and against the moneys and
  6 29 credits tax imposed in section 533.329, for any tax year the
  6 30 original transferor could have claimed the tax credit. Any
  6 31 consideration received for the transfer of the tax credit shall
  6 32 not be included as income under chapter 422, divisions II, III,
  6 33  and V.  Any consideration paid for the transfer of the tax
  6 34 credit shall not be deducted from income under chapter 422,
  6 35 divisions II, III, and V.
  7  1    Sec. 22.  Section 15E.62, subsection 8, Code 2017, is amended
  7  2 to read as follows:
  7  3    8.  "Tax credit" means a contingent tax credit issued
  7  4 pursuant to section 15E.66 that is available against tax
  7  5 liabilities imposed by chapter 422, divisions II, III, and
  7  6 V, and by chapter 432 and against the moneys and credits tax
  7  7 imposed by section 533.329.
  7  8    Sec. 23.  Section 15E.66, subsection 1, Code 2017, is amended
  7  9 to read as follows:
  7 10    1.  The board may issue certificates and related tax credits
  7 11 to designated investors which, if redeemed for the maximum
  7 12 possible amount, shall not exceed a total aggregate of sixty
  7 13 million dollars of tax credits. The certificates shall be
  7 14 issued contemporaneously with a commitment to invest in the
  7 15 Iowa fund of funds by a designated investor. A certificate
  7 16 issued by the board shall have a specific maturity date or
  7 17 dates designated by the board and shall be redeemable only in
  7 18 accordance with the contingencies reflected on the certificate
  7 19 or incorporated therein by reference. A certificate and the
  7 20 related tax credit shall be transferable by the designated
  7 21 investor. A tax credit shall not be claimed or redeemed except
  7 22 by a designated investor or transferee in accordance with the
  7 23 terms of a certificate from the board. A tax credit shall not
  7 24 be claimed for a tax year that begins earlier than the maturity
  7 25 date or dates stated on the certificate. An individual may
  7 26 claim the credit of a partnership, limited liability company,
  7 27 S corporation, estate, or trust electing to have the income
  7 28 taxed directly to the individual. The amount claimed by the
  7 29 individual shall be based upon the pro rata share of the
  7 30 individual's earnings from the partnership, limited liability
  7 31 company, S corporation, estate, or trust. Any tax credit in
  7 32 excess of the taxpayer's tax liability for the tax year may be
  7 33 credited to the tax liability for the following seven years, or
  7 34 until depleted, whichever is earlier.
  7 35    Sec. 24.  Section 15E.305, subsection 1, Code 2017, is
  8  1 amended to read as follows:
  8  2    1.  For tax years beginning on or after January 1, 2003,
  8  3 a tax credit shall be allowed against the taxes imposed in
  8  4 chapter 422, divisions II, III, and V, and in chapter 432, and
  8  5 against the moneys and credits tax imposed in section 533.329
  8  6 equal to twenty=five percent of a taxpayer's endowment gift to
  8  7 an endow Iowa qualified community foundation. An individual
  8  8 may claim a tax credit under this section of a partnership,
  8  9 limited liability company, S corporation, estate, or trust
  8 10 electing to have income taxed directly to the individual. The
  8 11 amount claimed by the individual shall be based upon the pro
  8 12 rata share of the individual's earnings from the partnership,
  8 13 limited liability company, S corporation, estate, or trust. A
  8 14 tax credit shall be allowed only for an endowment gift made to
  8 15 an endow Iowa qualified community foundation for a permanent
  8 16 endowment fund established to benefit a charitable cause in
  8 17 this state. The amount of the endowment gift for which the
  8 18 tax credit is claimed shall not be deductible in determining
  8 19 taxable income for state income tax purposes. Any tax credit
  8 20 in excess of the taxpayer's tax liability for the tax year may
  8 21 be credited to the tax liability for the following five years
  8 22 or until depleted, whichever occurs first. A tax credit shall
  8 23 not be carried back to a tax year prior to the tax year in which
  8 24 the taxpayer claims the tax credit.
  8 25    Sec. 25.  Section 16.64, subsection 2, Code 2017, is amended
  8 26 to read as follows:
  8 27    2.  Bonds and notes issued by the authority for purposes of
  8 28 financing the beginning farmer loan program provided in section
  8 29 16.75 are exempt from taxation by the state, and interest
  8 30 earned on the bonds and notes is deductible in determining
  8 31 net income for purposes of the state individual and corporate
  8 32 income tax under divisions II and division III of chapter 422.
  8 33    Sec. 26.  Section 16.80, subsection 1, Code 2017, is amended
  8 34 to read as follows:
  8 35    1.  An agricultural assets transfer tax credit is allowed
  9  1 under this section. The tax credit is allowed against the
  9  2 taxes imposed in chapter 422, division II, as provided in
  9  3 section 422.11M, and in chapter 422, division III, as provided
  9  4 in section 422.33, to facilitate the transfer of agricultural
  9  5 assets from a taxpayer to a qualified beginning farmer.
  9  6    Sec. 27.  Section 16.80, subsection 3, Code 2017, is amended
  9  7 by striking the subsection.
  9  8    Sec. 28.  Section 16.80, subsection 6, Code 2017, is amended
  9  9 to read as follows:
  9 10    6.  A tax credit in excess of the taxpayer's liability
  9 11 for the tax year may be credited to the tax liability for
  9 12 the following ten tax years or until depleted, whichever is
  9 13 earlier. A tax credit shall not be carried back to a tax year
  9 14 prior to the tax year in which the taxpayer redeems the tax
  9 15 credit. A tax credit shall not be transferable to any other
  9 16 person other than the taxpayer's estate or trust upon the
  9 17 taxpayer's death.
  9 18    Sec. 29.  Section 16.81, subsection 1, Code 2017, is amended
  9 19 to read as follows:
  9 20    1.  A custom farming contract tax credit is allowed under
  9 21 this section. The tax credit is allowed against the taxes
  9 22 imposed in chapter 422, division II, as provided in section
  9 23 422.11M, and in chapter 422, division III, as provided in
  9 24 section 422.33, to encourage taxpayers who are considering
  9 25 custom farming agricultural land located in this state to
  9 26 negotiate with qualified beginning farmers.
  9 27    Sec. 30.  Section 16.81, subsection 3, Code 2017, is amended
  9 28 by striking the subsection.
  9 29    Sec. 31.  Section 16.81, subsection 9, Code 2017, is amended
  9 30 to read as follows:
  9 31    9.  A custom farming contract tax credit in excess of the
  9 32 taxpayer's liability for the tax year may be credited to
  9 33 the tax liability for the following ten tax years or until
  9 34 depleted, whichever is earlier. A tax credit shall not be
  9 35 carried back to a tax year prior to the tax year in which the
 10  1 taxpayer redeems the tax credit. A tax credit shall not be
 10  2 transferable to any other person other than the taxpayer's
 10  3 estate or trust upon the taxpayer's death.
 10  4    Sec. 32.  Section 28A.24, Code 2017, is amended to read as
 10  5 follows:
 10  6    28A.24  Exemption from taxation.
 10  7    Since an authority is performing essential governmental
 10  8 functions, an authority is not required to pay any taxes or
 10  9 assessments of any kind or nature upon any property required
 10 10 or used by it for its purposes, or any rates, fees, rentals,
 10 11 receipts, or incomes at any time received by it, and the
 10 12 bonds issued by an authority, their transfer, and the income,
 10 13 including any profits made on the sale of the bonds, is
 10 14 deductible in determining net income for the purposes of the
 10 15 state individual and corporate income tax under chapter 422,
 10 16 divisions II and division III, and shall not be taxed by any
 10 17 political subdivision of this state.
 10 18    Sec. 33.  Section 29C.24, subsection 3, paragraph a,
 10 19 subparagraph (3), Code 2017, is amended to read as follows:
 10 20    (3)  The imposition of income taxes under chapter 422,
 10 21 divisions II and division III, including the requirement to
 10 22 file tax returns under sections 422.13 through 422.15 or
 10 23  section 422.36, as applicable, and including the requirement
 10 24 to withhold and remit income tax from out=of=state employees
 10 25 under section 422.16. In addition, the performance of disaster
 10 26 or emergency=related work during a disaster response period
 10 27 by an out=of=state business or out=of=state employee shall
 10 28 not require an out=of=state business to be included in a
 10 29 consolidated return under section 422.37, and shall not
 10 30 increase the amount of net income of the out=of=state business
 10 31 allocated and apportioned to the state under section 422.8 or
 10 32  422.33, as applicable.
 10 33    Sec. 34.  Section 29C.24, subsection 3, paragraph b,
 10 34 subparagraph (2), Code 2017, is amended by striking the
 10 35 subparagraph.
 11  1    Sec. 35.  Section 35A.13, subsection 2, paragraph b, Code
 11  2 2017, is amended to read as follows:
 11  3    b.  Moneys credited to the fund pursuant to an income tax
 11  4 checkoff provided in chapter 422, division II, Code 2017, if
 11  5 applicable.
 11  6    Sec. 36.  Section 68A.102, subsection 21, Code 2017, is
 11  7 amended by striking the subsection.
 11  8    Sec. 37.  Section 85.61, subsection 6, paragraph b, Code
 11  9 2017, is amended by striking the paragraph.
 11 10    Sec. 38.  Section 96.3, subsection 4, unnumbered paragraph
 11 11 2, Code 2017, is amended to read as follows:
 11 12    The maximum weekly benefit amount, if not a multiple of one
 11 13 dollar, shall be rounded to the lower multiple of one dollar.
 11 14 However, until such time as sixty=five percent of the statewide
 11 15 average weekly wage exceeds one hundred ninety dollars, the
 11 16 maximum weekly benefit amounts shall be determined using the
 11 17 statewide average weekly wage computed on the basis of wages
 11 18 reported for calendar year 1981. As used in this section
 11 19 "dependent" means dependent as defined in section 422.12,
 11 20 subsection 1, paragraph "a" has the same meaning as provided by
 11 21 the Internal Revenue Code, as if the individual claimant was
 11 22 a taxpayer, except that an individual claimant's nonworking
 11 23 spouse shall be deemed to be a dependent under this section.
 11 24 "Nonworking spouse" means a spouse who does not earn more than
 11 25 one hundred twenty dollars in gross wages in one week.
 11 26    Sec. 39.  Section 99B.8, Code 2017, is amended to read as
 11 27 follows:
 11 28    99B.8  Tax on prizes.
 11 29    All prizes awarded pursuant to a gambling activity under
 11 30 this chapter are Iowa earned income and are subject to state
 11 31 and federal income tax laws. A person conducting a game of
 11 32 skill, game of chance, bingo, or a raffle shall deduct state
 11 33 income taxes, pursuant to section 422.16, subsection 1, from a
 11 34 cash prize awarded to an individual. An amount deducted from
 11 35 the prize for payment of a state tax shall be remitted to the
 12  1 department of revenue on behalf of the prize winner.
 12  2    Sec. 40.  Section 99D.16, Code 2017, is amended to read as
 12  3 follows:
 12  4    99D.16  Withholding tax on winnings.
 12  5    All winnings provided in section 99D.11 are Iowa earned
 12  6 income and are subject to state and federal income tax laws.
 12  7 An amount deducted from winnings for payment of the state tax,
 12  8 pursuant to section 422.16, subsection 1, shall be remitted to
 12  9 the department of revenue on behalf of the individual who won
 12 10 the wager.
 12 11    Sec. 41.  Section 99F.18, Code 2017, is amended to read as
 12 12 follows:
 12 13    99F.18  Tax on winnings.
 12 14    All winnings derived from slot machines operated pursuant to
 12 15 this chapter are Iowa earned income and are subject to state
 12 16 and federal income tax laws. An amount deducted from winnings
 12 17 for payment of the state tax, pursuant to section 422.16,
 12 18 subsection 1, shall be remitted to the department of revenue
 12 19 on behalf of the winner.
 12 20    Sec. 42.  Section 99G.31, subsection 2, paragraph i, Code
 12 21 2017, is amended to read as follows:
 12 22    i.  The proceeds of any lottery prize shall be subject to
 12 23 state and federal income tax laws. An amount deducted from the
 12 24 prize for payment of a state tax, pursuant to section 422.16,
 12 25 subsection 1, shall be transferred by the authority to the
 12 26 department of revenue on behalf of the prize winner.
 12 27    Sec. 43.  Section 100B.13, subsection 2, paragraph a, Code
 12 28 2017, is amended to read as follows:
 12 29    a.  Moneys credited to the fund pursuant to an income tax
 12 30 checkoff provided in chapter 422, division II, Code 2017, if
 12 31 applicable.
 12 32    Sec. 44.  Section 190B.103, Code 2017, is amended to read as
 12 33 follows:
 12 34    190B.103  From farm to food donation tax credit.
 12 35    A from farm to food donation tax credit is allowed against
 13  1 the taxes imposed in chapter 422, divisions II and division
 13  2  III, as provided in this chapter.
 13  3    Sec. 45.  Section 216B.3, subsection 15, Code 2017, is
 13  4 amended to read as follows:
 13  5    15.  Develop a plan to provide telephone yellow pages
 13  6 information without charge to persons declared to be blind
 13  7 under the standards in section 422.12, subsection 2, paragraph
 13  8 "a", subparagraph (5), Code 2017. The department may apply for
 13  9 federal funds to support the service. The program shall be
 13 10 limited in scope by the availability of funds.
 13 11    Sec. 46.  Section 217.39, Code 2017, is amended to read as
 13 12 follows:
 13 13    217.39  Persecuted victims of World War II == reparations ==
 13 14 heirs.
 13 15    Notwithstanding any other law of this state, payments paid
 13 16 to and income from lost property of a victim of persecution for
 13 17 racial, ethnic, or religious reasons by Nazi Germany or any
 13 18 other Axis regime or as an heir of such victim which is exempt
 13 19 from state income tax as provided in section 422.7, subsection
 13 20 35, Code 2017, shall not be considered as income or an asset
 13 21 for determining the eligibility for state or local government
 13 22 benefit or entitlement programs. The proceeds are not subject
 13 23 to recoupment for the receipt of governmental benefits or
 13 24 entitlements, and liens, except liens for child support, are
 13 25 not enforceable against these sums for any reason.
 13 26    Sec. 47.  Section 235A.2, subsection 1, Code 2017, is amended
 13 27 to read as follows:
 13 28    1.  A child abuse prevention program fund is created in
 13 29 the state treasury under the control of the department of
 13 30 human services. The fund is composed of moneys appropriated
 13 31 or available to and obtained or accepted by the treasurer of
 13 32 state for deposit in the fund. The fund shall include moneys
 13 33 transferred to the fund pursuant to an income tax checkoff
 13 34 provided in chapter 422, division II, Code 2017, if applicable.
 13 35 All interest earned on moneys in the fund shall be credited to
 14  1 and remain in the fund. Section 8.33 does not apply to moneys
 14  2 in the fund.
 14  3    Sec. 48.  Section 257.19, Code 2017, is amended to read as
 14  4 follows:
 14  5    257.19  Instructional support funding.
 14  6    1.  The additional funding for the instructional support
 14  7 program for a budget year is limited to an amount not exceeding
 14  8 ten percent of the total of regular program district cost
 14  9 for the budget year and moneys received under section 257.14
 14 10 as a budget adjustment for the budget year. Moneys received
 14 11 by a district for the instructional support program are
 14 12 miscellaneous income and may be used for any general fund
 14 13 purpose. However, moneys received by a district for the
 14 14 instructional support program shall not be used as, or in a
 14 15 manner which has the effect of, supplanting funds authorized to
 14 16 be received under sections 257.41, 257.46, 298.2, and 298.4,
 14 17 or to cover any deficiencies in funding for special education
 14 18 instructional services resulting from the application of the
 14 19 special education weighting plan under section 256B.9.
 14 20    2.  Certification of a board's intent to participate for
 14 21 a budget year, the method of funding, and the amount to be
 14 22 raised shall be made to the department of management not later
 14 23 than April 15 of the base year. Funding for the instructional
 14 24 support program shall be obtained from instructional support
 14 25 state aid and from local funding using either an instructional
 14 26 support property tax or a combination of an instructional
 14 27 support property tax and an instructional support income
 14 28 surtax.
 14 29    The board of directors shall determine whether the
 14 30 instructional support property tax or the combination of the
 14 31 instructional support property tax and instructional support
 14 32 income surtax shall be used for the local funding. Subject to
 14 33 the limitation specified in section 298.14, if the board elects
 14 34 to use the combination of the instructional support property
 14 35 tax and instructional support income surtax, for each budget
 15  1 year the board shall determine the percent of income surtax
 15  2 that will be imposed, expressed as full percentage points, not
 15  3 to exceed twenty percent.
 15  4    Sec. 49.  Section 257.21, Code 2017, is amended to read as
 15  5 follows:
 15  6    257.21  Computation of instructional support amount.
 15  7    1.  The department of management shall establish the amount
 15  8 of instructional support property tax to be levied and the
 15  9 amount of instructional support income surtax to be imposed
 15 10  by a district in accordance with the decision of the board
 15 11 under section 257.19 for each school year for which the
 15 12 instructional support program is authorized. The department
 15 13 of management shall determine these amounts based upon the
 15 14 most recent figures available for the district's valuation of
 15 15 taxable property, individual state income tax paid, and budget
 15 16 enrollment in the district, and shall certify to the district's
 15 17 county auditor the amount of instructional support property
 15 18 tax, and to the director of revenue the amount of instructional
 15 19 support income surtax to be imposed if an instructional support
 15 20 income surtax is to be imposed levied.
 15 21    2.  The instructional support income surtax shall be imposed
 15 22 on the state individual income tax for the calendar year during
 15 23 which the school's budget year begins, or for a taxpayer's
 15 24 fiscal year ending during the second half of that calendar year
 15 25 and after the date the board adopts a resolution to participate
 15 26 in the program or the first half of the succeeding calendar
 15 27 year, and shall be imposed on all individuals residing in the
 15 28 school district on the last day of the applicable tax year.
 15 29 As used in this section, "state individual income tax" means
 15 30 the taxes computed under section 422.5, less the amounts of
 15 31 nonrefundable credits allowed under chapter 422, division II,
 15 32 except for the Iowa taxpayers trust fund tax credit allowed
 15 33 under section 422.11E.
 15 34    Sec. 50.  Section 257.29, subsections 3 and 4, Code 2017, are
 15 35 amended to read as follows:
 16  1    3.  The educational improvement program shall be funded
 16  2 by either an educational improvement property tax or by a
 16  3 combination of an educational improvement property tax and an
 16  4 educational improvement income surtax. The method of raising
 16  5 the educational improvement moneys shall be determined by the
 16  6 board. Subject to the limitation in section 298.14, if the
 16  7 board uses a combination of an educational improvement property
 16  8 tax and an educational improvement income surtax, the board
 16  9 shall determine the percent of income surtax to be imposed,
 16 10 expressed as full percentage points, not to exceed twenty
 16 11 percent.
 16 12    4.  The department of management shall establish the amount
 16 13 of the educational improvement property tax to be levied or
 16 14 the amount of the combination of the educational improvement
 16 15 property tax to be levied and the amount of the school district
 16 16 income surtax to be imposed for each school year that the
 16 17 educational improvement amount is authorized. The educational
 16 18 improvement property tax and income surtax, if an income
 16 19 surtax is imposed, shall be levied and imposed, collected,
 16 20 and paid to the school district in the manner provided for
 16 21 the instructional support program in sections section 257.21
 16 22 through 257.26. Moneys received by a school district under the
 16 23 educational improvement program are miscellaneous income.
 16 24    Sec. 51.  Section 260E.2, subsection 6, Code 2017, is amended
 16 25 to read as follows:
 16 26    6.  "Employee" means the person employed in a new job.
 16 27 "Employee" does not include a person who would not be subject
 16 28 to the withholding of Iowa income pursuant to a reciprocal
 16 29 agreement under section 422.8, subsection 5, Code 2017.
 16 30    Sec. 52.  Section 260E.5, subsections 2 and 6, Code 2017, are
 16 31 amended to read as follows:
 16 32    2.  An amount equal to one and one=half percent of the gross
 16 33 wages paid by the employer to each employee participating in a
 16 34 project shall be credited from the payment made by an employer
 16 35 pursuant to section 422.16, Code 2017. If the amount of the
 17  1 withholding by the employer is less than one and one=half
 17  2 percent of the gross wages paid to the employees covered by the
 17  3 agreement, then the employer shall receive a credit against
 17  4 other withholding taxes due by the employer. The employer
 17  5 shall remit the amount of the credit quarterly in the same
 17  6 manner as withholding payments are reported to the department
 17  7 of revenue, to the community college to be allocated to and
 17  8 when collected paid into a special fund of the community
 17  9 college to pay the principal of and interest on certificates
 17 10 issued by the community college to finance or refinance, in
 17 11 whole or in part, the project. When the principal and interest
 17 12 on the certificates have been paid, the employer credits shall
 17 13 cease and any money received after the certificates have
 17 14 been paid shall be remitted to the treasurer of state to be
 17 15 deposited in the general fund of the state.
 17 16    6.  An employee participating in a project will receive full
 17 17 credit for the amount withheld as provided in section 422.16,
 17 18 Code 2017.
 17 19    Sec. 53.  Section 260G.4A, subsections 2 and 5, Code 2017,
 17 20 are amended to read as follows:
 17 21    2.  Eligibility for program job credits shall be based on
 17 22 certification of program job positions and program job wages
 17 23 by the employer at the time established in the agreement. An
 17 24 amount up to ten percent of the gross program job wage as
 17 25 certified by the employer in the agreement shall be credited
 17 26 from the total payment made by an employer pursuant to section
 17 27 422.16, Code 2017. The employer shall receive a credit against
 17 28 all withholding taxes due by the employer regardless of whether
 17 29 or not the withholding from the employer of current program
 17 30 job wages is less than ten percent. The employer shall remit
 17 31 the amount of the credit quarterly in the same manner as
 17 32 withholding payments are reported to the department of revenue,
 17 33 to the community college to be allocated to and when collected
 17 34 paid into a special fund of the community college to pay, in
 17 35 part, the program costs. When the program costs have been
 18  1 paid, the employer credits shall cease and any moneys received
 18  2 after the program costs have been paid shall be remitted to the
 18  3 treasurer of state to be deposited in the general fund of the
 18  4 state.
 18  5    5.  Employees from an employer participating in an agreement
 18  6 shall receive full credit for the amount withheld as provided
 18  7 in section 422.16, Code 2017.
 18  8    Sec. 54.  Section 279.63, subsection 2, paragraph a, Code
 18  9 2017, is amended to read as follows:
 18 10    a.  All property tax levies, income surtaxes, and local
 18 11 option sales taxes in place in the school district, listed by
 18 12 type of levy, rate, amount, duration, and notification of the
 18 13 maximum rate and amount limitations permitted by statute.
 18 14    Sec. 55.  Section 298.2, subsection 1, paragraph a, Code
 18 15 2017, is amended to read as follows:
 18 16    a.  A physical plant and equipment levy of not exceeding
 18 17 one dollar and sixty=seven cents per thousand dollars of
 18 18 assessed valuation in the district is established except as
 18 19 otherwise provided in this subsection. The physical plant
 18 20 and equipment levy consists of the regular physical plant
 18 21 and equipment levy of not exceeding thirty=three cents per
 18 22 thousand dollars of assessed valuation in the district and
 18 23 a voter=approved physical plant and equipment levy of not
 18 24 exceeding one dollar and thirty=four cents per thousand
 18 25 dollars of assessed valuation in the district. However, the
 18 26 voter=approved physical plant and equipment levy may consist
 18 27 of a combination of a physical plant and equipment property
 18 28 tax levy and a physical plant and equipment income surtax as
 18 29 provided in subsection 4 with the maximum amount levied and
 18 30 imposed limited to an amount that could be raised by a one
 18 31 dollar and thirty=four cent property tax levy.
 18 32    Sec. 56.  Section 298.2, subsection 4, Code 2017, is amended
 18 33 to read as follows:
 18 34    4.  a.  The board may on its own motion, and upon the
 18 35 written request of not less than one hundred eligible electors
 19  1 or thirty percent of the number of eligible electors voting
 19  2 at the last regular school election, whichever is greater,
 19  3 shall, direct the county commissioner of elections to provide
 19  4 for submitting the proposition of levying the voter=approved
 19  5 physical plant and equipment levy for a period of time
 19  6 authorized by the voters at the election, not to exceed ten
 19  7 years. The election shall be held on a date specified in
 19  8 section 39.2, subsection 4, paragraph "c". The proposition is
 19  9 adopted if a majority of those voting on the proposition at the
 19 10 election approves it. The voter=approved physical plant and
 19 11 equipment levy shall be funded either by a physical plant and
 19 12 equipment property tax or by a combination of a physical plant
 19 13 and equipment property tax and a physical plant and equipment
 19 14 income surtax, as determined by the board. However, if the
 19 15 board intends to enter into a rental or lease arrangement under
 19 16 section 279.26, or intends to enter into a loan agreement under
 19 17 section 297.36, only a property tax shall be levied for those
 19 18 purposes. Subject to the limitations of section 298.14, if
 19 19 the board uses a combination of a physical plant and equipment
 19 20 property tax and a physical plant and equipment surtax, for
 19 21 each fiscal year the board shall determine the percent of
 19 22 income surtax to be imposed expressed as full percentage
 19 23 points, not to exceed twenty percent.
 19 24    b.  If a combination of a property tax and income surtax
 19 25 is used, by April 15 of the previous school year, the board
 19 26 shall certify the percent of the income surtax to be imposed
 19 27 and the amount to be raised to the department of management
 19 28 and the department of management shall establish the rate of
 19 29 the property tax and income surtax for the school year. The
 19 30 physical plant and equipment property tax and income surtax
 19 31  shall be levied or imposed, collected, and paid to the school
 19 32 district in the manner provided for the instructional support
 19 33 program in sections section 257.21 through 257.26.
 19 34    Sec. 57.  Section 403.19A, subsection 3, paragraphs b and i,
 19 35 Code 2017, are amended to read as follows:
 20  1    b.  An amount equal to three percent of the gross wages paid
 20  2 by an employer to each employee under a withholding agreement
 20  3 shall be credited from the payment made by the employer
 20  4 pursuant to section 422.16, Code 2017. If the amount of the
 20  5 withholding by the employer is less than three percent of the
 20  6 gross wages paid to the employees covered by the withholding
 20  7 agreement, the employer shall receive a credit against other
 20  8 withholding taxes due by the employer or may carry the credit
 20  9 forward for up to ten years or until depleted, whichever is
 20 10 the earlier. The employer shall remit the amount of the
 20 11 credit quarterly, in the same manner as withholding payments
 20 12 are reported to the department of revenue, to the pilot
 20 13 project city to be allocated to and when collected paid into
 20 14 a designated withholding project fund for the project. All
 20 15 amounts so deposited shall be used or pledged by the pilot
 20 16 project city for a project related to the employer pursuant to
 20 17 the withholding agreement.
 20 18    i.  An employee whose wages are subject to a withholding
 20 19 agreement shall receive full credit for the amount withheld as
 20 20 provided in section 422.16, Code 2017.
 20 21    Sec. 58.  Section 404A.2, subsection 2, Code 2017, is amended
 20 22 to read as follows:
 20 23    2.  The tax credit shall be allowed against the taxes imposed
 20 24 in chapter 422, divisions II, III, and V, and in chapter
 20 25 432. An individual may claim a tax credit under this section
 20 26  of a partnership, limited liability company, S corporation,
 20 27 estate, or trust electing to have income taxed directly to the
 20 28 individual. For an individual claiming a tax credit of an
 20 29 estate or trust, the amount claimed by the individual shall be
 20 30 based upon the pro rata share of the individual's earnings from
 20 31 the estate or trust. For an individual claiming a tax credit
 20 32 of a partnership, limited liability company, or S corporation,
 20 33 the amount claimed by the partner, member, or shareholder,
 20 34 respectively, shall be based upon the amounts designated by
 20 35 the eligible partnership, S corporation, or limited liability
 21  1 company, as applicable.
 21  2    Sec. 59.  Section 404A.2, subsection 3, paragraph c, Code
 21  3 2017, is amended to read as follows:
 21  4    c.  A tax credit shall not be claimed by a transferee
 21  5 under this section until a replacement tax credit certificate
 21  6 identifying the transferee as the proper holder has been
 21  7 issued. The transferee may use the amount of the tax credit
 21  8 transferred against the taxes imposed in chapter 422, divisions
 21  9 II, III, and V, and in chapter 432, for any tax year the
 21 10 original transferor could have claimed the tax credit. Any
 21 11 consideration received for the transfer of the tax credit shall
 21 12 not be included as income under chapter 422, divisions II, III,
 21 13  and V.  Any consideration paid for the transfer of the tax
 21 14 credit shall not be deducted from income under chapter 422,
 21 15 divisions II, III, and V.
 21 16    Sec. 60.  Section 404A.2, subsection 5, paragraph c, Code
 21 17 2017, is amended to read as follows:
 21 18    c.  The tax credit certificate, unless rescinded by the
 21 19 authority, shall be accepted by the department of revenue
 21 20 as payment for taxes imposed in chapter 422, divisions II,
 21 21  III, and V, and in chapter 432, subject to any conditions
 21 22 or restrictions placed by the authority or the department of
 21 23 revenue upon the face of the tax credit certificate and subject
 21 24 to the limitations of this program.
 21 25    Sec. 61.  Section 404A.2, subsection 6, Code 2017, is amended
 21 26 to read as follows:
 21 27    6.  For purposes of the individual and corporate income taxes
 21 28  tax and the franchise tax, the increase in the basis of the
 21 29 rehabilitated property that would otherwise result from the
 21 30 qualified rehabilitation expenditures shall be reduced by the
 21 31 amount of the credit computed under this section.
 21 32    Sec. 62.  Section 422.1, subsection 2, Code 2017, is amended
 21 33 to read as follows:
 21 34    2.  Division II              Personal net income tax Provisions
 21 35 related to the business tax on corporations.
 22  1    Sec. 63.  Section 422.11L, subsection 1, unnumbered
 22  2 paragraph 1, Code 2017, is amended to read as follows:
 22  3    The taxes imposed under this division, less the credits
 22  4 allowed under section 422.12, III shall be reduced by a solar
 22  5 energy system tax credit equal to the sum of the following:
 22  6    Sec. 64.  Section 422.11L, subsection 3, paragraph a, Code
 22  7 2017, is amended by striking the paragraph.
 22  8    Sec. 65.  Section 422.11N, subsection 3, unnumbered
 22  9 paragraph 1, Code 2017, is amended to read as follows:
 22 10    The taxes imposed under this division, less the credits
 22 11 allowed under section 422.12, III shall be reduced by an
 22 12 ethanol promotion tax credit for each tax year that the
 22 13 taxpayer is eligible to claim the tax credit under this
 22 14 section. In order to be eligible, all of the following must
 22 15 apply:
 22 16    Sec. 66.  Section 422.11N, subsection 9, Code 2017, is
 22 17 amended by striking the subsection.
 22 18    Sec. 67.  Section 422.11O, subsection 2, unnumbered
 22 19 paragraph 1, Code 2017, is amended to read as follows:
 22 20    The taxes imposed under this division, less the credits
 22 21 allowed under section 422.12, III shall be reduced by an
 22 22 E=85 gasoline promotion tax credit for each tax year that
 22 23 the taxpayer is eligible to claim the tax credit under this
 22 24 subsection.
 22 25    Sec. 68.  Section 422.11O, subsection 7, Code 2017, is
 22 26 amended by striking the subsection.
 22 27    Sec. 69.  Section 422.11P, subsection 3, unnumbered
 22 28 paragraph 1, Code 2017, is amended to read as follows:
 22 29    The taxes imposed under this division, less the credits
 22 30 allowed under section 422.12, III shall be reduced by a
 22 31 biodiesel blended fuel tax credit for each tax year that
 22 32 the taxpayer is eligible to claim a tax credit under this
 22 33 subsection.
 22 34    Sec. 70.  Section 422.11P, subsection 7, Code 2017, is
 22 35 amended by striking the subsection.
 23  1    Sec. 71.  Section 422.11S, subsection 1, Code 2017, is
 23  2 amended to read as follows:
 23  3    1.  The taxes imposed under this division, less the credits
 23  4 allowed under section 422.12, III shall be reduced by a
 23  5 school tuition organization tax credit equal to sixty=five
 23  6 percent of the amount of the voluntary cash or noncash
 23  7 contributions made by the taxpayer during the tax year to a
 23  8 school tuition organization, subject to the total dollar value
 23  9 of the organization's tax credit certificates as computed in
 23 10 subsection 8. The tax credit shall be claimed by use of a tax
 23 11 credit certificate as provided in subsection 7.
 23 12    Sec. 72.  Section 422.11S, subsections 4 and 5, Code 2017,
 23 13 are amended by striking the subsections.
 23 14    Sec. 73.  Section 422.11S, subsection 8, paragraph a,
 23 15 subparagraph (2), Code 2017, is amended to read as follows:
 23 16    (2)  "Total approved tax credits" means for the tax year
 23 17 beginning in the 2006 calendar year, two million five hundred
 23 18 thousand dollars, for the tax year beginning in the 2007
 23 19 calendar year, five million dollars, for tax years beginning
 23 20 on or after January 1, 2008, but before January 1, 2012, seven
 23 21 million five hundred thousand dollars, for tax years beginning
 23 22 on or after January 1, 2012, but before January 1, 2014, eight
 23 23 million seven hundred fifty thousand dollars, and for tax years
 23 24 beginning on or after January 1, 2014, twelve for tax years
 23 25 beginning on or after January 1, 2017, three million dollars.
 23 26    Sec. 74.  Section 422.11Y, subsection 3, unnumbered
 23 27 paragraph 1, Code 2017, is amended to read as follows:
 23 28    The taxes imposed under this division, less the credits
 23 29 allowed under section 422.12, III shall be reduced by the
 23 30 amount of the E=15 plus gasoline promotion tax credit for each
 23 31 tax year that the taxpayer is eligible to claim a tax credit
 23 32 under this subsection.
 23 33    Sec. 75.  Section 422.11Y, subsection 8, Code 2017, is
 23 34 amended by striking the subsection.
 23 35    Sec. 76.  Section 422.15, subsections 2 and 3, Code 2017, are
 24  1 amended by striking the subsections.
 24  2    Sec. 77.  Section 422.15, subsection 4, Code 2017, is amended
 24  3 to read as follows:
 24  4    4.  Notwithstanding subsections subsection 1, 2, and 3, or
 24  5 any other provision of this chapter, withholding of income
 24  6 tax and any reporting requirement shall not be imposed upon
 24  7 a person, corporation, or withholding agent or any payor of
 24  8 deferred compensation, pensions, or annuities with regard to
 24  9 such payments made to a nonresident of the state.
 24 10    Sec. 78.  Section 422.21, Code 2017, is amended by striking
 24 11 the section and inserting in lieu thereof the following:
 24 12    422.21  Form and time of return.
 24 13    Returns shall be in the form the director prescribes, and
 24 14 shall be filed with the department on or before the last day
 24 15 of the fourth month after the expiration of the tax year.
 24 16 However, cooperative associations as defined in section 6072(d)
 24 17 of the Internal Revenue Code shall file their returns on or
 24 18 before the fifteenth day of the ninth month following the
 24 19 close of the taxable year and nonprofit corporations subject
 24 20 to the unrelated business income tax imposed by section
 24 21 422.33, subsection 1A, shall file their returns on or before
 24 22 the fifteenth day of the fifth month following the close of
 24 23 the taxable year.  If, under the Internal Revenue Code, a
 24 24 corporation is required to file a return covering a tax period
 24 25 of less than twelve months, the state return shall be for the
 24 26 same period and is due forty=five days after the due date of
 24 27 the federal tax return, excluding any extension of time to
 24 28 file.  In case of sickness, absence, or other disability, or
 24 29 if good cause exists, the director may allow further time for
 24 30 filing returns.  The director shall cause to be prepared blank
 24 31 forms for the returns and shall cause them to be distributed
 24 32 throughout the state and to be furnished upon application,
 24 33 but failure to receive or secure the form does not relieve
 24 34 the taxpayer from the obligation of making a return that is
 24 35 required.  The department may as far as consistent with the
 25  1 Code draft income tax forms to conform to the income tax
 25  2 forms of the internal revenue department of the United States
 25  3 government.
 25  4    Sec. 79.  Section 422.22, Code 2017, is amended to read as
 25  5 follows:
 25  6    422.22  Supplementary returns.
 25  7    If the director shall be of the opinion that any taxpayer
 25  8 required under this division III to file a return has failed
 25  9 to file such a return or to include in a return filed, either
 25 10 intentionally or through error, items of taxable income,
 25 11 the director may require from such taxpayer a return or
 25 12 supplementary return in such form as the director shall
 25 13 prescribe, of all the items of income which the taxpayer
 25 14 received during the year for which the return is made, whether
 25 15 or not taxable under the provisions of this division III. If
 25 16 from a supplementary return, or otherwise, the director finds
 25 17 that any items of income, taxable under this division III, have
 25 18 been omitted from the original return, the director may require
 25 19 the items so omitted to be added to the original return. Such
 25 20 supplementary return and the correction of the original return
 25 21 shall not relieve the taxpayer from any of the penalties to
 25 22 which the taxpayer may be liable under any provisions of this
 25 23  division III, whether or not the director required a return or
 25 24 a supplementary return under this section.
 25 25    Sec. 80.  Section 422.32, Code 2017, is amended to read as
 25 26 follows:
 25 27    422.32  Definitions.
 25 28    1.  For the purpose of this division and unless otherwise
 25 29 required by the context:
 25 30    a.  1.  "Affiliated group" means a group of corporations as
 25 31 defined in section 1504(a) of the Internal Revenue Code.
 25 32    b.2.  a.  "Business income" means income arising from
 25 33 transactions and activity in the regular course of the
 25 34 taxpayer's trade or business; or income from tangible and
 25 35 intangible property if the acquisition, management, and
 26  1 disposition of the property constitute integral parts of the
 26  2 taxpayer's regular trade or business operations; or gain or
 26  3 loss resulting from the sale, exchange, or other disposition of
 26  4 real property or of tangible or intangible personal property,
 26  5 if the property while owned by the taxpayer was operationally
 26  6 related to the taxpayer's trade or business carried on in
 26  7 Iowa or operationally related to sources within Iowa, or the
 26  8 property was operationally related to sources outside this
 26  9 state and to the taxpayer's trade or business carried on in
 26 10 Iowa; or gain or loss resulting from the sale, exchange, or
 26 11 other disposition of stock in another corporation if the
 26 12 activities of the other corporation were operationally related
 26 13 to the taxpayer's trade or business carried on in Iowa while
 26 14 the stock was owned by the taxpayer. A taxpayer may have more
 26 15 than one regular trade or business in determining whether
 26 16 income is business income.
 26 17    (1)  b.  It is the intent of the general assembly to treat as
 26 18 apportionable business income all income that may be treated
 26 19 as apportionable business income under the Constitution of the
 26 20 United States.
 26 21    (2)  c.  The filing of an Iowa income tax return on a
 26 22 combined report basis is neither allowed nor required by this
 26 23 paragraph "b" subsection.
 26 24    c.  3.  "Commercial domicile" means the principal place from
 26 25 which the trade or business of the taxpayer is directed or
 26 26 managed.
 26 27    d.  4.  "Corporation" includes joint stock companies, and
 26 28 associations organized for pecuniary profit, and partnerships
 26 29 and limited liability companies taxed as corporations under the
 26 30 Internal Revenue Code.
 26 31    e.  5.  "Domestic corporation" means any corporation
 26 32 organized under the laws of this state.
 26 33    6.  "Fiduciary" means a guardian, trustee, executor,
 26 34 administrator, receiver, conservator, or any person, whether
 26 35 individual or corporate, acting in any fiduciary capacity for
 27  1 any person, trust, or estate.
 27  2    7.  "Fiscal year" means an accounting period of twelve
 27  3 months, ending on the last day of any month other than
 27  4 December.
 27  5    f.  8.  "Foreign corporation" means any corporation other
 27  6 than a domestic corporation.
 27  7    9.  "Foreign country" means any jurisdiction other than one
 27  8 embraced within the United States.  The words "United States",
 27  9 when used in a geographical sense, include the states, the
 27 10 District of Columbia, and the possessions of the United States.
 27 11    g.  10.  "Income from sources within this state" means income
 27 12 from real, tangible, or intangible property located or having
 27 13 a situs in this state.
 27 14    11.  "Income year" means the calendar year or the fiscal year
 27 15 upon the basis of which the net income is computed under this
 27 16 division.
 27 17    12.  "Individual" means a natural person.
 27 18    h.  13.  "Internal Revenue Code" means the Internal Revenue
 27 19 Code of 1954, prior to the date of its redesignation as the
 27 20 Internal Revenue Code of 1986 by the Tax Reform Act of 1986,
 27 21 or means the Internal Revenue Code of 1986 as amended to and
 27 22 including January 1, 2015.
 27 23    i.  14.  "Nonbusiness income" means all income other than
 27 24 business income.
 27 25    15.  "Paid", for the purposes of the deductions under this
 27 26 division, means "paid or accrued" or "paid or incurred", and
 27 27 the terms "paid or incurred" and "paid or accrued" shall be
 27 28 construed according to the method of accounting upon the basis
 27 29 of which the net income is computed under this division.  The
 27 30 term "received", for the purpose of the computation of net
 27 31 income under this division, means "received or accrued", and
 27 32 the term "received or accrued" shall be construed according to
 27 33 the method of accounting upon the basis of which the net income
 27 34 is computed under this division.
 27 35    16.  "Resident" applies only to individuals and includes, for
 28  1 the purpose of determining liability to the tax imposed by this
 28  2 division upon or with reference to the income of any tax year,
 28  3 any individual domiciled in the state, and any other individual
 28  4 who maintains a permanent place of abode within the state.
 28  5    j.  17.  "State" means any state of the United States, the
 28  6 District of Columbia, the Commonwealth of Puerto Rico, any
 28  7 territory or possession of the United States, and any foreign
 28  8 country or political subdivision thereof.
 28  9    18.  a.  "Tax year" means the calendar year, or the fiscal
 28 10 year ending during such calendar year, upon the basis of which
 28 11 the net income is computed under this division.
 28 12    b.  If a taxpayer has made the election provided by section
 28 13 441(f) of the Internal Revenue Code, "tax year" means the annual
 28 14 period so elected, varying from fifty=two to fifty=three weeks.
 28 15    c.  If the effective date or the applicability of a provision
 28 16 of this division is expressed in terms of a tax year beginning,
 28 17 including, or ending with reference to a specified date which
 28 18 is the first or last day of a month, a tax year described in
 28 19 paragraph "a" of this subsection shall be treated as beginning
 28 20 with the first day of the calendar month beginning nearest to
 28 21 the first day of the tax year or as ending with the last day of
 28 22 the calendar month ending nearest to the last day of the tax
 28 23 year.
 28 24    k.  19.  "Taxable in another state". For purposes of
 28 25 allocation and apportionment of income under this division, a
 28 26 taxpayer is "taxable in another state" if:
 28 27    (1)  a.  In that state the taxpayer is subject to a net
 28 28 income tax, a franchise tax measured by net income, a franchise
 28 29 tax for the privilege of doing business, or a corporate stock
 28 30 tax; or
 28 31    (2)  b.  That state has jurisdiction to subject the taxpayer
 28 32 to a net income tax regardless of whether, in fact, the state
 28 33 does or does not.
 28 34    l.  20.  "Unitary business" means a business carried on
 28 35 partly within and partly without a state where the portion
 29  1 of the business carried on within the state depends on or
 29  2 contributes to the business outside the state.
 29  3    2.  The words, terms, and phrases defined in section 422.4,
 29  4 subsections 4 to 6, 8, 9, 13, and 15 to 17, when used in this
 29  5 division, shall have the meanings ascribed to them in said
 29  6 section except where the context clearly indicates a different
 29  7 meaning.
 29  8    Sec. 81.  Section 422.33, subsection 28, Code 2017, is
 29  9 amended to read as follows:
 29 10    28.  The taxes imposed under this division shall be reduced
 29 11 by a school tuition organization tax credit allowed under
 29 12 section 422.11S.  The maximum amount of tax credits that
 29 13 may be approved under this subsection for a tax year equals
 29 14 twenty=five percent of the school tuition organization's tax
 29 15 credits that may be approved pursuant to section 422.11S,
 29 16 subsection 8, for a tax year.
 29 17    Sec. 82.  Section 422.35, subsection 2, Code 2017, is amended
 29 18 to read as follows:
 29 19    2.  Add interest and dividends from foreign securities, from
 29 20 securities of state and other political subdivisions, and from
 29 21 regulated investment companies exempt from federal income tax
 29 22 under the Internal Revenue Code, except for those securities
 29 23 the interest and dividends from which are exempt from taxation
 29 24 by the state of Iowa as otherwise provided by law, including
 29 25 those set forth in section 422.7, subsection 2.:
 29 26    a.  Vision Iowa program bonds pursuant to section 12.71,
 29 27 subsection 8.
 29 28    b.  School infrastructure program bonds pursuant to section
 29 29 12.81, subsection 8. 
 29 30    c.  Iowa jobs program revenue bonds pursuant to section
 29 31 12.87, subsection 8.
 29 32    d.  Iowa utility board and Iowa consumer advocate building
 29 33 project bonds pursuant to section 12.91, subsection 9.
 29 34    e.  Iowa finance authority beginning farmer loan program
 29 35 bonds pursuant to section 16.64, subsection 2.
 30  1    f.  Water pollution control works and drinking facilities
 30  2 financing program bonds pursuant to section 16.131, subsection
 30  3 5.
 30  4    g.  Iowa prison infrastructure revenue bonds pursuant to
 30  5 section 12.80, subsection 3, and section 16.177, subsection 8.
 30  6    h.  Quad cities interstate metropolitan authority bonds
 30  7 pursuant to section 28A.24.
 30  8    i.  Iowa finance authority E911 program bonds pursuant to
 30  9 section 34A.20, subsection 6.
 30 10    j.  Soil and water conservation subdistrict bonds pursuant
 30 11 to section 161A.22.
 30 12    k.  Community college residence hall and dormitory bonds
 30 13 pursuant to section 260C.61.
 30 14    l.  Community college bond program bonds pursuant to section
 30 15 260C.71, subsection 6.
 30 16    m.  Higher education loan authority bonds pursuant to section
 30 17 261A.27.
 30 18    n.  State board of regents bonds pursuant to sections 262.41,
 30 19 262.51, 262.60, 262A.8, and 263A.6.
 30 20    o.  Interstate bridges bonds pursuant to section 313A.36.
 30 21    p.  Aviation authority bonds pursuant to section 330A.16.
 30 22    q.  County health center bonds pursuant to section 331.441,
 30 23 subsection 2, paragraph "c", subparagraph (7).
 30 24    r.  Rural water district bonds pursuant to section 357A.15.
 30 25    s.  Urban renewal bonds pursuant to section 403.9, subsection
 30 26 2.
 30 27    t.  Municipal housing project bonds pursuant to section
 30 28 403A.12.
 30 29    u.  Comprehensive petroleum underground storage tank fund
 30 30 bonds pursuant to section 455G.6, subsection 14.
 30 31    v.  Honey creek premier destination park bonds pursuant to
 30 32 section 463C.12, subsection 8.
 30 33    Sec. 83.  Section 422.39, Code 2017, is amended to read as
 30 34 follows:
 30 35    422.39  Statutes applicable to corporation tax.
 31  1 All the provisions of sections 422.24 to 422.27 422.26 of
 31  2 division II, respecting payment and collection, shall apply in
 31  3 respect to the tax due and payable by a corporation taxable
 31  4 under this division.
 31  5    Sec. 84.  Section 422.73, Code 2017, is amended to read as
 31  6 follows:
 31  7    422.73  Correction of errors == refunds, credits, and
 31  8 carrybacks.
 31  9    1.  If it appears that an amount of tax, penalty, or interest
 31 10 has been paid which was not due under division II, III or V
 31 11 of this chapter, then that amount shall be credited against
 31 12 any tax due on the books of the department by the person who
 31 13 made the excessive payment, or that amount shall be refunded
 31 14 to the person or with the person's approval, credited to tax
 31 15 to become due. A claim for refund or credit that has not been
 31 16 filed with the department within three years after the return
 31 17 upon which a refund or credit claimed became due, or within one
 31 18 year after the payment of the tax upon which a refund or credit
 31 19 is claimed was made, whichever time is the later, shall not be
 31 20 allowed by the director. If, as a result of a carryback of a
 31 21 net operating loss or a net capital loss, the amount of tax
 31 22 in a prior period is reduced and an overpayment results, the
 31 23 claim for refund or credit of the overpayment shall be filed
 31 24 with the department within the three years after the return
 31 25 for the taxable year of the net operating loss or net capital
 31 26 loss became due. Notwithstanding the period of limitation
 31 27 specified, the taxpayer shall have six months from the day of
 31 28 final disposition of any income tax matter between the taxpayer
 31 29 and the internal revenue service with respect to the particular
 31 30 tax year to claim an income tax refund or credit.
 31 31    2.  Notwithstanding subsection 1, a claim for refund or
 31 32 credit of the individual income tax paid which resulted from a
 31 33 reduction in a person's federal adjusted gross income due to
 31 34 section 1106 of the FAA Modernization and Reform Act of 2012,
 31 35 Pub. L. No. 112=95, shall be considered timely if the claim is
 32  1 filed with the department on or before June 30, 2013.
 32  2    3.  The department shall enter into an agreement with the
 32  3 internal revenue service for the transmission of federal income
 32  4 tax reports on individuals required to file an Iowa income tax
 32  5 return who have been involved in an income tax matter with
 32  6 the internal revenue service. After final disposition of
 32  7 the income tax matter between the taxpayer and the internal
 32  8 revenue service, the department shall determine whether the
 32  9 individual is due a state income tax refund as a result of
 32 10 final disposition of such income tax matter. If the individual
 32 11 is due a state income tax refund, the department shall notify
 32 12 the individual within thirty days and request the individual to
 32 13 file a claim for refund or credit with the department.
 32 14    Sec. 85.  Section 422.110, Code 2017, is amended to read as
 32 15 follows:
 32 16    422.110  Income tax credit in lieu of refund.
 32 17    1.  In lieu of the fuel tax refund provided in section
 32 18 452A.17, a person or corporation subject to taxation under
 32 19 division II or III of this chapter may elect to receive an
 32 20 income tax credit. The person or corporation which elects to
 32 21 receive an income tax credit shall cancel its refund permit
 32 22 obtained under section 452A.18 within thirty days after the
 32 23 first day of its tax year or the permit becomes invalid at that
 32 24 time. For the purposes of this section, "person" includes a
 32 25 person claiming a tax credit based upon the person's pro rata
 32 26 share of the earnings from a partnership, limited liability
 32 27 company, or corporation which is not subject to a tax under
 32 28 division II or III of this chapter as a partnership, limited
 32 29 liability company, or corporation "corporation" means the same
 32 30 as defined in section 422.32. If the election to receive
 32 31 an income tax credit has been made, it remains effective for
 32 32 at least one tax year, and for subsequent tax years unless
 32 33 a change is requested and a new refund permit applied for
 32 34 within thirty days after the first day of the person's or
 32 35  corporation's tax year. The income tax credit shall be the
 33  1 amount of the Iowa fuel tax paid on fuel purchased by the
 33  2 person or corporation and is subject to the conditions provided
 33  3 in section 452A.17 with the exception that the income tax
 33  4 credit is not available for refunds relating to casualty
 33  5 losses, transport diversions, pumping credits, blending
 33  6 errors, idle time, power takeoffs, reefer units, and exports by
 33  7 distributors.
 33  8    2.  The right to a credit under this section is not
 33  9 assignable and the credit may be claimed only by the person or
 33 10  corporation that purchased the fuel.
 33 11    Sec. 86.  Section 422D.1, Code 2017, is amended to read as
 33 12 follows:
 33 13    422D.1  Authorization == election == imposition and repeal ==
 33 14 use of revenues.
 33 15    1.  a.  A county board of supervisors may offer for voter
 33 16 approval any of the following taxes or a combination of the
 33 17 following taxes:
 33 18    (1)  Local option income surtax.
 33 19    (2)  An an ad valorem property tax.
 33 20    b.  Revenues generated from these taxes the ad valorem
 33 21 property tax shall be used for emergency medical services as
 33 22 provided in section 422D.6.
 33 23    2.  a.  The taxes property tax for emergency medical services
 33 24 shall only be imposed after an election at which a majority of
 33 25 those voting on the question of imposing the tax or combination
 33 26 of taxes specified in subsection 1, paragraph "a", subparagraph
 33 27 (1) or (2), vote in favor of the question. However, the tax
 33 28 or combination of taxes specified in subsection 1 shall not
 33 29 be imposed on property within or on residents of a benefited
 33 30 emergency medical services district under chapter 357F.  The
 33 31 question of imposing the tax or combination of the taxes may
 33 32 be submitted at the regular city election, a special election,
 33 33 or the general election. Notice of the question shall be
 33 34 provided by publication at least sixty days before the time of
 33 35 the election and shall identify the tax or combination of taxes
 34  1 and the levy rate or rates, as applicable. If a majority of
 34  2 those voting on the question approve the imposition of the tax
 34  3 or combination of taxes, the tax or combination of taxes shall
 34  4 be imposed as follows:
 34  5    (1)  A local option income surtax shall be imposed for tax
 34  6 years beginning on or after January 1 of the fiscal year in
 34  7 which the favorable election was held.
 34  8    (2)  An ad valorem property tax shall be imposed levied for
 34  9 the fiscal year in which the election was held.
 34 10    b.  Before a county imposes an income surtax as specified
 34 11 in subsection 1, paragraph "a", subparagraph (1), a benefited
 34 12 emergency medical services district in the county shall be
 34 13 dissolved, and the county shall be liable for the outstanding
 34 14 obligations of the benefited district. If the benefited
 34 15 district extends into more than one county, the county imposing
 34 16 the income surtax shall be liable for only that portion of the
 34 17 obligations relating to the portion of the benefited district
 34 18 in the county.
 34 19    3.  Revenues received by the county from the taxes imposed
 34 20  tax levied under this chapter shall be deposited into the
 34 21 emergency medical services trust fund created pursuant to
 34 22 section 422D.6 and shall be used as provided in that section.
 34 23    4.  Any tax or combination of taxes imposed levied under this
 34 24 chapter shall be for a maximum period of five years.
 34 25    Sec. 87.  Section 425.17, subsection 7, Code 2017, is amended
 34 26 to read as follows:
 34 27    7.  "Income" means the sum of Iowa net income as defined
 34 28 in section 422.7, Code 2017, plus all of the following to
 34 29 the extent not already included in Iowa net income:  capital
 34 30 gains, alimony, child support money, cash public assistance and
 34 31 relief, except property tax relief granted under this division,
 34 32 amount of in=kind assistance for housing expenses, the gross
 34 33 amount of any pension or annuity, including but not limited
 34 34 to railroad retirement benefits, payments received under the
 34 35 federal Social Security Act, except child insurance benefits
 35  1 received by a member of the claimant's household, and all
 35  2 military retirement and veterans' disability pensions, interest
 35  3 received from the state or federal government or any of its
 35  4 instrumentalities, workers' compensation and the gross amount
 35  5 of disability income or "loss of time" insurance. "Income"
 35  6 does not include gifts from nongovernmental sources, or surplus
 35  7 foods or other relief in kind supplied by a governmental
 35  8 agency. In determining income, net operating losses and net
 35  9 capital losses shall not be considered.
 35 10    Sec. 88.  Section 425.23, subsection 4, paragraph b, Code
 35 11 2017, is amended to read as follows:
 35 12    b.  The annual adjustment factor for the 1998 base year is
 35 13 one hundred percent. For each subsequent base year, the annual
 35 14 adjustment factor equals the annual inflation factor for the
 35 15 calendar year, in which the base year begins, as computed in
 35 16 section 422.4 for purposes of the individual income tax, Code
 35 17 2017.
 35 18    Sec. 89.  Section 476.20, subsection 2, Code 2017, is amended
 35 19 to read as follows:
 35 20    2.  The board shall establish rules requiring a regulated
 35 21 public utility furnishing gas or electricity to include in
 35 22 the utility's notice of pending disconnection of service a
 35 23 written statement advising the customer that the customer
 35 24 may be eligible to participate in the low income home energy
 35 25 assistance program or weatherization assistance program
 35 26 administered by the division of community action agencies of
 35 27 the department of human rights. The written statement shall
 35 28 list the address and telephone number of the local agency
 35 29 which is administering the customer's low income home energy
 35 30 assistance program and the weatherization assistance program.
 35 31 The written statement shall also state that the customer
 35 32 is advised to contact the public utility to settle any of
 35 33 the customer's complaints with the public utility, but if a
 35 34 complaint is not settled to the customer's satisfaction, the
 35 35 customer may file the complaint with the board. The written
 36  1 statement shall include the address and phone number of the
 36  2 board. If the notice of pending disconnection of service
 36  3 applies to a residence, the written statement shall advise
 36  4 that the disconnection does not apply from November 1 through
 36  5 April 1 for a resident who is a "head of household", as
 36  6 defined in section 422.4, head of household and who has been
 36  7 certified to the public utility by the local agency which is
 36  8 administering the low income home energy assistance program and
 36  9 weatherization assistance program as being eligible for either
 36 10 the low income home energy assistance program or weatherization
 36 11 assistance program, and that if such a resident resides within
 36 12 the serviced residence, the customer should promptly have
 36 13 the qualifying resident notify the local agency which is
 36 14 administering the low income home energy assistance program and
 36 15 weatherization assistance program. The board shall establish
 36 16 rules requiring that the written notice contain additional
 36 17 information as it deems necessary and appropriate.
 36 18    Sec. 90.  Section 476.20, subsection 3, paragraph b, Code
 36 19 2017, is amended to read as follows:
 36 20    b.  A qualified applicant for the low income home energy
 36 21 assistance program or the weatherization assistance program who
 36 22 is also a "head of household", as defined in section 422.4,
 36 23 subsection 7, head of household shall be promptly certified
 36 24 by the local agency administering the applicant's program to
 36 25 the applicant's public utility that the resident is a "head
 36 26 of household" as defined in section 422.4, subsection 7, head
 36 27 of household and is qualified for the low income home energy
 36 28 assistance program or weatherization assistance program.
 36 29 Notwithstanding subsection 1, a public utility furnishing gas
 36 30 or electricity shall not disconnect service from November 1
 36 31 through April 1 to a residence which has a resident that has
 36 32 been certified under this paragraph.  For purposes of this
 36 33 section, "head of household" has the same meaning as provided
 36 34 by the Internal Revenue Code.
 36 35    Sec. 91.  Section 476B.2, Code 2017, is amended to read as
 37  1 follows:
 37  2    476B.2  General rule.
 37  3    The owner of a qualified facility shall, for each
 37  4 kilowatt=hour of qualified electricity that the owner sells
 37  5 or uses for on=site consumption during the ten=year period
 37  6 beginning on the date the qualified facility was originally
 37  7 placed in service, be allowed a wind energy production tax
 37  8 credit to the extent provided in this chapter against the tax
 37  9 imposed in chapter 422, divisions II, III, and V, and chapter
 37 10 432, and may claim a refund of tax imposed by chapter 423 or
 37 11 437A for any tax year within the time period set forth in
 37 12 section 423.47 or 437A.14.
 37 13    Sec. 92.  Section 476B.6, subsection 5, paragraphs a, b, and
 37 14 c, Code 2017, are amended to read as follows:
 37 15    a.  If the tax credit application is filed by a partnership,
 37 16 limited liability company, S corporation, estate, trust, or
 37 17 other reporting entity all of the income of which is taxed
 37 18 directly to its equity holders or beneficiaries, for the taxes
 37 19 imposed under chapter 422, division II or III, the tax credit
 37 20 certificate shall be issued directly to equity holders or
 37 21 beneficiaries of the applicant in proportion to their pro rata
 37 22 share of the income of such entity. The applicant shall, in
 37 23 the application made under this section, identify its equity
 37 24 holders or beneficiaries, and the percentage of such entity's
 37 25 income that is allocable to each equity holder or beneficiary.
 37 26    b.  If the tax credit applicant under this section is
 37 27 eligible to receive renewable electricity production credits
 37 28 authorized under section 45 of the Internal Revenue Code,
 37 29 as amended, and the tax credit applicant is a partnership,
 37 30 limited liability company, S corporation, estate, trust, or
 37 31 other reporting entity all of the income of which is taxed
 37 32 directly to its equity holders or beneficiaries, for the taxes
 37 33 imposed under chapter 422, division II or III, the tax credit
 37 34 certificate may be issued to a partner if the business is a
 37 35 partnership, a shareholder if the business is an S corporation,
 38  1 or a member if the business is a limited liability company
 38  2 in the amounts designated by the eligible partnership, S
 38  3 corporation, or limited liability company. In absence of
 38  4 such designation, the credits under this section shall flow
 38  5 through to the partners, shareholders, or members in accordance
 38  6 with their pro rata share of the income of the entity. The
 38  7 applicant shall, in the application made under this section,
 38  8 identify the holders or beneficiaries that are to receive the
 38  9 tax credit certificates and the percentage of the tax credit
 38 10 that is allocable to each holder or beneficiary.
 38 11    c.  If an applicant under this section is eligible to
 38 12 receive renewable electricity production credits authorized
 38 13 under section 45 of the Internal Revenue Code, as amended, and
 38 14 the tax credit applicant is a partnership, limited liability
 38 15 company, S corporation, estate, trust, or other reporting
 38 16 entity all of the income of which is taxed directly to its
 38 17 equity holders or beneficiaries, for the taxes imposed under
 38 18 chapter 422, division II or III, the tax credit certificates
 38 19 and all future rights to the tax credit in this section may be
 38 20 distributed to an equity holder or beneficiary as a liquidating
 38 21 distribution or portion thereof, of a holder or beneficiary's
 38 22 interest in the applicant entity. The applicant shall, in the
 38 23 application made under this section, designate the percentage
 38 24 of the tax credit allocable to the liquidating equity holder
 38 25 or beneficiary that is to receive the current and future tax
 38 26 credit certificates under this section.
 38 27    Sec. 93.  Section 476B.7, subsection 2, Code 2017, is amended
 38 28 to read as follows:
 38 29    2.  The tax credit shall be freely transferable. The
 38 30 transferee may use the amount of the tax credit transferred
 38 31 against the taxes imposed under chapter 422, divisions II, III,
 38 32  and V, and chapter 432 for any tax year the original transferor
 38 33 could have claimed the tax credit. The transferee may claim
 38 34 a refund under chapter 423 or 437A for any tax year within
 38 35 the time period set forth in section 423.47 or 437A.14 for
 39  1 which the original transferor could have claimed a refund.
 39  2 Any consideration received for the transfer of the tax credit
 39  3 shall not be included as income under chapter 422, divisions
 39  4 II, III, and V.  Any consideration paid for the transfer of the
 39  5 tax credit shall not be deducted from income under chapter 422,
 39  6 divisions II, III, and V.
 39  7    Sec. 94.  Section 476C.4, subsection 4, paragraph a, Code
 39  8 2017, is amended to read as follows:
 39  9    a.  If the tax credit application is filed by a partnership,
 39 10 limited liability company, S corporation, estate, trust, or
 39 11 other reporting entity all of the income of which is taxed
 39 12 directly to its equity holders or beneficiaries, for the taxes
 39 13 imposed under chapter 422, division II or III, the tax credit
 39 14 certificate shall be issued directly to equity holders or
 39 15 beneficiaries of the applicant in proportion to their pro rata
 39 16 share of the income of such entity. The applicant shall, in
 39 17 the application made under this section, identify its equity
 39 18 holders or beneficiaries, and the percentage of such entity's
 39 19 income that is allocable to each equity holder or beneficiary.
 39 20    Sec. 95.  Section 476C.4, subsection 4, paragraph b,
 39 21 subparagraph (1), Code 2017, is amended to read as follows:
 39 22    (1)  If the tax credit applicant under this section is
 39 23 eligible to receive renewable electricity production credits
 39 24 authorized under section 45 of the Internal Revenue Code,
 39 25 as amended, and the tax credit applicant is a partnership,
 39 26 limited liability company, S corporation, estate, trust, or
 39 27 other reporting entity all of the income of which is taxed
 39 28 directly to its equity holders or beneficiaries, for the taxes
 39 29 imposed under chapter 422, division II or III, the tax credit
 39 30 certificate may be issued to a partner if the business is a
 39 31 partnership, a shareholder if the business is an S corporation,
 39 32 or a member if the business is a limited liability company
 39 33 in the amounts designated by the eligible partnership, S
 39 34 corporation, or limited liability company. In absence of such
 39 35 designation, the credits under this section shall flow through
 40  1 to the partners, shareholders, or members in accordance with
 40  2 their pro rata share of the income of the entity.
 40  3    Sec. 96.  Section 476C.4, subsection 4, paragraph c,
 40  4 subparagraph (1), Code 2017, is amended to read as follows:
 40  5    (1)  If an applicant under this section is eligible to
 40  6 receive renewable electricity production credits authorized
 40  7 under section 45 of the Internal Revenue Code, as amended, and
 40  8 the tax credit applicant is a partnership, limited liability
 40  9 company, S corporation, estate, trust, or other reporting
 40 10 entity all of the income of which is taxed directly to its
 40 11 equity holders or beneficiaries, for the taxes imposed under
 40 12 chapter 422, division II or III, the tax credit certificates
 40 13 and all future rights to the tax credit in this section may be
 40 14 distributed to an equity holder or beneficiary as a liquidating
 40 15 distribution or portion thereof, of a holder or beneficiary's
 40 16 interest in the applicant entity.
 40 17    Sec. 97.  Section 476C.6, subsection 1, paragraph b, Code
 40 18 2017, is amended to read as follows:
 40 19    b.  The transferee may use the amount of the tax credit
 40 20 transferred against taxes imposed under chapter 422, divisions
 40 21 II, III, and V, and chapter 432 for any tax year the original
 40 22 transferor could have claimed the tax credit. The transferee
 40 23 may claim a refund under chapter 423 or 437A for any tax
 40 24 year within the time period set forth in section 423.47 or
 40 25 437A.14 for which the original transferor could have claimed
 40 26 the refund. Any consideration received for the transfer of
 40 27 the tax credit shall not be included as income under chapter
 40 28 422, divisions II, III, and V.  Any consideration paid for the
 40 29 transfer of the tax credit shall not be deducted from income
 40 30 under chapter 422, divisions II, III, and V.
 40 31    Sec. 98.  Section 483A.1A, subsection 10, paragraph e, Code
 40 32 2017, is amended to read as follows:
 40 33    e.  Is a member of the armed forces of the United States
 40 34 who is serving on active duty, and claims residency in this
 40 35 state, and has filed a state individual income tax return
 41  1 as a resident pursuant to chapter 422, division II, for the
 41  2 preceding tax year, or is stationed in this state.
 41  3    Sec. 99.  Section 904.809, subsection 5, paragraph a,
 41  4 subparagraph (2), Code 2017, is amended to read as follows:
 41  5    (2)  The inmate's employer shall provide each employed
 41  6 inmate with the withholding statement required under section
 41  7 422.16, and any other employment information necessary for the
 41  8 receipt of the remainder of an inmate's payroll earnings.
 41  9    Sec. 100.  REPEAL.  Sections 68A.601, 190B.105, 257.22
 41 10 through 257.26, 298.14, 422.4 through 422.11F, 422.11H through
 41 11 422.11J, 422.11M, 422.11Q, 422.11R, 422.11V, 422.11W, 422.11Z,
 41 12 422.12, 422.12A through 422.12E, 422.12H, 422.12J through
 41 13 422.12M, 422.13, 422.14, 422.16, 422.17, 422.19, 422.23,
 41 14 422.27, 422.31, 422D.2 through 422D.4, Code 2017, are repealed.
 41 15    Sec. 101.  CORRESPONDING AMENDMENTS LEGISLATION.  Additional
 41 16 legislation is required to fully implement this division of
 41 17 this Act.  The director of the department of revenue shall, in
 41 18 compliance with section 2.16, prepare draft legislation for
 41 19 submission to the legislative services agency, as necessary, to
 41 20 implement the repeal of the individual income tax under this
 41 21 division of this Act and under other provisions of law.
 41 22    Sec. 102.  EFFECTIVE DATE.  This division of this Act takes
 41 23 effect January 1, 2018.
 41 24    Sec. 103.  APPLICABILITY.  This division of this Act applies
 41 25 to tax years beginning on or after January 1, 2018.
 41 26                           DIVISION II
 41 27                        SALES AND USE TAX
 41 28    Sec. 104.  Section 423.2, subsection 1, unnumbered paragraph
 41 29 1, Code 2017, is amended to read as follows:
 41 30    There is imposed a tax of six eleven percent upon the sales
 41 31 price of all sales of tangible personal property, consisting
 41 32 of goods, wares, or merchandise, sold at retail in the state
 41 33 to consumers or users except as otherwise provided in this
 41 34 subchapter.
 41 35    Sec. 105.  Section 423.2, subsections 2 and 3, Code 2017, are
 42  1 amended to read as follows:
 42  2    2.  A tax of six eleven percent is imposed upon the sales
 42  3 price of the sale or furnishing of gas, electricity, water,
 42  4 heat, pay television service, and communication service,
 42  5 including the sales price from such sales by any municipal
 42  6 corporation or joint water utility furnishing gas, electricity,
 42  7 water, heat, pay television service, and communication service
 42  8 to the public in its proprietary capacity, except as otherwise
 42  9 provided in this subchapter, when sold at retail in the state
 42 10 to consumers or users.
 42 11    3.  A tax of six eleven percent is imposed upon the
 42 12 sales price of all sales of tickets or admissions to places
 42 13 of amusement, fairs, and athletic events except those of
 42 14 elementary and secondary educational institutions. A tax
 42 15 of six eleven percent is imposed on the sales price of an
 42 16 entry fee or like charge imposed solely for the privilege of
 42 17 participating in an activity at a place of amusement, fair, or
 42 18 athletic event unless the sales price of tickets or admissions
 42 19 charges for observing the same activity are taxable under this
 42 20 subchapter. A tax of six eleven percent is imposed upon that
 42 21 part of private club membership fees or charges paid for the
 42 22 privilege of participating in any athletic sports provided club
 42 23 members.
 42 24    Sec. 106.  Section 423.2, subsection 4, paragraph a, Code
 42 25 2017, is amended to read as follows:
 42 26    a.  A tax of six eleven percent is imposed upon the sales
 42 27 price derived from the operation of all forms of amusement
 42 28 devices and games of skill, games of chance, raffles, and bingo
 42 29 games as defined in chapter 99B, and card game tournaments
 42 30 conducted under section 99B.27, that are operated or conducted
 42 31 within the state, the tax to be collected from the operator in
 42 32 the same manner as for the collection of taxes upon the sales
 42 33 price of tickets or admission as provided in this section.
 42 34 Nothing in this subsection shall legalize any games of skill
 42 35 or chance or slot=operated devices which are now prohibited by
 43  1 law.
 43  2    Sec. 107.  Section 423.2, subsection 5, Code 2017, is amended
 43  3 to read as follows:
 43  4    5.  There is imposed a tax of six eleven percent upon the
 43  5 sales price from the furnishing of services as defined in
 43  6 section 423.1.
 43  7    Sec. 108.  Section 423.2, subsection 7, paragraph a,
 43  8 unnumbered paragraph 1, Code 2017, is amended to read as
 43  9 follows:
 43 10    A tax of six eleven percent is imposed upon the sales
 43 11 price from the sales, furnishing, or service of solid waste
 43 12 collection and disposal service.
 43 13    Sec. 109.  Section 423.2, subsection 8, paragraph a, Code
 43 14 2017, is amended to read as follows:
 43 15    a.  A tax of six eleven percent is imposed on the sales
 43 16 price from sales of bundled transactions. For the purposes of
 43 17 this subsection, a "bundled transaction" is the retail sale of
 43 18 two or more distinct and identifiable products, except real
 43 19 property and services to real property, which are sold for one
 43 20 nonitemized price. A "bundled transaction" does not include
 43 21 the sale of any products in which the sales price varies, or
 43 22 is negotiable, based on the selection by the purchaser of the
 43 23 products included in the transaction.
 43 24    Sec. 110.  Section 423.2, subsection 9, Code 2017, is amended
 43 25 to read as follows:
 43 26    9.  A tax of six eleven percent is imposed upon the
 43 27 sales price from any mobile telecommunications service,
 43 28 including all paging services, that this state is allowed
 43 29 to tax pursuant to the provisions of the federal Mobile
 43 30 Telecommunications Sourcing Act, Pub. L. No. 106=252, 4 U.S.C.
 43 31 {116 et seq. For purposes of this subsection, taxes on mobile
 43 32 telecommunications service, as defined under the federal Mobile
 43 33 Telecommunications Sourcing Act that are deemed to be provided
 43 34 by the customer's home service provider, shall be paid to
 43 35 the taxing jurisdiction whose territorial limits encompass
 44  1 the customer's place of primary use, regardless of where the
 44  2 mobile telecommunications service originates, terminates,
 44  3 or passes through and shall in all other respects be taxed
 44  4 in conformity with the federal Mobile Telecommunications
 44  5 Sourcing Act. All other provisions of the federal Mobile
 44  6 Telecommunications Sourcing Act are adopted by the state of
 44  7 Iowa and incorporated into this subsection by reference. With
 44  8 respect to mobile telecommunications service under the federal
 44  9 Mobile Telecommunications Sourcing Act, the director shall, if
 44 10 requested, enter into agreements consistent with the provisions
 44 11 of the federal Act.
 44 12    Sec. 111.  Section 423.2, subsection 11, paragraph b,
 44 13 subparagraphs (2) and (3), Code 2017, are amended to read as
 44 14 follows:
 44 15    (2)  Transfer from the remaining revenues the amounts
 44 16 required under Article VII, section 10, of the Constitution
 44 17 of the State of Iowa to the natural resources and outdoor
 44 18 recreation trust fund created in section 461.31, if applicable.
 44 19    (3)  Transfer one=sixth seventeen and two thousand five
 44 20 hundred forty=eight ten=thousandths percent of the remaining
 44 21 revenues to the secure an advanced vision for education fund
 44 22 created in section 423F.2. This subparagraph (3) is repealed
 44 23 December 31, 2029.
 44 24    Sec. 112.  Section 423.2, subsection 14, Code 2017, is
 44 25 amended to read as follows:
 44 26    14.  The sales tax rate of six eleven percent is reduced to
 44 27 five ten percent on January 1, 2030.
 44 28    Sec. 113.  Section 423.5, subsection 1, unnumbered paragraph
 44 29 1, Code 2017, is amended to read as follows:
 44 30    Except as provided in paragraph "c", an excise tax at the
 44 31 rate of six eleven percent of the purchase price or installed
 44 32 purchase price is imposed on the following:
 44 33    Sec. 114.  Section 423.5, subsection 5, Code 2017, is amended
 44 34 to read as follows:
 44 35    5.  The use tax rate of six eleven percent is reduced to five
 45  1  ten percent on January 1, 2030.
 45  2    Sec. 115.  Section 423.43, subsection 1, paragraph b, Code
 45  3 2017, is amended to read as follows:
 45  4    b.  Subsequent to the deposit into the general fund of
 45  5 the state and after the transfer of such revenues collected
 45  6 under chapter 423B, the department shall transfer one=sixth
 45  7  one=eleventh of such remaining revenues to the secure an
 45  8 advanced vision for education fund created in section 423F.2.
 45  9 This paragraph is repealed December 31, 2029.
 45 10    Sec. 116.  EFFECTIVE DATE.  This division of this Act takes
 45 11 effect January 1, 2018.
 45 12                           EXPLANATION
 45 13 The inclusion of this explanation does not constitute agreement with
 45 14 the explanation's substance by the members of the general assembly.
 45 15    This bill relates to state taxes by repealing the individual
 45 16 income tax and increasing the state sales and use tax rates.
 45 17    Division I repeals the individual income tax and makes
 45 18 numerous conforming changes to the Code to remove references
 45 19 to the individual income tax and to update or move provisions
 45 20 of the individual income tax that are also applicable by
 45 21 reference to the corporate income tax and the franchise tax.
 45 22 The division also repeals the emergency medical services income
 45 23 surtax in Code chapter 422D, the instructional support income
 45 24 surtax in Code section 257.21, the educational improvement
 45 25 income surtax in Code section 257.29, and the physical plant
 45 26 and equipment income surtax in Code section 298.2, because
 45 27 income surtax revenues will no longer be generated without the
 45 28 state individual income tax.
 45 29    The repeal of the individual income tax will also affect the
 45 30 industrial new jobs training program in Code chapter 260E, the
 45 31 accelerated career education program in Code chapter 260G, and
 45 32 the targeted jobs withholding credit in Code section 403.19A,
 45 33 because those programs rely on income tax amounts withheld from
 45 34 employee wages by employers.
 45 35    The division provides that additional legislation is
 46  1 required to fully implement the division and requires the
 46  2 director of the department of revenue to prepare draft
 46  3 legislation in compliance with Code section 2.16 for submission
 46  4 to the legislative services agency to implement the repeal of
 46  5 the individual income tax.
 46  6    The division takes effect January 1, 2018, and applies to tax
 46  7 years beginning on or after that date.
 46  8    Division II increases the state sales and use tax rate to
 46  9 11 percent from 6 percent. By operation of law as provided in
 46 10 Article VII, section 10 of the Iowa Constitution, a portion
 46 11 (0.375 percent) of the state sales tax generated and collected
 46 12 from the rate increase provided in this division will be
 46 13 transferred to the natural resources and outdoor recreation
 46 14 trust fund in Code section 461.31.  The division amends the
 46 15 transfer of state sales tax revenues to the secure an advanced
 46 16 vision for education fund (SAVE) in Code section 423F.2 from
 46 17 one=sixth (approximately 16.66 percent) of the revenues to
 46 18 17.2548 percent of the revenues to ensure that SAVE receives
 46 19 approximately the same proportion of the total sales tax
 46 20 revenue as it did prior to the sales tax rate increase provided
 46 21 in the division.
 46 22    The division takes effect January 1, 2018.
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