Bill Text: IA SF428 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act updating the Code references to the Internal Revenue Code and decoupling from certain federal bonus depreciation provisions, and including effective date and retroactive applicability provisions.
Sponsorship: Partisan Bill (Democrat 8)
Status: (Introduced - Dead) 2017-03-07 - Subcommittee: Feenstra, Behn, and Jochum. S.J. 509. [SF428 Detail]
Download: Iowa-2017-SF428-Introduced.html
Senate File 428 - Introduced SENATE FILE BY ALLEN, KINNEY, BOLKCOM, LYKAM, JOCHUM, RAGAN, HART, and BOWMAN A BILL FOR 1 An Act updating the Code references to the Internal Revenue 2 Code and decoupling from certain federal bonus depreciation 3 provisions, and including effective date and retroactive 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1935XS (3) 87 mm/sc PAG LIN 1 1 DIVISION I 1 2 INTERNAL REVENUE CODE REFERENCES 1 3 Section 1. Section 15.335, subsection 7, paragraph b, Code 1 4 2017, is amended to read as follows: 1 5 b. For purposes of this section, "Internal Revenue Code" 1 6 means the Internal Revenue Code in effect on January 1,2015 1 72017. 1 8 Sec. 2. Section 422.3, subsection 5, Code 2017, is amended 1 9 to read as follows: 1 10 5. "Internal Revenue Code" means the Internal Revenue Code 1 11 of 1954, prior to the date of its redesignation as the Internal 1 12 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 1 13 the Internal Revenue Code of 1986 as amended to and including 1 14 January 1,20152017. 1 15 Sec. 3. Section 422.9, subsection 2, paragraph i, Code 2017, 1 16 is amended to read as follows: 1 17 i. The deduction for state sales and use taxes is allowable 1 18 only if the taxpayer elected to deduct the state sales and use 1 19 taxes in lieu of state income taxes under section 164 of the 1 20 Internal Revenue Code. A deduction for state sales and use 1 21 taxes is not allowed if the taxpayer has taken the deduction 1 22 for state income taxes or claimed the standard deduction under 1 23 section 63 of the Internal Revenue Code. This paragraph 1 24 applies to taxable years beginning after December 31, 2003, and 1 25 before January 1, 2008, and to taxable years beginning after 1 26 December 31, 2009, and before January 1, 2015. 1 27 Sec. 4. Section 422.10, subsection 3, paragraph b, Code 1 28 2017, is amended to read as follows: 1 29 b. For purposes of this section, "Internal Revenue Code" 1 30 means the Internal Revenue Code in effect on January 1,2015 1 312017. 1 32 Sec. 5. Section 422.11L, subsection 6, Code 2017, is amended 1 33 to read as follows: 1 34 6. For purposes of this section, "Internal Revenue Code" 1 35 means the Internal Revenue Code of 1954, prior to the date of 2 1 its redesignation as the Internal Revenue Code of 1986 by the 2 2 Tax Reform Act of 1986, or means the Internal Revenue Code of 2 3 1986 as amended to and including January 1,20162017. 2 4 Sec. 6. Section 422.32, subsection 1, paragraph h, Code 2 5 2017, is amended to read as follows: 2 6 h. "Internal Revenue Code" means the Internal Revenue Code 2 7 of 1954, prior to the date of its redesignation as the Internal 2 8 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 2 9 the Internal Revenue Code of 1986 as amended to and including 2 10 January 1,20152017. 2 11 Sec. 7. Section 422.33, subsection 5, paragraph e, 2 12 subparagraph (2), Code 2017, is amended to read as follows: 2 13 (2) For purposes of this subsection, "Internal Revenue Code" 2 14 means the Internal Revenue Code in effect on January 1,2015 2 152017. 2 16 Sec. 8. EFFECTIVE UPON ENACTMENT. This division of this 2 17 Act, being deemed of immediate importance, takes effect upon 2 18 enactment. 2 19 Sec. 9. RETROACTIVE APPLICABILITY. This division of this 2 20 Act applies retroactively to January 1, 2016, for tax years 2 21 beginning on or after that date. 2 22 DIVISION II 2 23 BONUS DEPRECIATION 2 24 Sec. 10. Section 422.7, subsection 39A, unnumbered 2 25 paragraph 1, Code 2017, is amended to read as follows: 2 26 The additional first=year depreciation allowance authorized 2 27 in section 168(k) of the Internal Revenue Code, as enacted by 2 28 Pub. L. No. 110=185, {103, Pub. L. No. 111=5, {1201, Pub. L. 2 29 No. 111=240, {2022, Pub. L. No. 111=312, {401, Pub. L. No. 2 30 112=240, {331,andPub. L. No. 113=295, {125, and Pub. L. No. 2 31 114=113, {143, does not apply in computing net income for 2 32 state tax purposes. If the taxpayer has taken the additional 2 33 first=year depreciation allowance for purposes of computing 2 34 federal adjusted gross income, then the taxpayer shall make the 2 35 following adjustments to federal adjusted gross income when 3 1 computing net income for state tax purposes: 3 2 Sec. 11. Section 422.35, subsection 19A, unnumbered 3 3 paragraph 1, Code 2017, is amended to read as follows: 3 4 The additional first=year depreciation allowance authorized 3 5 in section 168(k) of the Internal Revenue Code, as enacted by 3 6 Pub. L. No. 110=185, {103, Pub. L. No. 111=5, {1201, Pub. L. 3 7 No. 111=240, {2022, Pub. L. No. 111=312, {401, Pub. L. No. 3 8 112=240, {331,andPub. L. No. 113=295, {125, and Pub. L. No. 3 9 114=113, {143, does not apply in computing net income for 3 10 state tax purposes. If the taxpayer has taken the additional 3 11 first=year depreciation allowance for purposes of computing 3 12 federal taxable income, then the taxpayer shall make the 3 13 following adjustments to federal taxable income when computing 3 14 net income for state tax purposes: 3 15 Sec. 12. EFFECTIVE UPON ENACTMENT. This division of this 3 16 Act, being deemed of immediate importance, takes effect upon 3 17 enactment. 3 18 Sec. 13. RETROACTIVE APPLICABILITY. This division of this 3 19 Act applies retroactively to January 1, 2016, for tax years 3 20 ending on or after that date. 3 21 EXPLANATION 3 22 The inclusion of this explanation does not constitute agreement with 3 23 the explanation's substance by the members of the general assembly. 3 24 Under current law with the exception of the solar energy 3 25 system credit in Code section 422.llL, Iowa Code references 3 26 to the Internal Revenue Code include the Internal Revenue 3 27 Code in effect on January 1, 2015, meaning federal income tax 3 28 revisions made by Congress in 2015 and 2016 are not applicable 3 29 for Iowa tax purposes for 2016 or beyond. This bill updates 3 30 the Iowa Code references to the Internal Revenue Code to make 3 31 those 2015 and 2016 federal income tax revisions applicable 3 32 for Iowa income tax purposes, and decouples with certain bonus 3 33 depreciation provisions. 3 34 DIVISION I ==== INTERNAL REVENUE CODE REFERENCES. The 3 35 division amends Code sections 422.3 and 422.32, general 4 1 definition sections in the chapter of the Code that governs 4 2 corporate and individual income tax and the franchise tax 4 3 on financial institutions, to update the references to the 4 4 Internal Revenue Code. 4 5 The division amends Code sections 15.335, 422.10, and 422.33 4 6 to update the references to the Internal Revenue Code for the 4 7 state research activities credit for individuals, corporations, 4 8 and corporations participating in certain economic development 4 9 programs to include the federal changes to the research 4 10 activities credit and the alternative simplified research 4 11 activities credit. 4 12 The division amends Code section 422.11L to update the 4 13 reference to the Internal Revenue Code for the state solar 4 14 energy system credit to include federal changes made in 2016 4 15 to the federal residential energy efficient property credit 4 16 and the federal energy credit. This reference to the Internal 4 17 Revenue Code already includes federal changes made in 2015 to 4 18 these federal credits (see 2016 Iowa Acts, ch. 1128, {4, 20, 4 19 and ch. 1138, {40=41). 4 20 Code section 422.9 provides individuals a deduction from 4 21 net income for state sales and use taxes if the individual 4 22 chose to deduct sales and use tax in lieu of state income taxes 4 23 or the standard deduction for federal income tax purposes. 4 24 This deduction was set to expire under both federal and Iowa 4 25 law for tax years beginning on or after January 1, 2015. The 4 26 federal Protecting Americans from Tax Hikes Act of 2015 made 4 27 the federal deduction permanent. The division allows the Iowa 4 28 deduction and makes it permanent for tax years beginning on or 4 29 after January 1, 2016. 4 30 Division I takes effect upon enactment and applies 4 31 retroactively to January 1, 2016, for tax years beginning on 4 32 or after that date. 4 33 DIVISION II ==== BONUS DEPRECIATION. The division decouples, 4 34 for Iowa income tax purposes, from the federal additional 4 35 first=year depreciation allowance in section 168(k) of the 5 1 Internal Revenue Code (bonus depreciation) which was modified 5 2 and extended through 2019 by the federal Protecting Americans 5 3 from Tax Hikes Act of 2015. By decoupling, taxpayers who claim 5 4 bonus depreciation for federal tax purposes are required to 5 5 add such depreciation amounts back to Iowa net income, but are 5 6 then allowed under existing state law to deduct the amount of 5 7 depreciation that would otherwise be allowable under federal 5 8 law, without regard to the bonus depreciation allowance. 5 9 Division II takes effect upon enactment and applies 5 10 retroactively to January 1, 2016, for tax years ending on or 5 11 after that date. LSB 1935XS (3) 87 mm/sc
