Bill Text: IA SF481 | 2015-2016 | 86th General Assembly | Introduced
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.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2015-03-30 - Subcommittee, Dotzler, Feenstra, and Quirmbach. S.J. 740. [SF481 Detail]
Download: Iowa-2015-SF481-Introduced.html
Senate File 481 - 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 1746XS (5) 86 mm/sc PAG LIN 1 1 DIVISION I 1 2 REPEAL OF THE INDIVIDUAL INCOME TAX 1 3 Section 1. Section 15.293A, subsection 1, paragraph a, Code 1 4 2015, is amended to read as follows: 1 5 a. A redevelopment tax credit shall be allowed against 1 6 the taxes imposed in chapter 422, divisionsII,III,and V, 1 7 and in chapter 432, and against the moneys and credits tax 1 8 imposed in section 533.329, for a portion of a taxpayer's 1 9 equity investment, as provided in subsection 3, in a qualifying 1 10 redevelopment project. 1 11 Sec. 2. Section 15.293A, subsection 1, paragraph b, Code 1 12 2015, is amended by striking the paragraph. 1 13 Sec. 3. Section 15.293A, subsection 2, paragraphs c and f, 1 14 Code 2015, are amended to read as follows: 1 15 c. The tax credit certificate, unless rescinded by the 1 16 authority, shall be accepted by the department of revenue as 1 17 payment for taxes imposed pursuant to chapter 422, divisions 1 18II,III,and V, and in chapter 432, and for the moneys and 1 19 credits tax imposed in section 533.329, subject to any 1 20 conditions or restrictions placed by the authority upon 1 21 the face of the tax credit certificate and subject to the 1 22 limitations of this section. 1 23 f. A tax credit shall not be claimed by a transferee 1 24 under this section until a replacement tax credit certificate 1 25 identifying the transferee as the proper holder has been 1 26 issued. The transferee may use the amount of the tax credit 1 27 transferred against the taxes imposed in chapter 422, divisions 1 28II,III,and V, and in chapter 432, and against the moneys and 1 29 credits tax imposed in section 533.329, for any tax year the 1 30 original transferor could have claimed the tax credit. Any 1 31 consideration received for the transfer of the tax credit shall 1 32 not be included as income under chapter 422, divisionsII,III,1 33 and V. Any consideration paid for the transfer of the tax 1 34 credit shall not be deducted from income under chapter 422, 1 35 divisionsII,III,and V. 2 1 Sec. 4. Section 15.293A, subsection 4, Code 2015, is amended 2 2 to read as follows: 2 3 4. For purposes ofindividual andcorporate income taxes and 2 4 the franchise tax, the increase in the basis of the redeveloped 2 5 property that would otherwise result from the qualified 2 6 redevelopment costs shall be reduced by the amount of the 2 7 credit computed under this part. 2 8 Sec. 5. Section 15.333, subsection 1, Code 2015, is amended 2 9 to read as follows: 2 10 1. An eligible business may claim a tax credit equal to a 2 11 percentage of the new investment directly related to new jobs 2 12 created or retained by the project. The tax credit shall be 2 13 amortized equally over five calendar years. The tax credit 2 14 shall be allowed against taxes imposed under chapter 422, 2 15 divisionII,III,or V, and against the moneys and credits tax 2 16 imposed in section 533.329.If the business is a partnership, 2 17 S corporation, limited liability company, cooperative organized 2 18 under chapter 501 and filing as a partnership for federal tax 2 19 purposes, or estate or trust electing to have the income taxed 2 20 directly to the individual, an individual may claim the tax 2 21 credit allowed. The amount claimed by the individual shall 2 22 be based upon the pro rata share of the individual's earnings 2 23 of the partnership, S corporation, limited liability company, 2 24 cooperative organized under chapter 501 and filing as a 2 25 partnership for federal tax purposes, or estate or trust.The 2 26 percentage shall be determined as provided in section 15.335A. 2 27 Any tax credit in excess of the tax liability for the tax year 2 28 may be credited to the tax liability for the following seven 2 29 years or until depleted, whichever occurs first. 2 30 Sec. 6. Section 15.335, subsection 6, Code 2015, is amended 2 31 by striking the subsection. 2 32 Sec. 7. Section 15.355, subsection 3, paragraph b, Code 2 33 2015, is amended to read as follows: 2 34 b. The tax credit shall be allowed against the taxes imposed 2 35 in chapter 422, divisionsII,III,and V, and in chapter 432, 3 1 and against the moneys and credits tax imposed in section 3 2 533.329. 3 3 Sec. 8. Section 15.355, subsection 3, paragraph c, Code 3 4 2015, is amended by striking the paragraph. 3 5 Sec. 9. Section 15.355, subsection 3, paragraph e, 3 6 subparagraphs (3) and (6), Code 2015, are amended to read as 3 7 follows: 3 8 (3) The tax credit certificate, unless rescinded by the 3 9 authority, shall be accepted by the department of revenue as 3 10 payment for taxes imposed pursuant to chapter 422, divisions 3 11II,III,and V, and in chapter 432, and for the moneys and 3 12 credits tax imposed in section 533.329, subject to any 3 13 conditions or restrictions placed by the authority upon 3 14 the face of the tax credit certificate and subject to the 3 15 limitations of this program. 3 16 (6) A tax credit shall not be claimed by a transferee 3 17 under this section until a replacement tax credit certificate 3 18 identifying the transferee as the proper holder has been 3 19 issued. The transferee may use the amount of the tax credit 3 20 transferred against the taxes imposed in chapter 422, divisions 3 21II,III,and V, and in chapter 432, and against the moneys and 3 22 credits tax imposed in section 533.329, for any tax year the 3 23 original transferor could have claimed the tax credit. Any 3 24 consideration received for the transfer of the tax credit shall 3 25 not be included as income under chapter 422, divisionsII,III,3 26 and V. Any consideration paid for the transfer of the tax 3 27 credit shall not be deducted from income under chapter 422, 3 28 divisionsII,III,and V. 3 29 Sec. 10. Section 15.355, subsection 3, paragraph f, Code 3 30 2015, is amended to read as follows: 3 31 f. For purposes of theindividual andcorporate income 3 32 taxes and the franchise tax, the increase in the basis of the 3 33 property that would otherwise result from the qualifying new 3 34 investment shall be reduced by the amount of the tax credit 3 35 computed under this subsection. 4 1 Sec. 11. Section 15E.43, subsection 1, paragraph a, Code 4 2 2015, is amended to read as follows: 4 3 a. For tax years beginning on or after January 1, 2002, 4 4 a tax credit shall be allowed against the taxes imposed in 4 5 chapter 422, divisionsII,III,and V, and in chapter 432, and 4 6 against the moneys and credits tax imposed in section 533.329, 4 7 for a portion of a taxpayer's equity investment, as provided 4 8 in subsection 2, in a qualifying business or a community=based 4 9 seed capital fund.An individual may claim a tax credit 4 10 under this paragraph of a partnership, limited liability 4 11 company, S corporation, estate, or trust electing to have 4 12 income taxed directly to the individual. The amount claimed 4 13 by the individual shall be based upon the pro rata share of the 4 14 individual's earnings from the partnership, limited liability 4 15 company, S corporation, estate, or trust.4 16 Sec. 12. Section 15E.43, subsection 1, paragraph c, Code 4 17 2015, is amended by striking the paragraph. 4 18 Sec. 13. Section 15E.44, subsection 4, Code 2015, is amended 4 19 to read as follows: 4 20 4. After verifying the eligibility of a qualifying 4 21 business, the authority shall issue a tax credit certificate 4 22 to be included with the equity investor's tax return. The tax 4 23 credit certificate shall contain the taxpayer's name, address, 4 24 tax identification number, the amount of credit, the name of 4 25 the qualifying business, and other information required by the 4 26 department of revenue. The tax credit certificate, unless 4 27 rescinded by the authority, shall be accepted by the department 4 28 of revenue as payment for taxes imposed pursuant to chapter 4 29 422, divisionsII, III,and V, and in chapter 432, and for the 4 30 moneys and credits tax imposed in section 533.329, subject to 4 31 any conditions or restrictions placed by the authority upon 4 32 the face of the tax credit certificate and subject to the 4 33 limitations of section 15E.43. 4 34 Sec. 14. Section 15E.45, subsection 4, Code 2015, is amended 4 35 to read as follows: 5 1 4. After verifying the eligibility of the community=based 5 2 seed capital fund, the authority shall issue a tax credit 5 3 certificate to be included with the taxpayer's tax return. 5 4 The tax credit certificate shall contain the taxpayer's name, 5 5 address, tax identification number, the amount of the tax 5 6 credit, the name of the community=based seed capital fund, and 5 7 other information required by the department of revenue. The 5 8 tax credit certificate, unless rescinded by the authority, 5 9 shall be accepted by the department of revenue or a local 5 10 taxing district, as applicable, as payment for taxes imposed 5 11 pursuant to chapter 422, divisionsII,III,and V, and chapter 5 12 432, and as payment for the moneys and credits tax imposed 5 13 pursuant to section 533.329, subject to any conditions or 5 14 restrictions placed by the authority on the face of the tax 5 15 credit certificate and subject to the limitations of section 5 16 15E.43. 5 17 Sec. 15. Section 15E.52, subsection 2, paragraph a, Code 5 18 2015, is amended to read as follows: 5 19 a. A tax credit shall be allowed against the taxes imposed 5 20 in chapter 422, divisionsII,III,and V, and in chapter 432, 5 21 and against the moneys and credits tax imposed in section 5 22 533.329, for a portion of a taxpayer's equity investment in the 5 23 form of cash in an innovation fund. 5 24 Sec. 16. Section 15E.52, subsection 2, paragraph b, Code 5 25 2015, is amended by striking the paragraph. 5 26 Sec. 17. Section 15E.62, subsection 8, Code 2015, is amended 5 27 to read as follows: 5 28 8. "Tax credit" means a contingent tax credit issued 5 29 pursuant to section 15E.66 that is available against tax 5 30 liabilities imposed by chapter 422, divisionsII,III,and 5 31 V, and by chapter 432 and against the moneys and credits tax 5 32 imposed by section 533.329. 5 33 Sec. 18. Section 15E.66, subsection 1, Code 2015, is amended 5 34 to read as follows: 5 35 1. The board may issue certificates and related tax credits 6 1 to designated investors which, if redeemed for the maximum 6 2 possible amount, shall not exceed a total aggregate of sixty 6 3 million dollars of tax credits. The certificates shall be 6 4 issued contemporaneously with a commitment to invest in the 6 5 Iowa fund of funds by a designated investor. A certificate 6 6 issued by the board shall have a specific maturity date or 6 7 dates designated by the board and shall be redeemable only in 6 8 accordance with the contingencies reflected on the certificate 6 9 or incorporated therein by reference. A certificate and the 6 10 related tax credit shall be transferable by the designated 6 11 investor. A tax credit shall not be claimed or redeemed except 6 12 by a designated investor or transferee in accordance with the 6 13 terms of a certificate from the board. A tax credit shall not 6 14 be claimed for a tax year that begins earlier than the maturity 6 15 date or dates stated on the certificate.An individual may 6 16 claim the credit of a partnership, limited liability company, 6 17 S corporation, estate, or trust electing to have the income 6 18 taxed directly to the individual. The amount claimed by the 6 19 individual shall be based upon the pro rata share of the 6 20 individual's earnings from the partnership, limited liability 6 21 company, S corporation, estate, or trust.Any tax credit in 6 22 excess of the taxpayer's tax liability for the tax year may be 6 23 credited to the tax liability for the following seven years, or 6 24 until depleted, whichever is earlier. 6 25 Sec. 19. Section 15E.305, subsection 1, Code 2015, is 6 26 amended to read as follows: 6 27 1. For tax years beginning on or after January 1, 2003, 6 28 a tax credit shall be allowed against the taxes imposed in 6 29 chapter 422, divisionsII,III,and V, and in chapter 432, and 6 30 against the moneys and credits tax imposed in section 533.329 6 31 equal to twenty=five percent of a taxpayer's endowment gift to 6 32 an endow Iowa qualified community foundation.An individual 6 33 may claim a tax credit under this section of a partnership, 6 34 limited liability company, S corporation, estate, or trust 6 35 electing to have income taxed directly to the individual. The 7 1 amount claimed by the individual shall be based upon the pro 7 2 rata share of the individual's earnings from the partnership, 7 3 limited liability company, S corporation, estate, or trust.A 7 4 tax credit shall be allowed only for an endowment gift made to 7 5 an endow Iowa qualified community foundation for a permanent 7 6 endowment fund established to benefit a charitable cause in 7 7 this state. The amount of the endowment gift for which the 7 8 tax credit is claimed shall not be deductible in determining 7 9 taxable income for state income tax purposes. Any tax credit 7 10 in excess of the taxpayer's tax liability for the tax year may 7 11 be credited to the tax liability for the following five years 7 12 or until depleted, whichever occurs first. A tax credit shall 7 13 not be carried back to a tax year prior to the tax year in which 7 14 the taxpayer claims the tax credit. 7 15 Sec. 20. Section 16.64, subsection 2, Code 2015, is amended 7 16 to read as follows: 7 17 2. Bonds and notes issued by the authority for purposes of 7 18 financing the beginning farmer loan program provided in section 7 19 16.75 are exempt from taxation by the state, and interest 7 20 earned on the bonds and notes is deductible in determining 7 21 net income for purposes of the stateindividual andcorporate 7 22 income tax underdivisions II anddivision III of chapter 422. 7 23 Sec. 21. Section 16.80, subsection 1, Code 2015, is amended 7 24 to read as follows: 7 25 1. An agricultural assets transfer tax credit is allowed 7 26 under this section. The tax credit is allowed against the 7 27 taxes imposed in chapter 422,division II, as provided in 7 28 section 422.11M, and in chapter 422,division III, as provided 7 29 in section 422.33, to facilitate the transfer of agricultural 7 30 assets from a taxpayer to a qualified beginning farmer. 7 31 Sec. 22. Section 16.80, subsection 3, Code 2015, is amended 7 32 by striking the subsection. 7 33 Sec. 23. Section 16.80, subsection 6, Code 2015, is amended 7 34 to read as follows: 7 35 6. A tax credit in excess of the taxpayer's liability 8 1 for the tax year may be credited to the tax liability for 8 2 the following ten tax years or until depleted, whichever is 8 3 earlier. A tax credit shall not be carried back to a tax year 8 4 prior to the tax year in which the taxpayer redeems the tax 8 5 credit.A tax credit shall not be transferable to any other 8 6 person other than the taxpayer's estate or trust upon the 8 7 taxpayer's death.8 8 Sec. 24. Section 16.81, subsection 1, Code 2015, is amended 8 9 to read as follows: 8 10 1. A custom farming contract tax credit is allowed under 8 11 this section. The tax credit is allowed against the taxes 8 12 imposed in chapter 422,division II, as provided in section 8 13 422.11M, and in chapter 422,division III, as provided in 8 14 section 422.33, to encourage taxpayers who are considering 8 15 custom farming agricultural land located in this state to 8 16 negotiate with qualified beginning farmers. 8 17 Sec. 25. Section 16.81, subsection 3, Code 2015, is amended 8 18 by striking the subsection. 8 19 Sec. 26. Section 16.81, subsection 9, Code 2015, is amended 8 20 to read as follows: 8 21 9. A custom farming contract tax credit in excess of the 8 22 taxpayer's liability for the tax year may be credited to 8 23 the tax liability for the following ten tax years or until 8 24 depleted, whichever is earlier. A tax credit shall not be 8 25 carried back to a tax year prior to the tax year in which the 8 26 taxpayer redeems the tax credit.A tax credit shall not be 8 27 transferable to any other person other than the taxpayer's 8 28 estate or trust upon the taxpayer's death.8 29 Sec. 27. Section 28A.24, Code 2015, is amended to read as 8 30 follows: 8 31 28A.24 Exemption from taxation. 8 32 Since an authority is performing essential governmental 8 33 functions, an authority is not required to pay any taxes or 8 34 assessments of any kind or nature upon any property required 8 35 or used by it for its purposes, or any rates, fees, rentals, 9 1 receipts, or incomes at any time received by it, and the 9 2 bonds issued by an authority, their transfer, and the income, 9 3 including any profits made on the sale of the bonds, is 9 4 deductible in determining net income for the purposes of the 9 5 stateindividual andcorporate income tax under chapter 422, 9 6divisions II anddivision III, and shall not be taxed by any 9 7 political subdivision of this state. 9 8 Sec. 28. Section 35A.13, subsection 2, paragraph b, Code 9 9 2015, is amended to read as follows: 9 10 b. Moneys credited to the fund pursuant to an income tax 9 11 checkoff provided in chapter 422, division II, Code 2015, if 9 12 applicable. 9 13 Sec. 29. Section 68A.102, subsection 21, Code 2015, is 9 14 amended by striking the subsection. 9 15 Sec. 30. Section 85.61, subsection 6, paragraph b, Code 9 16 2015, is amended by striking the paragraph. 9 17 Sec. 31. Section 100B.13, subsection 2, paragraph a, Code 9 18 2015, is amended to read as follows: 9 19 a. Moneys credited to the fund pursuant to an income tax 9 20 checkoff provided in chapter 422, division II, Code 2015, if 9 21 applicable. 9 22 Sec. 32. Section 190B.103, Code 2015, is amended to read as 9 23 follows: 9 24 190B.103 From farm to food donation tax credit. 9 25 A from farm to food donation tax credit is allowed against 9 26 the taxes imposed in chapter 422,divisions II anddivision 9 27 III, as provided in this chapter. 9 28 Sec. 33. Section 235A.2, subsection 1, Code 2015, is amended 9 29 to read as follows: 9 30 1. A child abuse prevention program fund is created in 9 31 the state treasury under the control of the department of 9 32 human services. The fund is composed of moneys appropriated 9 33 or available to and obtained or accepted by the treasurer of 9 34 state for deposit in the fund. The fund shall include moneys 9 35 transferred to the fund pursuant to an income tax checkoff 10 1 provided in chapter 422, division II, Code 2015, if applicable. 10 2 All interest earned on moneys in the fund shall be credited to 10 3 and remain in the fund. Section 8.33 does not apply to moneys 10 4 in the fund. 10 5 Sec. 34. Section 257.19, Code 2015, is amended to read as 10 6 follows: 10 7 257.19 Instructional support funding. 10 8 1. The additional funding for the instructional support 10 9 program for a budget year is limited to an amount not exceeding 10 10 ten percent of the total of regular program district cost 10 11 for the budget year and moneys received under section 257.14 10 12 as a budget adjustment for the budget year. Moneys received 10 13 by a district for the instructional support program are 10 14 miscellaneous income and may be used for any general fund 10 15 purpose. However, moneys received by a district for the 10 16 instructional support program shall not be used as, or in a 10 17 manner which has the effect of, supplanting funds authorized to 10 18 be received under sections 257.41, 257.46, 298.2, and 298.4, 10 19 or to cover any deficiencies in funding for special education 10 20 instructional services resulting from the application of the 10 21 special education weighting plan under section 256B.9. 10 22 2. Certification of a board's intent to participate for 10 23 a budget year, the method of funding, and the amount to be 10 24 raised shall be made to the department of management not later 10 25 than April 15 of the base year. Funding for the instructional 10 26 support program shall be obtained from instructional support 10 27 state aid and from local funding usingeitheran instructional 10 28 support property taxor a combination of an instructional 10 29 support property tax and an instructional support income 10 30 surtax. 10 31The board of directors shall determine whether the 10 32 instructional support property tax or the combination of the 10 33 instructional support property tax and instructional support 10 34 income surtax shall be used for the local funding. Subject to 10 35 the limitation specified in section 298.14, if the board elects 11 1 to use the combination of the instructional support property 11 2 tax and instructional support income surtax, for each budget 11 3 year the board shall determine the percent of income surtax 11 4 that will be imposed, expressed as full percentage points, not 11 5 to exceed twenty percent.11 6 Sec. 35. Section 257.21, Code 2015, is amended to read as 11 7 follows: 11 8 257.21 Computation of instructional support amount. 11 91.The department of management shall establish the amount 11 10 of instructional support property tax to be leviedand the 11 11 amount of instructional support income surtax to be imposed11 12 by a district in accordance with the decision of the board 11 13 under section 257.19 for each school year for which the 11 14 instructional support program is authorized. The department 11 15 of management shall determine these amounts based upon the 11 16 most recent figures available for the district's valuation of 11 17 taxable property, individual state income tax paid,and budget 11 18 enrollment in the district, and shall certify to the district's 11 19 county auditor the amount of instructional support property 11 20 tax, and to the director of revenue the amount of instructional 11 21 support income surtax to be imposed if an instructional support 11 22 income surtax isto beimposedlevied. 11 232. The instructional support income surtax shall be imposed 11 24 on the state individual income tax for the calendar year during 11 25 which the school's budget year begins, or for a taxpayer's 11 26 fiscal year ending during the second half of that calendar year 11 27 and after the date the board adopts a resolution to participate 11 28 in the program or the first half of the succeeding calendar 11 29 year, and shall be imposed on all individuals residing in the 11 30 school district on the last day of the applicable tax year. 11 31 As used in this section, "state individual income tax" means 11 32 the taxes computed under section 422.5, less the amounts of 11 33 nonrefundable credits allowed under chapter 422, division II, 11 34 except for the Iowa taxpayers trust fund tax credit allowed 11 35 under section 422.11E.12 1 Sec. 36. Section 257.29, subsections 3 and 4, Code 2015, are 12 2 amended to read as follows: 12 3 3. The educational improvement program shall be funded 12 4 byeitheran educational improvement property taxor by a 12 5 combination of an educational improvement property tax and an 12 6 educational improvement income surtax.The method of raising 12 7 the educational improvement moneys shall be determined by the 12 8 board. Subject to the limitation in section 298.14, if the 12 9 board uses a combination of an educational improvement property 12 10 tax and an educational improvement income surtax, the board 12 11 shall determine the percent of income surtax to be imposed, 12 12 expressed as full percentage points, not to exceed twenty 12 13 percent.12 14 4. The department of management shall establish the amount 12 15 of the educational improvement property tax to be leviedor 12 16 the amount of the combination of the educational improvement 12 17 property tax to be levied and the amount of the school district 12 18 income surtax to be imposedfor each school year that the 12 19 educational improvement amount is authorized. The educational 12 20 improvement property taxand income surtax, if an income 12 21 surtax is imposed,shall be leviedand imposed, collected, 12 22 and paid to the school district in the manner provided for 12 23 the instructional support program insectionssection 257.21 12 24through 257.26. Moneys received by a school district under the 12 25 educational improvement program are miscellaneous income. 12 26 Sec. 37. Section 279.63, subsection 2, paragraph a, Code 12 27 2015, is amended to read as follows: 12 28 a. All property tax levies, income surtaxes,and local 12 29 option sales taxes in place in the school district, listed by 12 30 type of levy, rate, amount, duration, and notification of the 12 31 maximum rate and amount limitations permitted by statute. 12 32 Sec. 38. Section 298.2, subsections 1 and 4, Code 2015, are 12 33 amended to read as follows: 12 34 1. A physical plant and equipment levy of not exceeding 12 35 one dollar and sixty=seven cents per thousand dollars of 13 1 assessed valuation in the district is established except as 13 2 otherwise provided in this subsection. The physical plant 13 3 and equipment levy consists of the regular physical plant 13 4 and equipment levy of not exceeding thirty=three cents per 13 5 thousand dollars of assessed valuation in the district and 13 6 a voter=approved physical plant and equipment levy of not 13 7 exceeding one dollar and thirty=four cents per thousand 13 8 dollars of assessed valuation in the district.However, the 13 9 voter=approved physical plant and equipment levy may consist 13 10 of a combination of a physical plant and equipment property 13 11 tax levy and a physical plant and equipment income surtax as 13 12 provided in subsection 4 with the maximum amount levied and 13 13 imposed limited to an amount that could be raised by a one 13 14 dollar and thirty=four cent property tax levy.13 15 4. a. The board may on its own motion, and upon the 13 16 written request of not less than one hundred eligible electors 13 17 or thirty percent of the number of eligible electors voting 13 18 at the last regular school election, whichever is greater, 13 19 shall, direct the county commissioner of elections to provide 13 20 for submitting the proposition of levying the voter=approved 13 21 physical plant and equipment levy for a period of time 13 22 authorized by the voters at the election, not to exceed ten 13 23 years. The election shall be held on a date specified in 13 24 section 39.2, subsection 4, paragraph "c". The proposition is 13 25 adopted if a majority of those voting on the proposition at the 13 26 election approves it. The voter=approved physical plant and 13 27 equipment levy shall be fundedeitherby a physical plant and 13 28 equipment property taxor by a combination of a physical plant 13 29 and equipment property tax and a physical plant and equipment 13 30 income surtax, as determined by the board.However, if the 13 31 board intends to enter into a rental or lease arrangement under 13 32 section 279.26, or intends to enter into a loan agreement under 13 33 section 297.36, only a property tax shall be levied for those 13 34 purposes. Subject to the limitations of section 298.14, if 13 35 the board uses a combination of a physical plant and equipment 14 1 property tax and a physical plant and equipment surtax, for 14 2 each fiscal year the board shall determine the percent of 14 3 income surtax to be imposed expressed as full percentage 14 4 points, not to exceed twenty percent.14 5 b.If a combination of a property tax and income surtax 14 6 is used, by April 15 of the previous school year, the board 14 7 shall certify the percent of the income surtax to be imposed 14 8 and the amount to be raised to the department of management 14 9 and the department of management shall establish the rate of 14 10 the property tax and income surtax for the school year.The 14 11 physical plant and equipment property taxand income surtax14 12 shall be leviedor imposed, collected, and paid to the school 14 13 district in the manner provided for the instructional support 14 14 program insectionssection 257.21through 257.26. 14 15 Sec. 39. Section 404A.2, subsection 2, Code 2015, is amended 14 16 to read as follows: 14 17 2. The tax credit shall be allowed against the taxes imposed 14 18 in chapter 422, divisionsII,III,and V, and in chapter 14 19 432.An individual may claim a tax credit under this section 14 20 of a partnership, limited liability company, S corporation, 14 21 estate, or trust electing to have income taxed directly to the 14 22 individual. For an individual claiming a tax credit of an 14 23 estate or trust, the amount claimed by the individual shall be 14 24 based upon the pro rata share of the individual's earnings from 14 25 the estate or trust. For an individual claiming a tax credit 14 26 of a partnership, limited liability company, or S corporation, 14 27 the amount claimed by the partner, member, or shareholder, 14 28 respectively, shall be based upon the amounts designated by 14 29 the eligible partnership, S corporation, or limited liability 14 30 company, as applicable.14 31 Sec. 40. Section 404A.2, subsection 4, paragraph c, Code 14 32 2015, is amended to read as follows: 14 33 c. The tax credit certificate, unless rescinded by the 14 34 department, shall be accepted by the department of revenue 14 35 as payment for taxes imposed in chapter 422, divisionsII,15 1 III,and V, and in chapter 432, subject to any conditions or 15 2 restrictions placed by the department or the department of 15 3 revenue upon the face of the tax credit certificate and subject 15 4 to the limitations of this program. 15 5 Sec. 41. Section 404A.2, subsection 5, paragraph c, Code 15 6 2015, is amended to read as follows: 15 7 c. A tax credit shall not be claimed by a transferee 15 8 under this section until a replacement tax credit certificate 15 9 identifying the transferee as the proper holder has been 15 10 issued. The transferee may use the amount of the tax credit 15 11 transferred against the taxes imposed in chapter 422, divisions 15 12II,III,and V, and in chapter 432, for any tax year the 15 13 original transferor could have claimed the tax credit. Any 15 14 consideration received for the transfer of the tax credit shall 15 15 not be included as income under chapter 422, divisionsII,III,15 16 and V. Any consideration paid for the transfer of the tax 15 17 credit shall not be deducted from income under chapter 422, 15 18 divisionsII,III,and V. 15 19 Sec. 42. Section 422.1, subsection 2, Code 2015, is amended 15 20 to read as follows: 15 21 2. Division IIPersonal net income taxProvisions 15 22 related to the business tax on corporations. 15 23 Sec. 43. Section 422.11L, subsection 1, unnumbered 15 24 paragraph 1, Code 2015, is amended to read as follows: 15 25 The taxes imposed underthisdivision, less the credits 15 26 allowed under section 422.12,III shall be reduced by a solar 15 27 energy system tax credit equal to the sum of the following: 15 28 Sec. 44. Section 422.11L, subsection 3, paragraph a, Code 15 29 2015, is amended by striking the paragraph. 15 30 Sec. 45. Section 422.11N, subsection 3, unnumbered 15 31 paragraph 1, Code 2015, is amended to read as follows: 15 32 The taxes imposed underthisdivision, less the credits 15 33 allowed under section 422.12,III shall be reduced by an 15 34 ethanol promotion tax credit for each tax year that the 15 35 taxpayer is eligible to claim the tax credit under this 16 1 section. In order to be eligible, all of the following must 16 2 apply: 16 3 Sec. 46. Section 422.11N, subsection 9, Code 2015, is 16 4 amended by striking the subsection. 16 5 Sec. 47. Section 422.11O, subsection 2, unnumbered 16 6 paragraph 1, Code 2015, is amended to read as follows: 16 7 The taxes imposed underthisdivision, less the credits 16 8 allowed under section 422.12,III shall be reduced by an 16 9 E=85 gasoline promotion tax credit for each tax year that 16 10 the taxpayer is eligible to claim the tax credit under this 16 11 subsection. 16 12 Sec. 48. Section 422.11O, subsection 7, Code 2015, is 16 13 amended by striking the subsection. 16 14 Sec. 49. Section 422.11P, subsection 3, unnumbered 16 15 paragraph 1, Code 2015, is amended to read as follows: 16 16 The taxes imposed underthisdivision, less the credits 16 17 allowed under section 422.12,III shall be reduced by a 16 18 biodiesel blended fuel tax credit for each tax year that 16 19 the taxpayer is eligible to claim a tax credit under this 16 20 subsection. 16 21 Sec. 50. Section 422.11P, subsection 7, Code 2015, is 16 22 amended by striking the subsection. 16 23 Sec. 51. Section 422.11S, subsection 1, Code 2015, is 16 24 amended to read as follows: 16 25 1. The taxes imposed underthisdivision, less the credits 16 26 allowed under section 422.12,III shall be reduced by a 16 27 school tuition organization tax credit equal to sixty=five 16 28 percent of the amount of the voluntary cash or noncash 16 29 contributions made by the taxpayer during the tax year to a 16 30 school tuition organization, subject to the total dollar value 16 31 of the organization's tax credit certificates as computed in 16 32 subsection 8. The tax credit shall be claimed by use of a tax 16 33 credit certificate as provided in subsection 7. 16 34 Sec. 52. Section 422.11S, subsections 4 and 5, Code 2015, 16 35 are amended by striking the subsections. 17 1 Sec. 53. Section 422.11S, subsection 8, paragraph a, 17 2 subparagraph (2), Code 2015, is amended to read as follows: 17 3 (2) "Total approved tax credits" meansfor the tax year 17 4 beginning in the 2006 calendar year, two million five hundred 17 5 thousand dollars, for the tax year beginning in the 2007 17 6 calendar year, five million dollars, for tax years beginning 17 7 on or after January 1, 2008, but before January 1, 2012, seven 17 8 million five hundred thousand dollars, for tax years beginning 17 9 on or after January 1, 2012, but before January 1, 2014, eight 17 10 million seven hundred fifty thousand dollars, and for tax years 17 11 beginning on or after January 1, 2014, twelvefor tax years 17 12 beginning on or after January 1, 2015, three million dollars. 17 13 Sec. 54. Section 422.11Y, subsection 3, unnumbered 17 14 paragraph 1, Code 2015, is amended to read as follows: 17 15 The taxes imposed underthisdivision, less the credits 17 16 allowed under section 422.12,III shall be reduced by the 17 17 amount of the E=15 plus gasoline promotion tax credit for each 17 18 tax year that the taxpayer is eligible to claim a tax credit 17 19 under this subsection. 17 20 Sec. 55. Section 422.11Y, subsection 8, Code 2015, is 17 21 amended by striking the subsection. 17 22 Sec. 56. Section 422.15, subsections 2 and 3, Code 2015, are 17 23 amended by striking the subsections. 17 24 Sec. 57. Section 422.15, subsection 4, Code 2015, is amended 17 25 to read as follows: 17 26 4. Notwithstandingsubsectionssubsection 1,2, and 3,or 17 27 any other provision of this chapter, withholding of income 17 28 tax and any reporting requirement shall not be imposed upon 17 29 a person, corporation, or withholding agent or any payor of 17 30 deferred compensation, pensions, or annuities with regard to 17 31 such payments made to a nonresident of the state. 17 32 Sec. 58. Section 422.21, Code 2015, is amended by striking 17 33 the section and inserting in lieu thereof the following: 17 34 422.21 Form and time of return. 17 35 Returns shall be in the form the director prescribes, and 18 1 shall be filed with the department on or before the last day 18 2 of the fourth month after the expiration of the tax year. 18 3 However, cooperative associations as defined in section 6072(d) 18 4 of the Internal Revenue Code shall file their returns on or 18 5 before the fifteenth day of the ninth month following the 18 6 close of the taxable year and nonprofit corporations subject 18 7 to the unrelated business income tax imposed by section 18 8 422.33, subsection 1A, shall file their returns on or before 18 9 the fifteenth day of the fifth month following the close of 18 10 the taxable year. If, under the Internal Revenue Code, a 18 11 corporation is required to file a return covering a tax period 18 12 of less than twelve months, the state return shall be for the 18 13 same period and is due forty=five days after the due date of 18 14 the federal tax return, excluding any extension of time to 18 15 file. In case of sickness, absence, or other disability, or 18 16 if good cause exists, the director may allow further time for 18 17 filing returns. The director shall cause to be prepared blank 18 18 forms for the returns and shall cause them to be distributed 18 19 throughout the state and to be furnished upon application, 18 20 but failure to receive or secure the form does not relieve 18 21 the taxpayer from the obligation of making a return that is 18 22 required. The department may as far as consistent with the 18 23 Code draft income tax forms to conform to the income tax 18 24 forms of the internal revenue department of the United States 18 25 government. 18 26 Sec. 59. Section 422.22, Code 2015, is amended to read as 18 27 follows: 18 28 422.22 Supplementary returns. 18 29 If the director shall be of the opinion that any taxpayer 18 30 required underthisdivision III to file a return has failed 18 31 to file such a return or to include in a return filed, either 18 32 intentionally or through error, items of taxable income, 18 33 the director may require from such taxpayer a return or 18 34 supplementary return in such form as the director shall 18 35 prescribe, of all the items of income which the taxpayer 19 1 received during the year for which the return is made, whether 19 2 or not taxable under the provisions ofthisdivision III. If 19 3 from a supplementary return, or otherwise, the director finds 19 4 that any items of income, taxable underthisdivision III, have 19 5 been omitted from the original return, the director may require 19 6 the items so omitted to be added to the original return. Such 19 7 supplementary return and the correction of the original return 19 8 shall not relieve the taxpayer from any of the penalties to 19 9 which the taxpayer may be liable under any provisions ofthis19 10 division III, whether or not the director required a return or 19 11 a supplementary return under this section. 19 12 Sec. 60. Section 422.32, Code 2015, is amended to read as 19 13 follows: 19 14 422.32 Definitions. 19 151.For the purpose of this division and unless otherwise 19 16 required by the context: 19 17a.1. "Affiliated group" means a group of corporations as 19 18 defined in section 1504(a) of the Internal Revenue Code. 19 19b.2. a. "Business income" means income arising from 19 20 transactions and activity in the regular course of the 19 21 taxpayer's trade or business; or income from tangible and 19 22 intangible property if the acquisition, management, and 19 23 disposition of the property constitute integral parts of the 19 24 taxpayer's regular trade or business operations; or gain or 19 25 loss resulting from the sale, exchange, or other disposition of 19 26 real property or of tangible or intangible personal property, 19 27 if the property while owned by the taxpayer was operationally 19 28 related to the taxpayer's trade or business carried on in 19 29 Iowa or operationally related to sources within Iowa, or the 19 30 property was operationally related to sources outside this 19 31 state and to the taxpayer's trade or business carried on in 19 32 Iowa; or gain or loss resulting from the sale, exchange, or 19 33 other disposition of stock in another corporation if the 19 34 activities of the other corporation were operationally related 19 35 to the taxpayer's trade or business carried on in Iowa while 20 1 the stock was owned by the taxpayer. A taxpayer may have more 20 2 than one regular trade or business in determining whether 20 3 income is business income. 20 4(1)b. It is the intent of the general assembly to treat as 20 5 apportionable business income all income that may be treated 20 6 as apportionable business income under the Constitution of the 20 7 United States. 20 8(2)c. The filing of an Iowa income tax return on a 20 9 combined report basis is neither allowed nor required by this 20 10paragraph "b"subsection. 20 11c.3. "Commercial domicile" means the principal place from 20 12 which the trade or business of the taxpayer is directed or 20 13 managed. 20 14d.4. "Corporation" includes joint stock companies, and 20 15 associations organized for pecuniary profit, and partnerships 20 16 and limited liability companies taxed as corporations under the 20 17 Internal Revenue Code. 20 18e.5. "Domestic corporation" means any corporation 20 19 organized under the laws of this state. 20 20 6. "Fiduciary" means a guardian, trustee, executor, 20 21 administrator, receiver, conservator, or any person, whether 20 22 individual or corporate, acting in any fiduciary capacity for 20 23 any person, trust, or estate. 20 24 7. "Fiscal year" means an accounting period of twelve 20 25 months, ending on the last day of any month other than 20 26 December. 20 27f.8. "Foreign corporation" means any corporation other 20 28 than a domestic corporation. 20 29 9. "Foreign country" means any jurisdiction other than one 20 30 embraced within the United States. The words "United States", 20 31 when used in a geographical sense, include the states, the 20 32 District of Columbia, and the possessions of the United States. 20 33g.10. "Income from sources within this state" means income 20 34 from real, tangible, or intangible property located or having 20 35 a situs in this state. 21 1 11. "Income year" means the calendar year or the fiscal year 21 2 upon the basis of which the net income is computed under this 21 3 division. 21 4 12. "Individual" means a natural person. 21 5h.13. "Internal Revenue Code" means the Internal Revenue 21 6 Code of 1954, prior to the date of its redesignation as the 21 7 Internal Revenue Code of 1986 by the Tax Reform Act of 1986, 21 8 or means the Internal Revenue Code of 1986 as amended to and 21 9 including January 1, 2014. 21 10i.14. "Nonbusiness income" means all income other than 21 11 business income. 21 12 15. The word "paid", for the purposes of the deductions 21 13 under this division, means "paid or accrued" or "paid or 21 14 incurred", and the terms "paid or incurred" and "paid or 21 15 accrued" shall be construed according to the method of 21 16 accounting upon the basis of which the net income is computed 21 17 under this division. The term "received", for the purpose 21 18 of the computation of net income under this division, means 21 19 "received or accrued", and the term "received or accrued" shall 21 20 be construed according to the method of accounting upon the 21 21 basis of which the net income is computed under this division. 21 22 16. "Resident" applies only to individuals and includes, for 21 23 the purpose of determining liability to the tax imposed by this 21 24 division upon or with reference to the income of any tax year, 21 25 any individual domiciled in the state, and any other individual 21 26 who maintains a permanent place of abode within the state. 21 27j.17. "State" means any state of the United States, the 21 28 District of Columbia, the Commonwealth of Puerto Rico, any 21 29 territory or possession of the United States, and any foreign 21 30 country or political subdivision thereof. 21 31 18. a. "Tax year" means the calendar year, or the fiscal 21 32 year ending during such calendar year, upon the basis of which 21 33 the net income is computed under this division. 21 34 b. If a taxpayer has made the election provided by section 21 35 441, subsection "f", of the Internal Revenue Code, "tax year" 22 1 means the annual period so elected, varying from fifty=two to 22 2 fifty=three weeks. 22 3 c. If the effective date or the applicability of a provision 22 4 of this division is expressed in terms of a tax year beginning, 22 5 including, or ending with reference to a specified date which 22 6 is the first or last day of a month, a tax year described in 22 7 paragraph "a" of this subsection shall be treated as beginning 22 8 with the first day of the calendar month beginning nearest to 22 9 the first day of the tax year or as ending with the last day of 22 10 the calendar month ending nearest to the last day of the tax 22 11 year. 22 12k.19. "Taxable in another state". For purposes of 22 13 allocation and apportionment of income under this division, a 22 14 taxpayer is "taxable in another state" if: 22 15(1)a. In that state the taxpayer is subject to a net 22 16 income tax, a franchise tax measured by net income, a franchise 22 17 tax for the privilege of doing business, or a corporate stock 22 18 tax; or 22 19(2)b. That state has jurisdiction to subject the taxpayer 22 20 to a net income tax regardless of whether, in fact, the state 22 21 does or does not. 22 22l.20. "Unitary business" means a business carried on 22 23 partly within and partly without a state where the portion 22 24 of the business carried on within the state depends on or 22 25 contributes to the business outside the state. 22 262. The words, terms, and phrases defined in section 422.4, 22 27 subsections 4 to 6, 8, 9, 13, and 15 to 17, when used in this 22 28 division, shall have the meanings ascribed to them in said 22 29 section except where the context clearly indicates a different 22 30 meaning.22 31 Sec. 61. Section 422.33, subsection 28, Code 2015, is 22 32 amended to read as follows: 22 33 28. The taxes imposed under this division shall be reduced 22 34 by a school tuition organization tax credit allowed under 22 35 section 422.11S.The maximum amount of tax credits that 23 1 may be approved under this subsection for a tax year equals 23 2 twenty=five percent of the school tuition organization's tax 23 3 credits that may be approved pursuant to section 422.11S, 23 4 subsection 8, for a tax year.23 5 Sec. 62. Section 422D.1, Code 2015, is amended to read as 23 6 follows: 23 7 422D.1 Authorization == election == imposition and repeal == 23 8 use of revenues. 23 9 1. a. A county board of supervisors may offer for voter 23 10 approvalany of the following taxes or a combination of the 23 11 following taxes:23 12(1) Local option income surtax.23 13(2)Anan ad valorem property tax. 23 14 b. Revenues generated fromthese taxesthe ad valorem 23 15 property tax shall be used for emergency medical services as 23 16 provided in section 422D.6. 23 17 2.a.Thetaxesproperty tax for emergency medical services 23 18 shall only be imposed after an election at which a majority of 23 19 those voting on the question of imposing the taxor combination 23 20 of taxes specified in subsection 1, paragraph "a", subparagraph 23 21 (1) or (2),vote in favor of the question. However, the tax 23 22or combination of taxes specified in subsection 1shall not 23 23 be imposed on property within or on residents of a benefited 23 24 emergency medical services district under chapter 357F. The 23 25 question of imposing the taxor combination of the taxesmay 23 26 be submitted at the regular city election, a special election, 23 27 or the general election. Notice of the question shall be 23 28 provided by publication at least sixty days before the time of 23 29 the election and shall identify the taxor combination of taxes23 30 and the levy rateor rates, as applicable. If a majority of 23 31 those voting on the question approve the imposition of the tax 23 32or combination of taxes, the taxor combination of taxesshall 23 33 beimposed as follows:23 34(1) A local option income surtax shall be imposed for tax 23 35 years beginning on or after January 1 of the fiscal year in 24 1 which the favorable election was held.24 2(2)An ad valorem property tax shall be imposedlevied for 24 3 the fiscal year in which the election was held. 24 4b. Before a county imposes an income surtax as specified 24 5 in subsection 1, paragraph "a", subparagraph (1), a benefited 24 6 emergency medical services district in the county shall be 24 7 dissolved, and the county shall be liable for the outstanding 24 8 obligations of the benefited district. If the benefited 24 9 district extends into more than one county, the county imposing 24 10 the income surtax shall be liable for only that portion of the 24 11 obligations relating to the portion of the benefited district 24 12 in the county.24 13 3. Revenues received by the county from thetaxes imposed 24 14tax levied under this chapter shall be deposited into the 24 15 emergency medical services trust fund created pursuant to 24 16 section 422D.6 and shall be used as provided in that section. 24 17 4. Any taxor combination of taxes imposedlevied under this 24 18 chapter shall be for a maximum period of five years. 24 19 Sec. 63. Section 425.23, subsection 4, paragraph b, Code 24 20 2015, is amended to read as follows: 24 21 b. The annual adjustment factor for the 1998 base year is 24 22 one hundred percent. For each subsequent base year, the annual 24 23 adjustment factor equals the annual inflation factor for the 24 24 calendar year, in which the base year begins, as computed in 24 25 section 422.4for purposes of the individual income tax, Code 24 26 2015. 24 27 Sec. 64. Section 476.20, subsection 3, paragraph b, Code 24 28 2015, is amended to read as follows: 24 29 b. A qualified applicant for the low income home energy 24 30 assistance program or the weatherization assistance program who 24 31 is also a"head of household", as defined in section 422.4, 24 32 subsection 7,head of household shall be promptly certified 24 33 by the local agency administering the applicant's program to 24 34 the applicant's public utility that the resident is a"head 24 35 of household" as defined in section 422.4, subsection 7,head 25 1 of household and is qualified for the low income home energy 25 2 assistance program or weatherization assistance program. 25 3 Notwithstanding subsection 1, a public utility furnishing gas 25 4 or electricity shall not disconnect service from November 1 25 5 through April 1 to a residence which has a resident that has 25 6 been certified under this paragraph. For purposes of this 25 7 paragraph, "head of household" has the same meaning as provided 25 8 by the Internal Revenue Code. 25 9 Sec. 65. Section 476B.2, Code 2015, is amended to read as 25 10 follows: 25 11 476B.2 General rule. 25 12 The owner of a qualified facility shall, for each 25 13 kilowatt=hour of qualified electricity that the owner sells 25 14 or uses for on=site consumption during the ten=year period 25 15 beginning on the date the qualified facility was originally 25 16 placed in service, be allowed a wind energy production tax 25 17 credit to the extent provided in this chapter against the tax 25 18 imposed in chapter 422, divisionsII,III,and V, and chapter 25 19 432, and may claim a refund of tax imposed by chapter 423 or 25 20 437A for any tax year within the time period set forth in 25 21 section 423.47 or 437A.14. 25 22 Sec. 66. Section 476B.6, subsection 5, paragraphs a, b, and 25 23 c, Code 2015, are amended to read as follows: 25 24 a. If the tax credit application is filed by a partnership, 25 25 limited liability company, S corporation, estate, trust, or 25 26 other reporting entity all of the income of which is taxed 25 27 directly to its equity holders or beneficiaries, for the taxes 25 28 imposed under chapter 422, divisionII orIII, the tax credit 25 29 certificate shall be issued directly to equity holders or 25 30 beneficiaries of the applicant in proportion to their pro rata 25 31 share of the income of such entity. The applicant shall, in 25 32 the application made under this section, identify its equity 25 33 holders or beneficiaries, and the percentage of such entity's 25 34 income that is allocable to each equity holder or beneficiary. 25 35 b. If the tax credit applicant under this section is 26 1 eligible to receive renewable electricity production credits 26 2 authorized under section 45 of the Internal Revenue Code, 26 3 as amended, and the tax credit applicant is a partnership, 26 4 limited liability company, S corporation, estate, trust, or 26 5 other reporting entity all of the income of which is taxed 26 6 directly to its equity holders or beneficiaries, for the taxes 26 7 imposed under chapter 422, divisionII orIII, the tax credit 26 8 certificate may be issued to a partner if the business is a 26 9 partnership, a shareholder if the business is an S corporation, 26 10 or a member if the business is a limited liability company 26 11 in the amounts designated by the eligible partnership, S 26 12 corporation, or limited liability company. In absence of 26 13 such designation, the credits under this section shall flow 26 14 through to the partners, shareholders, or members in accordance 26 15 with their pro rata share of the income of the entity. The 26 16 applicant shall, in the application made under this section, 26 17 identify the holders or beneficiaries that are to receive the 26 18 tax credit certificates and the percentage of the tax credit 26 19 that is allocable to each holder or beneficiary. 26 20 c. If an applicant under this section is eligible to 26 21 receive renewable electricity production credits authorized 26 22 under section 45 of the Internal Revenue Code, as amended, and 26 23 the tax credit applicant is a partnership, limited liability 26 24 company, S corporation, estate, trust, or other reporting 26 25 entity all of the income of which is taxed directly to its 26 26 equity holders or beneficiaries, for the taxes imposed under 26 27 chapter 422, divisionII orIII, the tax credit certificates 26 28 and all future rights to the tax credit in this section may be 26 29 distributed to an equity holder or beneficiary as a liquidating 26 30 distribution or portion thereof, of a holder or beneficiary's 26 31 interest in the applicant entity. The applicant shall, in the 26 32 application made under this section, designate the percentage 26 33 of the tax credit allocable to the liquidating equity holder 26 34 or beneficiary that is to receive the current and future tax 26 35 credit certificates under this section. 27 1 Sec. 67. Section 476B.7, subsection 2, Code 2015, is amended 27 2 to read as follows: 27 3 2. The tax credit shall be freely transferable. The 27 4 transferee may use the amount of the tax credit transferred 27 5 against the taxes imposed under chapter 422, divisionsII,III,27 6 and V, and chapter 432 for any tax year the original transferor 27 7 could have claimed the tax credit. The transferee may claim 27 8 a refund under chapter 423 or 437A for any tax year within 27 9 the time period set forth in section 423.47 or 437A.14 for 27 10 which the original transferor could have claimed a refund. 27 11 Any consideration received for the transfer of the tax credit 27 12 shall not be included as income under chapter 422, divisions 27 13II,III,and V. Any consideration paid for the transfer of the 27 14 tax credit shall not be deducted from income under chapter 422, 27 15 divisionsII,III,and V. 27 16 Sec. 68. Section 476C.4, subsection 4, paragraph a, Code 27 17 2015, is amended to read as follows: 27 18 a. If the tax credit application is filed by a partnership, 27 19 limited liability company, S corporation, estate, trust, or 27 20 other reporting entity all of the income of which is taxed 27 21 directly to its equity holders or beneficiaries, for the taxes 27 22 imposed under chapter 422, divisionII orIII, the tax credit 27 23 certificate shall be issued directly to equity holders or 27 24 beneficiaries of the applicant in proportion to their pro rata 27 25 share of the income of such entity. The applicant shall, in 27 26 the application made under this section, identify its equity 27 27 holders or beneficiaries, and the percentage of such entity's 27 28 income that is allocable to each equity holder or beneficiary. 27 29 Sec. 69. Section 476C.4, subsection 4, paragraph b, 27 30 subparagraph (1), Code 2015, is amended to read as follows: 27 31 (1) If the tax credit applicant under this section is 27 32 eligible to receive renewable electricity production credits 27 33 authorized under section 45 of the Internal Revenue Code, 27 34 as amended, and the tax credit applicant is a partnership, 27 35 limited liability company, S corporation, estate, trust, or 28 1 other reporting entity all of the income of which is taxed 28 2 directly to its equity holders or beneficiaries, for the taxes 28 3 imposed under chapter 422, divisionII orIII, the tax credit 28 4 certificate may be issued to a partner if the business is a 28 5 partnership, a shareholder if the business is an S corporation, 28 6 or a member if the business is a limited liability company 28 7 in the amounts designated by the eligible partnership, S 28 8 corporation, or limited liability company. In absence of such 28 9 designation, the credits under this section shall flow through 28 10 to the partners, shareholders, or members in accordance with 28 11 their pro rata share of the income of the entity. 28 12 Sec. 70. Section 476C.4, subsection 4, paragraph c, 28 13 subparagraph (1), Code 2015, is amended to read as follows: 28 14 (1) If an applicant under this section is eligible to 28 15 receive renewable electricity production credits authorized 28 16 under section 45 of the Internal Revenue Code, as amended, and 28 17 the tax credit applicant is a partnership, limited liability 28 18 company, S corporation, estate, trust, or other reporting 28 19 entity all of the income of which is taxed directly to its 28 20 equity holders or beneficiaries, for the taxes imposed under 28 21 chapter 422, divisionII orIII, the tax credit certificates 28 22 and all future rights to the tax credit in this section may be 28 23 distributed to an equity holder or beneficiary as a liquidating 28 24 distribution or portion thereof, of a holder or beneficiary's 28 25 interest in the applicant entity. 28 26 Sec. 71. Section 476C.6, subsection 1, paragraph b, Code 28 27 2015, is amended to read as follows: 28 28 b. The transferee may use the amount of the tax credit 28 29 transferred against taxes imposed under chapter 422, divisions 28 30II,III,and V, and chapter 432 for any tax year the original 28 31 transferor could have claimed the tax credit. The transferee 28 32 may claim a refund under chapter 423 or 437A for any tax 28 33 year within the time period set forth in section 423.47 or 28 34 437A.14 for which the original transferor could have claimed 28 35 the refund. Any consideration received for the transfer of 29 1 the tax credit shall not be included as income under chapter 29 2 422, divisionsII,III,and V. Any consideration paid for the 29 3 transfer of the tax credit shall not be deducted from income 29 4 under chapter 422, divisionsII,III,and V. 29 5 Sec. 72. Section 483A.1A, subsection 10, paragraph e, Code 29 6 2015, is amended to read as follows: 29 7 e. Is a member of the armed forces of the United States 29 8 who is serving on active duty,and claims residency in this 29 9 state, and has filed a state individual income tax return 29 10 as a resident pursuant to chapter 422, division II, for the 29 11 preceding tax year,or is stationed in this state. 29 12 Sec. 73. REPEAL. Sections 68A.601, 190B.105, 257.22 29 13 through 257.26, 298.14, 422.4 through 422.11F, 422.11H through 29 14 422.11J, 422.11M, 422.11Q, 422.11R, 422.11V, 422.11W, 422.11Z, 29 15 422.12, 422.12A through 422.12E, 422.12H, 422.12J through 29 16 422.14, 422.16, 422.17, 422.19, 422.23, 422.27, 422.31, 422D.2 29 17 through 422D.4, Code 2015, are repealed. 29 18 Sec. 74. CORRESPONDING AMENDMENTS LEGISLATION. Additional 29 19 legislation is required to fully implement this division of 29 20 this Act. The director of the department of revenue shall, in 29 21 compliance with section 2.16, prepare draft legislation for 29 22 submission to the legislative services agency, as necessary, to 29 23 implement the repeal of the individual income tax under this 29 24 division of this Act and under other provisions of law. 29 25 Sec. 75. APPLICABILITY. This division of this Act applies 29 26 to tax years beginning on or after January 1, 2016. 29 27 DIVISION II 29 28 SALES AND USE TAX 29 29 Sec. 76. Section 423.2, subsection 1, unnumbered paragraph 29 30 1, Code 2015, is amended to read as follows: 29 31 There is imposed a tax ofsixeleven percent upon the sales 29 32 price of all sales of tangible personal property, consisting 29 33 of goods, wares, or merchandise, sold at retail in the state 29 34 to consumers or users except as otherwise provided in this 29 35 subchapter. 30 1 Sec. 77. Section 423.2, subsections 2 and 3, Code 2015, are 30 2 amended to read as follows: 30 3 2. A tax ofsixeleven percent is imposed upon the sales 30 4 price of the sale or furnishing of gas, electricity, water, 30 5 heat, pay television service, and communication service, 30 6 including the sales price from such sales by any municipal 30 7 corporation or joint water utility furnishing gas, electricity, 30 8 water, heat, pay television service, and communication service 30 9 to the public in its proprietary capacity, except as otherwise 30 10 provided in this subchapter, when sold at retail in the state 30 11 to consumers or users. 30 12 3. A tax ofsixeleven percent is imposed upon the 30 13 sales price of all sales of tickets or admissions to places 30 14 of amusement, fairs, and athletic events except those of 30 15 elementary and secondary educational institutions. A tax 30 16 ofsixeleven percent is imposed on the sales price of an 30 17 entry fee or like charge imposed solely for the privilege of 30 18 participating in an activity at a place of amusement, fair, or 30 19 athletic event unless the sales price of tickets or admissions 30 20 charges for observing the same activity are taxable under this 30 21 subchapter. A tax ofsixeleven percent is imposed upon that 30 22 part of private club membership fees or charges paid for the 30 23 privilege of participating in any athletic sports provided club 30 24 members. 30 25 Sec. 78. Section 423.2, subsection 4, paragraph a, Code 30 26 2015, is amended to read as follows: 30 27 a. A tax ofsixeleven percent is imposed upon the sales 30 28 price derived from the operation of all forms of amusement 30 29 devices and games of skill, games of chance, raffles, and bingo 30 30 games as defined in chapter 99B, and card game tournaments 30 31 conducted under section 99B.7B, that are operated or conducted 30 32 within the state, the tax to be collected from the operator in 30 33 the same manner as for the collection of taxes upon the sales 30 34 price of tickets or admission as provided in this section. 30 35 Nothing in this subsection shall legalize any games of skill 31 1 or chance or slot=operated devices which are now prohibited by 31 2 law. 31 3 Sec. 79. Section 423.2, subsection 5, Code 2015, is amended 31 4 to read as follows: 31 5 5. There is imposed a tax ofsixeleven percent upon the 31 6 sales price from the furnishing of services as defined in 31 7 section 423.1. 31 8 Sec. 80. Section 423.2, subsection 7, paragraph a, 31 9 unnumbered paragraph 1, Code 2015, is amended to read as 31 10 follows: 31 11 A tax ofsixeleven percent is imposed upon the sales 31 12 price from the sales, furnishing, or service of solid waste 31 13 collection and disposal service. 31 14 Sec. 81. Section 423.2, subsection 8, paragraph a, Code 31 15 2015, is amended to read as follows: 31 16 a. A tax ofsixeleven percent is imposed on the sales 31 17 price from sales of bundled transactions. For the purposes of 31 18 this subsection, a "bundled transaction" is the retail sale of 31 19 two or more distinct and identifiable products, except real 31 20 property and services to real property, which are sold for one 31 21 nonitemized price. A "bundled transaction" does not include 31 22 the sale of any products in which the sales price varies, or 31 23 is negotiable, based on the selection by the purchaser of the 31 24 products included in the transaction. 31 25 Sec. 82. Section 423.2, subsection 9, Code 2015, is amended 31 26 to read as follows: 31 27 9. A tax ofsixeleven percent is imposed upon the 31 28 sales price from any mobile telecommunications service, 31 29 including all paging services, that this state is allowed 31 30 to tax pursuant to the provisions of the federal Mobile 31 31 Telecommunications Sourcing Act, Pub. L. No. 106=252, 4 U.S.C. 31 32 {116 et seq. For purposes of this subsection, taxes on mobile 31 33 telecommunications service, as defined under the federal Mobile 31 34 Telecommunications Sourcing Act that are deemed to be provided 31 35 by the customer's home service provider, shall be paid to 32 1 the taxing jurisdiction whose territorial limits encompass 32 2 the customer's place of primary use, regardless of where the 32 3 mobile telecommunications service originates, terminates, 32 4 or passes through and shall in all other respects be taxed 32 5 in conformity with the federal Mobile Telecommunications 32 6 Sourcing Act. All other provisions of the federal Mobile 32 7 Telecommunications Sourcing Act are adopted by the state of 32 8 Iowa and incorporated into this subsection by reference. With 32 9 respect to mobile telecommunications service under the federal 32 10 Mobile Telecommunications Sourcing Act, the director shall, if 32 11 requested, enter into agreements consistent with the provisions 32 12 of the federal Act. 32 13 Sec. 83. Section 423.2, subsection 11, paragraph b, 32 14 subparagraph (3), Code 2015, is amended to read as follows: 32 15 (3) Transferone=sixthseventeen and two thousand five 32 16 hundred forty=eight ten=thousandths percent of the remaining 32 17 revenues to the secure an advanced vision for education fund 32 18 created in section 423F.2. This subparagraph (3) is repealed 32 19 December 31, 2029. 32 20 Sec. 84. Section 423.2, subsection 13, Code 2015, is amended 32 21 to read as follows: 32 22 13. The sales tax rate ofsixeleven percent is reduced to 32 23fiveten percent on January 1, 2030. 32 24 Sec. 85. Section 423.5, subsection 1, unnumbered paragraph 32 25 1, Code 2015, is amended to read as follows: 32 26 Except as provided in paragraph "c", an excise tax at the 32 27 rate ofsixeleven percent of the purchase price or installed 32 28 purchase price is imposed on the following: 32 29 Sec. 86. Section 423.5, subsection 5, Code 2015, is amended 32 30 to read as follows: 32 31 5. The use tax rate ofsixeleven percent is reduced tofive 32 32ten percent on January 1, 2030. 32 33 Sec. 87. Section 423.43, subsection 1, paragraph b, Code 32 34 2015, is amended to read as follows: 32 35 b. Subsequent to the deposit into the general fund of 33 1 the state and after the transfer of such revenues collected 33 2 under chapter 423B, the department shall transferone=sixth 33 3one=eleventh of such remaining revenues to the secure an 33 4 advanced vision for education fund created in section 423F.2. 33 5 This paragraph is repealed December 31, 2029. 33 6 Sec. 88. EFFECTIVE DATE. This division of this Act takes 33 7 effect January 1, 2016. 33 8 EXPLANATION 33 9 The inclusion of this explanation does not constitute agreement with 33 10 the explanation's substance by the members of the general assembly. 33 11 This bill relates to state taxes by repealing the individual 33 12 income tax and increasing the state sales and use tax rates. 33 13 Division I repeals the individual income tax and makes 33 14 numerous conforming changes to the Code to remove references 33 15 to the individual income tax and to update or move provisions 33 16 of the individual income tax that are also applicable by 33 17 reference to the corporate income tax and the franchise tax. 33 18 The division also repeals the emergency medical services income 33 19 surtax in Code chapter 422D, the instructional support income 33 20 surtax in Code section 257.21, the educational improvement 33 21 income surtax in Code section 257.29, and the physical plant 33 22 and equipment income surtax in Code section 298.2, because 33 23 income surtax revenues will no longer be generated without the 33 24 state individual income tax. 33 25 The division provides that additional legislation is 33 26 required to fully implement the division and requires the 33 27 director of the department of revenue to prepare draft 33 28 legislation in compliance with Code section 2.16 for submission 33 29 to the legislative services agency to implement the repeal of 33 30 the individual income tax. 33 31 The division takes effect on January 1, 2016, and applies to 33 32 tax years beginning on or after that date. 33 33 Division II increases the state sales and use tax rate to 33 34 11 percent from 6 percent. By operation of law as provided in 33 35 Article VII, section 10 of the Iowa Constitution, a portion 34 1 (0.375 percent) of the state sales tax generated and collected 34 2 from the rate increase provided in this division will be 34 3 transferred to the natural resources and outdoor recreation 34 4 trust fund in Code section 461.31. The division amends the 34 5 transfer of state sales tax revenues to the secure an advanced 34 6 vision for education fund (SAVE) in Code section 423F.2 from 34 7 one=sixth (approximately 16.66 percent) of the revenues to 34 8 17.2548 percent of the revenues to ensure that SAVE receives 34 9 approximately the same proportion of the total sales tax 34 10 revenue as it did prior to the sales tax rate increase provided 34 11 in the division. 34 12 The division takes effect on January 1, 2016. LSB 1746XS (5) 86 mm/sc
