Bill Text: IA SF609 | 2021-2022 | 89th General Assembly | Introduced


Bill Title: A bill for an act relating to the administration and implementation of state taxation matters and credits, including economic development and energy tax incentives and programs, and future tax contingencies, making appropriations, and including effective date provisions.(Formerly SSB 1269.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2022-01-19 - Subcommittee: Dawson, Goodwin, and Petersen. S.J. 120. [SF609 Detail]

Download: Iowa-2021-SF609-Introduced.html
Senate File 609 - Introduced SENATE FILE 609 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1269) A BILL FOR An Act relating to the administration and implementation of 1 state taxation matters and credits, including economic 2 development and energy tax incentives and programs, and 3 future tax contingencies, making appropriations, and 4 including effective date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2820SV (1) 89 jm/jh
S.F. 609 DIVISION I 1 HIGH QUALITY JOBS AND RENEWABLE CHEMICAL PRODUCTION TAX CREDITS 2 Section 1. Section 15.119, subsection 2, paragraph a, 3 subparagraphs (2) and (3), Code 2021, are amended to read as 4 follows: 5 (2) In allocating tax credits pursuant to this subsection 6 for each fiscal year of the fiscal period beginning July 1, 7 2016, and ending June 30, 2021 the fiscal year beginning July 8 1, 2021, and for each fiscal year thereafter , the authority 9 shall not allocate more than one hundred five seventy million 10 dollars for purposes of this paragraph. This subparagraph (2) 11 is repealed July 1, 2021. 12 (3) (a) In allocating tax credits pursuant to this 13 subsection for the fiscal year beginning July 1, 2021, and 14 ending June 30, 2022, the authority shall not allocate more 15 than one hundred five million dollars for purposes of this 16 paragraph if the aggregate amount of renewable chemical 17 production tax credits under section 15.319 that were awarded 18 on or after July 1, 2018, but before July 1, 2021, equals or 19 exceeds twenty-seven million dollars. 20 (b) As soon as practicable after June 30, 2021, the 21 authority shall notify the general assembly of the aggregate 22 amount of renewable chemical production tax credits awarded 23 under section 15.319 on or after July 1, 2018, but before 24 July 1, 2021, and whether or not the tax credit allocation 25 limitation described in subparagraph division (a) is 26 applicable. 27 (c) This subparagraph (3) is repealed July 1, 2022. 28 Sec. 2. Section 15.119, subsection 2, paragraph h, Code 29 2021, is amended to read as follows: 30 h. The renewable chemical production tax credit program 31 administered pursuant to sections 15.315 through 15.322 . In 32 allocating tax credits pursuant to this subsection for the 33 fiscal year beginning July 1, 2021, and for each fiscal year 34 thereafter , the authority shall not allocate more than ten five 35 -1- LSB 2820SV (1) 89 jm/jh 1/ 20
S.F. 609 million dollars for purposes of this paragraph. This paragraph 1 is repealed July 1, 2030. 2 Sec. 3. EFFECTIVE DATE. This division of this Act, being 3 deemed of immediate importance, takes effect upon enactment. 4 DIVISION II 5 HIGH QUALITY JOBS —— ELIGIBILITY REQUIREMENTS 6 Sec. 4. HIGH QUALITY JOBS —— REDUCTIONS IN OPERATIONS. 7 1. Notwithstanding section 15.329, subsection 1, paragraph 8 “b”, subparagraph (2), the economic development authority shall 9 not presume that a reduction in operations is a reduction in 10 operations while simultaneously applying for assistance with 11 regard to a business that submits an application on or before 12 June 30, 2022, if the business demonstrates to the satisfaction 13 of the authority all of the following: 14 a. That the reduction in operations occurred after March 1, 15 2020. 16 b. That the reduction in operations was caused by the 17 COVID-19 pandemic. 18 2. The economic development authority shall consider 19 whether the benefit of the project proposed by a business 20 under subsection 1 outweighs any negative impact related to 21 the business’s reduction in operations. The business shall 22 remain subject to all other eligibility requirements pursuant 23 to section 15.329. 24 3. This section is repealed July 1, 2022. 25 DIVISION III 26 MANUFACTURING 4.0 27 Sec. 5. NEW SECTION . 15.371 Manufacturing 4.0 technology 28 investment program. 29 1. This section shall be known as and may be cited as the 30 “Manufacturing 4.0 Technology Investment Program” . 31 2. For purposes of this section unless the context otherwise 32 requires: 33 a. “Financial assistance” means the same as defined in 34 section 15.102. 35 -2- LSB 2820SV (1) 89 jm/jh 2/ 20
S.F. 609 b. “Manufacturing 4.0 technology investments” means projects 1 that are intended to lead to the adoption of, and integration 2 of, smart technologies into existing manufacturing operations 3 located in the state by mitigating the risk to the manufacturer 4 of significant technology investments. Projects may include 5 investments in specialized hardware, software, or other 6 equipment intended to assist a manufacturer in increasing the 7 manufacturer’s productivity, efficiency, and competitiveness. 8 3. a. A manufacturing 4.0 technology investment fund 9 is created within the state treasury under the control of 10 the authority for the purpose of financing manufacturing 4.0 11 technology investments as described in this section. 12 b. The fund may be administered as a revolving fund and 13 may consist of any moneys appropriated by the general assembly 14 for purposes of this section and any other moneys that are 15 lawfully available to the authority. Any moneys appropriated 16 to the fund shall be used for purposes of the manufacturing 17 4.0 technology investment program. The authority may use all 18 other moneys in the fund, including interest, earnings, and 19 recaptures, for purposes of this section. 20 c. Notwithstanding section 8.33, moneys appropriated in this 21 section that remain unencumbered or unobligated at the close of 22 the fiscal year shall not revert but shall remain available for 23 expenditure for the purposes designated until the close of the 24 succeeding fiscal year. 25 d. Notwithstanding any law to the contrary, the authority 26 may transfer any unobligated and unencumbered moneys in the 27 fund, except for moneys appropriated for purposes of this 28 section, to any fund created pursuant to section 15.106A, 29 subsection 1, paragraph “o” . 30 4. The authority shall establish and administer a 31 manufacturing 4.0 technology investment program and shall use 32 moneys in the fund to award financial assistance to eligible 33 manufacturers for manufacturing 4.0 technology investments. 34 5. To be eligible for a financial assistance award under the 35 -3- LSB 2820SV (1) 89 jm/jh 3/ 20
S.F. 609 manufacturing 4.0 technology investment program, a manufacturer 1 must do all of the following: 2 a. Manufacture goods at a facility located in this state. 3 b. Have a North American industry classification system 4 number within the manufacturing sector range of 31-33. 5 c. Have been an established business for a minimum of three 6 years prior to the date of application to the program. 7 d. Derive a minimum of fifty-one percent of the 8 manufacturer’s overall revenue from the sale of manufactured 9 goods. 10 e. Employ a minimum of three full-time employees and no 11 more than seventy-five full-time employees across all of the 12 manufacturer’s locations. 13 f. Have an assessment of the manufacturer’s proposed 14 manufacturing 4.0 technology investment completed by the center 15 for industrial research and service at Iowa state university of 16 science and technology. 17 g. Demonstrate the ability to provide matching financial 18 support for the manufacturer’s manufacturing 4.0 technology 19 investment on a one-to-one basis. The matching financial 20 support must be obtained from private sources. 21 6. Eligible manufacturers shall submit applications to the 22 manufacturing 4.0 technology investment program in the manner 23 prescribed by the authority by rule. 24 7. a. The authority may accept applications during one 25 or more application periods each fiscal year as determined by 26 the authority. All completed applications shall be reviewed 27 and scored on a competitive basis pursuant to rules adopted by 28 the authority. The authority may engage an outside technical 29 review panel to complete technical reviews of applications. 30 The board shall review the recommendations of the authority 31 and of the technical review panel, if applicable, and shall 32 approve, defer, or deny each application. 33 b. In making recommendations to the board, the authority and 34 the technical review panel, if applicable, shall consider all 35 -4- LSB 2820SV (1) 89 jm/jh 4/ 20
S.F. 609 of the following: 1 (1) The completeness of the manufacturer’s application. 2 (2) Whether the board should approve or deny an application. 3 (3) If the board approves an application, the type and 4 amount of financial assistance that should to be awarded to the 5 applicant. 6 (4) The percentage of the manufacturer’s overall revenue 7 that is derived from the sale of manufactured goods pursuant 8 to subsection 5, paragraph “d” . 9 (5) Whether the manufacturer’s proposed manufacturing 10 4.0 technology investment is consistent with the assessment 11 completed by the center for industrial research and service at 12 Iowa state university of science and technology pursuant to 13 subsection 5, paragraph “f” . 14 c. The board shall not approve an application for financial 15 assistance for a manufacturing 4.0 technology investment that 16 was made prior to the date of the application. 17 8. The maximum amount of financial assistance awarded to an 18 eligible manufacturer under the manufacturing 4.0 technology 19 investment program shall not exceed seventy-five thousand 20 dollars. 21 9. The authority shall adopt rules pursuant to chapter 17A 22 necessary to implement and administer this section. 23 DIVISION IV 24 ENERGY INFRASTRUCTURE REVOLVING LOAN PROGRAM 25 Sec. 6. Section 476.10A, subsection 2, Code 2021, is amended 26 to read as follows: 27 2. Notwithstanding section 8.33 , any unexpended moneys 28 remitted to the treasurer of state under this section shall be 29 retained for the purposes designated. Notwithstanding section 30 12C.7, subsection 2 , interest or earnings on investments or 31 time deposits of the moneys remitted under this section shall 32 be retained and used for the purposes designated, pursuant to 33 section 476.46 . 34 Sec. 7. Section 476.46, subsection 2, paragraph e, 35 -5- LSB 2820SV (1) 89 jm/jh 5/ 20
S.F. 609 subparagraph (3), Code 2021, is amended to read as follows: 1 (3) Interest on the fund shall be deposited in the fund. 2 A portion of the interest on the fund, not to exceed fifty 3 percent of the total interest accrued, shall be used for 4 promotion and administration of the fund. 5 Sec. 8. Section 476.46, Code 2021, is amended by adding the 6 following new subsections: 7 NEW SUBSECTION . 3. The Iowa energy center shall not 8 initiate any new loans under this section after June 30, 2021. 9 NEW SUBSECTION . 4. Loan payments received under this 10 section on or after July 1, 2021, and any other moneys in the 11 fund on or after July 1, 2021, shall be deposited in the energy 12 infrastructure revolving loan fund created in section 476.46A. 13 Sec. 9. NEW SECTION . 476.46A Energy infrastructure 14 revolving loan program. 15 1. a. An energy infrastructure revolving loan fund is 16 created in the office of the treasurer of state and shall be 17 administered by the Iowa energy center established in section 18 15.120. 19 b. The fund may be administered as a revolving fund and may 20 consist of any moneys appropriated by the general assembly for 21 purposes of this section and any other moneys that are lawfully 22 directed to the fund. 23 c. Moneys in the fund shall be used to provide financial 24 assistance for the development and construction of energy 25 infrastructure, including projects that support electric or gas 26 generation transmission, storage, or distribution; electric 27 grid modernization; energy-sector workforce development; 28 emergency preparedness for rural and underserved areas; the 29 expansion of biomass, biogas, and renewable natural gas; 30 innovative technologies; and the development of infrastructure 31 for alternative fuel vehicles. 32 d. Notwithstanding section 8.33, moneys appropriated in this 33 section that remain unencumbered or unobligated at the close of 34 the fiscal year shall not revert but shall remain available for 35 -6- LSB 2820SV (1) 89 jm/jh 6/ 20
S.F. 609 expenditure for the purposes designated until the close of the 1 succeeding fiscal year. 2 e. Notwithstanding section 12C.7, subsection 2, interest or 3 earnings on moneys in the fund shall be credited to the fund. 4 2. a. The Iowa energy center shall establish and administer 5 an energy infrastructure revolving loan program to encourage 6 the development of energy infrastructure within the state. 7 b. An individual, business, rural electric cooperative, or 8 municipal utility located and operating in this state shall be 9 eligible for financial assistance under the program. With the 10 approval of the Iowa energy center governing board established 11 under section 15.120, subsection 2, the economic development 12 authority shall determine the amount and the terms of all 13 financial assistance awarded to an individual, business, rural 14 electric cooperative, or municipal utility under the program. 15 All agreements and administrative authority sha11 be vested in 16 the Iowa energy center governing board. 17 c. The economic development authority may use not more than 18 five percent of the moneys in the fund at the beginning of each 19 fiscal year for purposes of administrative costs, marketing, 20 technical assistance, and other program support. 21 3. For the purposes of this section: 22 a. “Energy infrastructure” means land, buildings, physical 23 plant and equipment, and services directly related to the 24 development of projects used for, or useful for, electricity or 25 gas generation, transmission, storage, or distribution. 26 b. “Financial assistance” means the same as defined in 27 section 15.102. 28 Sec. 10. ALTERNATE ENERGY REVOLVING LOAN FUND —— MONEYS 29 TRANSFERRED AND APPROPRIATED. Any unencumbered or unobligated 30 moneys remaining after June 30, 2021, in the alternate energy 31 revolving loan fund created pursuant to section 476.46, are 32 transferred and appropriated to the energy infrastructure 33 revolving loan fund created pursuant to section 476.46A, to be 34 used for purposes of the energy infrastructure revolving loan 35 -7- LSB 2820SV (1) 89 jm/jh 7/ 20
S.F. 609 program. 1 DIVISION V 2 WORKFORCE HOUSING TAX INCENTIVES 3 Sec. 11. Section 15.119, subsection 2, paragraph g, Code 4 2021, is amended to read as follows: 5 g. (1) The workforce housing tax incentives program 6 administered pursuant to sections 15.351 through 15.356 . 7 In allocating tax credits pursuant to this subsection , the 8 authority shall not allocate more than twenty-five thirty 9 million dollars for purposes of this paragraph. Of the moneys 10 allocated under this paragraph, ten fifteen million dollars 11 shall be reserved for allocation to qualified housing projects 12 in small cities, as defined in section 15.352 , that are 13 registered on or after July 1, 2017. 14 (2) (a) Notwithstanding subparagraph (1), in allocating 15 tax credits pursuant to this subsection for the fiscal year 16 beginning July 1, 2021, and ending June 30, 2022, the authority 17 shall not allocate more than forty million dollars for the 18 purposes of this paragraph. Of the moneys allocated under 19 this paragraph for the fiscal year beginning July 1, 2021, and 20 ending June 30, 2022, twelve million dollars shall be reserved 21 for allocation to qualified housing projects in small cities, 22 as defined in section 15.352, that are registered on or after 23 July 1, 2017. 24 (b) This subparagraph is repealed July 1, 2022. 25 Sec. 12. Section 15.354, subsection 3, paragraph d, Code 26 2021, is amended to read as follows: 27 d. Upon completion of a housing project, an a housing 28 business shall submit all of the following to the authority: 29 (1) An examination of the project in accordance with the 30 American institute of certified public accountants’ statements 31 on standards for attestation engagements, completed by a 32 certified public accountant authorized to practice in this 33 state , shall be submitted to the authority . 34 (2) A statement of the final amount of qualifying new 35 -8- LSB 2820SV (1) 89 jm/jh 8/ 20
S.F. 609 investment for the housing project. 1 (3) Any information the authority deems necessary to ensure 2 compliance with the agreement signed by the housing business 3 pursuant to paragraph “a” , the requirements of this part, 4 and rules the authority and the department of revenue adopt 5 pursuant to section 15.356. 6 Sec. 13. Section 15.354, subsection 3, paragraph e, 7 subparagraph (1), Code 2021, is amended to read as follows: 8 (1) Upon review of the examination , and verification of 9 the amount of the qualifying new investment, and review of 10 any other information submitted pursuant to paragraph “d” , 11 subparagraph (3), the authority may notify the housing business 12 of the amount that the housing business may claim as a refund 13 of the sales and use tax under section 15.355, subsection 2 , 14 and may issue a tax credit certificate to the housing business 15 stating the amount of workforce housing investment tax credits 16 under section 15.355 , subsection 3 , the eligible housing 17 business may claim. The sum of the amount that the housing 18 business may claim as a refund of the sales and use tax and 19 the amount of the tax credit certificate shall not exceed the 20 amount of the tax incentive award. 21 Sec. 14. Section 15.354, subsection 6, paragraphs b and c, 22 Code 2021, are amended to read as follows: 23 b. Notwithstanding subsection 1 , the authority may accept 24 applications for disaster recovery housing projects on a 25 continuous basis establish a disaster recovery application 26 period following the declaration of a major disaster by the 27 president of the United States for a county in Iowa . 28 c. Notwithstanding subsection 2 , paragraphs “a” , “b” , and 29 “d” , upon Upon review of a housing business’s application , 30 and scoring of all applications received during a disaster 31 recovery application period, the authority may make a tax 32 incentive award to a disaster recovery housing project. The 33 tax incentive award shall represent the maximum amount of tax 34 incentives that the disaster recovery housing project may 35 -9- LSB 2820SV (1) 89 jm/jh 9/ 20
S.F. 609 qualify for under the program. In determining a tax incentive 1 award, the authority shall not use an amount of project costs 2 that exceeds the amount included in the application of the 3 housing business. Tax incentive awards shall be approved by 4 the director of the authority. 5 Sec. 15. Section 15.355, subsection 2, Code 2021, is amended 6 to read as follows: 7 2. A housing business may claim a refund of the sales and 8 use taxes paid under chapter 423 that are directly related to 9 a housing project and specified in the agreement. The refund 10 available pursuant to this subsection shall be as provided in 11 section 15.331A , excluding subsection 2 , paragraph “c” , of 12 that section. For purposes of the program, the term “project 13 completion” , as used in section 15.331A , shall mean the date 14 on which the authority notifies the department of revenue that 15 all applicable requirements of an the agreement entered into 16 pursuant to section 15.354 , subsection 3, paragraph “a” , and 17 all applicable requirements of this part, including the rules 18 the authority and the department of revenue adopted pursuant to 19 section 15.356, are satisfied. 20 DIVISION VI 21 BROWNFIELDS AND GRAYFIELDS 22 Sec. 16. Section 15.293A, subsection 8, Code 2021, is 23 amended to read as follows: 24 8. This section is repealed on June 30, 2021 2031 . 25 Sec. 17. Section 15.293B, Code 2021, is amended by adding 26 the following new subsection: 27 NEW SUBSECTION . 5A. a. Tax credits revoked under 28 subsection 3 including tax credits revoked up to five years 29 prior to the effective date of this division of this Act, and 30 tax credits not awarded under subsection 4 or 5, may be awarded 31 in the next annual application period established in subsection 32 1, paragraph “c” . 33 b. Tax credits awarded pursuant to paragraph “a” shall not 34 be counted against the limit under section 15.119, subsection 35 -10- LSB 2820SV (1) 89 jm/jh 10/ 20
S.F. 609 3. 1 Sec. 18. Section 15.293B, subsection 7, Code 2021, is 2 amended to read as follows: 3 7. This section is repealed on June 30, 2021 2031 . 4 Sec. 19. EFFECTIVE DATE. The following, being deemed of 5 immediate importance, take effect upon enactment: 6 1. The section of this division of this Act amending section 7 15.293A, subsection 8. 8 2. The section of this division of this Act amending section 9 15.293B, subsection 7. 10 DIVISION VII 11 FEDERAL PAYCHECK PROTECTION PROGRAM 12 Sec. 20. FEDERAL PAYCHECK PROTECTION PROGRAM. 13 Notwithstanding any other provision of the law to the contrary, 14 for any tax year ending after March 27, 2020, Division N, Tit. 15 II, subtit. B, §276 and §278(a), of the federal Consolidated 16 Appropriations Act, 2021, Pub. L. No. 116-260, applies in 17 computing net income for state tax purposes under section 422.7 18 or 422.35. 19 Sec. 21. EFFECTIVE DATE. This division of this Act, being 20 deemed of immediate importance, takes effect upon enactment. 21 DIVISION VIII 22 FUTURE TAX CHANGES 23 Sec. 22. 2018 Iowa Acts, chapter 1161, section 133, is 24 amended by striking the section and inserting in lieu thereof 25 the following: 26 SEC. 133. EFFECTIVE DATE. This division of this Act takes 27 effect January 1, 2023. 28 EXPLANATION 29 The inclusion of this explanation does not constitute agreement with 30 the explanation’s substance by the members of the general assembly. 31 This bill relates to the administration and implementation 32 of state taxation matters and credits, including economic 33 development and energy tax incentives and programs, and future 34 tax contingencies. The bill is divided into divisions. 35 -11- LSB 2820SV (1) 89 jm/jh 11/ 20
S.F. 609 DIVISION I —— HIGH QUALITY JOBS AND RENEWABLE CHEMICAL 1 PRODUCTION TAX CREDITS. Division I reduces the maximum 2 amount of tax credits that the economic development authority 3 (authority) may allocate to the high quality jobs program for 4 the fiscal year beginning July 1, 2021, and for each fiscal 5 year thereafter, from $105 million to $70 million. The maximum 6 amount of tax credits that the authority may allocate to the 7 renewable chemical production tax credit program for the fiscal 8 year beginning July 1, 2021, and ending June 30, 2022, and for 9 each fiscal year thereafter is reduced from $10 million to $5 10 million. 11 DIVISION II —— HIGH QUALITY JOBS —— ELIGIBILITY 12 REQUIREMENTS. To be eligible to receive incentives or 13 assistance under the high quality jobs program, a business 14 cannot be in the process of reducing operations in one 15 community while simultaneously apply for assistance under the 16 program. Under current law, a reduction in operations within 17 12 months before or after a business submits an application to 18 the high quality jobs program is presumed to be a reduction 19 in operations while simultaneously applying for assistance 20 under the program. Under the bill, the economic development 21 authority (authority) cannot presume that a reduction in 22 operations is a reduction while simultaneously applying for 23 assistance under the program with regard to a business that 24 submits an application on or before June 30, 2022, if the 25 business demonstrates to the satisfaction of the authority that 26 the reduction in operations occurred after March 1, 2020, and 27 that it was a result of the COVID-19 pandemic. The authority 28 must consider whether the benefit of the project proposed by 29 the business outweighs any negative impact related to the 30 reduction in operations. The business remains subject to all 31 other eligibility requirements. This division of the bill is 32 repealed July 1, 2022. 33 DIVISION III —— MANUFACTURING 4.0. The division establishes 34 the manufacturing 4.0 technology investment program (program) 35 -12- LSB 2820SV (1) 89 jm/jh 12/ 20
S.F. 609 and creates the manufacturing 4.0 technology investment 1 fund (fund). “Manufacturing 4.0 technology investments” 2 (investments) is defined as projects that are intended to lead 3 to the adoption of, and integration of, smart technologies 4 into existing manufacturing operations located in the state 5 by mitigating the risk to the manufacturer of significant 6 technology investments. Projects may include investments in 7 specialized hardware, software, or other equipment intended 8 to assist a manufacturer in increasing the manufacturer’s 9 productivity, efficiency, and competitiveness. 10 The fund may be administered as a revolving fund and may 11 consist of any moneys appropriated for purposes of the program 12 and any other moneys that are lawfully available to the 13 authority. The authority must use moneys in the fund to award 14 financial assistance to eligible manufacturers for investments. 15 Financial assistance may include but is not limited to 16 grants, loans, and forgivable loans. The requirements for a 17 manufacturer to be eligible for financial assistance under the 18 program are outlined in the bill. 19 Eligible manufacturers must submit an application to the 20 program in the manner prescribed by the economic development 21 authority (authority) by rule. The authority may accept 22 applications during one or more application periods during a 23 fiscal year as determined by the authority. All completed 24 applications must be reviewed and scored on a competitive basis 25 pursuant to rules adopted by the authority. The authority may 26 engage an outside technical review panel (panel) to complete a 27 technical review of applications. The authority board members 28 appointed by the governor must review the recommendations 29 of the authority and of the panel, if applicable, and 30 shall approve, defer, or deny each application. In making 31 recommendations to the board, the authority and the panel must 32 consider the factors detailed in the bill. 33 The board cannot approve an application for financial 34 assistance for an investment that was made prior to the date 35 -13- LSB 2820SV (1) 89 jm/jh 13/ 20
S.F. 609 of the application. 1 The maximum amount of financial assistance awarded to an 2 eligible manufacturer under the program cannot exceed $75,000. 3 The authority must adopt rules as necessary to implement and 4 administer the program. 5 DIVISION IV —— ENERGY INFRASTRUCTURE REVOLVING LOAN PROGRAM. 6 The division modifies Code section 476.46, alternate energy 7 revolving loan program, to prohibit the Iowa energy center from 8 initiating any new loans after June 30, 2021. The division 9 also requires that all loan payments received after June 30, 10 2021, be deposited, and any moneys remaining in the alternate 11 energy revolving loan fund after June 30, 2021, be transferred, 12 to the newly created energy infrastructure revolving loan fund. 13 The division creates an energy infrastructure revolving 14 fund (fund) in the office of the treasurer of state to be 15 administered by the Iowa energy center (center). Moneys in 16 the fund are to be used to provide financial assistance for 17 the development and construction of energy infrastructure, 18 including projects that support electric or gas generation 19 transmission, storage, or distribution; electric grid 20 modernization; energy-sector workforce development; emergency 21 preparedness for rural and underserved areas; the expansion 22 of biomass, biogas, and renewable natural gas; innovative 23 technologies; and the development of infrastructure for 24 alternative fuel vehicles. “Energy infrastructure” is defined 25 as land, buildings, physical plant and equipment, and services 26 directly related to the development of projects used for, 27 or useful for, electricity or gas generation, transmission, 28 storage, or distribution. “Financial assistance” is also 29 defined in the bill. 30 The center is required to establish and administer an energy 31 infrastructure revolving loan program (program) to encourage 32 the development of energy infrastructure within the state. An 33 individual, business, rural electric cooperative, or municipal 34 utility located and operating in this state is eligible for 35 -14- LSB 2820SV (1) 89 jm/jh 14/ 20
S.F. 609 financial assistance under the program. With the approval 1 of the center’s governing board, the economic development 2 authority (authority) must determine the amount and the terms 3 of all financial assistance awarded to an individual, business, 4 rural electric cooperative, or municipal utility under the 5 program. All agreements and administrative authority are 6 vested in the center’s governing board. The authority may 7 use not more than 5 percent of the moneys in the fund at the 8 beginning of each fiscal year for purposes of administrative 9 costs, marketing, technical assistance, and other program 10 support. 11 DIVISION V —— WORKFORCE HOUSING TAX INCENTIVES. Code 12 section 15.119 sets an aggregate tax credit amount limit for 13 certain economic development programs. Under current law, the 14 workforce housing tax incentives program administered under 15 Code sections 15.351 through 15.356 shall not be allocated 16 more than $25 million in tax credits, and of the tax credits 17 allocated to this program, $10 million is reserved for 18 allocation to qualified housing projects in small cities. 19 This division increases the workforce housing tax credit 20 allocations from $25 million to $40 million for FY 2021-2022. 21 Of the moneys allocated to workforce housing tax credits in 22 FY 2021-2022, the bill increases the tax credits reserved for 23 qualified housing projects in small cities from $10 million 24 to $12 million. Beginning with FY 2022-2023 and each fiscal 25 year thereafter, the bill sets the workforce housing tax credit 26 allocations at $30 million, of which $15 million shall be 27 reserved for small cities. 28 Currently, upon completion of a housing project, a housing 29 business (housing developer, contractor, or nonprofit that 30 completes a housing project) submits an examination of the 31 project in accordance with the American institute of certified 32 public accountants to the authority. In addition to an 33 examination by certified public accountants, the bill requires 34 the housing business to submit the following to the authority 35 -15- LSB 2820SV (1) 89 jm/jh 15/ 20
S.F. 609 upon completion of a housing project: a statement of the 1 final amount of the qualifying new investment for the housing 2 project and any information the authority deems necessary to 3 ensure compliance with the agreement between the authority and 4 the housing business including any rules the authority and the 5 department of revenue adopt pursuant to Code section 15.356. 6 The bill also requires the authority to review the information 7 submitted by the housing business prior to notifying the 8 housing business of tax incentive awards. 9 The bill permits the authority to establish a disaster 10 housing recovery period following the declaration of a major 11 disaster by the president of the United States. Currently, the 12 authority may accept applications for disaster recovery housing 13 projects on a continuous basis. 14 Moneys available for the program may consist of moneys 15 appropriated for use in the program, and any other moneys that 16 are lawfully available to the economic development authority, 17 including moneys transferred or deposited from other funds 18 created pursuant to Code section 15.106A(1)(o). 19 DIVISION VI —— BROWNFIELDS AND GRAYFIELDS. Current law 20 provides that the economic development authority (authority) 21 may allocate not more than $10 million in tax credits in 22 a fiscal year to the brownfield redevelopment program 23 (brownfields). The division provides that tax credits that are 24 not awarded or that are revoked (including revoked within the 25 previous five years) under brownfields may be awarded during 26 the next annual application period, and those tax credits do 27 not count against the $10 million tax credit maximum. Under 28 current law, Code section 15.293A, redevelopment tax credits, 29 is repealed on June 30, 2021. The division changes the repeal 30 date to June 30, 2031, and the repeal date is effective upon 31 enactment of the division. Under current law, Code section 32 15.293B, related to the application, review, registration, 33 and authorization of projects awarded tax credits under 34 brownfields, is repealed on June 30, 2021. The division 35 -16- LSB 2820SV (1) 89 jm/jh 16/ 20
S.F. 609 changes the repeal date to June 30, 2031, and the repeal date 1 is effective upon enactment of the division. 2 DIVISION VII —— FEDERAL PAYCHECK PROTECTION PROGRAM. Under 3 current law, for the tax year 2020 and later, Iowa law fully 4 conforms with the federal treatment of forgiven paycheck 5 protection program loans and excludes such amounts from net 6 income and allows certain deductions for business expenses 7 paid using those loans. For fiscal-year filers who received 8 paycheck protection program loans during the 2019 tax year, 9 current law excludes such amounts from net income, but does 10 not allow certain deductions for business expenses paid using 11 those loans. The bill fully conforms with federal law for 12 those fiscal-year filers who previously were excluded from such 13 conformity and allows such filers to take business expense 14 deductions using federal paycheck protection program loan 15 proceeds that were forgiven. 16 This division of the bill takes effect upon enactment. 17 DIVISION VIII —— FUTURE TAX CHANGES. The bill amends 2018 18 Iowa Acts, chapter 1161, section 133 (trigger), by striking 19 the two conditions necessary for the trigger to occur, and 20 specifies the provisions in 2018 Iowa Acts, chapter 1161, 21 sections 99 through 132, take effect January 1, 2023. 22 Currently, the two conditions are necessary for the trigger 23 to occur include net general fund revenues for the fiscal year 24 ending June 30, 2022, equaling or exceeding $8.3146 billion, 25 and also equaling or exceeding 104 percent of the net general 26 fund revenues for the fiscal year ending June 30, 2021. If 27 these two conditions are not satisfied, current law institutes 28 the changes for tax years beginning on or after the January 1 29 following the first fiscal year for which the two conditions 30 do occur. By striking the “trigger”, the bill sets in motion 31 numerous tax changes for tax years beginning on or after 32 January 1, 2023, described below. 33 The tax changes include reducing the number of individual 34 income tax brackets from nine to four, and modifying the 35 -17- LSB 2820SV (1) 89 jm/jh 17/ 20
S.F. 609 taxable income amounts and tax rates as follows: 1 Income over: But not over: Tax Rate: 2 1) $0 $6,000 4.40% 3 2) $6,000 $30,000 4.82% 4 3) $30,000 $75,000 5.70% 5 4) $75,000 6.50% 6 For a married couple filing a joint return, the taxable 7 income amounts in each bracket above are doubled. Also, the 8 taxable income amounts in each bracket above will be indexed to 9 inflation and increased in future tax years, beginning in the 10 tax year following the 2023 tax year. 11 Under current law, the starting point for computing the 12 Iowa individual income tax is federal adjusted gross income 13 before the net operating loss deduction, which is generally a 14 taxpayer’s gross income minus several deductions. From that 15 point, Iowa requires several adjustments and then provides 16 taxpayers with a deduction for federal income taxes paid, 17 and the option to deduct a standard deduction or itemized 18 deductions. The bill changes the starting point for computing 19 the individual income tax to federal taxable income, which 20 includes all deductions and adjustments taken at the federal 21 level in computing tax, including a standard deduction 22 or itemized deductions, and the qualified business income 23 deduction allowed for certain income earned from a pass-through 24 entity. Because the starting point changes to federal taxable 25 income, and federal law does not provide for the filing status 26 of married filing separately on a combined return, the bill 27 repeals that filing status option for Iowa tax purposes. 28 Because net operating loss is no longer calculated at the state 29 level, the bill requires a taxpayer to add back any federal 30 net operating loss deduction carried over from a taxable year 31 beginning prior to the 2023 tax year, but allows taxpayers 32 to deduct any remaining Iowa net operating loss from a prior 33 taxable year. The bill repeals the individual alternative 34 minimum tax (AMT), allows an individual to claim any remaining 35 -18- LSB 2820SV (1) 89 jm/jh 18/ 20
S.F. 609 AMT credit against the individual’s regular tax liability for 1 the 2023 tax year, and then repeals the AMT credit in the 2 tax year following the 2023 tax year. The bill repeals most 3 Iowa-specific deductions, exemptions, and adjustments currently 4 available when computing net income and taxable income under 5 Iowa law, including the Iowa optional standard deduction and 6 all itemized deductions, and the ability to deduct federal 7 income taxes, except for a one-year phase out in the 2023 tax 8 year for taxes paid, or refunds received, that relate to a 9 prior year. The bill maintains the add-back for income from 10 securities that are federally exempt but not state-exempt, and 11 for bonus depreciation amounts. The bill maintains the general 12 pension exclusion and the deduction for income from federal 13 securities. The bill maintains the deduction for contributions 14 to the Iowa 529 plan, the Iowa ABLE plan, a first-time 15 homebuyer savings account, and an individual development 16 account. The bill also maintains the deductions for military 17 pension income, military active duty pay, social security 18 retirement benefits, certain payments received for providing 19 unskilled in-home health care, certain amounts received from 20 the veterans trust fund, victim compensation awards, biodiesel 21 production refunds, certain wages paid to individuals with 22 disabilities or individuals previously convicted of a felony, 23 certain organ donations, and Segal AmeriCorps education award 24 payments. The bill modifies the existing deduction for health 25 insurance payments in Code section 422.7(29) to make the 26 deduction only applicable to taxpayers who are at least 65 27 years old and who have net income below $100,000. The bill 28 also modifies the existing capital gain deduction in Code 29 section 422.7(21) to restrict the deduction to the sale of 30 real property used in farming businesses by permitting the 31 taxpayer to take the deduction if either of the following 32 apply: the taxpayer materially participated in the farming 33 business for at least 10 years and held the real property for 34 at least 10 years; or the taxpayer sold the real property to 35 -19- LSB 2820SV (1) 89 jm/jh 19/ 20
S.F. 609 a relative. The bill expands the definition of “relative” to 1 include an entity in which a relative of the taxpayer has a 2 legal or equitable interest in the entity as an owner, member, 3 partner, or beneficiary. The bill provides a new deduction 4 for any income of an employee resulting from the payment by 5 an employer, whether paid to the employee or a lender, of 6 principal or interest on the employee’s qualified education 7 loan. The bill also modifies the calculation of net income 8 for purposes of the alternate tax calculation in Code section 9 422.5(3) and (3B), and the tax return filing thresholds in 10 Code section 422.13, to require that any amount of itemized 11 deduction, standard deduction, personal exemption deduction, 12 or qualified business income deduction that was allowed in 13 computing federal taxable income shall be added back. 14 Under current law, the starting point for calculating the 15 corporate income tax and franchise tax is federal taxable 16 income before the net operating loss deduction, because net 17 operating loss is calculated at the state level. The bill 18 repeals the separate calculation of net operating loss at the 19 state level. As a result, the bill requires taxpayers to add 20 back any federal net operating loss deduction carried over from 21 a taxable year beginning prior to the trigger year, but allows 22 taxpayers to deduct any remaining Iowa net operating loss from 23 a prior taxable year. The bill also repeals most Iowa-specific 24 deductions, exemptions, and adjustments currently available 25 when computing net income and taxable income under Iowa law. 26 The bill maintains the add-back for income from securities 27 that are federally exempt but not state exempt, and for bonus 28 depreciation amounts. The bill maintains the deductions for 29 income from federal securities, for foreign dividend and 30 subpart F income, for certain wages paid to individuals with 31 disabilities or individuals previously convicted of a felony, 32 and for biodiesel production refunds. 33 -20- LSB 2820SV (1) 89 jm/jh 20/ 20
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