SF 2319 (LSB 1380SZ (2) 86)

SENATE FILE 2319

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO SF 483)
(SUCCESSOR TO SF 143)

A BILL FOR

An Act relating to an alternative fuel vehicle facility income tax credit and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, Code 2016, is amended by adding the following new subsection:
   NEW SUBSECTION.  51.  a.  A taxpayer taking a depreciation allowance under section 168 of the Internal Revenue Code for property described in section 422.11G is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of the property under section 422.11G. If a credit is taken for the purchase and installation of the property under section 422.11G, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   b.  A taxpayer taking an expensing allowance under section 179 of the Internal Revenue Code for property described in section 422.11G is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of such property under section 422.11G. If a credit is taken for the purchase and installation of the property under section 422.11G, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   c.  This subsection is repealed on January 1, 2025.
    Sec. 2.  NEW SECTION.  422.11G  Alternative fuel vehicle facility tax credit.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Alternative fuel” means electricity, compressed natural gas, or liquid propane gas.
   b.  “Motor vehicle” means a vehicle that is self-propelled, including but not limited to automobiles, trucks, motorcycles, all-terrain vehicles, and implements of husbandry.
   2.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by an alternative fuel vehicle facility tax credit. In order to be eligible to claim the tax credit, the taxpayer must comply with this section and rules adopted by the director pursuant to chapter 17A necessary to administer and enforce this section.
   3.  a.  The taxpayer claiming the alternative fuel vehicle facility tax credit on an agricultural basis as provided in subsection 11 must purchase and install any of the following:
   (1)  An electric vehicle facility located in this state that serves a motor vehicle designed by the manufacturer to operate using electricity.
   (2)  A natural gas vehicle facility located in this state that serves a motor vehicle that is any of the following:
   (a)  Designed by the manufacturer to operate using compressed natural gas.
   (b)  An aftermarket alternative fuel vehicle converted to operate using compressed natural gas if the conversion equipment is certified by the United States environmental protection agency, including as provided in 40 C.F.R. pt. 85.
   (3)  A liquid propane gas vehicle facility located in this state that serves a motor vehicle that is any of the following:
   (a)  Designed by the manufacturer to operate using liquid propane gas. 
   (b)  An aftermarket alternative fuel vehicle converted to operate using liquid propane gas if the conversion equipment is certified by the United States environmental protection agency, including as provided in 40 C.F.R. pt. 85.
   b.  The taxpayer claiming the tax credit on a commercial basis as provided in subsection 11 must purchase and install any of the following:
   (1)  An electric vehicle facility located in this state that serves a motor vehicle designed by the manufacturer to operate using electricity.
   (2)  A natural gas vehicle facility located in this state that serves a motor vehicle that is any of the following:
   (a)  Designed by the manufacturer to operate using compressed natural gas.
   (b)  An aftermarket alternative fuel vehicle converted to operate using compressed natural gas if the conversion equipment is certified by the United States environmental protection agency, including as provided in 40 C.F.R. pt. 85.
   (3)  A liquid propane gas vehicle facility located in this state that serves a motor vehicle that is any of the following:
   (a)  Designed by the manufacturer to operate using liquid propane gas.
   (b)  An aftermarket alternative fuel vehicle converted to operate using liquid propane gas if the conversion equipment is certified by the United States environmental protection agency, including as provided in 40 C.F.R. pt. 85.
   c.  The taxpayer claiming the tax credit on a residential basis as provided in subsection 11 must purchase and install an electric vehicle facility located in this state that serves a motor vehicle designed by the manufacturer to operate using electricity.
   4.  a.  In order to claim an alternative fuel vehicle facility tax credit, the taxpayer must apply to be issued a tax credit certificate by the department. The tax credit certificate must be included with the taxpayer’s return. The department may require supporting documentation to be included with the application. The department shall issue the tax credit certificate to the taxpayer in the taxpayer’s name. The tax credit certificate is not transferable. The tax credit certificate shall include all of the following:
   (1)  The taxpayer’s name, address, and tax identification number.
   (2)  The type of infrastructure, equipment, or machinery purchased and installed.
   (3)  The amount of the tax credit being claimed.
   (4)  The date that the installation of the alternative fuel vehicle facility was completed.
   (5)  Any other information required by the department.
   b.  A taxpayer claiming an alternative fuel facility tax credit on an agricultural or commercial basis in three equal installments in three consecutive tax years pursuant to subsection 11 shall include documentation included with the taxpayer’s tax return in the second and third tax year that verifies that the alternative fuel vehicle facility has not been taken out of service.
   c.  The department shall adopt rules establishing the contents of applications and documentation required to be filed with the department under this section, and criteria for the receipt of the applications or documentation.
   5.  The aggregate amount of tax credit certificates that may be issued pursuant to this section shall not exceed five million dollars for all tax years that the tax credit is available under this section. The department shall issue the tax credit certificates to qualified applicants as follows:
   a.  Two million dollars for electric vehicle facilities in which installation is completed between January 1, 2017, and December 31, 2019. However, the following limitations shall apply:
   (1)  The department shall not issue tax credit certificates to a taxpayer for electric vehicle facilities on an agricultural basis equal to more than two hundred thousand dollars in the aggregate.
   (2)  The department shall not issue tax credit certificates to a taxpayer for electric vehicle facilities on a commercial basis equal to more than four hundred thousand dollars in the aggregate.
   (3)  The department shall not issue tax credit certificates to a taxpayer for electric vehicle facilities on a residential basis equal to more than two hundred thousand dollars in the aggregate.
   b.  Two million dollars for natural gas vehicle facilities in which installation is completed between January 1, 2017, and December 31, 2019. However, the following limitations shall apply:
   (1)  The department shall not issue tax credit certificates to a taxpayer for natural gas vehicle facilities on an agricultural basis equal to more than two hundred thousand dollars in the aggregate.
   (2)  The department shall not issue tax credit certificates to a taxpayer for natural gas vehicle facilities on a commercial basis equal to more than four hundred thousand dollars in the aggregate.
   c.  One million dollars for liquid propane gas vehicle facilities in which installation is completed between January 1, 2017, and December 31, 2018. However, the following limitations shall apply:
   (1)  The department shall not issue tax credit certificates to a taxpayer for liquid propane gas vehicle facilities on an agricultural basis equal to more than two hundred thousand dollars in the aggregate.
   (2)  The department shall not issue tax credit certificates to a taxpayer for liquid propane gas vehicle facilities on a commercial basis equal to more than four hundred thousand dollars in the aggregate.
   d.  Notwithstanding paragraph “c”, on and after January 1, 2019, the aggregate amount of tax credit certificates that have not been issued to taxpayers for liquid propane gas vehicle facilities shall be issued to qualified applicants for installations of alternative fuel vehicle facilities completed between January 1, 2017, and December 31, 2019. All of the following shall apply:
   (1)  A taxpayer is eligible to be issued a tax credit certificate under this paragraph “d” regardless of whether it is for electric vehicle facilities on an agricultural, commercial, or residential basis; natural gas vehicle facilities on an agricultural or commercial basis; or liquid propane gas vehicle facilities on an agricultural or commercial basis.
   (2)  A taxpayer is eligible to be issued tax credit certificates under this paragraph “d”, subject to the applicable aggregate dollar limitations on tax credit certificate amounts in paragraphs “a” through “c”. However, paragraph “b”, subparagraph (2), does not apply to limit the aggregate amount of tax credit certificates that a taxpayer may receive for installing natural gas vehicle facilities on a commercial basis.
   (3)  A taxpayer shall not be issued a tax credit certificate under this paragraph “d” for an alternative fuel vehicle facility for which the taxpayer had already been issued a tax credit certificate prior to January 1, 2019.
   6.  A taxpayer is eligible to receive a tax credit certificate only if all of the following apply:
   a.  Installation of the alternative fuel vehicle facility is completed between January 1, 2017, and December 31, 2019.
   b.  Installation of the alternative fuel vehicle facility is completed on or before the date when the application for the tax credit certificate is submitted.
   c.  The alternative fuel vehicle facility complies with any applicable federal and state standards and the latest applicable and available ASTM international specifications on the date that the installation was completed.
   d.  The application does not seek an alternative fuel vehicle facility tax credit for the repair or expansion of an alternative fuel vehicle facility.
   7.  The department may approve an eligible application and issue a tax credit certificate to a taxpayer for completing installation of more than one alternative fuel vehicle facility at different locations or at the same location so long as the alternative fuel vehicle facility is separate and distinct from any other alternative fuel vehicle facility.
   8.  a.  The department shall accept and approve eligible applications for tax credit certificates on and after May 1, 2017. However, the department shall not issue tax credit certificates to qualified applicants prior to July 1, 2017, and taxpayers shall not claim the alternative fuel vehicle facility tax credit prior to September 1, 2017.
   b.  The department shall issue tax credit certificates under paragraph “a” on a first-come, first-served basis. Eligible applications that were approved by the department beginning on May 1, 2017, and ending December 31, 2018, but for which tax credit certificates were not issued under subsection 5, paragraphs “a” and “b”, due to lack of funding, shall be placed on a wait list in the order the eligible applications were received by the department and shall be given priority for being issued tax credit certificates on and after January 1, 2019, from moneys available under subsection 5, paragraph “d”.
   9.  a.  The alternative fuel vehicle tax credit is limited to the cost of purchasing and installing infrastructure, equipment, or machinery used to store, dispense, dry, or meter an alternative fuel that serves motor vehicles. For electric vehicle facilities, this may include charging equipment, connection devices, and batteries. For natural gas vehicle facilities, this may include storage tanks, pipes, compressors, dryers, and vaporizers. For liquid propane gas vehicle facilities, this may include storage tanks, dispensers, pumps, and motors.
   b.  The tax credit is not available for costs related to the acquisition of real property or to the remodeling or expansion of a building. The tax credit is available for costs related to rewiring, so long as the costs are limited to those necessary to place in service an electric vehicle facility.
   10.  Subject to the limitations described in subsection 5, the amount of the alternative fuel vehicle facility tax credit equals thirty percent of the total cost to the taxpayer of purchasing the infrastructure, equipment, or machinery and thirty percent of the total cost to the taxpayer of installing the infrastructure, equipment, or machinery.
   11.  The alternative fuel vehicle facility tax credit may be claimed by a taxpayer on an agricultural, commercial, or residential basis as follows:
   a.  A taxpayer may claim the tax credit on an agricultural basis if the alternative fuel vehicle facility is located on land primarily used in the production of a crop as defined in section 202.1 or livestock as defined in section 717.1. The alternative fuel vehicle facility must be used by an agricultural producer as defined in section 15E.202 or a person under the management of the agricultural producer. The tax credit must be taken in equal installments in three consecutive tax years, beginning with the tax year that the taxpayer completed installation of the alternative fuel vehicle facility. However, if the taxpayer’s application for a tax credit certificate was placed on a wait list pursuant to subsection 8, the taxpayer must claim the tax credit beginning with the tax year that the tax credit certificate is issued. If any part of the alternative fuel vehicle facility is taken out of service and not immediately replaced and the facility placed back in service, the tax credit expires and the taxpayer cannot take any remaining installment of the tax credit.
   b.  A taxpayer may claim the tax credit on a commercial basis if the alternative fuel vehicle facility is part of a business selling alternative fuel on a retail basis, or may claim the tax credit if the alternative fuel vehicle facility is used by a business for its own vehicle fleet or employees. The tax credit must be taken in equal installments in three consecutive tax years, beginning with the tax year that the taxpayer completed installation of the alternative fuel vehicle facility. However, if the taxpayer’s application for a tax credit certificate was placed on a wait list pursuant to subsection 8, the taxpayer must claim the tax credit beginning with the tax year that the tax credit certificate is issued. If any part of the alternative fuel vehicle facility is taken out of service and not immediately replaced and the facility placed back in service, the tax credit expires and the taxpayer cannot take any remaining installment of the tax credit.
   c.  A taxpayer may claim the tax credit on a residential basis only for an electric vehicle facility that is for personal, family, or household use as part of the taxpayer’s primary residence. The entire amount of the tax credit must be claimed in the tax year that the taxpayer completed installation of the electric vehicle facility. However, if the taxpayer’s application for a tax credit certificate was placed on a wait list pursuant to subsection 8, the taxpayer must claim the tax credit beginning with the tax year that the tax credit certificate is issued.
   12.  Any tax credit in excess of the taxpayer’s tax liability shall be refunded. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year.
   13.  An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   14.  This section is repealed on January 1, 2025.
    Sec. 3.  Section 422.33, Code 2016, is amended by adding the following new subsection:
   NEW SUBSECTION.  11.  The taxes imposed under this division shall be reduced by an alternative fuel vehicle facility tax credit allowed for each tax year that the taxpayer is eligible to claim the tax credit under this subsection. 
   a.  The taxpayer must claim the tax credit on an agricultural, commercial, or residential basis in the same manner as provided in section 422.11G. The taxpayer must claim the tax credit according to the same requirements, for the same amount, and for the same period as provided in section 422.11G.  The amount of the tax credit shall be calculated in the same manner as provided in section 422.11G. A taxpayer claiming a tax credit on an agricultural or commercial basis is subject to the same penalty for taking the alternative fuel vehicle facility out of service as provided in section 422.11G.
   b.  This subsection is repealed on January 1, 2025.
    Sec. 4.  Section 422.35, Code 2016, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.  a.  A taxpayer taking a depreciation allowance under section 168 of the Internal Revenue Code for property described in section 422.33, subsection 11, is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of the property under section 422.33, subsection 11. If a credit is taken for the purchase and installation of the property under section 422.33, subsection 11, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   b.  A taxpayer taking an expensing allowance under section 179 of the Internal Revenue Code for property described in section 422.33, subsection 11, is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of such property under section 422.33, subsection 11. If a credit is taken for the purchase and installation of the property under section 422.33, subsection 11, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   c.  This subsection is repealed on January 1, 2025.
    Sec. 5.  APPLICABILITY DATE.  This Act applies to tax years beginning on or after January 1, 2017.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill creates an alternative fuel vehicle facility tax credit for an electric vehicle facility, a (compressed) natural gas vehicle facility, and a liquid propane gas vehicle facility. The tax credit is administered by the department of revenue. A taxpayer may claim the tax credit for an electric vehicle facility on an agricultural, commercial, or residential basis and may claim the tax credit for a natural gas facility or liquid propane gas facility on an agricultural or commercial basis. The amount of the tax credit that a taxpayer may claim is limited to 30 percent of the cost of purchasing and 30 percent of the cost of installing the facility. A taxpayer claiming the tax credit on a residential basis must claim the entire tax credit for the tax year in which the facility was installed. The taxpayer must install the facility between January 1, 2017, and December 31, 2019. The aggregate amount of tax credit certificates that may be issued cannot exceed a total amount of $5 million for all tax years that the tax credit is available. That total amount is divided into three reserved amounts: (1) $2 million allocated for electric vehicle facilities, (2) $2 million allocated for natural gas facilities, and (3) $1 million allocated for liquid propane gas facilities. 
   The department is to issue tax credit certificates on a first-come, first-served basis. If moneys are no longer available from a reserved amount, the taxpayer’s application for a tax credit certificate is to be placed on a waitlist. On and after January 1, 2019, the aggregate amount of tax credit certificates that have not been issued to taxpayers for liquid propane gas vehicle facilities are available to be issued to taxpayers for installations of all alternative fuel vehicle facilities completed between January 1, 2017, and December 31, 2019. If a taxpayer’s application for a tax credit certificate was placed on a wait list, the taxpayer must claim the tax credit beginning with the tax year that the tax credit certificate is issued. The department must accept and approve eligible applications for tax credit certificates on and after May 1, 2017. However, the department cannot issue a tax credit certificate to a taxpayer prior to July 1, 2017, and a taxpayer cannot claim the tax credit prior to September 1, 2017.