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PAG LIN 1 1 Amend the Senate amendment, S-5580, to the House 1 2 amendment, S-5574, to Senate File 2449, as amended, 1 3 passed, and reprinted by the Senate, as follows: 1 4 #1. By striking page 1, line 1, through page 27, 1 5 line 21, and inserting the following: 1 6 "Amend the House amendment, S-5574, to Senate File 1 7 2449, as amended, passed, and reprinted by the Senate, 1 8 as follows: 1 9 # . By striking page 1, line 1, through page 6, 1 10 line 10, and inserting the following: 1 11 "Amend Senate File 2449, as amended, passed, and 1 12 reprinted by the Senate, as follows: 1 13 "# . By striking everything after the enacting 1 14 clause and inserting the following: 1 15 "DIVISION I 1 16 INCOME TAX INDEXATION 1 17 Section 1. Section 422.4, subsection 1, paragraphs 1 18 a and d, Code 1995, are amended to read as follows: 1 19 a. "Annual inflation factor" means an index, 1 20 expressed as a percentage, determined by the 1 21 department by October 15 of the calendar year 1 22 preceding the calendar year for which the factor is 1 23 determined, which reflects the purchasing power of the 1 24 dollar as a result of inflation during the fiscal year 1 25 ending in the calendar year preceding the calendar 1 26 year for which the factor is determined. In 1 27 determining the annual inflation factor, the 1 28 department shall use the annual percent change, but 1 29 not less than zero percent, in theimplicit price1 30deflator for the gross national productgross domestic 1 31 product price deflator computed for the second quarter 1 32 of the calendar year by the bureau of economic 1 33 analysis of the United States department of commerce 1 34 and shall addone-halfall of that percent change to 1 35 one hundred percent. The annual inflation factor and 1 36 the cumulative inflation factor shall each be 1 37 expressed as a percentage rounded to the nearest one- 1 38 tenth of one percent. The annual inflation factor 1 39 shall not be less than one hundred percent. 1 40 d. Notwithstanding the computation of the annual 1 41 inflation factor under paragraph "a", the annual 1 42 inflation factor is one hundred percent for any 1 43 calendar year in which the unobligated state general 1 44 fund balance on June 30 as certified by the director 1 45 of the department of management by October 10, is less 1 46 than sixty million dollars. Notwithstanding section 1 47 8.58, in determining the unobligated state general 1 48 fund balance on June 30, unobligated moneys in the 1 49 cash reserve fund and Iowa economic emergency fund on 1 50 June 30 shall be counted as part of the unobligated 2 1 state general fund balance for purposes of this 2 2 paragraph. 2 3 Sec. 2. Section 422.4, subsection 2, paragraph a, 2 4 Code 1995, is amended to read as follows: 2 5 a. "Annual standard deduction factor" means an 2 6 index, expressed as a percentage, determined by the 2 7 department by October 15 of the calendar year 2 8 preceding the calendar year for which the factor is 2 9 determined, which reflects the purchasing power of the 2 10 dollar as a result of inflation during the fiscal year 2 11 ending in the calendar year preceding the calendar 2 12 year for which the factor is determined. In 2 13 determining the annual standard deduction factor, the 2 14 department shall use the annual percent change, but 2 15 not less than zero percent, in theimplicit price2 16deflator for the gross national productgross domestic 2 17 product price deflator computed for the second quarter 2 18 of the calendar year by the bureau of economic 2 19 analysis of the United States department of commerce 2 20 and shall addone-halfall of that percent change to 2 21 one hundred percent. The annual standard deduction 2 22 factor and the cumulative standard deduction factor 2 23 shall each be expressed as a percentage rounded to the 2 24 nearest one-tenth of one percent. The annual standard 2 25 deduction factor shall not be less than one hundred 2 26 percent. 2 27 Sec. 3. This division of this Act, being deemed of 2 28 immediate importance, takes effect upon enactment and 2 29 applies to the computation of the annual inflation 2 30 factor and annual standard deduction factor for 2 31 calendar years beginning on or after January 1, 1996. 2 32 The department of revenue and finance shall adjust the 2 33 annual inflation factor and annual standard deduction 2 34 factor previously computed for the 1996 calendar year 2 35 to reflect the change made in the computation of those 2 36 factors in this Act. 2 37 DIVISION II 2 38 INHERITANCE TAXATION 2 39 Sec. 4. Section 450.7, subsection 1, unnumbered 2 40 paragraph 1, Code Supplement 1995, is amended to read 2 41 as follows: 2 42 Except for the share of the estate passing to the 2 43 surviving spouse, father or mother, each son and 2 44 daughter, including legally adopted sons and daughters 2 45 or biological sons and daughters, stepchildren, and 2 46 grandchildren, the tax is a charge against and a lien 2 47 upon the estate subject to tax under this chapter, and 2 48 all property of the estate or owned by the decedent 2 49 from the death of the decedent until paid, subject to 2 50 the following limitation: 3 1 Sec. 5. Section 450.9, subsection 1, Code 1995, is 3 2 amended to read as follows: 3 3 1. Surviving spouse, father or mother, son or 3 4 daughter, including legally adopted sons and daughters 3 5 or biological sons and daughters, stepchildren, or 3 6 grandchild, the entire amount of property, interest in 3 7 property, and income. 3 8 Sec. 6. Section 450.9, subsections 2 and 3, Code 3 9 1995, are amended by striking the subsections. 3 10 Sec. 7. Section 450.10, subsection 1, unnumbered 3 11 paragraph 1, Code 1995, is amended to read as follows: 3 12 When the property, interest, or income passes to 3 13the father or mother, or to a child ora lineal 3 14 descendant of the decedent, grantor, donor, or vendor,3 15including a legally adopted child or biological child3 16entitled to inherit under the laws of this statenot 3 17 included in subsection 7, the tax imposed shall be on 3 18 the individual share so passing in excess of the 3 19 exemptions allowed as follows: 3 20 Sec. 8. Section 450.10, subsection 2, unnumbered 3 21 paragraph 1, Code 1995, is amended to read as follows: 3 22 When the property or any interestthereinin 3 23 property, or incometherefromfrom property taxable 3 24 under the provisions of this chapter passes to the 3 25 brother or sister, son-in-law, or daughter-in-law,or3 26step-children,the rate of tax imposed on the 3 27 individual share so passing shall be as follows: 3 28 Sec. 9. Section 450.10, subsection 7, Code 1995, 3 29 is amended to read as follows: 3 30 7. Property, interest in property, or income 3 31 passing to the surviving spouse, father or mother, son 3 32 or daughter, including legally adopted sons and 3 33 daughters or biological sons and daughters, stepchild, 3 34 or grandchild, is not taxable under this section. 3 35 Sec. 10. This division of this Act applies to 3 36 estates of decedents dying on or after July 1, 1996. 3 37 DIVISION III 3 38 SCHOOL PROPERTY TAX AND FUNDING 3 39 Sec. 11. Section 257.1, subsection 2, unnumbered 3 40 paragraph 2, Code Supplement 1995, is amended to read 3 41 as follows: 3 42 For the budget year commencing July 1,19911996, 3 43 and for each succeeding budget year the regular 3 44 program foundation base per pupil is eighty-three 3 45 percent of the regular program state cost per pupil,3 46except that the regular program foundation base per3 47pupil for the portion of weighted enrollment that is3 48additional enrollment because of special education is3 49seventy-nine percent of the regular program state cost3 50per pupil. For the budget year commencing July 1, 4 119911996, and for each succeeding budget year the 4 2 special education support services foundation base is 4 3seventy-nineeighty-three percent of the special 4 4 education support services state cost per pupil. The 4 5 combined foundation base is the sum of the regular 4 6 program foundation base and the special education 4 7 support services foundation base. 4 8 Sec. 12. Section 257.3, subsection 1, unnumbered 4 9 paragraph 1, Code Supplement 1995, is amended to read 4 10 as follows: 4 11Except as provided in subsections 2 and 3, aA 4 12 school district shall cause to be levied each year, 4 13 for the school general fund, a foundation property tax 4 14 equal tofivefour dollars andfortyseventy cents per 4 15 thousand dollars of assessed valuation on all taxable 4 16 property in the district. The county auditor shall 4 17 spread the foundation levy over all taxable property 4 18 in the district. 4 19 Sec. 13. Section 257.3, subsections 2 and 3, Code 4 20 Supplement 1995, are amended by striking the 4 21 subsections. 4 22 Sec. 14. Section 257.3, subsection 4, Code 4 23 Supplement 1995, is amended to read as follows: 4 24 4. RAILWAY CORPORATIONS. For purposes of section 4 25 257.1, the "amount per pupil of foundation property 4 26 tax" does not include the tax levied under subsection 4 27 1, 2, or 3on the property of a railway corporation, 4 28 or on its trustee if the corporation has been declared 4 29 bankrupt or is in bankruptcy proceedings. 4 30 Sec. 15. Section 275.55, unnumbered paragraph 4, 4 31 Code 1995, is amended by striking the unnumbered 4 32 paragraph. 4 33 Sec. 16. Section 425A.3, subsection 1, Code 1995, 4 34 is amended to read as follows: 4 35 1. The family farm tax credit fund shall be 4 36 apportioned each year in the manner provided in this 4 37 chapter so as to give a credit against the tax on each 4 38 eligible tract of agricultural land within the several 4 39 school districts of the state in which the levy for 4 40 the general school fund exceedsfivefour dollars and 4 41fortyseventy cents per thousand dollars of assessed 4 42 value. The amount of the credit on each eligible 4 43 tract of agricultural land shall be the amount the tax 4 44 levied for the general school fund exceeds the amount 4 45 of tax which would be levied on each eligible tract of 4 46 agricultural land were the levy for the general school 4 47 fundfivefour dollars andfortyseventy cents per 4 48 thousand dollars of assessed value for the previous 4 49 year. However, in the case of a deficiency in the 4 50 family farm tax credit fund to pay the credits in 5 1 full, the credit on each eligible tract of 5 2 agricultural land in the state shall be proportionate 5 3 and applied as provided in this chapter. 5 4 Sec. 17. Section 425A.5, Code 1995, is amended to 5 5 read as follows: 5 6 425A.5 COMPUTATION BY COUNTY AUDITOR. 5 7 The family farm tax credit allowed each year shall 5 8 be computed as follows: On or before March 1, the 5 9 county auditor shall list by school districts all 5 10 tracts of agricultural land which are entitled to 5 11 credit, the taxable value for the previous year, the 5 12 budget from each school district for the previous 5 13 year, and the tax rate determined for the general fund 5 14 of the school district in the manner prescribed in 5 15 section 444.3 for the previous year, and if the tax 5 16 rate is in excess offivefour dollars andforty5 17 seventy cents per thousand dollars of assessed value, 5 18 the auditor shall multiply the tax levy which is in 5 19 excess offivefour dollars andfortyseventy cents 5 20 per thousand dollars of assessed value by the total 5 21 taxable value of the agricultural land entitled to 5 22 credit in the school district, and on or before March 5 23 1, certify the total amount of credit and the total 5 24 number of acres entitled to the credit to the 5 25 department of revenue and finance. 5 26 Sec. 18. Section 426.3, Code 1995, is amended to 5 27 read as follows: 5 28 426.3 WHERE CREDIT GIVEN. 5 29 The agricultural land credit fund shall be 5 30 apportioned each year in the mannerhereinafter5 31 provided in this chapter so as to give a credit 5 32 against the tax on each tract of agricultural lands 5 33 within the several school districts of the state in 5 34 which the levy for the general school fund exceeds 5 35fivefour dollars andfortyseventy cents per thousand 5 36 dollars of assessed value; the amount ofsuchcredit 5 37 on each tract ofsuchlands shall be the amount the 5 38 tax levied for the general school fund exceeds the 5 39 amount of tax which would be levied onsaidthe tract 5 40 ofsuchlands were the levy for the general school 5 41 fundfivefour dollars andfortyseventy cents per 5 42 thousand dollars of assessed value for the previous 5 43 year, except in the case of a deficiency in the 5 44 agricultural land credits fund to paysaidcredits in 5 45 full, in which case the credit on each eligible tract 5 46 ofsuchlands in the state shall be proportionate and 5 47 shall be applied ashereinafterprovided in this 5 48 chapter. 5 49 Sec. 19. Section 426.6, unnumbered paragraph 1, 5 50 Code 1995, is amended to read as follows: 6 1 The agricultural land tax credit allowed each year 6 2 shall be computed as follows: On or before the first 6 3 of June the county auditor shall list by school 6 4 districts all tracts of agricultural lands which they 6 5 are entitled to credit, together with the taxable 6 6 value for the previous year, together with the budget 6 7 from each school district for the previous year, and 6 8 the tax rate determined for the general fund of the 6 9 district in the manner prescribed in section 444.3 for 6 10 the previous year, and ifsuchthe tax rate is in 6 11 excess offivefour dollars andfortyseventy cents 6 12 per thousand dollars of assessed value, the auditor 6 13 shall multiply the tax levy which is in excess offive6 14 four dollars andfortyseventy cents per thousand 6 15 dollars of assessed value by the total taxable value 6 16 of the agricultural lands entitled to credit in the 6 17 district, and on or before the first of June certify 6 18 the amount to the department of revenue and finance. 6 19 Sec. 20. 6 20 1. Sections 11 through 15 of this division of this 6 21 Act, being deemed of immediate importance, take effect 6 22 upon enactment, and apply to the computation of school 6 23 foundation property taxes payable during school budget 6 24 years beginning on or after July 1, 1996. 6 25 2. Sections 16 through 19 of this division of this 6 26 Act take effect January 1, 1997, and apply to the 6 27 computation of family farm tax credits and 6 28 agricultural land tax credits granted for property 6 29 taxes payable in school budget years beginning on or 6 30 after July 1, 1997. 6 31 DIVISION IV 6 32 FAMILY FARM AND AGRICULTURAL LAND TAX CREDITS 6 33 Sec. 21. Section 425A.1, Code 1995, is amended to 6 34 read as follows: 6 35 425A.1 FAMILY FARM TAX CREDIT FUND. 6 36 The family farm tax credit fund is created in the 6 37 office of the treasurer of state. There shall be 6 38transferredappropriated annually to the fund the 6 39first ten million dollars of the amount annually6 40appropriated to the agricultural land credit fund,6 41provided in section 426.1sum of thirty million 6 42 dollars. Any balance in the fund on June 30 shall 6 43 revert to the general fund. 6 44 Sec. 22. Section 425A.2, subsection 4, Code 1995, 6 45 is amended to read as follows: 6 46 4. "Designated person" means one of the following: 6 47 a. If the owner is an individual, the designated 6 48 person includes the owner of the tractor a person6 49related to the owner as, the owner's spouse,parent,6 50grandparent,the owner's child, grandchild,or 7 1 stepchild, and their spouses, or the owner's relative 7 2 within the third degree of consanguinity, and the 7 3 relative's spouse. 7 4 b. If the owner is a partnership, a partner, or 7 5 the partner's spouse. 7 6 c. If the owner is a family farm corporation, a 7 7 family member who is a shareholder of the family farm 7 8 corporation or the shareholder's spouse. 7 9 d. If the owner is an authorized farm corporation, 7 10 a shareholder who owns at least fifty-one percent of 7 11 the stock of the authorized farm corporation or the 7 12 shareholder's spouse. 7 13 e. If the owner is an individual who leases the 7 14 tract to a family farm corporation, a shareholder of 7 15 the corporation if the combined stock of the family 7 16 farm corporation owned by the owner of the tract and 7 17 persons related to the owner as enumerated in 7 18 paragraph "a" is equal to at least fifty-one percent 7 19 of the stock of the family farm corporation. 7 20 f. If the owner is an individual who leases the 7 21 tract to a partnership, a partner if the combined 7 22 partnership interest owned by the owner of the tract 7 23 and persons related to the owner as enumerated in 7 24 paragraph "a" is equal to at least fifty-one percent 7 25 of the ownership interest of the partnership. 7 26 Sec. 23. Section 426.1, Code 1995, is amended to 7 27 read as follows: 7 28 426.1 AGRICULTURAL LAND CREDIT FUND. 7 29 There is created as a permanent fund in the office 7 30 of the treasurer of state a fund to be known as the 7 31 agricultural land credit fund, and for the purpose of 7 32 establishing and maintaining this fund for each fiscal 7 33 year there is appropriatedtheretoto the fund from 7 34 funds in the general fund not otherwise appropriated 7 35 the sum ofthirty-ninetwenty-nine million one hundred 7 36 thousand dollarsof which the first ten million7 37dollars shall be transferred to and deposited into the7 38family farm tax credit fund created in section 425A.1. 7 39 Any balance in said fund on June 30 shall revert to 7 40 the general fund. 7 41 Sec. 24. This division of this Act, being deemed 7 42 of immediate importance, takes effect upon enactment 7 43 and applies to family farm tax credits and 7 44 agricultural land credits allowed for property taxes 7 45 due and payable in fiscal years beginning on or after 7 46 July 1, 1996. 7 47 DIVISION V 7 48 SUBCHAPTER S CORPORATIONS 7 49 Sec. 25. Section 422.5, subsection 1, paragraph j, 7 50 Code 1995, is amended by adding the following new 8 1 unnumbered paragraph: 8 2 NEW UNNUMBERED PARAGRAPH. The tax imposed upon the 8 3 taxable income of a resident shareholder in a 8 4 corporation which has in effect for the tax year an 8 5 election under subchapter S of the Internal Revenue 8 6 Code and carries on business within and without the 8 7 state shall be computed by reducing the amount 8 8 determined pursuant to paragraphs "a" through "i" by 8 9 the amounts of nonrefundable credits under this 8 10 division and by multiplying this resulting amount by a 8 11 fraction of which the resident's net income allocated 8 12 to Iowa, as determined in section 422.8, subsection 2, 8 13 paragraph "b", is the numerator and the resident's 8 14 total net income computed under section 422.7 is the 8 15 denominator. This paragraph also applies to 8 16 individuals who are residents of Iowa for less than 8 17 the entire tax year. 8 18 Sec. 26. Section 422.5, subsection 1, paragraph k, 8 19 unnumbered paragraph 4, Code 1995, is amended to read 8 20 as follows: 8 21 In the case of a resident, including a resident 8 22 estate or trust, the state's apportioned share of the 8 23 state alternative minimum tax is one hundred percent 8 24 of the state alternative minimum tax computed in this 8 25 subsection. In the case of a resident or part year 8 26 resident shareholder in a corporation which has in 8 27 effect for the tax year an election under subchapter S 8 28 of the Internal Revenue Code and carries on business 8 29 within and without the state, a nonresident, including 8 30 a nonresident estate or trust, or an individual, 8 31 estate, or trust that is domiciled in the state for 8 32 less than the entire tax year, the state's apportioned 8 33 share of the state alternative minimum tax is the 8 34 amount of tax computed under this subsection, reduced 8 35 by the applicable credits in sections 422.10 through 8 36 422.12 and this result multiplied by a fraction with a 8 37 numerator of the sum of state net income allocated to 8 38 Iowa as determined in section 422.8, subsection 2, 8 39 paragraph "a" or "b" as applicable, plus tax 8 40 preference items, adjustments, and losses under 8 41 subparagraph (1) attributable to Iowa and with a 8 42 denominator of the sum of total net income computed 8 43 under section 422.7 plus all tax preference items, 8 44 adjustments, and losses under subparagraph (1). In 8 45 computing this fraction, those items excludable under 8 46 subparagraph (1) shall not be used in computing the 8 47 tax preference items. Married taxpayers electing to 8 48 file separate returns or separately on a combined 8 49 return must allocate the minimum tax computed in this 8 50 subsection in the proportion that each spouse's 9 1 respective preference items, adjustments, and losses 9 2 under subparagraph (1) bear to the combined preference 9 3 items, adjustments, and losses under subparagraph (1) 9 4 of both spouses. 9 5 Sec. 27. Section 422.8, subsection 2, Code 1995, 9 6 is amended to read as follows: 9 7 2. a. Nonresident's net income allocated to Iowa 9 8 is the net income, or portion thereof, which is 9 9 derived from a business, trade, profession, or 9 10 occupation carried on within this state or income from 9 11 any property, trust, estate, or other source within 9 12 Iowa. However, income derived from a business, trade, 9 13 profession, or occupation carried on within this state 9 14 and income from any property, trust, estate, or other 9 15 source within Iowa shall not include distributions 9 16 from pensions, including defined benefit or defined 9 17 contribution plans, annuities, individual retirement 9 18 accounts, and deferred compensation plans or any 9 19 earnings attributable thereto so long as the 9 20 distribution is directly related to an individual's 9 21 documented retirement and received while the 9 22 individual is a nonresident of this state. If a 9 23 business, trade, profession, or occupation is carried 9 24 on partly within and partly without the state, only 9 25 the portion of the net income which is fairly and 9 26 equitably attributable to that part of the business, 9 27 trade, profession, or occupation carried on within the 9 28 state is allocated to Iowa for purposes of section 9 29 422.5, subsection 1, paragraph "j", and section 422.13 9 30 and income from any property, trust, estate, or other 9 31 source partly within and partly without the state is 9 32 allocated to Iowa in the same manner, except that 9 33 annuities, interest on bank deposits and interest- 9 34 bearing obligations, and dividends are allocated to 9 35 Iowa only to the extent to which they are derived from 9 36 a business, trade, profession, or occupation carried 9 37 on within the state. 9 38 b. A resident's income allocable to Iowa is the 9 39 income determined under section 422.7 reduced by items 9 40 of income and expenses from a subchapter S corporation 9 41 which pass directly to the shareholders under 9 42 provisions of the Internal Revenue Code and increased 9 43 by the greatest of the following: 9 44 (1) The net income or loss of the corporation 9 45 which is fairly and equitably attributable to this 9 46 state under section 422.33, subsections 2 and 3. 9 47 (2) The taxpayer's pro rata share of an amount 9 48 deemed distributed to shareholders which when added to 9 49 the salaries, wages, or other compensation for 9 50 services performed by all shareholders will equal ten 10 1 percent of the net income of the corporation computed 10 2 in accordance with section 422.35 and considering 10 3 items of income and expense which pass directly to the 10 4 shareholders under provisions of the Internal Revenue 10 5 Code before deduction of shareholder's salaries, 10 6 wages, or other compensation for services performed. 10 7 (3) Any cash or the value of any property 10 8 distributions made to the extent they are paid from 10 9 income upon which Iowa income tax has not been paid as 10 10 determined under rules of the director. 10 11 Sec. 28. Section 422.8, Code 1995, is amended by 10 12 adding the following new subsection: 10 13 NEW SUBSECTION. 6. If the resident or part year 10 14 resident is a shareholder of a corporation which has 10 15 in effect an election under subchapter S of the 10 16 Internal Revenue Code, subsections 1 and 3 do not 10 17 apply to any income taxes paid to another state or 10 18 foreign country on the income from the corporation 10 19 which has in effect an election under subchapter S of 10 20 the Internal Revenue Code. 10 21 Sec. 29. This division of this Act, being deemed 10 22 of immediate importance, takes effect upon enactment 10 23 and applies retroactively to January 1, 1996, for tax 10 24 years beginning on or after that date." 10 25 # . Title page, by striking lines 1 through 17 10 26 and inserting the following: "An Act relating to 10 27 taxation within the state by changing the computation 10 28 of the inflation factors for the tax brackets and 10 29 standard deduction of the state individual income tax, 10 30 adjusting exemptions from the state inheritance tax, 10 31 increasing the funding for the family farm tax credit; 10 32 changing the computation of taxable income of 10 33 shareholders of subchapter S corporation; and reducing 10 34 the school district uniform levy for purposes of 10 35 providing tax relief and providing effective and 10 36 retroactive and other applicability date 10 37 provisions.""" 10 38 10 39 10 40 10 41 WAYNE D. BENNETT 10 42 10 43 10 44 10 45 10 46 10 47 10 48 SF 2449.506 76 10 49 sc/jw
Text: S05593 Text: S05595 Text: S05500 - S05599 Text: S Index Bills and Amendments: General Index Bill History: General Index
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