Text: HF00305 Text: HF00307 Text: HF00300 - HF00399 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 HOUSE FILE 306 1 2 1 3 AN ACT 1 4 RELATING TO THE INDIVIDUAL INCOME TAX BY EXTENDING THE 1 5 SPECIAL METHOD OF COMPUTATION OF TAX FOR VALUE-ADDED 1 6 S CORPORATION SHAREHOLDERS TO ALL S CORPORATION SHARE- 1 7 HOLDERS AND ELIMINATING THE REFUND LIMITATION AND 1 8 INCLUDING EFFECTIVE AND RETROACTIVE APPLICABILITY DATE 1 9 PROVISIONS. 1 10 1 11 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 12 1 13 Section 1. Section 422.4, subsection 18, Code 1997, is 1 14 amended by striking the subsection. 1 15 Sec. 2. Section 422.5, subsection 1, paragraph j, 1 16 subparagraph (2), subparagraph subdivisions (a) and (c), Code 1 17 1997, are amended by striking the subparagraph subdivisions. 1 18 Sec. 3. Section 422.5, subsection 1, paragraph j, 1 19 subparagraph (2), Code 1997, is amended to read as follows: 1 20 (2) The tax imposed upon the taxable income of a resident 1 21 shareholder ina value-addedan S corporation which has in 1 22 effect for the tax year an election under subchapter S of the 1 23 Internal Revenue Code and carries on business within and 1 24 without the state may be computed by reducing the amount 1 25 determined pursuant to paragraphs "a" through "i" by the 1 26 amounts of nonrefundable credits under this division and by 1 27 multiplying this resulting amount by a fraction of which the 1 28 resident's net income allocated to Iowa, as determined in 1 29 section 422.8, subsection 2, paragraph "b", is the numerator 1 30 and the resident's total net income computed under section 1 31 422.7 is the denominator. If a resident shareholder has 1 32 elected to take advantage of this subparagraph, and for the 1 33 next tax year elects not to take advantage of this 1 34 subparagraph, the resident shareholder shall not reelect to 1 35 take advantage of this subparagraph for the three tax years 2 1 immediately following the first tax year for which the 2 2 shareholder elected not to take advantage of this 2 3 subparagraph, unless the director consents to the reelection. 2 4 Thisparagraphsubparagraph also applies to individuals who 2 5 are residents of Iowa for less than the entire tax year. 2 6(a) In order for a resident shareholder in a value-added2 7corporation which has in effect for the tax year an election2 8under subchapter S of the Internal Revenue Code and carries on2 9business within and without the state, to claim the benefits2 10of apportionment of income of the value-added S corporation,2 11the taxpayer must completely fill out the return, determine2 12the taxpayer's income tax liability without the benefit of2 13apportionment of the value-added corporation's income, and pay2 14the amount of tax owed. The taxpayer shall recompute the2 15taxpayer's income tax liability, by applying the provisions of2 16this subparagraph on a special return. This special return2 17shall be filed under rules of the director and constitutes a2 18claim for refund of the difference between the amount of tax2 19the taxpayer paid as determined without the provisions of this2 20subparagraph and the amount of tax determined with the2 21provisions of this subparagraph.2 22(b)This subparagraph shall not affect the amount of the 2 23 taxpayer's checkoff to the Iowa election campaign fund under 2 24 section 56.18, the checkoff for the fish and game fund in 2 25 section 456A.16, the credits from tax provided in sections 2 26 422.10, 422.11A, and 422.12 and the allocation of these 2 27 credits between spouses if the taxpayers filed separate 2 28 returns or separately on combined returns. 2 29(c) For any tax year, the aggregate amount of refund2 30claims that shall be paid pursuant to this subparagraph shall2 31not exceed five million dollars. If, for a tax year, the2 32aggregate amount of refund claims filed pursuant to this2 33subparagraph exceeds five million dollars, each claim for2 34refund shall be paid on a pro rata basis so that the aggregate2 35amount of refund claims does not exceed five million dollars.3 1In the case where refund claims are not paid in full, the3 2amount of the refund to which the taxpayer is entitled under3 3this subparagraph is the pro rata amount that was paid and the3 4taxpayer is not entitled to a refund of the unpaid portion and3 5is not entitled to carry that amount forward or backward to3 6another tax year. Taxpayers shall not use refunds as3 7estimated payments for the succeeding tax year. Taxpayers3 8whose tax years begin on January 1 must file their refund3 9claims by October 31 of the calendar year following the end of3 10their tax year to be eligible for refunds. Taxpayers whose3 11tax years begin on a date other than January 1 must file their3 12refund claims by the end of the tenth month following the end3 13of their tax years to be eligible. The department shall3 14determine on February 1 of the second succeeding calendar year3 15if the total amount of claims for refund exceeds five million3 16dollars for the tax year. Notwithstanding any other3 17provision, interest shall not be due on any refund claims that3 18are paid by the last day of February of the second succeeding3 19calendar year. If the claim is not payable on February 1 of3 20the second succeeding calendar year, because the taxpayer is a3 21fiscal year filer, then the amount of the claim allowed shall3 22be in the same ratio as the refund claims available on3 23February 1 of the second succeeding calendar year. These3 24claims shall be funded by moneys appropriated for payment of3 25individual income tax refunds.3 26 Sec. 4. Section 422.5, subsection 1, paragraph k, 3 27 unnumbered paragraph 4, Code 1997, is amended to read as 3 28 follows: 3 29 In the case of a resident, including a resident estate or 3 30 trust, the state's apportioned share of the state alternative 3 31 minimum tax is one hundred percent of the state alternative 3 32 minimum tax computed in this subsection. In the case of a 3 33 resident or part-year resident shareholder ina value-addedan 3 34 S corporation which has in effect for the tax year an election 3 35 under subchapter S of the Internal Revenue Code and carries on 4 1 business within and without the state, a nonresident, 4 2 including a nonresident estate or trust, or an individual, 4 3 estate, or trust that is domiciled in the state for less than 4 4 the entire tax year, the state's apportioned share of the 4 5 state alternative minimum tax is the amount of tax computed 4 6 under this subsection, reduced by the applicable credits in 4 7 sections 422.10 through 422.12 and this result multiplied by a 4 8 fraction with a numerator of the sum of state net income 4 9 allocated to Iowa as determined in section 422.8, subsection 4 10 2, paragraph "a" or "b" as applicable, plus tax preference 4 11 items, adjustments, and losses under subparagraph (1) 4 12 attributable to Iowa and with a denominator of the sum of 4 13 total net income computed under section 422.7 plus all tax 4 14 preference items, adjustments, and losses under subparagraph 4 15 (1). In computing this fraction, those items excludable under 4 16 subparagraph (1) shall not be used in computing the tax 4 17 preference items. Married taxpayers electing to file separate 4 18 returns or separately on a combined return must allocate the 4 19 minimum tax computed in this subsection in the proportion that 4 20 each spouse's respective preference items, adjustments, and 4 21 losses under subparagraph (1) bear to the combined preference 4 22 items, adjustments, and losses under subparagraph (1) of both 4 23 spouses. 4 24 Sec. 5. Section 422.8, subsection 2, paragraph b, 4 25 unnumbered paragraph 1, Code 1997, is amended to read as 4 26 follows: 4 27 A resident's income allocable to Iowa is the income 4 28 determined under section 422.7 reduced by items of income and 4 29 expenses froma subchapteran S corporationwhich is a value-4 30added corporationthat carries on business within and without 4 31 the state when those items of income and expenses pass 4 32 directly to the shareholders under provisions of the Internal 4 33 Revenue Code. These items of income and expenses are 4 34 increased by the greater of the following: 4 35 Sec. 6. Section 422.8, subsection 6, Code 1997, is amended 5 1 to read as follows: 5 2 6. If the resident or part-year resident is a shareholder 5 3 ofa value-addedan S corporation which has in effect an 5 4 election under subchapter S of the Internal Revenue Code, 5 5 subsections 1 and 3 do not apply to any income taxes paid to 5 6 another state or foreign country on the income from thevalue-5 7addedcorporation which has in effect an election under 5 8 subchapter S of the Internal Revenue Code. 5 9 Sec. 7. Section 2 of this Act applies retroactively to 5 10 January 1, 1997, for tax years beginning on or after that 5 11 date. 5 12 Sec. 8. This Act, except for section 2 of this Act, is 5 13 effective January 1, 1998, and applies to tax years beginning 5 14 on or after that date. 5 15 5 16 5 17 5 18 RON J. CORBETT 5 19 Speaker of the House 5 20 5 21 5 22 5 23 MARY E. KRAMER 5 24 President of the Senate 5 25 5 26 I hereby certify that this bill originated in the House and 5 27 is known as House File 306, Seventy-seventh General Assembly. 5 28 5 29 5 30 5 31 ELIZABETH ISAACSON 5 32 Chief Clerk of the House 5 33 Approved , 1997 5 34 5 35 6 1 6 2 TERRY E. BRANSTAD 6 3 Governor
Text: HF00305 Text: HF00307 Text: HF00300 - HF00399 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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