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Text: S03195                            Text: S03197
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Senate Amendment 3196

Amendment Text

PAG LIN
  1  1    Amend House File 388 as follows:
  1  2    #1.  By striking everything after the enacting
  1  3 clause and inserting the following:  
  1  4             "DIVISION I – IOWA NET INCOME
  1  5    Section 1.  Section 422.4, subsection 1, paragraphs
  1  6 b and c, Code 1997, are amended to read as follows:
  1  7    b.  "Cumulative inflation factor" means the product
  1  8 of the annual inflation factor for the 1988 1997
  1  9 calendar year and all annual inflation factors for
  1 10 subsequent calendar years as determined pursuant to
  1 11 this subsection.  The cumulative inflation factor
  1 12 applies to all tax years beginning on or after January
  1 13 1 of the calendar year for which the latest annual
  1 14 inflation factor has been determined.
  1 15    c.  The annual inflation factor for the 1988 1997
  1 16 calendar year is one hundred percent.
  1 17    Sec. 2.  Section 422.4, subsections 2 and 16, Code
  1 18 1997, are amended by striking the subsections.
  1 19    Sec. 3.  Section 422.4, subsection 9, Code 1997, is
  1 20 amended to read as follows:
  1 21    9.  The word "individual" means a natural person;
  1 22 and if an individual is permitted to file as a
  1 23 corporation, under the Internal Revenue Code, that
  1 24 fictional status is not recognized for purposes of
  1 25 this chapter, and the individual's taxable net income
  1 26 shall be computed as required under the Internal
  1 27 Revenue Code relating to individuals not filing as a
  1 28 corporation, with the adjustments allowed by this
  1 29 chapter division.
  1 30    Sec. 4.  Section 422.4, Code 1997, is amended by
  1 31 adding the following new subsection:
  1 32    NEW SUBSECTION.  9A.  "Net income" means the
  1 33 federal taxable income as properly computed for
  1 34 federal tax purposes under the Internal Revenue Code
  1 35 with the adjustments made in section 422.7,
  1 36 subsections 1 and 2.
  1 37    Sec. 5.  Section 422.5, subsection 1, Code 1997, is
  1 38 amended by striking the subsection and inserting in
  1 39 lieu thereof the following:
  1 40    1.  A tax is imposed upon every resident and
  1 41 nonresident individual or estate and trust which tax
  1 42 shall be levied, collected, and paid annually upon and
  1 43 with respect to the entire net income as defined in
  1 44 this division at rates, depending on filing status, as
  1 45 follows:
  1 46    a.  For a single individual, estate, or trust, the
  1 47 rates of tax are the following:  
  1 48   Net Income
  1 49      over                   but not over    Rate
  1 50  $    0                        3,400        3.8%
  2  1     3,400                      7,000        4.5
  2  2     7,000                     21,000        5.7
  2  3    21,000                    100,000        6.0
  2  4   100,000                                   6.5
  2  5    b.  For husband and wife filing a joint return, the
  2  6 rates of tax are the following:  
  2  7   Net Income
  2  8      over                   but not over    Rate
  2  9  $    0                        4,400        3.8%
  2 10     4,400                      9,000        4.5
  2 11     9,000                     27,000        5.7
  2 12    27,000                    100,000        6.0
  2 13   100,000                                   6.5
  2 14    c.  For a married person filing separately, the
  2 15 rates of tax are the following:  
  2 16   Net Income
  2 17      over                   but not over    Rate
  2 18  $    0                        2,200        3.8%
  2 19     2,200                      4,500        4.5
  2 20     4,500                     13,500        5.7
  2 21    13,500                     50,000        6.0
  2 22    50,000                                   6.5
  2 23    d.  For a head of household, the rates of tax are
  2 24 the following:  
  2 25   Net Income
  2 26      over                   but not over    Rate
  2 27  $    0                        3,700        3.8%
  2 28     3,700                      7,600        4.5
  2 29     7,600                     22,800        5.7
  2 30    22,800                    100,000        6.0
  2 31   100,000                                   6.5
  2 32    e.  (1)  The tax imposed upon the net income of a
  2 33 nonresident shall be computed by reducing the amount
  2 34 determined pursuant to paragraphs "a" through "d", by
  2 35 the amounts of nonrefundable credits under this
  2 36 division and by multiplying this resulting amount by a
  2 37 fraction of which the nonresident's net income
  2 38 allocated to Iowa, as determined in section 422.8,
  2 39 subsection 2, paragraph "a", is the numerator and the
  2 40 nonresident's total net income computed under section
  2 41 422.7 is the denominator.  This provision also applies
  2 42 to individuals who are residents of Iowa for less than
  2 43 the entire tax year.
  2 44    (2)  The tax imposed upon the net income of a
  2 45 resident shareholder in a value-added corporation
  2 46 which has in effect for the tax year an election under
  2 47 subchapter S of the Internal Revenue Code and carries
  2 48 on business within and without the state may be
  2 49 computed by reducing the amount determined pursuant to
  2 50 paragraphs "a" through "d", by the amounts of
  3  1 nonrefundable credits under this division and by
  3  2 multiplying this resulting amount by a fraction of
  3  3 which the resident's net income allocated to Iowa, as
  3  4 determined in section 422.8, subsection 2, paragraph
  3  5 "b", is the numerator and the resident's total net
  3  6 income computed under section 422.7 is the
  3  7 denominator.  This subparagraph also applies to
  3  8 individuals who are residents of Iowa for less than
  3  9 the entire tax year.
  3 10    (a)  In order for a resident shareholder in a
  3 11 value-added corporation which has in effect for the
  3 12 tax year an election under subchapter S of the
  3 13 Internal Revenue Code and carries on business within
  3 14 and without the state, to claim the benefits of
  3 15 apportionment of income of the value-added
  3 16 corporation, the taxpayer must completely fill out the
  3 17 return, determine the taxpayer's income tax liability
  3 18 without the benefit of apportionment of the value-
  3 19 added corporation's income, and pay the amount of tax
  3 20 owed.  The taxpayer shall recompute the taxpayer's
  3 21 income tax liability, by applying the provisions of
  3 22 this subparagraph on a special return.  This special
  3 23 return shall be filed under rules of the director and
  3 24 constitutes a claim for refund of the difference
  3 25 between the amount of tax the taxpayer paid as
  3 26 determined without the provisions of this subparagraph
  3 27 and the amount of tax determined with the provisions
  3 28 of this subparagraph.
  3 29    (b)  This subparagraph shall not affect the amount
  3 30 of the taxpayer's checkoff to the Iowa election
  3 31 campaign fund under section 56.18, the checkoff for
  3 32 the fish and game fund in section 456A.16, the credits
  3 33 from tax provided in sections 422.10, 422.11A, and
  3 34 422.12 and the allocation of these credits between
  3 35 spouses if the taxpayers filed separate returns.
  3 36    (c)  For any tax year, the aggregate amount of
  3 37 refund claims that shall be paid pursuant to this
  3 38 subparagraph shall not exceed five million dollars.
  3 39 If, for a tax year, the aggregate amount of refund
  3 40 claims filed pursuant to this subparagraph exceeds
  3 41 five million dollars, each claim for refund shall be
  3 42 paid on a pro rata basis so that the aggregate amount
  3 43 of refund claims does not exceed five million dollars.
  3 44 In the case where refund claims are not paid in full,
  3 45 the amount of the refund to which the taxpayer is
  3 46 entitled under this subparagraph is the pro rata
  3 47 amount that was paid and the taxpayer is not entitled
  3 48 to a refund of the unpaid portion and is not entitled
  3 49 to carry that amount forward or backward to another
  3 50 tax year.  Taxpayers shall not use refunds as
  4  1 estimated payments for the succeeding tax year.
  4  2 Taxpayers whose tax years begin on January 1 must file
  4  3 their refund claims by October 31 of the calendar year
  4  4 following the end of their tax year to be eligible for
  4  5 refunds.  Taxpayers whose tax years begin on a date
  4  6 other than January 1 must file their refund claims by
  4  7 the end of the tenth month following the end of their
  4  8 tax years to be eligible.  The department shall
  4  9 determine on February 1 of the second succeeding
  4 10 calendar year if the total amount of claims for refund
  4 11 exceeds five million dollars for the tax year.
  4 12 Notwithstanding any other provision, interest shall
  4 13 not be due on any refund claims that are paid by the
  4 14 last day of February of the second succeeding calendar
  4 15 year.  If the claim is not payable on February 1 of
  4 16 the second succeeding calendar year, because the
  4 17 taxpayer is a fiscal year filer, then the amount of
  4 18 the claim allowed shall be in the same ratio as the
  4 19 refund claims available on February 1 of the second
  4 20 succeeding calendar year.  These claims shall be
  4 21 funded by moneys appropriated for payment of
  4 22 individual income tax refunds.
  4 23    1A.  There is imposed upon every resident and
  4 24 nonresident of this state, including estates and
  4 25 trusts, the greater of the tax determined in
  4 26 paragraphs "a" through "e", or the state alternative
  4 27 minimum tax equal to eighty-five percent of the
  4 28 maximum state individual income tax rate applicable to
  4 29 the taxpayer for the tax year, rounded to the nearest
  4 30 one-tenth of one percent, of the state alternative
  4 31 minimum net income of the taxpayer as computed under
  4 32 this subsection.
  4 33    The state alternative minimum net income of a
  4 34 taxpayer is equal to the taxpayer's federal
  4 35 alternative minimum taxable income, as computed for
  4 36 federal income tax purposes with the adjustments
  4 37 provided in section 422.7.
  4 38    In the case of a resident, including a resident
  4 39 estate or trust, the state's apportioned share of the
  4 40 state alternative minimum tax is one hundred percent
  4 41 of the state alternative minimum tax computed in this
  4 42 subsection.  In the case of a resident or part-year
  4 43 resident shareholder in a value-added corporation
  4 44 which has in effect for the tax year an election under
  4 45 subchapter S of the Internal Revenue Code and carries
  4 46 on business within and without the state, a
  4 47 nonresident, including a nonresident estate or trust,
  4 48 or an individual, estate, or trust that is domiciled
  4 49 in the state for less than the entire tax year, the
  4 50 state's apportioned share of the state alternative
  5  1 minimum tax is the amount of tax computed under this
  5  2 subsection, reduced by the applicable credits in
  5  3 sections 422.10 through 422.12 and this result
  5  4 multiplied by a fraction with a numerator of the sum
  5  5 of state net income allocated to Iowa as determined in
  5  6 section 422.8, subsection 2, paragraph "a" or "b", as
  5  7 applicable, plus tax preference items, adjustments,
  5  8 and losses attributable to Iowa and with a denominator
  5  9 of the sum of total net income computed under section
  5 10 422.7 plus all tax preference items, adjustments, and
  5 11 losses.  In computing this fraction, those items
  5 12 excludable in computing state alternative minimum net
  5 13 income shall not be used in computing the tax
  5 14 preference items.
  5 15    Sec. 6.  Section 422.5, subsections 2 and 6, Code
  5 16 1997, are amended to read as follows:
  5 17    2.  However, the tax shall not be imposed on a
  5 18 resident or nonresident whose net income, as defined
  5 19 in section 422.7, is thirteen thousand five hundred
  5 20 dollars or less in the case of married persons filing
  5 21 jointly or filing separately on a combined return,
  5 22 unmarried heads of household, and surviving spouses or
  5 23 nine thousand dollars or less in the case of all other
  5 24 persons; but in the event that the payment of tax
  5 25 under this division would reduce the net income to
  5 26 less than thirteen thousand five hundred dollars or
  5 27 nine thousand dollars as applicable, then the tax
  5 28 shall be reduced to that amount which would result in
  5 29 allowing the taxpayer to retain a net income of
  5 30 thirteen thousand five hundred dollars or nine
  5 31 thousand dollars as applicable.  The preceding
  5 32 sentence does not apply to estates or trusts.  For the
  5 33 purpose of this subsection, the entire net income,
  5 34 including any part of the net income not allocated to
  5 35 Iowa, shall be taken into account.  For purposes of
  5 36 this subsection, net income includes all amounts of
  5 37 pensions or other retirement income received from any
  5 38 source which is not taxable under this division as a
  5 39 result of the government pension exclusions in section
  5 40 422.7, or any other state law.  If the combined net
  5 41 income of a husband and wife exceeds thirteen thousand
  5 42 five hundred dollars, neither of them shall receive
  5 43 the benefit of this subsection, and it is immaterial
  5 44 whether they file a joint return or separate returns.
  5 45 However, if a husband and wife file separate returns
  5 46 and have a combined net income of thirteen thousand
  5 47 five hundred dollars or less, neither spouse shall
  5 48 receive the benefit of this paragraph, if one spouse
  5 49 has a net operating loss and elects to carry back or
  5 50 carry forward the loss as provided in section 422.9,
  6  1 subsection 3.  A person who is claimed as a dependent
  6  2 by another person as defined in section 422.12 shall
  6  3 not receive the benefit of this subsection if the
  6  4 person claiming the dependent has net income exceeding
  6  5 thirteen thousand five hundred dollars or nine
  6  6 thousand dollars as applicable or the person claiming
  6  7 the dependent and the person's spouse have combined
  6  8 net income exceeding thirteen thousand five hundred
  6  9 dollars or nine thousand dollars as applicable.
  6 10    In addition, if the married persons', filing
  6 11 jointly or filing separately on a combined return,
  6 12 unmarried head of household's, or surviving spouse's
  6 13 net income exceeds thirteen thousand five hundred
  6 14 dollars, the regular tax imposed under this division
  6 15 shall be the lesser of the maximum state individual
  6 16 income tax rate times the portion of the net income in
  6 17 excess of thirteen thousand five hundred dollars or
  6 18 the regular tax liability computed without regard to
  6 19 this sentence.  Taxpayers electing to file separately
  6 20 shall compute the alternate tax described in this
  6 21 paragraph using the total net income of the husband
  6 22 and wife.  The alternate tax described in this
  6 23 paragraph does not apply if one spouse elects to carry
  6 24 back or carry forward the loss as provided in section
  6 25 422.9, subsection 3.
  6 26    6.  Upon determination of the latest cumulative
  6 27 inflation factor, the director shall multiply each
  6 28 dollar amount set forth in subsection 1, paragraphs
  6 29 "a" through "i" "d", of this section by this
  6 30 cumulative inflation factor, shall round off the
  6 31 resulting product to the nearest one dollar, and shall
  6 32 incorporate the result into the income tax forms and
  6 33 instructions for each tax year.
  6 34    Sec. 7.  Section 422.5, subsections 3, 4, 5, 7, 9,
  6 35 10, 11, and 12, Code 1997, are amended by striking the
  6 36 subsections.
  6 37    Sec. 8.  Section 422.6, unnumbered paragraph 1,
  6 38 Code 1997, is amended to read as follows:
  6 39    The tax imposed by section 422.5 less the credits
  6 40 allowed under sections 422.10, 422.11A, and 422.11B,
  6 41 and 422.11C, and the personal exemption credit allowed
  6 42 under section 422.12 apply to and are a charge against
  6 43 estates and trusts with respect to their taxable net
  6 44 income, and the rates are the same as those applicable
  6 45 to individuals.  The fiduciary shall make the return
  6 46 of income for the estate or trust for which the
  6 47 fiduciary acts, whether the income is taxable to the
  6 48 estate or trust or to the beneficiaries.
  6 49    Sec. 9.  Section 422.7, Code 1997, is amended by
  6 50 striking the section and inserting in lieu thereof the
  7  1 following:
  7  2    422.7  NET INCOME COMPUTED.
  7  3    In determining the taxpayer's net income, the
  7  4 taxpayer's federal taxable income shall be adjusted as
  7  5 provided in subsections 1 and 2.
  7  6    1.  Federal taxable income is increased by the
  7  7 following:
  7  8    a.  Interest and dividends from foreign securities
  7  9 and from securities of states and other political
  7 10 subdivisions exempt from federal income tax under the
  7 11 Internal Revenue Code to the extent not otherwise
  7 12 exempted by this state.
  7 13    b.  Interest and dividends from regulated
  7 14 investment companies exempt from federal income tax
  7 15 under the Internal Revenue Code.
  7 16    c.  Iowa income taxes, to the extent deducted in
  7 17 computing federal taxable income.
  7 18    d.  Federal income tax refunds, to the extent
  7 19 deducted in computing state income taxes for tax years
  7 20 beginning before January 1, 1997.
  7 21    2.  Federal taxable income is decreased by the
  7 22 following:
  7 23    a.  Interest and dividends from federal securities.
  7 24 The amount decreased shall be reduced by any interest
  7 25 on indebtedness incurred to carry the federal
  7 26 securities and by any expenses incurred in the
  7 27 production of interest and dividends from the federal
  7 28 securities to the extent deductible in determining
  7 29 federal taxable income.
  7 30    b.  The loss on the sale or exchange of a share of
  7 31 a regulated investment company held for six months or
  7 32 less to the extent the loss was disallowed under
  7 33 section 852(b)(4)(B) of the Internal Revenue Code.
  7 34    c.  Iowa income tax refunds, to the extent included
  7 35 in determining federal taxable income.
  7 36    d.  Federal income taxes, to the extent paid for
  7 37 tax years beginning before January 1, 1997.
  7 38    e.  For a person who is disabled, or is fifty-five
  7 39 years of age or older, or is the surviving spouse of
  7 40 an individual or a survivor having an insurable
  7 41 interest in an individual who would have qualified for
  7 42 the deduction under this paragraph for the tax year,
  7 43 subtract, to the extent included, the total amount of
  7 44 a governmental or other pension or retirement pay,
  7 45 including, but not limited to, defined benefit or
  7 46 defined contribution plans, annuities, individual
  7 47 retirement accounts, plans maintained or contributed
  7 48 to by an employer, or maintained or contributed to by
  7 49 a self-employed person as an employer, and deferred
  7 50 compensation plans or any earnings attributable to the
  8  1 deferred compensation plans, up to a maximum of ten
  8  2 thousand dollars for a person who files a separate
  8  3 state income tax return and up to a maximum of twenty
  8  4 thousand dollars for a husband and wife who file a
  8  5 joint state income tax return.  However, a surviving
  8  6 spouse who is not disabled or fifty-five years of age
  8  7 or older can only exclude the amount of pension or
  8  8 retirement pay received as a result of the death of
  8  9 the other spouse.
  8 10    f.  In the case of married persons filing a joint
  8 11 return where both spouses have qualified earned
  8 12 income, subtract an amount equal to thirty-four
  8 13 percent of the lesser of thirty thousand dollars or
  8 14 the amount of the qualified earned income of the
  8 15 spouse with the lower qualified earned income.
  8 16    For purposes of this paragraph "qualified earned
  8 17 income" means the same as defined for the federal
  8 18 income tax year beginning in the 1986 calendar year.
  8 19    Sec. 10.  Section 422.8, subsection 2, paragraph a,
  8 20 Code 1997, is amended to read as follows:
  8 21    a.  Nonresident's net income allocated to Iowa is
  8 22 the net income, or portion of net income, which is
  8 23 derived from a business, trade, profession, or
  8 24 occupation carried on within this state or income from
  8 25 any property, trust, estate, or other source within
  8 26 Iowa.  However, income derived from a business, trade,
  8 27 profession, or occupation carried on within this state
  8 28 and income from any property, trust, estate, or other
  8 29 source within Iowa shall not include distributions
  8 30 from pensions, including defined benefit or defined
  8 31 contribution plans, annuities, individual retirement
  8 32 accounts, and deferred compensation plans or any
  8 33 earnings attributable thereto so long as the
  8 34 distribution is directly related to an individual's
  8 35 documented retirement and received while the
  8 36 individual is a nonresident of this state.  If a
  8 37 business, trade, profession, or occupation is carried
  8 38 on partly within and partly without the state, only
  8 39 the portion of the net income which is fairly and
  8 40 equitably attributable to that part of the business,
  8 41 trade, profession, or occupation carried on within the
  8 42 state is allocated to Iowa for purposes of section
  8 43 422.5, subsection 1, paragraph "j" "d", and section
  8 44 422.13 and income from any property, trust, estate, or
  8 45 other source partly within and partly without the
  8 46 state is allocated to Iowa in the same manner, except
  8 47 that annuities, interest on bank deposits and
  8 48 interest-bearing obligations, and dividends are
  8 49 allocated to Iowa only to the extent to which they are
  8 50 derived from a business, trade, profession, or
  9  1 occupation carried on within the state.
  9  2    Sec. 11.  Section 422.8, subsection 2, paragraph b,
  9  3 subparagraph (2), Code 1997, is amended to read as
  9  4 follows:
  9  5    (2)  Any cash or the value of property
  9  6 distributions which are made only to the extent that
  9  7 they are paid from income upon which Iowa income tax
  9  8 has not been paid, as determined under rules of the
  9  9 director, reduced by fifty percent of the amount of
  9 10 any of these distributions that are made to enable the
  9 11 shareholder to pay federal income tax on items of
  9 12 income, loss, and expenses from the corporation.
  9 13    Sec. 12.  Section 422.8, subsections 3 and 4, Code
  9 14 1997, are amended to read as follows:
  9 15    3.  Taxable Net income of resident and nonresident
  9 16 estates and trusts shall be allocated in the same
  9 17 manner as individuals.
  9 18    4.  The amount of minimum tax paid to another state
  9 19 or foreign country by a resident taxpayer of this
  9 20 state from preference items derived from sources
  9 21 outside of Iowa shall be allowed as a credit against
  9 22 the tax computed under this division except that the
  9 23 credit shall not exceed what the amount of state
  9 24 alternative minimum tax would have been on the same
  9 25 preference items which were taxed by the other state
  9 26 or foreign country.  The limitation on this credit
  9 27 shall be computed according to the following formula:
  9 28 The total of preference items earned outside of Iowa
  9 29 and taxed by another state or foreign country shall be
  9 30 divided by the total of preference items of the
  9 31 resident taxpayer of Iowa.  In computing this
  9 32 quotient, those items excludable under section 422.5,
  9 33 subsection 1, paragraph "k", subparagraph (1) 422.7
  9 34 shall not be used in computing the preference items.
  9 35 This quotient multiplied times the net state
  9 36 alternative minimum tax as determined in section
  9 37 422.5, subsection 1, paragraph "k" 1A, on the total of
  9 38 preference items as if entirely earned in Iowa shall
  9 39 be the maximum tax credit against the Iowa alternative
  9 40 minimum tax.  However, the maximum tax credit will not
  9 41 be allowed to the extent that the minimum tax imposed
  9 42 by the other state or foreign country is less than the
  9 43 maximum tax credit computed above.
  9 44    Sec. 13.  Section 422.11B, Code 1997, is amended to
  9 45 read as follows:
  9 46    422.11B  MINIMUM TAX CREDIT.
  9 47    1.  There is allowed as a credit against the tax
  9 48 determined in section 422.5, subsection 1, paragraphs
  9 49 "a" through "j" "e", for a tax year an amount equal to
  9 50 the minimum tax credit for that tax year.
 10  1    The minimum tax credit for a tax year is the
 10  2 excess, if any, of the adjusted net minimum tax
 10  3 imposed for all prior tax years beginning on or after
 10  4 January 1, 1987, over the amount allowable as a credit
 10  5 under this section for those prior tax years.
 10  6    2.  The allowable credit under subsection 1 for a
 10  7 tax year shall not exceed the excess, if any, of the
 10  8 tax determined in section 422.5, subsection 1,
 10  9 paragraphs "a" through "j" "e", over the state
 10 10 alternative minimum tax as determined in section
 10 11 422.5, subsection 1, paragraph "k" 1A.
 10 12    The net minimum tax for a tax year is the excess,
 10 13 if any, of the tax determined in section 422.5,
 10 14 subsection 1, paragraph "k" 1A, for the tax year over
 10 15 the tax determined in section 422.5, subsection 1,
 10 16 paragraphs "a" through "j" "e", for the tax year.
 10 17    The adjusted net minimum tax for a tax year is the
 10 18 net minimum tax for the tax year reduced by the amount
 10 19 which would be the net minimum tax if the only item of
 10 20 tax preference taken into account was that described
 10 21 in paragraph (6) of section 57(a) of the Internal
 10 22 Revenue Code.
 10 23    Sec. 14.  Section 422.12, subsections 1 and 3, Code
 10 24 1997, are amended by striking the subsections.
 10 25    Sec. 15.  Section 422.12, subsection 2, unnumbered
 10 26 paragraph 1, Code 1997, is amended to read as follows:
 10 27    A tuition credit equal to ten percent of the first
 10 28 one thousand dollars which the taxpayer has paid to
 10 29 others for each dependent in grades kindergarten
 10 30 through twelve, for tuition and textbooks of each
 10 31 dependent in attending an elementary or secondary
 10 32 school situated in Iowa, which school is accredited or
 10 33 approved under section 256.11, which is not operated
 10 34 for profit, and which adheres to the provisions of the
 10 35 federal Civil Rights Act of 1964 and chapter 216.  As
 10 36 used in this subsection, "textbooks" means books and
 10 37 other instructional materials and equipment used in
 10 38 elementary and secondary schools in teaching only
 10 39 those subjects legally and commonly taught in public
 10 40 elementary and secondary schools in this state and
 10 41 does not include instructional books and materials
 10 42 used in the teaching of religious tenets, doctrines,
 10 43 or worship, the purpose of which is to inculcate those
 10 44 tenets, doctrines, or worship, and does not include
 10 45 books or materials for extracurricular activities
 10 46 including sporting events, musical or dramatic events,
 10 47 speech activities, driver's education, or programs of
 10 48 a similar nature.  Notwithstanding any other
 10 49 provision, all other credits the credit allowed under
 10 50 this section and section 422.12B shall be deducted
 11  1 before the tuition credit under this subsection.  The
 11  2 department, when conducting an audit of a taxpayer's
 11  3 return, shall also audit the tuition tax credit
 11  4 portion of the tax return.
 11  5    Sec. 16.  Section 422.12B, subsection 2, Code 1997,
 11  6 is amended to read as follows:
 11  7    2.  Married taxpayers electing to file separate
 11  8 returns or filing separately on a combined return may
 11  9 avail themselves of the earned income credit by
 11 10 allocating the earned income credit to each spouse in
 11 11 the proportion that each spouse's respective earned
 11 12 income bears to the total combined earned income.
 11 13 Taxpayers affected by the allocation provisions of
 11 14 section 422.8 shall be permitted a deduction for the
 11 15 credit only in the amount fairly and equitably
 11 16 allocable to Iowa under rules prescribed by the
 11 17 director.
 11 18    Sec. 17.  Section 422.12C, subsection 3, Code 1997,
 11 19 is amended by striking the subsection and inserting in
 11 20 lieu thereof the following:
 11 21    3.  Nonresidents or part-year residents of Iowa
 11 22 must determine their Iowa child and dependent care
 11 23 credit in the ratio of their Iowa source net income to
 11 24 their all source net income.
 11 25    Sec. 18.  Section 422.13, subsection 1A, Code 1997,
 11 26 is amended to read as follows:
 11 27    1A.  Notwithstanding any other provision in this
 11 28 section, a resident of this state is not required to
 11 29 make and file a return if the person's net income is
 11 30 equal to or less than the appropriate dollar amount
 11 31 listed in section 422.5, subsection 2, upon which tax
 11 32 is not imposed.  A nonresident of this state is not
 11 33 required to make and file a return if the person's
 11 34 total net income in section 422.5, subsection 1,
 11 35 paragraph "j" "e", is equal to or less than the
 11 36 appropriate dollar amount provided in section 422.5,
 11 37 subsection 2, upon which tax is not imposed.  For
 11 38 purposes of this subsection, the amount of a lump sum
 11 39 distribution subject to separate federal tax shall be
 11 40 included in net income for purposes of determining if
 11 41 a resident is required to file a return and the
 11 42 portion of the lump sum distribution that is allocable
 11 43 to Iowa is included in total net income for purposes
 11 44 of determining if a nonresident is required to make
 11 45 and file a return.
 11 46    Sec. 19.  NEW SECTION.  422.13A  INCOME TAX FILING
 11 47 STATUS.
 11 48    1.  Married taxpayers who file a joint federal
 11 49 income tax return shall file a joint return for Iowa
 11 50 income tax purposes.
 12  1    2.  Married taxpayers who file separate federal
 12  2 income tax returns shall file separately for Iowa
 12  3 income tax purposes.
 12  4    Sec. 20.  Section 422.14, subsection 1, Code 1997,
 12  5 is amended to read as follows:
 12  6    1.  A fiduciary subject to taxation under this
 12  7 division, as provided in section 422.6, shall make a
 12  8 return, signed in accordance with forms and rules
 12  9 prescribed by the director, for the individual,
 12 10 estate, or trust for whom or for which the fiduciary
 12 11 acts, if the taxable net income thereof amounts to six
 12 12 hundred dollars or more.  A nonresident fiduciary
 12 13 shall file a copy of the federal income tax return for
 12 14 the current tax year with the return required by this
 12 15 section.
 12 16    Sec. 21.  Section 422.15, subsection 3, Code 1997,
 12 17 is amended to read as follows:
 12 18    3.  Every fiduciary shall make a return for the
 12 19 individual, estate, or trust for whom or for which the
 12 20 fiduciary acts, and shall set forth in such return the
 12 21 taxable net income, the names and addresses of the
 12 22 beneficiaries, and the amounts distributed or
 12 23 distributable to each as reported on the federal
 12 24 fiduciary income tax return.  Such return may be made
 12 25 by one or two or more joint fiduciaries.
 12 26    Sec. 22.  Section 422.21, unnumbered paragraphs 5
 12 27 and 7, Code 1997, are amended to read as follows:
 12 28    The director shall determine for the 1989 1998 and
 12 29 each subsequent calendar year the annual and
 12 30 cumulative inflation factors for each calendar year to
 12 31 be applied to tax years beginning on or after January
 12 32 1 of that calendar year.  The director shall compute
 12 33 the new dollar amounts as specified to be adjusted in
 12 34 section 422.5 by the latest cumulative inflation
 12 35 factor and round off the result to the nearest one
 12 36 dollar.  The annual and cumulative inflation factors
 12 37 determined by the director are not rules as defined in
 12 38 section 17A.2, subsection 10.  The director shall
 12 39 determine for the 1990 calendar year and each
 12 40 subsequent calendar year the annual and cumulative
 12 41 standard deduction factors to be applied to tax years
 12 42 beginning on or after January 1 of that calendar year.
 12 43 The director shall compute the new dollar amounts of
 12 44 the standard deductions specified in section 422.9,
 12 45 subsection 1, by the latest cumulative standard
 12 46 deduction factor and round off the result to the
 12 47 nearest ten dollars.  The annual and cumulative
 12 48 standard deduction factors determined by the director
 12 49 are not rules as defined in section 17A.2, subsection
 12 50 10.
 13  1    If married taxpayers file a joint return or file
 13  2 separately on a combined return in accordance with
 13  3 rules prescribed by the director, both spouses are
 13  4 jointly and severally liable for the total tax due on
 13  5 the return, except when one spouse is considered to be
 13  6 an innocent spouse under criteria established pursuant
 13  7 to section 6013(e) of the Internal Revenue Code.
 13  8    Sec. 23.  Section 422.9, Code 1997, is repealed.  
 13  9         DIVISION II – COORDINATING AMENDMENTS
 13 10    Sec. 24.  Section 96.3, subsection 4, Code 1997, is
 13 11 amended to read as follows:
 13 12    4.  DETERMINATION OF BENEFITS.  With respect to
 13 13 benefit years beginning on or after July 1, 1983, an
 13 14 eligible individual's weekly benefit amount for a week
 13 15 of total unemployment shall be an amount equal to the
 13 16 following fractions of the individual's total wages in
 13 17 insured work paid during that quarter of the
 13 18 individual's base period in which such total wages
 13 19 were highest; the director shall determine annually a
 13 20 maximum weekly benefit amount equal to the following
 13 21 percentages, to vary with the number of dependents, of
 13 22 the statewide average weekly wage paid to employees in
 13 23 insured work which shall be effective the first day of
 13 24 the first full week in July:  
 13 25 If the        The weekly        Subject to the
 13 26 number of     benefit amount    following maxi-
 13 27 dependents    shall equal the   mum percentage
 13 28 is:           following frac-   of the statewide
 13 29               tion of high      average weekly
 13 30               quarter wages:    wage:
 13 31 0             1/23              53%
 13 32 1             1/22              55%
 13 33 2             1/21              57%
 13 34 3             1/20              60%
 13 35 4 or more     1/19              65%
 13 36 The maximum weekly benefit amount, if not a multiple
 13 37 of one dollar shall be rounded to the lower multiple
 13 38 of one dollar.  However, until such time as sixty-five
 13 39 percent of the statewide average weekly wage exceeds
 13 40 one hundred ninety dollars, the maximum weekly benefit
 13 41 amounts shall be determined using the statewide
 13 42 average weekly wage computed on the basis of wages
 13 43 reported for calendar year 1981.  As used in this
 13 44 section "dependent" means dependent as defined in
 13 45 section 422.12, subsection 1, paragraph "c" for state
 13 46 individual income tax purposes, as if the individual
 13 47 claimant was a taxpayer, except that an individual
 13 48 claimant's nonworking spouse shall be deemed to be a
 13 49 dependent under this section.  "Nonworking spouse"
 13 50 means a spouse who does not earn more than one hundred
 14  1 twenty dollars in gross wages in one week.
 14  2    Sec. 25.  Section 216B.3, subsection 15, Code 1997,
 14  3 is amended to read as follows:
 14  4    15.  Develop a plan to provide telephone yellow
 14  5 pages information without charge to persons declared
 14  6 to be blind under the standards in section 422.12,
 14  7 subsection 1, paragraph "e".  The department may apply
 14  8 for federal funds to support the service.  The program
 14  9 shall be limited in scope by the availability of
 14 10 funds.  For the purposes of this subsection, an
 14 11 individual is blind only if the individual's central
 14 12 visual acuity does not exceed twenty-two hundredths in
 14 13 the better eye with correcting lenses, or if the
 14 14 individual's visual acuity is greater than twenty-two
 14 15 hundredths but is accompanied by a limitation in the
 14 16 fields of vision such that the widest diameter of the
 14 17 visual field subtends an angle no greater than twenty
 14 18 degrees.
 14 19    Sec. 26.  Section 476.6, subsection 1, unnumbered
 14 20 paragraph 2, Code 1997, is amended to read as follows:
 14 21    A subscriber of a telephone exchange or service,
 14 22 who is declared to be legally blind under section
 14 23 422.12, subsection 1, paragraph "e", is exempt from
 14 24 any charges for telephone directory assistance that
 14 25 may be approved by the board.  For the purposes of
 14 26 this paragraph, an individual is legally blind only if
 14 27 the individual's central visual acuity does not exceed
 14 28 twenty-two hundredths in the better eye with
 14 29 correcting lenses, or if the individual's visual
 14 30 acuity is greater than twenty-two hundredths but is
 14 31 accompanied by a limitation in the fields of vision
 14 32 such that the widest diameter of the visual field
 14 33 subtends an angle no greater than twenty degrees.
 14 34    Sec. 27.  Section 541A.2, subsection 7, unnumbered
 14 35 paragraph 1, Code 1997, is amended to read as follows:
 14 36    An individual development account closed in
 14 37 accordance with this subsection is not subject to the
 14 38 limitations and benefits provided by this chapter but
 14 39 is subject to state tax in accordance with the
 14 40 provisions of section 422.7, subsection 28, and
 14 41 section 450.4, subsection 6.  An individual
 14 42 development account may be closed for any of the
 14 43 following reasons:
 14 44    Sec. 28.  Section 541A.3, subsection 2, Code 1997,
 14 45 is amended by striking the subsection.  
 14 46    DIVISION III – EFFECTIVE AND APPLICABILITY DATE
 14 47                       PROVISIONS
 14 48    Sec. 29.  This Act, being deemed of immediate
 14 49 importance, takes effect upon enactment and applies
 14 50 retroactively to tax years beginning on or after
 15  1 January 1, 1997."
 15  2    #2.  Title page, by striking lines 1 and 2 and
 15  3 inserting the following:  "An Act relating to the
 15  4 state individual income tax by tying the computation
 15  5 more closely to the federal individual income tax,
 15  6 establishing a new rate structure, and providing an
 15  7 effective and retroactive applicability date
 15  8 provision." 
 15  9 
 15 10 
 15 11                               
 15 12 TOM VILSACK
 15 13 TOM FLYNN
 15 14 PATRICK J. DELUHERY
 15 15 HF 388.303 77
 15 16 mg/cf/28
     

Text: S03195                            Text: S03197
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