Text: HF02482 Text: HF02484 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. NEW SECTION. 15E.41 PURPOSE. 1 2 The purpose of this division is to enhance the quality of 1 3 life for citizens of this state by encouraging the creation of 1 4 new jobs, industry, products, and wealth through the increased 1 5 availability and accessibility to capital, particularly at the 1 6 seed and venture capital investment stages. 1 7 Sec. 2. NEW SECTION. 15E.42 TAX CREDITS. 1 8 1. For tax years beginning on or after January 1, 2000, a 1 9 tax credit shall be allowed against the taxes imposed in 1 10 chapter 422, divisions II, III, and V, and in chapter 432, for 1 11 net losses, as described in section 15E.43, subsection 2, 1 12 incurred by a taxpayer in an equity investment approved 1 13 pursuant to section 15E.43. An individual may claim the 1 14 credit of a partnership, limited liability company, S 1 15 corporation, estate or trust electing to have income taxed 1 16 directly to the individual. The amount claimed by the 1 17 individual shall be based upon the pro rata share of the 1 18 individual's earnings from the partnership, limited liability 1 19 company, S corporation, estate or trust. Any tax credit in 1 20 excess of the taxpayer's liability for the tax year may be 1 21 credited to the tax liability for the following three years or 1 22 until depleted, whichever is earlier. A tax credit shall not 1 23 be carried back to a tax year prior to the tax year in which 1 24 the taxpayer redeems the tax credit. 1 25 2. The maximum tax credit for a qualifying taxpayer shall 1 26 not exceed fifty percent of the taxpayer's original equity 1 27 investment in an approved investment or one hundred thousand 1 28 dollars, whichever is less. 1 29 3. The aggregate amount of tax credits issued under this 1 30 section for taxes imposed pursuant to chapter 422, divisions 1 31 II, III, and V, and chapter 432 shall not exceed a total of 1 32 thirty-five million dollars. 1 33 4. The department of revenue and finance, in consultation 1 34 with the department of economic development, shall develop a 1 35 system for registration, issuance, and redemption of tax 2 1 credits issued by the state under this section. The 2 2 department of revenue and finance and the department of 2 3 economic development shall adopt any other policies, 2 4 procedures, or rules pursuant to chapter 17A necessary for the 2 5 administration of this division and of tax credits issued by 2 6 the state under this section. 2 7 Sec. 3. NEW SECTION. 15E.43 APPROVED INVESTMENTS. 2 8 1. In order for an investment to qualify for a tax credit 2 9 under section 15E.42, the investment must be approved by the 2 10 department of economic development and be in a qualifying 2 11 business. In order to be a qualifying business, the business 2 12 must meet all of the following criteria: 2 13 a. The business has a business plan which details the 2 14 business's growth strategy, the management team if applicable, 2 15 a production or management plan, a financial plan, and other 2 16 standard elements of a business plan. 2 17 b. The business has an owner who is currently 2 18 participating in, or has successfully completed, a recognized 2 19 entrepreneurial venture development curriculum or have an 2 20 owner with a minimum of three years of management experience. 2 21 c. The business is not a business engaged primarily in 2 22 retail sales. 2 23 d. The business is headquartered in this state and its 2 24 principal business operations are located in this state. 2 25 e. The business has no more than one hundred employees, at 2 26 least seventy-five percent of whom are employed in the state. 2 27 f. During the two most recent fiscal years of the 2 28 business, the business had an average annual net income, after 2 29 federal income taxes and excluding any carry-over losses, of 2 30 not more than two million dollars as determined in accordance 2 31 with generally accepted accounting principles. 2 32 g. The business has a net worth that is not in excess of 2 33 five million dollars. 2 34 h. The business is not predominately engaged in the 2 35 provision of professional services provided by accountants, 3 1 attorneys, or physicians. 3 2 i. The business is not engaged in the development of real 3 3 estate for resale. 3 4 j. The business is not engaged in banking or lending. 3 5 k. The business is predominantly engaged in a targeted 3 6 industry as described in section 15.329, subsection 2, 3 7 paragraph "b", subparagraphs (1) and (3) through (10). 3 8 l. It is the intent of the business to provide long-term 3 9 attractive compensation packages with many of the compensation 3 10 packages for owners and employees to be risk and venture based 3 11 with a focus on future returns. 3 12 2. The tax credit authorized under section 15E.42 may be 3 13 redeemed for losses of the taxpayer's original equity 3 14 investment incurred upon the insolvency of the business. The 3 15 tax credit shall not be redeemed later than ten years from the 3 16 date of the qualifying investment. 3 17 3. A taxpayer may, prior to making an investment in a 3 18 specified business, request a written opinion from the 3 19 department that a business in which it proposes to invest is a 3 20 qualified business. The department shall issue a written 3 21 opinion stating whether the business meets the criteria under 3 22 subsection 1 for a qualified business. 3 23 4. A taxpayer shall submit an application for an approved 3 24 investment to the department on a form prescribed by the 3 25 department. The application shall include the name of the 3 26 taxpayer applying for approval, the name of the qualifying 3 27 business, the amount of the proposed equity investment, and 3 28 any other information specified by the department. The 3 29 application shall also include an undertaking by the taxpayer 3 30 to make the equity investment within five days after the 3 31 department notifies the taxpayer that the investment has been 3 32 approved. 3 33 Sec. 4. NEW SECTION. 15E.44 REPORTS AND RESERVES. 3 34 1. By December 15 of each year, the department of economic 3 35 development, in consultation with the department of revenue 4 1 and finance, shall submit a report to the governor and the 4 2 general assembly. The report shall include, but not be 4 3 limited to, the anticipated value of any tax credits issued 4 4 and the estimated current and anticipated impact the approved 4 5 investments have on the state. 4 6 2. The department of economic development shall conduct an 4 7 annual risk analysis which matches the current and anticipated 4 8 value of approved equity investments with the current and 4 9 anticipated value of any tax credits issued. If the 4 10 anticipated value of the tax credits authorized exceeds the 4 11 anticipated value of approved investments, the department of 4 12 economic development shall establish a reserve account within 4 13 the repayment stream of an Iowa agricultural industry finance 4 14 loan made pursuant to section 15E.208 sufficient to cover such 4 15 losses to the general fund of the state in the event that tax 4 16 credits are redeemed. 4 17 Sec. 5. NEW SECTION. 422.11C APPROVED INVESTMENT TAX 4 18 CREDIT. 4 19 The taxes imposed under this division, less the credits 4 20 allowed under sections 422.12 and 422.12B, shall be reduced by 4 21 an approved investment tax credit received pursuant to 4 22 sections 15E.41 through 15E.44. 4 23 An individual may claim the approved investment tax credit 4 24 allowed a partnership, limited liability company, S 4 25 corporation, or estate or trust electing to have the income 4 26 taxed directly to the individual. The amount claimed by the 4 27 individual shall be based upon the pro rata share of the 4 28 individual's earnings of the partnership, limited liability 4 29 company, S corporation, or estate or trust. 4 30 Any credit in excess of the tax liability for the tax year 4 31 may be credited to the tax liability for the following three 4 32 years or until depleted, whichever is earlier. 4 33 Sec. 6. Section 422.33, Code Supplement 1999, is amended 4 34 by adding the following new subsection: 4 35 NEW SUBSECTION. 9. The taxes imposed under this division 5 1 shall be reduced by an approved investment tax credit received 5 2 pursuant to sections 15E.41 through 15E.44. 5 3 Any credit in excess of the tax liability for the tax year 5 4 may be credited to the tax liability for the following three 5 5 tax years or until depleted, whichever is earlier. 5 6 Sec. 7. Section 422.60, Code 1999, is amended by adding 5 7 the following new subsection: 5 8 NEW SUBSECTION. 4. The taxes imposed under this division 5 9 shall be reduced by an approved investment tax credit received 5 10 pursuant to sections 15E.41 through 15E.44. 5 11 Any credit in excess of the tax liability for the tax year 5 12 may be credited to the tax liability for the following three 5 13 tax years or until depleted, whichever is earlier. 5 14 Sec. 8. NEW SECTION. 432.12A APPROVED INVESTMENT TAX 5 15 CREDIT. 5 16 The taxes imposed under this chapter shall be reduced by an 5 17 approved investment tax credit received pursuant to sections 5 18 15E.41 through 15E.44. 5 19 Any credit in excess of the tax liability for the calendar 5 20 year may be credited to the tax liability for the following 5 21 three calendar years or until depleted, whichever is earlier. 5 22 EXPLANATION 5 23 This bill creates a personal income, corporate income, 5 24 financial institution franchise, and insurance premium tax 5 25 credit which may be claimed by a taxpayer for net losses 5 26 incurred by the taxpayer in an approved equity investment. 5 27 The bill provides that any tax credit in excess of the 5 28 taxpayer's liability may be credited to the tax liability for 5 29 the following three years or until depleted, whichever is 5 30 earlier. The bill provides that the tax credit shall not be 5 31 carried back to previous tax years. The bill provides that 5 32 the maximum tax credit for a qualifying taxpayer shall not 5 33 exceed 50 percent of the taxpayer's original equity investment 5 34 in an approved investment or $100,000, whichever is less. The 5 35 bill provides that the aggregate amount of tax credits issued 6 1 by the state shall not exceed a total of $35 million. 6 2 The bill provides that in order for an investment to 6 3 qualify for a tax credit, the investment must be approved by 6 4 the department of economic development and be in a qualifying 6 5 business which meets certain criteria. The bill provides that 6 6 a taxpayer may request the department to issue a written 6 7 opinion regarding whether a business meets the criteria of a 6 8 qualifying business. The bill provides for an application 6 9 procedure for the taxpayer to perform and provides that the 6 10 taxpayer shall make the approved investment within five days 6 11 after the department notifies the taxpayer that the investment 6 12 has been approved. The bill provides that a tax credit may be 6 13 redeemed for losses of the taxpayer's original equity 6 14 investment incurred upon the insolvency of the business. The 6 15 bill provides that the tax credit shall not be redeemed later 6 16 than 10 years from the date of the qualifying investment. 6 17 The bill provides that, by December 15 of each year, the 6 18 department of economic development, in consultation with the 6 19 department of revenue and finance, shall submit a report to 6 20 the governor and the general assembly relating to the 6 21 anticipated value of any tax credits issued and the estimated 6 22 current and anticipated impact the approved investments have 6 23 on the state. The bill provides that the department of 6 24 economic development shall conduct an annual risk analysis 6 25 which matches the current and anticipated value of approved 6 26 equity investments with the current and anticipated value of 6 27 any tax credits issued. The bill provides that if the 6 28 anticipated value of the tax credits authorized exceeds the 6 29 anticipated value of qualifying equity investments, the 6 30 department of economic development shall establish a reserve 6 31 account within the repayment stream of an Iowa agricultural 6 32 industry finance loan made pursuant to Code section 15E.208 6 33 sufficient to cover such losses to the general fund of the 6 34 state in the event that tax credits are redeemed. 6 35 LSB 6053HV 78 7 1 tm/cls/14
Text: HF02482 Text: HF02484 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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