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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