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Senate File 2456

Partial Bill History

Bill Text

PAG LIN
  1  1    Section 1.  Section 15.335, Code Supplement 1999, is
  1  2 amended to read as follows:
  1  3    15.335  RESEARCH ACTIVITIES CREDIT.
  1  4    1.  An eligible business may claim a corporate tax credit
  1  5 for increasing research activities in this state during the
  1  6 period the eligible business is participating in the program.
  1  7    a.  The credit equals six and one-half percent of the
  1  8 state's apportioned share of the qualifying expenditures for
  1  9 increasing research activities. the sum of the following:
  1 10    (1)  Six and one-half percent of the excess of qualified
  1 11 research expenses during the tax year over the base amount for
  1 12 the tax year based upon the state's apportioned share of the
  1 13 qualifying expenditures for increasing research activities.
  1 14    (2)  Six and one-half percent of the basic research
  1 15 payments determined under section 41(e)(1)(A) of the Internal
  1 16 Revenue Code during the tax year based upon the state's
  1 17 apportioned share of the qualifying expenditures for
  1 18 increasing research activities.
  1 19    The state's apportioned share of the qualifying
  1 20 expenditures for increasing research activities is a percent
  1 21 equal to the ratio of qualified research expenditures in this
  1 22 state to total qualified research expenditures.
  1 23    b.  In lieu of the credit amount computed in paragraph "a",
  1 24 subparagraph (1), an eligible business may elect to compute
  1 25 the credit amount for qualified research expenses incurred in
  1 26 this state in a manner consistent with the alternative
  1 27 incremental credit described in section 41(c)(4) of the
  1 28 Internal Revenue Code.  The taxpayer may make this election
  1 29 regardless of the method used for the taxpayer's federal
  1 30 income tax.  The election made under this paragraph is for the
  1 31 tax year and the taxpayer may use another or the same method
  1 32 for any subsequent year.
  1 33    c.  For purposes of the alternate credit computation method
  1 34 in paragraph "b", the credit percentages applicable to
  1 35 qualified research expenses described in clauses (i), (ii),
  2  1 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code
  2  2 are one and sixty-five hundredths percent, two and twenty
  2  3 hundredths percent, and two and seventy-five hundredths
  2  4 percent, respectively.
  2  5    2.  The credit allowed in this section is in addition to
  2  6 the credit authorized in section 422.33, subsection 5, and
  2  7 section 422.10.  However, if the alternative credit
  2  8 computation method is used in section 422.33, subsection 5, or
  2  9 section 422.10, the credit allowed in this section shall also
  2 10 be computed using that method.
  2 11    3.  If the eligible business is a partnership, subchapter S
  2 12 corporation, limited liability company, or estate or trust
  2 13 electing to have the income taxed directly to the individual,
  2 14 an individual may claim the tax credit allowed.  The amount
  2 15 claimed by the individual shall be based upon the pro rata
  2 16 share of the individual's earnings of the partnership,
  2 17 subchapter S corporation, limited liability company, or estate
  2 18 or trust.
  2 19    4.  For purposes of this section, "qualifying expenditures
  2 20 for increasing research activities" means the qualifying
  2 21 expenditures "base amount", "basic research payment", and
  2 22 "qualified research expense" mean the same as defined for the
  2 23 federal credit for increasing research activities which would
  2 24 be allowable under section 41 of the Internal Revenue Code in
  2 25 effect on January 1, 1999, except that for the alternative
  2 26 incremental credit such amounts are for research conducted
  2 27 within this state.  For purposes of this section, "Internal
  2 28 Revenue Code" means the Internal Revenue Code in effect on
  2 29 January 1, 2000.
  2 30    5.  Any credit in excess of the tax liability for the
  2 31 taxable year shall be refunded with interest computed under
  2 32 section 422.25.  In lieu of claiming a refund, a taxpayer may
  2 33 elect to have the overpayment shown on its final, completed
  2 34 return credited to the tax liability for the following year.
  2 35    Sec. 2.  Section 15A.9, subsection 8, Code Supplement 1999,
  3  1 is amended to read as follows:
  3  2    8.  CORPORATE TAX RESEARCH CREDIT.  A corporate tax credit
  3  3 shall be available to the primary business or a supporting
  3  4 business for increasing research activities in this state
  3  5 within the zone.
  3  6    a.  The credit equals thirteen percent of the state's
  3  7 apportioned share of the qualifying expenditures for
  3  8 increasing research activities. the sum of the following:
  3  9    (1)  Thirteen percent of the excess of qualified research
  3 10 expenses during the tax year over the base amount for the tax
  3 11 year based upon the state's apportioned share of the
  3 12 qualifying expenditures for increasing research activities.
  3 13    (2)  Thirteen percent of the basic research payments
  3 14 determined under section 41(e)(1)(A) of the Internal Revenue
  3 15 Code during the tax year based upon the state's apportioned
  3 16 share of the qualifying expenditures for increasing research
  3 17 activities.
  3 18    The state's apportioned share of the qualifying
  3 19 expenditures for increasing research activities is a percent
  3 20 equal to the ratio of qualified research expenditures in this
  3 21 state within the zone to total qualified research
  3 22 expenditures.
  3 23    b.  In lieu of the credit amount computed in paragraph "a",
  3 24 subparagraph (1), a business may elect to compute the credit
  3 25 amount for qualified research expenses incurred in this state
  3 26 within the zone in a manner consistent with the alternative
  3 27 incremental credit described in section 41(c)(4) of the
  3 28 Internal Revenue Code.  The taxpayer may make this election
  3 29 regardless of the method used for the taxpayer's federal
  3 30 income tax.  The election made under this paragraph is for the
  3 31 tax year and the taxpayer may use another or the same method
  3 32 for any subsequent year.
  3 33    c.  For purposes of the alternate credit computation method
  3 34 in paragraph "b", the credit percentages applicable to
  3 35 qualified research expenses described in clauses (i), (ii),
  4  1 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code
  4  2 are three and thirty hundredths percent, four and forty
  4  3 hundredths percent, and five and fifty hundredths percent,
  4  4 respectively.
  4  5    d.  Any credit in excess of the tax liability for the tax
  4  6 year shall be refunded with interest computed under section
  4  7 422.25.  In lieu of claiming a refund, the primary business or
  4  8 a supporting business may elect to have the overpayment shown
  4  9 on its final return credited to its tax liability for the
  4 10 following tax year.
  4 11    e.  For the purposes of this section, "qualifying
  4 12 expenditures for increasing research activities" means the
  4 13 qualifying expenditures subsection, "base amount", "basic
  4 14 research payment", and "qualified research expense" mean the
  4 15 same as defined for the federal credit for increasing research
  4 16 activities which would be allowable under section 41 of the
  4 17 Internal Revenue Code in effect on January 1, 1999, except
  4 18 that for the alternative incremental credit such amounts are
  4 19 for research conducted within this state within the zone.  For
  4 20 purposes of this subsection, "Internal Revenue Code" means the
  4 21 Internal Revenue Code in effect on January 1, 2000.
  4 22    f.  The credit authorized in this subsection is in lieu of
  4 23 the credit authorized in section 422.33, subsection 5 and
  4 24 section 422.10.
  4 25    Sec. 3.  Section 422.10, Code Supplement 1999, is amended
  4 26 to read as follows:
  4 27    422.10  RESEARCH ACTIVITIES CREDIT.
  4 28    1.  The taxes imposed under this division shall be reduced
  4 29 by a state tax credit for increasing research activities in
  4 30 this state.
  4 31    a.  For individuals, the credit equals six and one-half
  4 32 percent of the state's apportioned share of the qualifying
  4 33 expenditures for increasing research activities. the sum of
  4 34 the following:
  4 35    (1)  Six and one-half percent of the excess of qualified
  5  1 research expenses during the tax year over the base amount for
  5  2 the tax year based upon the state's apportioned share of the
  5  3 qualifying expenditures for increasing research activities.
  5  4    (2)  Six and one-half percent of the basic research
  5  5 payments determined under section 41(e)(1)(A) of the Internal
  5  6 Revenue Code during the tax year based upon the state's
  5  7 apportioned share of the qualifying expenditures for
  5  8 increasing research activities.
  5  9    The state's apportioned share of the qualifying
  5 10 expenditures for increasing research activities is a percent
  5 11 equal to the ratio of qualified research expenditures in this
  5 12 state to total qualified research expenditures.
  5 13    b.  In lieu of the credit amount computed in paragraph "a",
  5 14 subparagraph (1), a taxpayer may elect to compute the credit
  5 15 amount for qualified research expenses incurred in this state
  5 16 in a manner consistent with the alternative incremental credit
  5 17 described in section 41(c)(4) of the Internal Revenue Code.
  5 18 The taxpayer may make this election regardless of the method
  5 19 used for the taxpayer's federal income tax.  The election made
  5 20 under this paragraph is for the tax year and the taxpayer may
  5 21 use another or the same method for any subsequent year.
  5 22    c.  For purposes of the alternate credit computation method
  5 23 in paragraph "b", the credit percentages applicable to
  5 24 qualified research expenses described in clauses (i), (ii),
  5 25 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code
  5 26 are one and sixty-five hundredths percent, two and twenty
  5 27 hundredths percent, and two and seventy-five hundredths
  5 28 percent, respectively.
  5 29    2.  For purposes of this section, an individual may claim a
  5 30 research credit for qualifying research expenditures incurred
  5 31 by a partnership, subchapter S corporation, limited liability
  5 32 company, estate, or trust electing to have the income taxed
  5 33 directly to the individual.  The amount claimed by the
  5 34 individual shall be based upon the pro rata share of the
  5 35 individual's earnings of a partnership, subchapter S
  6  1 corporation, limited liability company, estate, or trust.
  6  2    3.  For purposes of this section, "qualifying expenditures
  6  3 for increasing research activities" means the qualifying
  6  4 expenditures "base amount", "basic research payment", and
  6  5 "qualified research expense" mean the same as defined for the
  6  6 federal credit for increasing research activities which would
  6  7 be allowable under section 41 of the Internal Revenue Code in
  6  8 effect on January 1, 1999, except that for the alternative
  6  9 incremental credit such amounts are for research conducted
  6 10 within this state.  For purposes of this section, "Internal
  6 11 Revenue Code" means the Internal Revenue Code in effect on
  6 12 January 1, 2000.
  6 13    4.  Any credit in excess of the tax liability imposed by
  6 14 section 422.5 less the credits allowed under sections 422.11A,
  6 15 422.12, and 422.12B for the taxable year shall be refunded
  6 16 with interest computed under section 422.25.  In lieu of
  6 17 claiming a refund, a taxpayer may elect to have the
  6 18 overpayment shown on the taxpayer's final, completed return
  6 19 credited to the tax liability for the following taxable year.
  6 20    Sec. 4.  Section 422.33, subsection 5, Code Supplement
  6 21 1999, is amended to read as follows:
  6 22    5.  a.  The taxes imposed under this division shall be
  6 23 reduced by a state tax credit for increasing research
  6 24 activities in this state equal to six and one-half percent of
  6 25 the state's apportioned share of the qualifying expenditures
  6 26 for increasing research activities. the sum of the following:
  6 27    (1)  Six and one-half percent of the excess of qualified
  6 28 research expenses during the tax year over the base amount for
  6 29 the tax year based upon the state's apportioned share of the
  6 30 qualifying expenditures for increasing research activities.
  6 31    (2)  Six and one-half percent of the basic research
  6 32 payments determined under section 41(e)(1)(A) of the Internal
  6 33 Revenue Code during the tax year based upon the state's
  6 34 apportioned share of the qualifying expenditures for
  6 35 increasing research activities.
  7  1    The state's apportioned share of the qualifying
  7  2 expenditures for increasing research activities is a percent
  7  3 equal to the ratio of qualified research expenditures in this
  7  4 state to the total qualified research expenditures.
  7  5    b.  In lieu of the credit amount computed in paragraph "a",
  7  6 subparagraph (1), a corporation may elect to compute the
  7  7 credit amount for qualified research expenses incurred in this
  7  8 state in a manner consistent with the alternative incremental
  7  9 credit described in section 41(c)(4) of the Internal Revenue
  7 10 Code.  The taxpayer may make this election regardless of the
  7 11 method used for the taxpayer's federal income tax.  The
  7 12 election made under this paragraph is for the tax year and the
  7 13 taxpayer may use another or the same method for any subsequent
  7 14 year.
  7 15    c.  For purposes of the alternate credit computation method
  7 16 in paragraph "b", the credit percentages applicable to
  7 17 qualified research expenses described in clauses (i), (ii),
  7 18 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code
  7 19 are one and sixty-five hundredths percent, two and twenty
  7 20 hundredths percent, and two and seventy-five hundredths
  7 21 percent, respectively.
  7 22    d.  For purposes of this subsection, "qualifying
  7 23 expenditures for increasing research activities" means the
  7 24 qualifying expenditures "base amount", "basic research
  7 25 payment", and "qualified research expense" mean the same as
  7 26 defined for the federal credit for increasing research
  7 27 activities which would be allowable under section 41 of the
  7 28 Internal Revenue Code in effect on January 1, 1999, except
  7 29 that for the alternative incremental credit such amounts are
  7 30 for research conducted within this state.  For purposes of
  7 31 this subsection, "Internal Revenue Code" means the Internal
  7 32 Revenue Code in effect on January 1, 2000.
  7 33    e.  Any credit in excess of the tax liability for the
  7 34 taxable year shall be refunded with interest computed under
  7 35 section 422.25.  In lieu of claiming a refund, a taxpayer may
  8  1 elect to have the overpayment shown on its final, completed
  8  2 return credited to the tax liability for the following taxable
  8  3 year.
  8  4    Sec. 5.  APPLICABILITY DATE.  This Act applies
  8  5 retroactively to January 1, 2000, for tax years beginning on
  8  6 or after that date.  
  8  7                           EXPLANATION
  8  8    This bill expands the research activities credit for income
  8  9 tax purposes for businesses under the new jobs and income
  8 10 program, the quality jobs enterprise zone program, the
  8 11 incentives for building in enterprise zones, the individual
  8 12 income tax, and corporate income tax.  The expansion provides
  8 13 for an alternative method of computing the tax credit based
  8 14 upon the federal approach using an incremental computation
  8 15 method for measuring increased research activities.  This
  8 16 alternative method is in lieu of a portion of Iowa's present
  8 17 computation approach.  Therefore, the present Iowa law is
  8 18 rewritten in a manner that coincides with the computation
  8 19 under the federal income tax credit.  The federal approach has
  8 20 three tiers under the incremented approach with a different
  8 21 percentage for each tier.  The bill uses the same percentages
  8 22 for the three tiers which were used for federal income taxes
  8 23 for tax years beginning before July 1, 1999.
  8 24    The bill applies retroactively to January 1, 2000, for tax
  8 25 years beginning on or after that date.  
  8 26 LSB 7319SV 78
  8 27 mg/cf/24
     

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