Text: HF00750 Text: HF00752 Text: HF00700 - HF00799 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 INVESTMENT TAX CREDITS.
1 8 1. For tax years beginning on or after January 1, 2001, 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 a portion of the taxpayer's equity investment, as provided in
1 12 subsection 2, in a qualified business. However, for tax
1 13 credits earned from investments made in the 2001, 2002, 2003,
1 14 and 2004 calendar years, taxpayers shall not claim the tax
1 15 credit sooner than the tax year beginning in the 2005 calendar
1 16 year. An individual may claim the credit of a partnership,
1 17 limited liability company, S corporation, estate, or trust
1 18 electing to have income taxed directly to the individual. The
1 19 amount claimed by the individual shall be based upon the pro
1 20 rata share of the individual's earnings from the partnership,
1 21 limited liability company, S corporation, estate, or trust.
1 22 Any tax credit in excess of the taxpayer's liability for the
1 23 tax year may be credited to the tax liability for the
1 24 following five years or until depleted, whichever is earlier.
1 25 A tax credit shall not be carried back to a tax year prior to
1 26 the tax year in which the taxpayer redeems the tax credit.
1 27 2. The tax credit equals fifty percent, not to exceed one
1 28 hundred thousand dollars, of the taxpayer's equity investment
1 29 made in a qualified business during the tax year.
1 30 3. The aggregate amount of tax credits issued under this
1 31 section for taxes imposed pursuant to chapter 422, divisions
1 32 II, III, and V, and chapter 432 shall not exceed a total of
1 33 twenty-five million dollars.
1 34 4. The department of revenue and finance, in consultation
1 35 with the department of economic development, shall develop a
2 1 system for registration, authorization, and redemption of tax
2 2 credits issued by the state under this section. The
2 3 department of revenue and finance and the department of
2 4 economic development shall adopt any other policies,
2 5 procedures, or rules pursuant to chapter 17A necessary for the
2 6 administration of this division and of tax credits issued by
2 7 the state under this section.
2 8 Sec. 3. NEW SECTION. 15E.43 QUALIFYING BUSINESSES.
2 9 1. In order for an equity investment to qualify for a tax
2 10 credit, a taxpayer, within ninety days of making an investment
2 11 in a qualifying business, shall notify the department of
2 12 economic development regarding the investment and provide the
2 13 department with information documenting the investment. In
2 14 order to be a qualifying business, the business must meet all
2 15 of the following criteria:
2 16 a. The principal business operations of the business are
2 17 located in this state.
2 18 b. The business has been in operation for five years or
2 19 less.
2 20 c. The business has a business plan approved by the
2 21 department which details the business's growth strategy, the
2 22 management team if applicable, a production or management
2 23 plan, a financial plan, and other standard elements of a
2 24 business plan.
2 25 d. The business has an owner who has successfully
2 26 completed a recognized entrepreneurial venture development
2 27 curriculum or has three years of relevant business experience.
2 28 e. The business is not a business engaged primarily in
2 29 retail sales or the provision of health care or other
2 30 professional services.
2 31 f. The business shall not have a net worth that exceeds
2 32 five million dollars.
2 33 2. After verifying the eligibility of the business, the
2 34 department of economic development shall notify the department
2 35 of revenue and finance that the investment has been made in a
3 1 qualifying business and the department of revenue and finance
3 2 shall issue a tax credit certificate to be attached to the
3 3 person's tax return. The tax credit certificate shall contain
3 4 the taxpayer's name, address, tax identification number, the
3 5 amount of credit, other information required by the department
3 6 of revenue and finance, and a place for the name and tax
3 7 identification number of any transferee and the amount of the
3 8 tax credit being transferred.
3 9 3. The tax credit shall not be redeemed during any tax
3 10 year beginning prior to January 1, 2005.
3 11 4. A person receiving a tax credit under this section may
3 12 transfer all or a portion of the unused tax credit to any
3 13 other person. However, the tax credit shall only be
3 14 transferred once. The transferee may use the amount of the
3 15 tax credit transferred against taxes imposed under chapter
3 16 422, divisions II, III, and V, and under chapter 432 for any
3 17 tax year the original transferor could have claimed the
3 18 credit. Any consideration received for the transfer of the
3 19 tax credit shall not be included as income under chapter 422,
3 20 divisions II, III, and V, or as premiums under chapter 432.
3 21 Any consideration paid for the transfer of the tax credit
3 22 shall not be deducted from income under chapter 422, divisions
3 23 II, III, and V, or from premiums under chapter 432.
3 24 5. Any consideration received by a transferor shall be
3 25 invested in the qualifying business.
3 26 Sec. 4. NEW SECTION. 422.11C INVESTMENT TAX CREDITS.
3 27 The taxes imposed under this division, less the credits
3 28 allowed under sections 422.12 and 422.12B, shall be reduced by
3 29 an investment tax credit authorized pursuant to sections
3 30 15E.41 through 15E.43.
3 31 Sec. 5. Section 422.33, Code 2001, is amended by adding
3 32 the following new subsection:
3 33 NEW SUBSECTION. 11. The taxes imposed under this division
3 34 shall be reduced by an investment tax credit authorized
3 35 pursuant to sections 15E.41 through 15E.43.
4 1 Sec. 6. Section 422.60, Code 2001, is amended by adding
4 2 the following new subsection:
4 3 NEW SUBSECTION. 4. The taxes imposed under this division
4 4 shall be reduced by an investment tax credit authorized
4 5 pursuant to sections 15E.41 through 15E.43.
4 6 Sec. 7. NEW SECTION. 432.12A INVESTMENT TAX CREDITS.
4 7 The taxes imposed under this chapter shall be reduced by an
4 8 investment tax credit authorized pursuant to sections 15E.41
4 9 through 15E.43.
4 10 EXPLANATION
4 11 This bill creates a personal income, corporate income,
4 12 financial institution franchise, and insurance premium tax
4 13 credit which may be claimed by a taxpayer for a portion of the
4 14 taxpayer's equity investment in a qualified business. The
4 15 bill provides that for tax credits earned from investments
4 16 made in 2001, 2002, 2003, and 2004 calendar years, taxpayers
4 17 shall not claim the tax credit sooner than the tax year
4 18 beginning in the 2005 calendar year. The bill provides that
4 19 any tax credit in excess of the taxpayer's liability for the
4 20 tax year may be credited to the tax liability for the
4 21 following five years or until depleted, whichever is earlier.
4 22 The bill provides that the tax credit shall not be carried
4 23 back to previous tax years. The bill provides that the tax
4 24 credit equals 50 percent, not to exceed $100,000, of the
4 25 taxpayer's equity investment in a qualified business during
4 26 the tax year.
4 27 The bill provides that, in order for an equity investment
4 28 to qualify for a tax credit, a taxpayer, within 90 days of
4 29 making an investment in a qualifying business, shall notify
4 30 the department of economic development regarding the
4 31 investment and provide the department with information
4 32 documenting the investment and the business must meet certain
4 33 identified criteria. The bill provides that, after verifying
4 34 the eligibility of the business, the department of economic
4 35 development shall notify the department of revenue and finance
5 1 that the investment has been made in a qualifying business and
5 2 the department of revenue and finance shall issue a tax credit
5 3 certificate to be attached to the person's tax return.
5 4 The bill provides that the aggregate amount of tax credits
5 5 issued by the state shall not exceed a total of $25 million.
5 6 The bill provides that a person receiving a tax credit may
5 7 transfer all or a portion of the unused tax credit to any
5 8 other person; however, a tax credit shall only be transferred
5 9 once. The bill provides that the transferee may use the
5 10 amount of the tax credit transferred against personal income
5 11 taxes, corporate income taxes, financial institution franchise
5 12 taxes, and insurance premium taxes for any tax year the
5 13 original transferor could have claimed the tax credit. The
5 14 bill provides that any consideration received by a transferor
5 15 shall be invested in the qualifying business.
5 16 The bill requires the department of revenue and finance, in
5 17 consultation with the department of economic development, to
5 18 develop a system for registration, authorization, and
5 19 redemption of investment tax credits.
5 20 LSB 3714YH 79
5 21 tm/cls/14
Text: HF00750 Text: HF00752 Text: HF00700 - HF00799 Text: HF Index Bills and Amendments: General Index Bill History: General Index
© 2001 Cornell College and League of Women Voters of Iowa
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