Text: S03715 Text: S03717 Text: S03700 - S03799 Text: S Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Amend House File 757, as passed by the House, as 1 2 follows: 1 3 #1. By striking everything after the enacting 1 4 clause and inserting the following: 1 5 "Section 1. Section 422.4, subsection 1, 1 6 paragraphs b and c, Code 2001, are amended to read as 1 7 follows: 1 8 b. "Cumulative inflation factor" means the product 1 9 of the annual inflation factor for the19882001 1 10 calendar year and all annual inflation factors for 1 11 subsequent calendar years as determined pursuant to 1 12 this subsection. The cumulative inflation factor 1 13 applies to all tax years beginning on or after January 1 14 1 of the calendar year for which the latest annual 1 15 inflation factor has been determined. 1 16 c. The annual inflation factor for the19882001 1 17 calendar year is one hundred percent. 1 18 Sec. 2. Section 422.5, subsection 1, paragraphs a 1 19 through i, Code 2001, are amended by striking the 1 20 paragraphs and inserting in lieu thereof the 1 21 following: 1 22 a. On all taxable income from zero through eight 1 23 thousand dollars, one and eighty-five hundredths 1 24 percent. 1 25 b. On all taxable income exceeding eight thousand 1 26 dollars but not exceeding forty thousand dollars, five 1 27 and three-tenths percent. 1 28 c. On all taxable income exceeding forty thousand 1 29 dollars but not exceeding sixty thousand dollars, six 1 30 and thirty-five hundredths percent. 1 31 d. On all taxable income exceeding sixty thousand 1 32 dollars, six and six-tenths percent. 1 33 Sec. 3. Section 422.5, subsection 1, paragraph j, 1 34 Code 2001, is amended to read as follows: 1 35j.e. (1) The tax imposed upon the taxable 1 36 income of a nonresident shall be computed by reducing 1 37 the amount determined pursuant to paragraphs "a" 1 38 through"i""d" by the amounts of nonrefundable 1 39 credits under this division and by multiplying this 1 40 resulting amount by a fraction of which the 1 41 nonresident's net income allocated to Iowa, as 1 42 determined in section 422.8, subsection 2, paragraph 1 43 "a", is the numerator and the nonresident's total net 1 44 income computed under section 422.7 is the 1 45 denominator. This provision also applies to 1 46 individuals who are residents of Iowa for less than 1 47 the entire tax year. 1 48 (2) The tax imposed upon the taxable income of a 1 49 resident shareholder in an S corporation which has in 1 50 effect for the tax year an election under subchapter S 2 1 of the Internal Revenue Code and carries on business 2 2 within and without the state may be computed by 2 3 reducing the amount determined pursuant to paragraphs 2 4 "a" through"i""d" by the amounts of nonrefundable 2 5 credits under this division and by multiplying this 2 6 resulting amount by a fraction of which the resident's 2 7 net income allocated to Iowa, as determined in section 2 8 422.8, subsection 2, paragraph "b", is the numerator 2 9 and the resident's total net income computed under 2 10 section 422.7 is the denominator. If a resident 2 11 shareholder has elected to take advantage of this 2 12 subparagraph, and for the next tax year elects not to 2 13 take advantage of this subparagraph, the resident 2 14 shareholder shall not reelect to take advantage of 2 15 this subparagraph for the three tax years immediately 2 16 following the first tax year for which the shareholder 2 17 elected not to take advantage of this subparagraph, 2 18 unless the director consents to the reelection. This 2 19 subparagraph also applies to individuals who are 2 20 residents of Iowa for less than the entire tax year. 2 21 This subparagraph shall not affect the amount of 2 22 the taxpayer's checkoff to the Iowa election campaign 2 23 fund under section 56.18, the checkoff for the fish 2 24 and game fund in section 456A.16, the credits from tax 2 25 provided in sections 422.10, 422.11A, and 422.12 and 2 26 the allocation of these credits between spouses if the 2 27 taxpayers filed separate returns or separately on 2 28 combined returns. 2 29 Sec. 4. Section 422.5, subsection 1, paragraph k, 2 30 Code 2001, is amended by relettering the paragraph as 2 31 paragraph f. 2 32 Sec. 5. Section 422.5, subsection 1, paragraph k, 2 33 unnumbered paragraph 1, Code 2001, is amended to read 2 34 as follows: 2 35 There is imposed upon every resident and 2 36 nonresident of this state, including estates and 2 37 trusts, the greater of the tax determined in 2 38 paragraphs "a" through"j""e" or the state 2 39 alternative minimum tax equal to seventy-five percent 2 40 of the maximum state individual income tax rate for 2 41 the tax year, rounded to the nearest one-tenth of one 2 42 percent, of the state alternative minimum taxable 2 43 income of the taxpayer as computed under this 2 44 paragraph. 2 45 Sec. 6. Section 422.5, subsections 2, 5, and 7, 2 46 Code 2001, are amended to read as follows: 2 47 2. However, the tax shall not be imposed on a 2 48 resident or nonresident whose net income, as defined 2 49 in section 422.7, is thirteen thousand five hundred 2 50 dollars or less in the case of married persons filing 3 1 jointly or filing separately on a combined return, 3 2 unmarried heads of household, and surviving spouses or 3 3nineten thousand dollars or less in the case of all 3 4 other persons; but in the event that the payment of 3 5 tax under this division would reduce the net income to 3 6 less than thirteen thousand five hundred dollars or 3 7nineten thousand dollars as applicable, then the tax 3 8 shall be reduced to that amount which would result in 3 9 allowing the taxpayer to retain a net income of 3 10 thirteen thousand five hundred dollars ornineten 3 11 thousand dollars as applicable. The preceding 3 12 sentence does not apply to estates or trusts. For the 3 13 purpose of this subsection, the entire net income, 3 14 including any part of the net income not allocated to 3 15 Iowa, shall be taken into account. For purposes of 3 16 this subsection, net income includes all amounts of 3 17 pensions or other retirement income received from any 3 18 source which is not taxable under this division as a 3 19 result of the government pension exclusions in section 3 20 422.7, or any other state law. If the combined net 3 21 income of a husband and wife exceeds thirteen thousand 3 22 five hundred dollars, neither of them shall receive 3 23 the benefit of this subsection, and it is immaterial 3 24 whether they file a joint return or separate returns. 3 25 However, if a husband and wife file separate returns 3 26 and have a combined net income of thirteen thousand 3 27 five hundred dollars or less, neither spouse shall 3 28 receive the benefit of this paragraph, if one spouse 3 29 has a net operating loss and elects to carry back or 3 30 carry forward the loss as provided in section 422.9, 3 31 subsection 3. A person who is claimed as a dependent 3 32 by another person as defined in section 422.12 shall 3 33 not receive the benefit of this subsection if the 3 34 person claiming the dependent has net income exceeding 3 35 thirteen thousand five hundred dollars ornineten 3 36 thousand dollars as applicable or the person claiming 3 37 the dependent and the person's spouse have combined 3 38 net income exceeding thirteen thousand five hundred 3 39 dollars ornineten thousand dollars as applicable. 3 40 In addition, if the married persons', filing 3 41 jointly or filing separately on a combined return, 3 42 unmarried head of household's, or surviving spouse's 3 43 net income exceeds thirteen thousand five hundred 3 44 dollars, the regular tax imposed under this division 3 45 shall be the lesser of the maximum state individual 3 46 income tax rate times the portion of the net income in 3 47 excess of thirteen thousand five hundred dollars or 3 48 the regular tax liability computed without regard to 3 49 this sentence. Taxpayers electing to file separately 3 50 shall compute the alternate tax described in this 4 1 paragraph using the total net income of the husband 4 2 and wife. The alternate tax described in this 4 3 paragraph does not apply if one spouse elects to carry 4 4 back or carry forward the loss as provided in section 4 5 422.9, subsection 3. 4 6 5. Upon determination of the latest cumulative 4 7 inflation factor, the director shall multiply each 4 8 dollar amount set forth in subsection 1, paragraphs 4 9 "a" through"i""d" of this section by this cumulative 4 10 inflation factor, shall round off the resulting 4 11 product to the nearest one dollar, and shall 4 12 incorporate the result into the income tax forms and 4 13 instructions for each tax year. 4 14 7. In addition to the other taxes imposed by this 4 15 section, a tax is imposed on the amount of a lump sum 4 16 distribution for which the taxpayer has elected under 4 17 section 402(e) of the Internal Revenue Code to be 4 18 separately taxed for federal income tax purposes for 4 19 the tax year. The rate of tax is equal to twenty-five 4 20 percent of the separate federal tax imposed on the 4 21 amount of the lump sum distribution. A nonresident is 4 22 liable for this tax only on that portion of the lump 4 23 sum distribution allocable to Iowa. The total amount 4 24 of the lump sum distribution subject to separate 4 25 federal tax shall be included in net income for 4 26 purposes of determining eligibility under the thirteen 4 27 thousand five hundred dollar or less ornineten 4 28 thousand dollar or less exclusion, as applicable. 4 29 Sec. 7. Section 422.8, subsection 2, paragraph a, 4 30 Code 2001, is amended to read as follows: 4 31 a. Nonresident's net income allocated to Iowa is 4 32 the net income, or portion of net income, which is 4 33 derived from a business, trade, profession, or 4 34 occupation carried on within this state or income from 4 35 any property, trust, estate, or other source within 4 36 Iowa. However, income derived from a business, trade, 4 37 profession, or occupation carried on within this state 4 38 and income from any property, trust, estate, or other 4 39 source within Iowa shall not include distributions 4 40 from pensions, including defined benefit or defined 4 41 contribution plans, annuities, individual retirement 4 42 accounts, and deferred compensation plans or any 4 43 earnings attributable thereto so long as the 4 44 distribution is directly related to an individual's 4 45 documented retirement and received while the 4 46 individual is a nonresident of this state. If a 4 47 business, trade, profession, or occupation is carried 4 48 on partly within and partly without the state, only 4 49 the portion of the net income which is fairly and 4 50 equitably attributable to that part of the business, 5 1 trade, profession, or occupation carried on within the 5 2 state is allocated to Iowa for purposes of section 5 3 422.5, subsection 1, paragraph"j""e", and section 5 4 422.13 and income from any property, trust, estate, or 5 5 other source partly within and partly without the 5 6 state is allocated to Iowa in the same manner, except 5 7 that annuities, interest on bank deposits and 5 8 interest-bearing obligations, and dividends are 5 9 allocated to Iowa only to the extent to which they are 5 10 derived from a business, trade, profession, or 5 11 occupation carried on within the state. 5 12 Sec. 8. Section 422.8, subsection 4, Code 2001, is 5 13 amended to read as follows: 5 14 4. The amount of minimum tax paid to another state 5 15 or foreign country by a resident taxpayer of this 5 16 state from preference items derived from sources 5 17 outside of Iowa shall be allowed as a credit against 5 18 the tax computed under this division except that the 5 19 credit shall not exceed what the amount of state 5 20 alternative minimum tax would have been on the same 5 21 preference items which were taxed by the other state 5 22 or foreign country. The limitation on this credit 5 23 shall be computed according to the following formula: 5 24 The total of preference items earned outside of Iowa 5 25 and taxed by another state or foreign country shall be 5 26 divided by the total of preference items of the 5 27 resident taxpayer of Iowa. In computing this 5 28 quotient, those items excludable under section 422.5, 5 29 subsection 1, paragraph"k""f", subparagraph (1) 5 30 shall not be used in computing the preference items. 5 31 This quotient multiplied times the net state 5 32 alternative minimum tax as determined in section 5 33 422.5, subsection 1, paragraph"k""f" on the total of 5 34 preference items as if entirely earned in Iowa shall 5 35 be the maximum tax credit against the Iowa alternative 5 36 minimum tax. However, the maximum tax credit will not 5 37 be allowed to the extent that the minimum tax imposed 5 38 by the other state or foreign country is less than the 5 39 maximum tax credit computed above. 5 40 Sec. 9. Section 422.9, subsection 1, Code 2001, as 5 41 amended by 2001 Iowa Acts, Senate File 350, section 5 42 22, is amended to read as follows: 5 43 1. An optional standard deduction, after deduction 5 44 of federal income tax, equal to one thousand two 5 45 hundred thirty dollars for a married person who files 5 46 separately or a single person or equal to three 5 47 thousand thirty dollars for a husband and wife who 5 48 file a joint return, a surviving spouse, or an 5 49 unmarried head of household. The optional standard 5 50 deduction shall not exceed the amount remaining after 6 1 deduction of the federal income tax. The amount of 6 2 federal income taxes deducted shall not exceed the 6 3 amount as computed under subsection 2, paragraph "b". 6 4 Sec. 10. Section 422.9, subsection 2, paragraph b, 6 5 Code 2001, as amended by 2001 Iowa Acts, Senate File 6 6 350, section 22, is amended by striking the paragraph 6 7 and inserting in lieu thereof the following: 6 8 b. Add the amount of federal income taxes paid or 6 9 accrued, as the case may be, to the extent the federal 6 10 tax payment is for a tax year beginning prior to 6 11 January 1, 2001. Subtract the amount of federal 6 12 income tax refunds received in a tax year to the 6 13 extent that the federal income tax was deducted on an 6 14 Iowa individual income tax return for a tax year 6 15 beginning prior to January 1, 2001. 6 16 Sec. 11. Section 422.11B, Code 2001, is amended to 6 17 read as follows: 6 18 422.11B MINIMUM TAX CREDIT. 6 19 1. There is allowed as a credit against the tax 6 20 determined in section 422.5, subsection 1, paragraphs 6 21 "a" through"j""e" for a tax year an amount equal to 6 22 the minimum tax credit for that tax year. 6 23 The minimum tax credit for a tax year is the 6 24 excess, if any, of the adjusted net minimum tax 6 25 imposed for all prior tax years beginning on or after 6 26 January 1, 1987, over the amount allowable as a credit 6 27 under this section for those prior tax years. 6 28 2. The allowable credit under subsection 1 for a 6 29 tax year shall not exceed the excess, if any, of the 6 30 tax determined in section 422.5, subsection 1, 6 31 paragraphs "a" through"j""e" over the state 6 32 alternative minimum tax as determined in section 6 33 422.5, subsection 1, paragraph"k""f". 6 34 The net minimum tax for a tax year is the excess, 6 35 if any, of the tax determined in section 422.5, 6 36 subsection 1, paragraph"k""f" for the tax year over 6 37 the tax determined in section 422.5, subsection 1, 6 38 paragraphs "a" through"j""e" for the tax year. 6 39 The adjusted net minimum tax for a tax year is the 6 40 net minimum tax for the tax year reduced by the amount 6 41 which would be the net minimum tax if the only item of 6 42 tax preference taken into account was that described 6 43 in paragraph (6) of section 57(a) of the Internal 6 44 Revenue Code. 6 45 Sec. 12. Section 422.13, subsection 1, paragraph 6 46 c, Code 2001, as amended by 2001 Iowa Acts, Senate 6 47 File 140, section 7, is amended to read as follows: 6 48 c. However, if that part of the net income of a 6 49 nonresident which is allocated to Iowa pursuant to 6 50 section 422.8, subsection 2, is less than one thousand 7 1 dollars the nonresident is not required to make and 7 2 sign a return except when the nonresident is subject 7 3 to the state alternative minimum tax imposed pursuant 7 4 to section 422.5, subsection 1, paragraph"k""f". 7 5 Sec. 13. Section 422.13, subsection 1A, Code 2001, 7 6 as amended by 2001, Iowa Acts, Senate File 140, 7 7 section 7, is amended to read as follows: 7 8 1A. Notwithstanding any other provision in this 7 9 section, a resident of this state is not required to 7 10 make and file a return if the person's net income is 7 11 equal to or less than the appropriate dollar amount 7 12 listed in section 422.5, subsection 2, upon which tax 7 13 is not imposed. A nonresident of this state is not 7 14 required to make and file a return if the person's 7 15 total net income in section 422.5, subsection 1, 7 16 paragraph"j""e", is equal to or less than the 7 17 appropriate dollar amount provided in section 422.5, 7 18 subsection 2, upon which tax is not imposed. For 7 19 purposes of this subsection, the amount of a lump sum 7 20 distribution subject to separate federal tax shall be 7 21 included in net income for purposes of determining if 7 22 a resident is required to file a return and the 7 23 portion of the lump sum distribution that is allocable 7 24 to Iowa is included in total net income for purposes 7 25 of determining if a nonresident is required to make 7 26 and file a return. 7 27 Sec. 14. Section 422.21, unnumbered paragraph 5, 7 28 Code 2001, is amended to read as follows: 7 29 The director shall determine for the19892002 7 30 calendar year and each subsequent calendar year the 7 31 annual and cumulative inflation factors for each 7 32 calendar year to be applied to tax years beginning on 7 33 or after January 1 of that calendar year. The 7 34 director shall compute the new dollar amounts as 7 35 specified to be adjusted in section 422.5 by the 7 36 latest cumulative inflation factor and round off the 7 37 result to the nearest one dollar. The annual and 7 38 cumulative inflation factors determined by the 7 39 director are not rules as defined in section 17A.2, 7 40 subsection 11. The director shall determine for the 7 41 1990 calendar year and each subsequent calendar year 7 42 the annual and cumulative standard deduction factors 7 43 to be applied to tax years beginning on or after 7 44 January 1 of that calendar year. The director shall 7 45 compute the new dollar amounts of the standard 7 46 deductions specified in section 422.9, subsection 1, 7 47 by the latest cumulative standard deduction factor and 7 48 round off the result to the nearest ten dollars. The 7 49 annual and cumulative standard deduction factors 7 50 determined by the director are not rules as defined in 8 1 section 17A.2, subsection 11. 8 2 Sec. 15. EFFECTIVE AND APPLICABILITY DATES. 8 3 This Act, being deemed of immediate importance, 8 4 takes effect upon enactment and applies retroactively 8 5 to January 1, 2001, for tax years beginning on or 8 6 after that date." 8 7 #2. Title page, by striking lines 1 through 3 and 8 8 inserting the following: "An Act relating to the 8 9 individual income tax by eliminating the deduction for 8 10 federal income taxes paid, decreasing the tax rates, 8 11 increasing the amount of the net income exclusion for 8 12 single individuals, and including effective and 8 13 retroactive applicability date provisions." 8 14 8 15 8 16 8 17 PATRICIA HARPER 8 18 8 19 8 20 8 21 JOHNIE HAMMOND 8 22 8 23 8 24 8 25 MATT McCOY 8 26 8 27 8 28 8 29 BETTY A. SOUKUP 8 30 8 31 8 32 8 33 TOM FLYNN 8 34 8 35 8 36 PATRICK J. DELUHERY 8 37 8 38 8 39 8 40 MIKE CONNOLLY 8 41 8 42 8 43 JOE BOLKCOM 8 44 8 45 8 46 8 47 ROBERT E. DVORSKY 8 48 8 49 8 50 9 1 MICHAEL E. GRONSTAL 9 2 HF 757.702 79 9 3 mg/cls
Text: S03715 Text: S03717 Text: S03700 - S03799 Text: S Index Bills and Amendments: General Index Bill History: General Index
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