House File 2489 H-8476 Amend House File 2489 as follows: 1 1. By striking everything after the enacting clause and 2 inserting: 3 < DIVISION I 4 INTEREST ACCRUAL ON CERTAIN TAX REFUNDS 5 Section 1. Section 15.335, subsection 8, Code 2018, is 6 amended to read as follows: 7 8. Any credit in excess of the tax liability for the 8 taxable year shall be refunded with interest computed under 9 section 422.25 in accordance with section 421.60, subsection 10 2, paragraph “e” . In lieu of claiming a refund, a taxpayer may 11 elect to have the overpayment shown on its final, completed 12 return credited to the tax liability for the following year. 13 Sec. 2. NEW SECTION . 421.6 Definition of return. 14 For purposes of this title, unless the context otherwise 15 requires, “return” means any tax or information return, 16 amended return, declaration of estimated tax, or claim for 17 refund that is required by, provided for, or permitted under, 18 the provisions of this title and which is filed with the 19 department by, on behalf of, or with respect to any person. 20 “Return” includes any amendment or supplement to these items, 21 including supporting schedules, attachments, or lists which are 22 supplemental to or part of the filed return. 23 Sec. 3. Section 421.60, subsection 2, paragraph e, Code 24 2018, is amended to read as follows: 25 e. Unless otherwise provided by law, all All Iowa taxes 26 which are administered by the department and which result in 27 a refund shall accrue interest at the rate in effect under 28 section 421.7 from the first day of the second calendar month 29 following the date of payment or the date the return upon 30 which the refund is claimed was due to be filed , including any 31 extensions, or was filed, whichever is the latest. 32 Sec. 4. Section 422.10, subsection 4, Code 2018, is amended 33 to read as follows: 34 4. Any credit in excess of the tax liability imposed by 35 -1- HF2489.5704 (3) 87 mm/jh 1/ 149 #1.

section 422.5 less the amounts of nonrefundable credits allowed 1 under this division for the taxable year shall be refunded 2 with interest computed under section 422.25 in accordance 3 with section 421.60, subsection 2, paragraph “e” . In lieu of 4 claiming a refund, a taxpayer may elect to have the overpayment 5 shown on the taxpayer’s final, completed return credited to the 6 tax liability for the following taxable year. 7 Sec. 5. Section 422.16, subsection 9, Code 2018, is amended 8 to read as follows: 9 9. The amount of any overpayment of the individual income 10 tax liability of the employee taxpayer, nonresident, or other 11 person which may result from the withholding and payment of 12 withheld tax by the employer or withholding agent to the 13 department under subsections 1 and 12 , as compared to the 14 individual income tax liability of the employee taxpayer, 15 nonresident, or other person properly and correctly determined 16 under the provisions of section 422.4 , to and including section 17 422.25 , may be credited against any income tax or installment 18 thereof then due the state of Iowa and any balance of one 19 dollar or more shall be refunded to the employee taxpayer, 20 nonresident, or other person with interest at the rate in 21 effect under section 421.7 for each month or fraction of a 22 month, the interest to begin to accrue on the first day of 23 the second calendar month following the date the return was 24 due to be filed or was filed, whichever is the later date 25 in accordance with section 421.60, subsection 2, paragraph 26 “e” . Amounts less than one dollar shall be refunded to the 27 taxpayer, nonresident, or other person only upon written 28 application, in accordance with section 422.73 , and only if 29 the application is filed within twelve months after the due 30 date of the return. Refunds in the amount of one dollar 31 or more provided for by this subsection shall be paid by 32 the treasurer of state by warrants drawn by the director of 33 the department of administrative services, or an authorized 34 employee of the department, and the taxpayer’s return of 35 -2- HF2489.5704 (3) 87 mm/jh 2/ 149

income shall constitute a claim for refund for this purpose, 1 except in respect to amounts of less than one dollar. There 2 is appropriated, out of any funds in the state treasury not 3 otherwise appropriated, a sum sufficient to carry out the 4 provisions of this subsection . 5 Sec. 6. Section 422.25, subsection 3, Code 2018, is amended 6 to read as follows: 7 3. a. If the amount of the tax as determined by the 8 department is less than the amount paid, the excess shall be 9 refunded with interest , the interest to begin to accrue on the 10 first day of the second calendar month following the date of 11 payment or the date the return was due to be filed, or the 12 extended due date by which the return was due to be filed if 13 ninety percent of the tax was paid by the original due date, 14 or was filed, whichever is the latest, at the rate in effect 15 under section 421.7 counting each fraction of a month as an 16 entire month under the rules prescribed by the director. If 17 an overpayment of tax results from a net operating loss or 18 net capital loss which is carried back to a prior year, the 19 overpayment, for purposes of computing interest on refunds, 20 shall be considered as having been made on the date a claim 21 for refund or amended return carrying back the net operating 22 loss or net capital loss is filed with the department or on the 23 first day of the second calendar month following the date of 24 the actual payment of the tax, whichever is later. However, in 25 accordance with section 421.60, subsection 2, paragraph “e” . 26 b. Notwithstanding section 421.60, subsection 2, paragraph 27 “e” , and paragraph “a” of this subsection, when the net 28 operating loss or net capital loss carryback to a prior year 29 eliminates or reduces an underpayment of tax due for an earlier 30 year, the full amount of the underpayment of tax shall bear 31 interest at the rate in effect under section 421.7 for each 32 month counting each fraction of a month as an entire month from 33 the due date of the tax for the earlier year to the last day of 34 the taxable year in which the net operating loss or net capital 35 -3- HF2489.5704 (3) 87 mm/jh 3/ 149

loss occurred. 1 Sec. 7. Section 422.28, Code 2018, is amended to read as 2 follows: 3 422.28 Revision of tax. 4 A taxpayer may appeal to the director for revision of 5 the tax, interest, or penalties assessed at any time within 6 sixty days from the date of the notice of the assessment of 7 tax, additional tax, interest, or penalties. The director 8 shall grant a hearing and if, upon the hearing, the director 9 determines that the tax, interest, or penalties are excessive 10 or incorrect, the director shall revise them according to 11 the law and the facts and adjust the computation of the tax, 12 interest, or penalties accordingly. The director shall notify 13 the taxpayer by mail of the result of the hearing and shall 14 refund to the taxpayer the amount, if any, paid in excess of 15 the tax, interest, or penalties found by the director to be 16 due, with interest accruing from the first day of the second 17 calendar month following the date of payment by the taxpayer 18 at the rate in effect under section 421.7 for each month 19 or fraction of a month in accordance with section 421.60, 20 subsection 2, paragraph “e” . 21 Sec. 8. Section 422.33, subsection 5, paragraph f, Code 22 2018, is amended to read as follows: 23 f. Any credit in excess of the tax liability for the 24 taxable year shall be refunded with interest computed under 25 section 422.25 in accordance with section 421.60, subsection 26 2, paragraph “e” . In lieu of claiming a refund, a taxpayer may 27 elect to have the overpayment shown on its final, completed 28 return credited to the tax liability for the following taxable 29 year. 30 Sec. 9. Section 422.33, subsection 9, paragraph a, Code 31 2018, is amended to read as follows: 32 a. The taxes imposed under this division shall be reduced by 33 an assistive device tax credit. A small business purchasing, 34 renting, or modifying an assistive device or making workplace 35 -4- HF2489.5704 (3) 87 mm/jh 4/ 149

modifications for an individual with a disability who is 1 employed or will be employed by the small business is eligible, 2 subject to availability of credits, to receive this assistive 3 device tax credit which is equal to fifty percent of the 4 first five thousand dollars paid during the tax year for the 5 purchase, rental, or modification of the assistive device 6 or for making the workplace modifications. Any credit in 7 excess of the tax liability shall be refunded with interest 8 computed under section 422.25 in accordance with section 9 421.60, subsection 2, paragraph “e” . In lieu of claiming a 10 refund, a taxpayer may elect to have the overpayment shown on 11 the taxpayer’s final, completed return credited to the tax 12 liability for the following tax year. If the small business 13 elects to take the assistive device tax credit, the small 14 business shall not deduct for Iowa tax purposes any amount of 15 the cost of an assistive device or workplace modifications 16 which is deductible for federal income tax purposes. 17 Sec. 10. Section 422.91, Code 2018, is amended to read as 18 follows: 19 422.91 Credit for estimated tax. 20 1. Any amount of estimated tax paid is a credit against 21 the amount of tax due on a final, completed return, and any 22 overpayment of five dollars or more shall be refunded to the 23 taxpayer with interest , the interest to begin to accrue on 24 the first day of the second calendar month following the date 25 of payment or the date the return was due to be filed or was 26 filed, whichever is the latest, at the rate established under 27 section 421.7 in accordance with section 421.60, subsection 2, 28 paragraph “e” , and the return constitutes a claim for refund for 29 this purpose. Amounts less than five dollars shall be refunded 30 to the taxpayer only upon written application in accordance 31 with section 422.73 , and only if the application is filed 32 within twelve months after the due date for the return. 33 2. In lieu of claiming a refund, the taxpayer may elect 34 to have the overpayment shown on its final, completed return 35 -5- HF2489.5704 (3) 87 mm/jh 5/ 149

for the taxable year credited to the tax liability for the 1 following taxable year. 2 Sec. 11. Section 423.4, subsection 1, paragraph c, Code 3 2018, is amended to read as follows: 4 c. Refunds authorized under this subsection shall accrue 5 interest at the rate in effect under section 421.7 from the 6 first day of the second calendar month following the date the 7 refund claim is received by the department in accordance with 8 section 421.60, subsection 2, paragraph “e” . 9 Sec. 12. Section 423.4, subsection 6, paragraph c, 10 subparagraph (2), Code 2018, is amended to read as follows: 11 (2) Refunds authorized under this subsection shall accrue 12 interest at the rate in effect under section 421.7 from the 13 first day of the second calendar month following the date the 14 refund claim is received by the department in accordance with 15 section 421.60, subsection 2, paragraph “e” . 16 Sec. 13. Section 450.94, subsection 3, Code 2018, is amended 17 to read as follows: 18 3. If the amount paid is greater than the correct tax, 19 penalty, and interest due, the department shall refund the 20 excess with interest . Interest shall be computed at the rate 21 in effect under section 421.7 , under the rules prescribed by 22 the director counting each fraction of a month as an entire 23 month and the interest shall begin to accrue on the first day 24 of the second calendar month following the date of payment 25 or on the date the return was due to be filed or was filed, 26 whichever is the latest in accordance with section 421.60, 27 subsection 2, paragraph “e” . However, the director shall 28 not allow a claim for refund or credit that has not been 29 filed with the department within three years after the tax 30 payment upon which a refund or credit is claimed became due, 31 or one year after the tax payment was made, whichever time is 32 later. A determination by the department of the amount of 33 tax, penalty, and interest due, or the amount of refund for 34 excess tax paid, is final unless the person aggrieved by the 35 -6- HF2489.5704 (3) 87 mm/jh 6/ 149

determination appeals to the director for a revision of the 1 determination within sixty days from the date of the notice 2 of determination of tax, penalty, and interest due or refund 3 owing or unless the taxpayer contests the determination by 4 paying the tax, interest, and penalty and timely filing a claim 5 for refund. The director shall grant a hearing, and upon the 6 hearing the director shall determine the correct tax, penalty, 7 and interest or refund due, and notify the appellant of the 8 decision by mail. The decision of the director is final unless 9 the appellant seeks judicial review of the director’s decision 10 under section 450.59 within sixty days after the date of the 11 notice of the director’s decision. 12 Sec. 14. Section 452A.65, subsection 1, Code 2018, is 13 amended to read as follows: 14 1. In addition to the tax or additional tax, the taxpayer 15 shall pay a penalty as provided in section 421.27 . The 16 taxpayer shall also pay interest on the tax or additional 17 tax at the rate in effect under section 421.7 counting each 18 fraction of a month as an entire month, computed from the date 19 the return was required to be filed. If the amount of the tax 20 as determined by the appropriate state agency is less than the 21 amount paid, the excess shall be refunded with interest , the 22 interest to begin to accrue on the first day of the second 23 calendar month following the date of payment or the date the 24 return was due to be filed or was filed, whichever is the 25 latest, at the rate in effect under section 421.7 counting 26 each fraction of a month as an entire month under the rules 27 prescribed by the appropriate state agency in accordance with 28 section 421.60, subsection 2, paragraph “e” . Claims for 29 refund filed under sections 452A.17 and 452A.21 shall accrue 30 interest beginning with the first day of the second calendar 31 month following the date the refund claim is received by the 32 department. 33 Sec. 15. EFFECTIVE DATE. This division of this Act, being 34 deemed of immediate importance, takes effect upon enactment. 35 -7- HF2489.5704 (3) 87 mm/jh 7/ 149

Sec. 16. RETROACTIVE APPLICABILITY. This division of this 1 Act applies retroactively to January 1, 2018, for tax years 2 beginning on or after that date, and for refunds issued on or 3 after that date. 4 DIVISION II 5 TAX PENALTIES 6 Sec. 17. Section 421.27, subsection 6, Code 2018, is amended 7 to read as follows: 8 6. Improper receipt of refund or credit payments . A person 9 who makes an erroneous application for refund , or credit , 10 reimbursement, rebate, or other payment shall be liable for any 11 overpayment received or tax liability reduced plus interest 12 at the rate in effect under section 421.7 . In addition, a 13 person who willfully makes a false or frivolous application 14 for refund , or credit , reimbursement, rebate, or other payment 15 with intent to evade tax or with intent to receive a refund , 16 or credit , reimbursement, rebate, or other payment to which 17 the person is not entitled is guilty of a fraudulent practice 18 and is liable for a penalty equal to seventy-five percent of 19 the refund , or credit , reimbursement, rebate, or other payment 20 being claimed. Payments, penalties, and interest due under 21 this subsection may be collected and enforced in the same 22 manner as the tax imposed. 23 Sec. 18. Section 425.29, Code 2018, is amended to read as 24 follows: 25 425.29 False claim —— penalty. 26 A person who makes a false affidavit for the purpose 27 of obtaining credit or reimbursement provided for in this 28 division or who knowingly receives the credit or reimbursement 29 without being legally entitled to it or makes claim for the 30 credit or reimbursement in more than one county in the state 31 without being legally entitled to it is guilty of a fraudulent 32 practice. The claim for credit or reimbursement shall be 33 disallowed in full and if the claim has been paid the amount 34 shall be recovered in the manner provided in section 425.27 . 35 -8- HF2489.5704 (3) 87 mm/jh 8/ 149

The department of revenue may impose penalties under section 1 421.27. The department of revenue shall send a notice of 2 disallowance of the claim. 3 Sec. 19. LEGISLATIVE INTENT. It is the intent of the 4 general assembly that the provisions of this division of this 5 Act are conforming amendments consistent with current state 6 law, and that the amendments do not change the application of 7 current law but instead reflect current law both before and 8 after the enactment of this division of this Act. 9 Sec. 20. EFFECTIVE DATE. This division of this Act, being 10 deemed of immediate importance, takes effect upon enactment. 11 DIVISION III 12 MISCELLANEOUS TAX PROVISIONS 13 Sec. 21. Section 34A.7B, subsection 13, Code 2018, is 14 amended to read as follows: 15 13. The department shall transfer all remitted reported 16 prepaid wireless 911 surcharges to the treasurer of state 17 for deposit in the 911 emergency communications fund created 18 under section 34A.7A, subsection 2 , within thirty days of 19 receipt after deducting an amount, not to exceed two percent of 20 collected surcharges, that shall be retained by the department 21 to reimburse its direct costs of administering the collection 22 and remittance of prepaid wireless 911 surcharges. 23 Sec. 22. Section 421.17, subsection 2, paragraph d, Code 24 2018, is amended to read as follows: 25 d. To facilitate uniformity and equalization of 26 assessments throughout the state of Iowa and to facilitate 27 transfers of funds to local governments, the director may 28 use geographic information system technology and may require 29 assessing authorities and local governments that have adopted 30 compatible technology to provide information to the department 31 electronically using electronic geographic information 32 system file formats. The department of revenue shall act on 33 behalf of political subdivisions and the state to deliver a 34 consolidated response to the boundary and annexation survey 35 -9- HF2489.5704 (3) 87 mm/jh 9/ 149

and provide legal boundary geography data to the United States 1 census bureau. The department shall coordinate with political 2 subdivisions and the state to ensure that consistent, accurate, 3 and integrated geography is provided to the United States 4 census bureau. The office of the chief information officer 5 shall provide geographic information system and technical 6 support to the department to facilitate the exchange. 7 Sec. 23. Section 421.19, Code 2018, is amended to read as 8 follows: 9 421.19 Counsel. 10 1. It shall be the duty of the attorney general and of 11 the county attorneys in their respective counties to commence 12 and prosecute actions, prosecutions, and complaints, when 13 so directed by the director of revenue and to represent the 14 director in any litigation arising from the discharge of the 15 director’s duties. 16 2. If the department has information that indicates a 17 taxpayer intentionally filed a false claim, affidavit, return, 18 or other information with intent to evade tax or to obtain 19 a refund, credit, or other benefit from the department, the 20 department may notify federal, state, or local law enforcement 21 and may disclose state returns, state return information, 22 state investigative or audit information, or any other state 23 information to such law enforcement, notwithstanding sections 24 422.20 and 422.72. 25 3. Notwithstanding sections 422.20 and 422.72, the 26 department may disclose state returns, state return 27 information, state investigative or audit information, or any 28 other state information under this section. 29 Sec. 24. NEW SECTION . 421.71 Class actions —— implied right 30 of action —— private cause of action immunity. 31 1. Class actions prohibited. No class action may be brought 32 against the department, a taxpayer, or a person required to 33 collect any tax imposed under this title, in any court, agency, 34 or other adjudicative body, or in any other forum, based on 35 -10- HF2489.5704 (3) 87 mm/jh 10/ 149

any act or omission arising from or related to any provision 1 of this title. 2 2. No implied right of action. Nothing in this title shall 3 be construed as creating or providing an implied private right 4 of action or any private common law claim against any taxpayer, 5 or against any person required to collect any tax imposed under 6 this title, in any court, agency, or other adjudicative body, 7 or in any other forum. This subsection shall not apply to or 8 otherwise limit any claim, action, mandate, power, remedy, or 9 discretion of the department, or an agent or designee of the 10 department. 11 3. Private cause of action immunity for overpayment of 12 certain taxes. 13 a. A taxpayer, or any person required to collect taxes 14 imposed under chapters 423, 423A, 423B, 423C, and 423D, and 15 chapter 423G, as enacted in 2018 Iowa Acts, Senate File 512, 16 shall be immune from any private cause of action arising from 17 or related to the overpayment of taxes imposed under chapters 18 423, 423A, 423B, 423C, and 423D, and chapter 423G, as enacted 19 in 2018 Iowa Acts, Senate File 512, that are collected and 20 remitted to the department. 21 b. Nothing in this subsection shall apply to or otherwise 22 limit any of the following: 23 (1) Any claim, action, mandate, power, remedy, or 24 discretion of the department, or an agent or designee of the 25 department. 26 (2) A taxpayer’s right to seek a refund from the department 27 related to taxes imposed under chapters 423, 423A, 423B, 28 423C, and 423D, and chapter 423G, as enacted in 2018 Iowa 29 Acts, Senate File 512, that are collected from or paid by the 30 taxpayer. 31 Sec. 25. Section 423G.5, subsection 1, as enacted by 2018 32 Iowa Acts, Senate File 512, section 15, is amended to read as 33 follows: 34 1. The director of revenue shall administer the water 35 -11- HF2489.5704 (3) 87 mm/jh 11/ 149

service tax as nearly as possible in conjunction with the 1 administration of the state sales and use tax law, except that 2 portion of the law that implements the streamlined sales and 3 use tax agreement. The director shall provide appropriate 4 forms, or provide on the regular state tax forms, for reporting 5 water service tax liability , and for ease of administration may 6 require water service tax liability to be identified, reported, 7 and remitted to the department as sales and use tax liability, 8 provided the department has the ability to properly identify 9 such amounts as water service tax revenues upon receipt . 10 Sec. 26. Section 423G.6, subsection 2, paragraphs a, b, and 11 c, as enacted by 2018 Iowa Acts, Senate File 512, section 16, 12 are amended to read as follows: 13 a. For revenues collected reported on or after July 1, 2018, 14 but before August 1, 2019, one-twelfth of the revenues to the 15 water quality infrastructure fund created in section 8.57B, 16 and one-twelfth of the revenues to the water quality financial 17 assistance fund created in section 16.134A. 18 b. For revenues collected reported on or after August 1, 19 2019, but before August 1, 2020, one-sixth of the revenues to 20 the water quality infrastructure fund created in section 8.57B, 21 and one-sixth of the revenues to the water quality financial 22 assistance fund created in section 16.134A. 23 c. For revenues collected reported on or after August 1, 24 2020, one-half of the revenues to the water quality financial 25 assistance fund created in section 16.134A. 26 Sec. 27. IOWA ELECTION CAMPAIGN FUND TAX CHECKOFF AND 27 CONTRIBUTIONS —— CREDIT TO GENERAL FUND. Notwithstanding 28 section 68A.601 or 422.12J, or any other provision of law to 29 the contrary, any amount of contribution to the Iowa election 30 campaign fund in section 68A.602 designated on an individual 31 income tax return for any tax year and filed on or after 32 January 1, 2018, is void and shall be disregarded, and such 33 contribution amount shall be credited to the general fund and 34 not to the Iowa election campaign fund. 35 -12- HF2489.5704 (3) 87 mm/jh 12/ 149

Sec. 28. EFFECTIVE DATE. The following, being deemed of 1 immediate importance, take effect upon enactment: 2 1. The section of this division of this Act relating to the 3 Iowa election campaign fund tax checkoff and contributions. 4 2. The section of this division of this Act enacting section 5 421.71. 6 Sec. 29. RETROACTIVE APPLICABILITY. The following applies 7 retroactively to January 1, 2018, for individual income tax 8 returns filed on or after that date: 9 The section of this division of this Act relating to the Iowa 10 election campaign fund tax checkoff and contributions. 11 DIVISION IV 12 TAX CREDITS 13 Sec. 30. Section 15E.52, subsection 8, Code 2018, is amended 14 to read as follows: 15 8. The board shall not certify an innovation fund after June 16 30, 2018 2023 . 17 Sec. 31. Section 403.19A, subsection 3, paragraph c, 18 subparagraph (2), Code 2018, is amended to read as follows: 19 (2) The pilot project city and the economic development 20 authority shall not enter into a withholding agreement after 21 June 30, 2018 2019 . 22 Sec. 32. Section 422.10, subsection 1, Code 2018, is amended 23 by adding the following new paragraph: 24 NEW PARAGRAPH . 0a. An individual shall only be eligible for 25 the credit provided in this section if the business conducting 26 the research meets all of the following requirements: 27 (1) (a) The business is engaged in the manufacturing, 28 life sciences, software engineering, or aviation and aerospace 29 industry. 30 (b) Persons that shall not be considered to be engaged in 31 the manufacturing, life sciences, software engineering, or 32 aviation and aerospace industry, and thus are not eligible 33 for the credit, include but are not limited to all of the 34 following: 35 -13- HF2489.5704 (3) 87 mm/jh 13/ 149

(i) A person engaged in agricultural production as defined 1 in section 423.1. 2 (ii) A person who is a contractor, subcontractor, builder, 3 or a contractor-retailer that engages in commercial and 4 residential repair and installation, including but not limited 5 to heating or cooling installation and repair, plumbing and 6 pipe fitting, security system installation, and electrical 7 installation and repair. For purposes of this subparagraph 8 subdivision, “contractor-retailer” means a business that makes 9 frequent retail sales to the public or to other contractors and 10 that also engages in the performance of construction contracts. 11 (iii) A finance or investment company. 12 (iv) A retailer. 13 (v) A wholesaler. 14 (vi) A transportation company. 15 (vii) A publisher. 16 (viii) An agricultural cooperative association as defined 17 in section 502.102. 18 (ix) A real estate company. 19 (x) A collection agency. 20 (xi) An accountant. 21 (xii) An architect. 22 (2) The business claims and is allowed a research credit 23 for such qualified research expenses under section 41 of the 24 Internal Revenue Code for the same taxable year as it is 25 claiming the credit provided in this section. 26 Sec. 33. Section 422.10, subsection 3, Code 2018, is amended 27 by adding the following new paragraph: 28 NEW PARAGRAPH . 0a. For purposes of this section, “base 29 amount” means the product of the fixed-based percentage times 30 the average annual gross receipts of the taxpayer for the four 31 taxable years preceding the taxable year for which the credit 32 is being determined, but in no event shall the base amount be 33 less than fifty percent of the qualified research expenses for 34 the credit year. 35 -14- HF2489.5704 (3) 87 mm/jh 14/ 149

Sec. 34. Section 422.10, subsection 3, paragraph a, Code 1 2018, is amended to read as follows: 2 a. For purposes of this section , “base amount” , “basic 3 research payment” , and “qualified research expense” mean the 4 same as defined for the federal credit for increasing research 5 activities under section 41 of the Internal Revenue Code, 6 except that for the alternative simplified credit such amounts 7 are for research conducted within this state. 8 Sec. 35. Section 422.11S, subsection 6, paragraph a, Code 9 2018, is amended to read as follows: 10 a. “Eligible student” means a student who is a member of a 11 household whose total annual income during the calendar year 12 before the student receives a tuition grant for purposes of 13 this section does not exceed an amount equal to three four 14 times the most recently published federal poverty guidelines in 15 the federal register by the United States department of health 16 and human services. 17 Sec. 36. Section 422.11S, subsection 8, paragraph a, 18 subparagraph (2), Code 2018, is amended to read as follows: 19 (2) “Total approved tax credits” means for the tax year 20 beginning in the 2006 calendar year, two million five hundred 21 thousand dollars, for the tax year beginning in the 2007 22 calendar year, five million dollars, for tax years beginning 23 on or after January 1, 2008, but before January 1, 2012, seven 24 million five hundred thousand dollars, for tax years beginning 25 on or after January 1, 2012, but before January 1, 2014, eight 26 million seven hundred fifty thousand dollars, and for tax years 27 beginning on or after January 1, 2014, but before January 1, 28 2019, twelve million dollars , and for tax years beginning on or 29 after January 1, 2019, thirteen million dollars . 30 Sec. 37. Section 422.33, subsection 5, Code 2018, is amended 31 by adding the following new paragraph: 32 NEW PARAGRAPH . 0e. A corporation shall only be 33 eligible for the credit provided in this subsection if the 34 business conducting the research meets all of the following 35 -15- HF2489.5704 (3) 87 mm/jh 15/ 149

requirements: 1 (1) (a) The business is engaged in the manufacturing, 2 life sciences, software engineering, or aviation and aerospace 3 industry. 4 (b) Persons that shall not be considered to be engaged in 5 the manufacturing, life sciences, software engineering, or 6 aviation and aerospace industry, and thus are not eligible 7 for the credit, include but are not limited to all of the 8 following: 9 (i) A person engaged in agricultural production as defined 10 in section 423.1. 11 (ii) A person who is a contractor, subcontractor, builder, 12 or a contractor-retailer that engages in commercial and 13 residential repair and installation, including but not limited 14 to heating or cooling installation and repair, plumbing and 15 pipe fitting, security system installation, and electrical 16 installation and repair. For purposes of this subparagraph 17 subdivision, “contractor-retailer” means a business that makes 18 frequent retail sales to the public or to other contractors and 19 that also engages in the performance of construction contracts. 20 (iii) A finance or investment company. 21 (iv) A retailer. 22 (v) A wholesaler. 23 (vi) A transportation company. 24 (vii) A publisher. 25 (viii) An agricultural cooperative association as defined 26 in section 502.102. 27 (ix) A real estate company. 28 (x) A collection agency. 29 (xi) An accountant. 30 (xii) An architect. 31 (2) The business claims and is allowed a research credit 32 for such qualified research expenses under section 41 of the 33 Internal Revenue Code for the same taxable year as it is 34 claiming the credit provided in this subsection. 35 -16- HF2489.5704 (3) 87 mm/jh 16/ 149

Sec. 38. Section 422.33, subsection 5, paragraph e, Code 1 2018, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (01) For purposes of this section, “base 3 amount” means the product of the fixed-based percentage times 4 the average annual gross receipts of the taxpayer for the four 5 taxable years preceding the taxable year for which the credit 6 is being determined, but in no event shall the base amount be 7 less than fifty percent of the qualified research expenses for 8 the credit year. 9 Sec. 39. Section 422.33, subsection 5, paragraph e, 10 subparagraph (1), Code 2018, is amended to read as follows: 11 (1) For purposes of this subsection , “base amount” , “basic 12 research payment” , and “qualified research expense” mean the 13 same as defined for the federal credit for increasing research 14 activities under section 41 of the Internal Revenue Code, 15 except that for the alternative simplified credit such amounts 16 are for research conducted within this state. 17 Sec. 40. 2019 INTERIM TAX CREDIT STUDY. 18 1. The legislative council is requested to authorize a 19 study committee to evaluate tax credits available under Iowa 20 law, including Iowa’s utilization of tax credits as a tool 21 for promoting and supporting economic growth and development. 22 The study committee shall also consider new or different 23 tax credits or incentive programs, or tax rate or structure 24 changes, that will foster economic growth and improve Iowa’s 25 overall tax and economic development climate. The study 26 committee shall make recommendations that the committee 27 believes will improve predictability for the state’s budget, 28 improve accountability to the taxpayers of Iowa, maximize 29 flexibility in utilization, and place Iowa in the best position 30 for attracting and retaining workers and businesses in the 31 future. In developing recommendations, the study committee 32 shall place significant emphasis on directing tax credits, 33 incentive programs, or tax rate or structure changes toward 34 Iowa workers and programs to strengthen Iowa’s workforce by 35 -17- HF2489.5704 (3) 87 mm/jh 17/ 149

incentivizing efforts to expand Iowans’ skills and capabilities 1 in high-demand career fields. 2 2. The study committee shall consist of five members of 3 the senate, three of whom shall be appointed by the majority 4 leader of the senate and two of whom shall be appointed by 5 the minority leader of the senate, and five members of the 6 house of representatives, three of whom shall be appointed by 7 the speaker of the house of representatives and two of whom 8 shall be appointed by the minority leader of the house of 9 representatives. 10 3. The study committee shall meet during the 2019 11 legislative interim to make recommendations for consideration 12 during the 2020 legislative session in a report submitted to 13 the general assembly. 14 Sec. 41. LEGISLATIVE INTENT. It is the intent of the 15 general assembly that the provisions of this division of this 16 Act enacting section 422.10, subsection 3, paragraph “0a”, 17 amending section 422.10, subsection 3, paragraph “a”, enacting 18 section 422.33, subsection 5, paragraph e, subparagraph (01), 19 and amending section 422.33, subsection 5, paragraph “e”, 20 subparagraph (1), are conforming amendments consistent with 21 current state law, and that the amendments do not change the 22 application of current law but instead reflect current law both 23 before and after the enactment of this division of this Act. 24 Sec. 42. REPEAL. Sections 422.10A and 422.11I, Code 2018, 25 are repealed. 26 Sec. 43. REPEAL. Section 422.11L, Code 2018, is repealed. 27 Sec. 44. EFFECTIVE DATE. The following, being deemed of 28 immediate importance, take effect upon enactment: 29 1. The section of this division of this Act amending section 30 15E.52, subsection 8. 31 2. The section of this division of this Act enacting section 32 422.10, subsection 1, paragraph “0a”. 33 3. The section of this division of this Act enacting section 34 422.10, subsection 3, paragraph “0a”. 35 -18- HF2489.5704 (3) 87 mm/jh 18/ 149