Senate File 2417 S-5310 Amend the amendment, S-5302, to Senate File 2417 as follows: 1 1. By striking page 1, line 1, through page 150, line 1, and 2 inserting: 3 < Amend Senate File 2417 as follows: 4 1. By striking everything after the enacting clause and 5 inserting: 6 < DIVISION I 7 INTEREST ACCRUAL ON CERTAIN TAX REFUNDS 8 Section 1. Section 15.335, subsection 8, Code 2018, is 9 amended to read as follows: 10 8. Any credit in excess of the tax liability for the 11 taxable year shall be refunded with interest computed under 12 section 422.25 in accordance with section 421.60, subsection 13 2, paragraph “e” . In lieu of claiming a refund, a taxpayer may 14 elect to have the overpayment shown on its final, completed 15 return credited to the tax liability for the following year. 16 Sec. 2. NEW SECTION . 421.6 Definition of return. 17 For purposes of this title, unless the context otherwise 18 requires, “return” means any tax or information return, 19 amended return, declaration of estimated tax, or claim for 20 refund that is required by, provided for, or permitted under, 21 the provisions of this title and which is filed with the 22 department by, on behalf of, or with respect to any person. 23 “Return” includes any amendment or supplement to these items, 24 including supporting schedules, attachments, or lists which are 25 supplemental to or part of the filed return. 26 Sec. 3. Section 421.60, subsection 2, paragraph e, Code 27 2018, is amended to read as follows: 28 e. Unless otherwise provided by law, all All Iowa taxes 29 which are administered by the department and which result in 30 a refund shall accrue interest at the rate in effect under 31 section 421.7 from the first day of the second calendar month 32 following the date of payment or the date the return upon 33 which the refund is claimed was due to be filed , including any 34 extensions, or was filed, whichever is the latest. 35 -1- S5302.5778 (1) 87 mm/jh 1/ 148 #1.

Sec. 4. Section 422.10, subsection 4, Code 2018, is amended 1 to read as follows: 2 4. Any credit in excess of the tax liability imposed by 3 section 422.5 less the amounts of nonrefundable credits allowed 4 under this division for the taxable year shall be refunded 5 with interest computed under section 422.25 in accordance 6 with section 421.60, subsection 2, paragraph “e” . In lieu of 7 claiming a refund, a taxpayer may elect to have the overpayment 8 shown on the taxpayer’s final, completed return credited to the 9 tax liability for the following taxable year. 10 Sec. 5. Section 422.16, subsection 9, Code 2018, is amended 11 to read as follows: 12 9. The amount of any overpayment of the individual income 13 tax liability of the employee taxpayer, nonresident, or other 14 person which may result from the withholding and payment of 15 withheld tax by the employer or withholding agent to the 16 department under subsections 1 and 12 , as compared to the 17 individual income tax liability of the employee taxpayer, 18 nonresident, or other person properly and correctly determined 19 under the provisions of section 422.4 , to and including section 20 422.25 , may be credited against any income tax or installment 21 thereof then due the state of Iowa and any balance of one 22 dollar or more shall be refunded to the employee taxpayer, 23 nonresident, or other person with interest at the rate in 24 effect under section 421.7 for each month or fraction of a 25 month, the interest to begin to accrue on the first day of 26 the second calendar month following the date the return was 27 due to be filed or was filed, whichever is the later date 28 in accordance with section 421.60, subsection 2, paragraph 29 “e” . Amounts less than one dollar shall be refunded to the 30 taxpayer, nonresident, or other person only upon written 31 application, in accordance with section 422.73 , and only if 32 the application is filed within twelve months after the due 33 date of the return. Refunds in the amount of one dollar 34 or more provided for by this subsection shall be paid by 35 -2- S5302.5778 (1) 87 mm/jh 2/ 148

the treasurer of state by warrants drawn by the director of 1 the department of administrative services, or an authorized 2 employee of the department, and the taxpayer’s return of 3 income shall constitute a claim for refund for this purpose, 4 except in respect to amounts of less than one dollar. There 5 is appropriated, out of any funds in the state treasury not 6 otherwise appropriated, a sum sufficient to carry out the 7 provisions of this subsection . 8 Sec. 6. Section 422.25, subsection 3, Code 2018, is amended 9 to read as follows: 10 3. a. If the amount of the tax as determined by the 11 department is less than the amount paid, the excess shall be 12 refunded with interest , the interest to begin to accrue on the 13 first day of the second calendar month following the date of 14 payment or the date the return was due to be filed, or the 15 extended due date by which the return was due to be filed if 16 ninety percent of the tax was paid by the original due date, 17 or was filed, whichever is the latest, at the rate in effect 18 under section 421.7 counting each fraction of a month as an 19 entire month under the rules prescribed by the director. If 20 an overpayment of tax results from a net operating loss or 21 net capital loss which is carried back to a prior year, the 22 overpayment, for purposes of computing interest on refunds, 23 shall be considered as having been made on the date a claim 24 for refund or amended return carrying back the net operating 25 loss or net capital loss is filed with the department or on the 26 first day of the second calendar month following the date of 27 the actual payment of the tax, whichever is later. However, in 28 accordance with section 421.60, subsection 2, paragraph “e” . 29 b. Notwithstanding section 421.60, subsection 2, paragraph 30 “e” , and paragraph “a” of this subsection, when the net 31 operating loss or net capital loss carryback to a prior year 32 eliminates or reduces an underpayment of tax due for an earlier 33 year, the full amount of the underpayment of tax shall bear 34 interest at the rate in effect under section 421.7 for each 35 -3- S5302.5778 (1) 87 mm/jh 3/ 148

month counting each fraction of a month as an entire month from 1 the due date of the tax for the earlier year to the last day of 2 the taxable year in which the net operating loss or net capital 3 loss occurred. 4 Sec. 7. Section 422.28, Code 2018, is amended to read as 5 follows: 6 422.28 Revision of tax. 7 A taxpayer may appeal to the director for revision of 8 the tax, interest, or penalties assessed at any time within 9 sixty days from the date of the notice of the assessment of 10 tax, additional tax, interest, or penalties. The director 11 shall grant a hearing and if, upon the hearing, the director 12 determines that the tax, interest, or penalties are excessive 13 or incorrect, the director shall revise them according to 14 the law and the facts and adjust the computation of the tax, 15 interest, or penalties accordingly. The director shall notify 16 the taxpayer by mail of the result of the hearing and shall 17 refund to the taxpayer the amount, if any, paid in excess of 18 the tax, interest, or penalties found by the director to be 19 due, with interest accruing from the first day of the second 20 calendar month following the date of payment by the taxpayer 21 at the rate in effect under section 421.7 for each month 22 or fraction of a month in accordance with section 421.60, 23 subsection 2, paragraph “e” . 24 Sec. 8. Section 422.33, subsection 5, paragraph f, Code 25 2018, is amended to read as follows: 26 f. Any credit in excess of the tax liability for the 27 taxable year shall be refunded with interest computed under 28 section 422.25 in accordance with section 421.60, subsection 29 2, paragraph “e” . In lieu of claiming a refund, a taxpayer may 30 elect to have the overpayment shown on its final, completed 31 return credited to the tax liability for the following taxable 32 year. 33 Sec. 9. Section 422.33, subsection 9, paragraph a, Code 34 2018, is amended to read as follows: 35 -4- S5302.5778 (1) 87 mm/jh 4/ 148

a. The taxes imposed under this division shall be reduced by 1 an assistive device tax credit. A small business purchasing, 2 renting, or modifying an assistive device or making workplace 3 modifications for an individual with a disability who is 4 employed or will be employed by the small business is eligible, 5 subject to availability of credits, to receive this assistive 6 device tax credit which is equal to fifty percent of the 7 first five thousand dollars paid during the tax year for the 8 purchase, rental, or modification of the assistive device 9 or for making the workplace modifications. Any credit in 10 excess of the tax liability shall be refunded with interest 11 computed under section 422.25 in accordance with section 12 421.60, subsection 2, paragraph “e” . In lieu of claiming a 13 refund, a taxpayer may elect to have the overpayment shown on 14 the taxpayer’s final, completed return credited to the tax 15 liability for the following tax year. If the small business 16 elects to take the assistive device tax credit, the small 17 business shall not deduct for Iowa tax purposes any amount of 18 the cost of an assistive device or workplace modifications 19 which is deductible for federal income tax purposes. 20 Sec. 10. Section 422.91, Code 2018, is amended to read as 21 follows: 22 422.91 Credit for estimated tax. 23 1. Any amount of estimated tax paid is a credit against 24 the amount of tax due on a final, completed return, and any 25 overpayment of five dollars or more shall be refunded to the 26 taxpayer with interest , the interest to begin to accrue on 27 the first day of the second calendar month following the date 28 of payment or the date the return was due to be filed or was 29 filed, whichever is the latest, at the rate established under 30 section 421.7 in accordance with section 421.60, subsection 2, 31 paragraph “e” , and the return constitutes a claim for refund for 32 this purpose. Amounts less than five dollars shall be refunded 33 to the taxpayer only upon written application in accordance 34 with section 422.73 , and only if the application is filed 35 -5- S5302.5778 (1) 87 mm/jh 5/ 148

within twelve months after the due date for the return. 1 2. In lieu of claiming a refund, the taxpayer may elect 2 to have the overpayment shown on its final, completed return 3 for the taxable year credited to the tax liability for the 4 following taxable year. 5 Sec. 11. Section 423.4, subsection 1, paragraph c, Code 6 2018, is amended to read as follows: 7 c. Refunds authorized under this subsection shall accrue 8 interest at the rate in effect under section 421.7 from the 9 first day of the second calendar month following the date the 10 refund claim is received by the department in accordance with 11 section 421.60, subsection 2, paragraph “e” . 12 Sec. 12. Section 423.4, subsection 6, paragraph c, 13 subparagraph (2), Code 2018, is amended to read as follows: 14 (2) Refunds authorized under this subsection shall accrue 15 interest at the rate in effect under section 421.7 from the 16 first day of the second calendar month following the date the 17 refund claim is received by the department in accordance with 18 section 421.60, subsection 2, paragraph “e” . 19 Sec. 13. Section 450.94, subsection 3, Code 2018, is amended 20 to read as follows: 21 3. If the amount paid is greater than the correct tax, 22 penalty, and interest due, the department shall refund the 23 excess with interest . Interest shall be computed at the rate 24 in effect under section 421.7 , under the rules prescribed by 25 the director counting each fraction of a month as an entire 26 month and the interest shall begin to accrue on the first day 27 of the second calendar month following the date of payment 28 or on the date the return was due to be filed or was filed, 29 whichever is the latest in accordance with section 421.60, 30 subsection 2, paragraph “e” . However, the director shall 31 not allow a claim for refund or credit that has not been 32 filed with the department within three years after the tax 33 payment upon which a refund or credit is claimed became due, 34 or one year after the tax payment was made, whichever time is 35 -6- S5302.5778 (1) 87 mm/jh 6/ 148

later. A determination by the department of the amount of 1 tax, penalty, and interest due, or the amount of refund for 2 excess tax paid, is final unless the person aggrieved by the 3 determination appeals to the director for a revision of the 4 determination within sixty days from the date of the notice 5 of determination of tax, penalty, and interest due or refund 6 owing or unless the taxpayer contests the determination by 7 paying the tax, interest, and penalty and timely filing a claim 8 for refund. The director shall grant a hearing, and upon the 9 hearing the director shall determine the correct tax, penalty, 10 and interest or refund due, and notify the appellant of the 11 decision by mail. The decision of the director is final unless 12 the appellant seeks judicial review of the director’s decision 13 under section 450.59 within sixty days after the date of the 14 notice of the director’s decision. 15 Sec. 14. Section 452A.65, subsection 1, Code 2018, is 16 amended to read as follows: 17 1. In addition to the tax or additional tax, the taxpayer 18 shall pay a penalty as provided in section 421.27 . The 19 taxpayer shall also pay interest on the tax or additional 20 tax at the rate in effect under section 421.7 counting each 21 fraction of a month as an entire month, computed from the date 22 the return was required to be filed. If the amount of the tax 23 as determined by the appropriate state agency is less than the 24 amount paid, the excess shall be refunded with interest , the 25 interest to begin to accrue on the first day of the second 26 calendar month following the date of payment or the date the 27 return was due to be filed or was filed, whichever is the 28 latest, at the rate in effect under section 421.7 counting 29 each fraction of a month as an entire month under the rules 30 prescribed by the appropriate state agency in accordance with 31 section 421.60, subsection 2, paragraph “e” . Claims for 32 refund filed under sections 452A.17 and 452A.21 shall accrue 33 interest beginning with the first day of the second calendar 34 month following the date the refund claim is received by the 35 -7- S5302.5778 (1) 87 mm/jh 7/ 148

department. 1 Sec. 15. EFFECTIVE DATE. This division of this Act, being 2 deemed of immediate importance, takes effect upon enactment. 3 Sec. 16. RETROACTIVE APPLICABILITY. This division of this 4 Act applies retroactively to January 1, 2018, for tax years 5 beginning on or after that date, and for refunds issued on or 6 after that date. 7 DIVISION II 8 TAX PENALTIES 9 Sec. 17. Section 421.27, subsection 6, Code 2018, is amended 10 to read as follows: 11 6. Improper receipt of refund or credit payments . A person 12 who makes an erroneous application for refund , or credit , 13 reimbursement, rebate, or other payment shall be liable for any 14 overpayment received or tax liability reduced plus interest 15 at the rate in effect under section 421.7 . In addition, a 16 person who willfully makes a false or frivolous application 17 for refund , or credit , reimbursement, rebate, or other payment 18 with intent to evade tax or with intent to receive a refund , 19 or credit , reimbursement, rebate, or other payment to which 20 the person is not entitled is guilty of a fraudulent practice 21 and is liable for a penalty equal to seventy-five percent of 22 the refund , or credit , reimbursement, rebate, or other payment 23 being claimed. Payments, penalties, and interest due under 24 this subsection may be collected and enforced in the same 25 manner as the tax imposed. 26 Sec. 18. Section 425.29, Code 2018, is amended to read as 27 follows: 28 425.29 False claim —— penalty. 29 A person who makes a false affidavit for the purpose 30 of obtaining credit or reimbursement provided for in this 31 division or who knowingly receives the credit or reimbursement 32 without being legally entitled to it or makes claim for the 33 credit or reimbursement in more than one county in the state 34 without being legally entitled to it is guilty of a fraudulent 35 -8- S5302.5778 (1) 87 mm/jh 8/ 148

practice. The claim for credit or reimbursement shall be 1 disallowed in full and if the claim has been paid the amount 2 shall be recovered in the manner provided in section 425.27 . 3 The department of revenue may impose penalties under section 4 421.27. The department of revenue shall send a notice of 5 disallowance of the claim. 6 Sec. 19. LEGISLATIVE INTENT. It is the intent of the 7 general assembly that the provisions of this division of this 8 Act are conforming amendments consistent with current state 9 law, and that the amendments do not change the application of 10 current law but instead reflect current law both before and 11 after the enactment of this division of this Act. 12 Sec. 20. EFFECTIVE DATE. This division of this Act, being 13 deemed of immediate importance, takes effect upon enactment. 14 DIVISION III 15 MISCELLANEOUS TAX PROVISIONS 16 Sec. 21. Section 34A.7B, subsection 13, Code 2018, is 17 amended to read as follows: 18 13. The department shall transfer all remitted reported 19 prepaid wireless 911 surcharges to the treasurer of state 20 for deposit in the 911 emergency communications fund created 21 under section 34A.7A, subsection 2 , within thirty days of 22 receipt after deducting an amount, not to exceed two percent of 23 collected surcharges, that shall be retained by the department 24 to reimburse its direct costs of administering the collection 25 and remittance of prepaid wireless 911 surcharges. 26 Sec. 22. Section 421.17, subsection 2, paragraph d, Code 27 2018, is amended to read as follows: 28 d. To facilitate uniformity and equalization of 29 assessments throughout the state of Iowa and to facilitate 30 transfers of funds to local governments, the director may 31 use geographic information system technology and may require 32 assessing authorities and local governments that have adopted 33 compatible technology to provide information to the department 34 electronically using electronic geographic information 35 -9- S5302.5778 (1) 87 mm/jh 9/ 148

system file formats. The department of revenue shall act on 1 behalf of political subdivisions and the state to deliver a 2 consolidated response to the boundary and annexation survey 3 and provide legal boundary geography data to the United States 4 census bureau. The department shall coordinate with political 5 subdivisions and the state to ensure that consistent, accurate, 6 and integrated geography is provided to the United States 7 census bureau. The office of the chief information officer 8 shall provide geographic information system and technical 9 support to the department to facilitate the exchange. 10 Sec. 23. Section 421.19, Code 2018, is amended to read as 11 follows: 12 421.19 Counsel. 13 1. It shall be the duty of the attorney general and of 14 the county attorneys in their respective counties to commence 15 and prosecute actions, prosecutions, and complaints, when 16 so directed by the director of revenue and to represent the 17 director in any litigation arising from the discharge of the 18 director’s duties. 19 2. If the department has information that indicates a 20 taxpayer intentionally filed a false claim, affidavit, return, 21 or other information with intent to evade tax or to obtain 22 a refund, credit, or other benefit from the department, the 23 department may notify federal, state, or local law enforcement 24 and may disclose state returns, state return information, 25 state investigative or audit information, or any other state 26 information to such law enforcement, notwithstanding sections 27 422.20 and 422.72. 28 3. Notwithstanding sections 422.20 and 422.72, the 29 department may disclose state returns, state return 30 information, state investigative or audit information, or any 31 other state information under this section. 32 Sec. 24. NEW SECTION . 421.71 Class actions —— implied right 33 of action —— private cause of action immunity. 34 1. Class actions prohibited. No class action may be brought 35 -10- S5302.5778 (1) 87 mm/jh 10/ 148

against the department, a taxpayer, or a person required to 1 collect any tax imposed under this title, in any court, agency, 2 or other adjudicative body, or in any other forum, based on 3 any act or omission arising from or related to any provision 4 of this title. 5 2. No implied right of action. Nothing in this title shall 6 be construed as creating or providing an implied private right 7 of action or any private common law claim against any taxpayer, 8 or against any person required to collect any tax imposed under 9 this title, in any court, agency, or other adjudicative body, 10 or in any other forum. This subsection shall not apply to or 11 otherwise limit any claim, action, mandate, power, remedy, or 12 discretion of the department, or an agent or designee of the 13 department. 14 3. Private cause of action immunity for overpayment of 15 certain taxes. 16 a. A taxpayer, or any person required to collect taxes 17 imposed under chapters 423, 423A, 423B, 423C, and 423D, and 18 chapter 423G, as enacted in 2018 Iowa Acts, Senate File 512, 19 shall be immune from any private cause of action arising from 20 or related to the overpayment of taxes imposed under chapters 21 423, 423A, 423B, 423C, and 423D, and chapter 423G, as enacted 22 in 2018 Iowa Acts, Senate File 512, that are collected and 23 remitted to the department. 24 b. Nothing in this subsection shall apply to or otherwise 25 limit any of the following: 26 (1) Any claim, action, mandate, power, remedy, or 27 discretion of the department, or an agent or designee of the 28 department. 29 (2) A taxpayer’s right to seek a refund from the department 30 related to taxes imposed under chapters 423, 423A, 423B, 31 423C, and 423D, and chapter 423G, as enacted in 2018 Iowa 32 Acts, Senate File 512, that are collected from or paid by the 33 taxpayer. 34 Sec. 25. Section 423G.5, subsection 1, as enacted by 2018 35 -11- S5302.5778 (1) 87 mm/jh 11/ 148

Iowa Acts, Senate File 512, section 15, is amended to read as 1 follows: 2 1. The director of revenue shall administer the water 3 service tax as nearly as possible in conjunction with the 4 administration of the state sales and use tax law, except that 5 portion of the law that implements the streamlined sales and 6 use tax agreement. The director shall provide appropriate 7 forms, or provide on the regular state tax forms, for reporting 8 water service tax liability , and for ease of administration may 9 require water service tax liability to be identified, reported, 10 and remitted to the department as sales and use tax liability, 11 provided the department has the ability to properly identify 12 such amounts as water service tax revenues upon receipt . 13 Sec. 26. Section 423G.6, subsection 2, paragraphs a, b, and 14 c, as enacted by 2018 Iowa Acts, Senate File 512, section 16, 15 are amended to read as follows: 16 a. For revenues collected reported on or after July 1, 2018, 17 but before August 1, 2019, one-twelfth of the revenues to the 18 water quality infrastructure fund created in section 8.57B, 19 and one-twelfth of the revenues to the water quality financial 20 assistance fund created in section 16.134A. 21 b. For revenues collected reported on or after August 1, 22 2019, but before August 1, 2020, one-sixth of the revenues to 23 the water quality infrastructure fund created in section 8.57B, 24 and one-sixth of the revenues to the water quality financial 25 assistance fund created in section 16.134A. 26 c. For revenues collected reported on or after August 1, 27 2020, one-half of the revenues to the water quality financial 28 assistance fund created in section 16.134A. 29 Sec. 27. IOWA ELECTION CAMPAIGN FUND TAX CHECKOFF AND 30 CONTRIBUTIONS —— CREDIT TO GENERAL FUND. Notwithstanding 31 section 68A.601 or 422.12J, or any other provision of law to 32 the contrary, any amount of contribution to the Iowa election 33 campaign fund in section 68A.602 designated on an individual 34 income tax return for any tax year and filed on or after 35 -12- S5302.5778 (1) 87 mm/jh 12/ 148

January 1, 2018, is void and shall be disregarded, and such 1 contribution amount shall be credited to the general fund and 2 not to the Iowa election campaign fund. 3 Sec. 28. EFFECTIVE DATE. The following, being deemed of 4 immediate importance, take effect upon enactment: 5 1. The section of this division of this Act relating to the 6 Iowa election campaign fund tax checkoff and contributions. 7 2. The section of this division of this Act enacting section 8 421.71. 9 Sec. 29. RETROACTIVE APPLICABILITY. The following applies 10 retroactively to January 1, 2018, for individual income tax 11 returns filed on or after that date: 12 The section of this division of this Act relating to the Iowa 13 election campaign fund tax checkoff and contributions. 14 DIVISION IV 15 TAX CREDITS 16 Sec. 30. Section 15E.52, subsection 8, Code 2018, is amended 17 to read as follows: 18 8. The board shall not certify an innovation fund after June 19 30, 2018 2023 . 20 Sec. 31. Section 403.19A, subsection 3, paragraph c, 21 subparagraph (2), Code 2018, is amended to read as follows: 22 (2) The pilot project city and the economic development 23 authority shall not enter into a withholding agreement after 24 June 30, 2018 2019 . 25 Sec. 32. Section 422.10, subsection 1, Code 2018, is amended 26 by adding the following new paragraph: 27 NEW PARAGRAPH . 0a. An individual shall only be eligible for 28 the credit provided in this section if the business conducting 29 the research meets all of the following requirements: 30 (1) (a) The business is engaged in the manufacturing, 31 life sciences, software engineering, or aviation and aerospace 32 industry. 33 (b) Persons that shall not be considered to be engaged in 34 the manufacturing, life sciences, software engineering, or 35 -13- S5302.5778 (1) 87 mm/jh 13/ 148

aviation and aerospace industry, and thus are not eligible 1 for the credit, include but are not limited to all of the 2 following: 3 (i) A person engaged in agricultural production as defined 4 in section 423.1. 5 (ii) A person who is a contractor, subcontractor, builder, 6 or a contractor-retailer that engages in commercial and 7 residential repair and installation, including but not limited 8 to heating or cooling installation and repair, plumbing and 9 pipe fitting, security system installation, and electrical 10 installation and repair. For purposes of this subparagraph 11 subdivision, “contractor-retailer” means a business that makes 12 frequent retail sales to the public or to other contractors and 13 that also engages in the performance of construction contracts. 14 (iii) A finance or investment company. 15 (iv) A retailer. 16 (v) A wholesaler. 17 (vi) A transportation company. 18 (vii) A publisher. 19 (viii) An agricultural cooperative association as defined 20 in section 502.102. 21 (ix) A real estate company. 22 (x) A collection agency. 23 (xi) An accountant. 24 (xii) An architect. 25 (2) The business claims and is allowed a research credit 26 for such qualified research expenses under section 41 of the 27 Internal Revenue Code for the same taxable year as it is 28 claiming the credit provided in this section. 29 Sec. 33. Section 422.10, subsection 3, Code 2018, is amended 30 by adding the following new paragraph: 31 NEW PARAGRAPH . 0a. For purposes of this section, “base 32 amount” means the product of the fixed-based percentage times 33 the average annual gross receipts of the taxpayer for the four 34 taxable years preceding the taxable year for which the credit 35 -14- S5302.5778 (1) 87 mm/jh 14/ 148

is being determined, but in no event shall the base amount be 1 less than fifty percent of the qualified research expenses for 2 the credit year. 3 Sec. 34. Section 422.10, subsection 3, paragraph a, Code 4 2018, is amended to read as follows: 5 a. For purposes of this section , “base amount” , “basic 6 research payment” , and “qualified research expense” mean the 7 same as defined for the federal credit for increasing research 8 activities under section 41 of the Internal Revenue Code, 9 except that for the alternative simplified credit such amounts 10 are for research conducted within this state. 11 Sec. 35. Section 422.11S, subsection 6, paragraph a, Code 12 2018, is amended to read as follows: 13 a. “Eligible student” means a student who is a member of a 14 household whose total annual income during the calendar year 15 before the student receives a tuition grant for purposes of 16 this section does not exceed an amount equal to three four 17 times the most recently published federal poverty guidelines in 18 the federal register by the United States department of health 19 and human services. 20 Sec. 36. Section 422.11S, subsection 8, paragraph a, 21 subparagraph (2), Code 2018, is amended to read as follows: 22 (2) “Total approved tax credits” means for the tax year 23 beginning in the 2006 calendar year, two million five hundred 24 thousand dollars, for the tax year beginning in the 2007 25 calendar year, five million dollars, for tax years beginning 26 on or after January 1, 2008, but before January 1, 2012, seven 27 million five hundred thousand dollars, for tax years beginning 28 on or after January 1, 2012, but before January 1, 2014, eight 29 million seven hundred fifty thousand dollars, and for tax years 30 beginning on or after January 1, 2014, but before January 1, 31 2019, twelve million dollars , and for tax years beginning on or 32 after January 1, 2019, thirteen million dollars . 33 Sec. 37. Section 422.33, subsection 5, Code 2018, is amended 34 by adding the following new paragraph: 35 -15- S5302.5778 (1) 87 mm/jh 15/ 148

NEW PARAGRAPH . 0e. A corporation shall only be 1 eligible for the credit provided in this subsection if the 2 business conducting the research meets all of the following 3 requirements: 4 (1) (a) The business is engaged in the manufacturing, 5 life sciences, software engineering, or aviation and aerospace 6 industry. 7 (b) Persons that shall not be considered to be engaged in 8 the manufacturing, life sciences, software engineering, or 9 aviation and aerospace industry, and thus are not eligible 10 for the credit, include but are not limited to all of the 11 following: 12 (i) A person engaged in agricultural production as defined 13 in section 423.1. 14 (ii) A person who is a contractor, subcontractor, builder, 15 or a contractor-retailer that engages in commercial and 16 residential repair and installation, including but not limited 17 to heating or cooling installation and repair, plumbing and 18 pipe fitting, security system installation, and electrical 19 installation and repair. For purposes of this subparagraph 20 subdivision, “contractor-retailer” means a business that makes 21 frequent retail sales to the public or to other contractors and 22 that also engages in the performance of construction contracts. 23 (iii) A finance or investment company. 24 (iv) A retailer. 25 (v) A wholesaler. 26 (vi) A transportation company. 27 (vii) A publisher. 28 (viii) An agricultural cooperative association as defined 29 in section 502.102. 30 (ix) A real estate company. 31 (x) A collection agency. 32 (xi) An accountant. 33 (xii) An architect. 34 (2) The business claims and is allowed a research credit 35 -16- S5302.5778 (1) 87 mm/jh 16/ 148

for such qualified research expenses under section 41 of the 1 Internal Revenue Code for the same taxable year as it is 2 claiming the credit provided in this subsection. 3 Sec. 38. Section 422.33, subsection 5, paragraph e, Code 4 2018, is amended by adding the following new subparagraph: 5 NEW SUBPARAGRAPH . (01) For purposes of this section, “base 6 amount” means the product of the fixed-based percentage times 7 the average annual gross receipts of the taxpayer for the four 8 taxable years preceding the taxable year for which the credit 9 is being determined, but in no event shall the base amount be 10 less than fifty percent of the qualified research expenses for 11 the credit year. 12 Sec. 39. Section 422.33, subsection 5, paragraph e, 13 subparagraph (1), Code 2018, is amended to read as follows: 14 (1) For purposes of this subsection , “base amount” , “basic 15 research payment” , and “qualified research expense” mean the 16 same as defined for the federal credit for increasing research 17 activities under section 41 of the Internal Revenue Code, 18 except that for the alternative simplified credit such amounts 19 are for research conducted within this state. 20 Sec. 40. 2019 INTERIM TAX CREDIT STUDY. 21 1. The legislative council is requested to authorize a 22 study committee to evaluate tax credits available under Iowa 23 law, including Iowa’s utilization of tax credits as a tool 24 for promoting and supporting economic growth and development. 25 The study committee shall also consider new or different 26 tax credits or incentive programs, or tax rate or structure 27 changes, that will foster economic growth and improve Iowa’s 28 overall tax and economic development climate. The study 29 committee shall make recommendations that the committee 30 believes will improve predictability for the state’s budget, 31 improve accountability to the taxpayers of Iowa, maximize 32 flexibility in utilization, and place Iowa in the best position 33 for attracting and retaining workers and businesses in the 34 future. In developing recommendations, the study committee 35 -17- S5302.5778 (1) 87 mm/jh 17/ 148

shall place significant emphasis on directing tax credits, 1 incentive programs, or tax rate or structure changes toward 2 Iowa workers and programs to strengthen Iowa’s workforce by 3 incentivizing efforts to expand Iowans’ skills and capabilities 4 in high-demand career fields. 5 2. The study committee shall consist of five members of 6 the senate, three of whom shall be appointed by the majority 7 leader of the senate and two of whom shall be appointed by 8 the minority leader of the senate, and five members of the 9 house of representatives, three of whom shall be appointed by 10 the speaker of the house of representatives and two of whom 11 shall be appointed by the minority leader of the house of 12 representatives. 13 3. The study committee shall meet during the 2019 14 legislative interim to make recommendations for consideration 15 during the 2020 legislative session in a report submitted to 16 the general assembly. 17 Sec. 41. LEGISLATIVE INTENT. It is the intent of the 18 general assembly that the provisions of this division of this 19 Act enacting section 422.10, subsection 3, paragraph “0a”, 20 amending section 422.10, subsection 3, paragraph “a”, enacting 21 section 422.33, subsection 5, paragraph e, subparagraph (01), 22 and amending section 422.33, subsection 5, paragraph “e”, 23 subparagraph (1), are conforming amendments consistent with 24 current state law, and that the amendments do not change the 25 application of current law but instead reflect current law both 26 before and after the enactment of this division of this Act. 27 Sec. 42. REPEAL. Sections 422.10A and 422.11I, Code 2018, 28 are repealed. 29 Sec. 43. EFFECTIVE DATE. The following, being deemed of 30 immediate importance, take effect upon enactment: 31 1. The section of this division of this Act amending section 32 15E.52, subsection 8. 33 2. The section of this division of this Act enacting section 34 422.10, subsection 1, paragraph “0a”. 35 -18- S5302.5778 (1) 87 mm/jh 18/ 148