Senate File 2405 - Enrolled PAG LIN 1 1 SENATE FILE 2405 1 2 1 3 AN ACT 1 4 RELATING TO RENEWABLE ENERGY, PROVIDING FOR STATE BANK ACQUISI= 1 5 TION OF EQUITY INTERESTS IN WIND ENERGY PRODUCTION FACILITIES, 1 6 PROVIDING FOR QUALIFICATION FOR SPECIFIED TAX CREDITS AND 1 7 REFUNDS BY STATE BANKS AND BY OWNERS OR MANUFACTURING FACILI= 1 8 TIES GENERATING WIND ENERGY FOR ON=SITE CONSUMPTION RATHER 1 9 THAN SALE, PROVIDING FOR THE ESTABLISHMENT OR PARTICIPATION 1 10 IN A PROGRAM TO TRACK, RECORD, OR VERIFY THE TRADING OF 1 11 CREDITS FOR ELECTRICITY GENERATED FROM SPECIFIED SOURCES, 1 12 AND PROVIDING EFFECTIVE AND RETROACTIVE APPLICABILITY DATES. 1 13 1 14 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 15 1 16 DIVISION I 1 17 BANK WIND ENERGY INVESTMENT 1 18 Section 1. Section 524.802, Code 2007, is amended by 1 19 adding the following new subsection: 1 20 NEW SUBSECTION. 13A. Provide customer financing for wind 1 21 energy production facilities eligible for production tax 1 22 credits pursuant to chapter 476B in a manner that maximizes 1 23 the availability of production tax credits to the state bank, 1 24 including structuring such financing as a membership 1 25 investment whereby the state bank as equity investor may take 1 26 a majority financial position, but not a management position, 1 27 in each such facility, subject to the following: 1 28 a. Prior to providing financing, a creditworthiness review 1 29 shall be conducted pursuant to the state bank's standard loan 1 30 underwriting criteria. 1 31 b. The state bank shall not participate in the operation 1 32 of the facility, the production of wind energy, or the sale of 1 33 wind energy if such sale is contemplated by the customer. 1 34 c. If the facility does not perform as projected in the 1 35 equity investment agreement, the state bank may either sell 2 1 its interest in the facility or pursue liquidation. 2 2 d. The state bank shall not share in any appreciation in 2 3 value of its interest in the facility or in any of the 2 4 customer's real or personal assets. 2 5 e. At the end of any applicable holding period, the state 2 6 bank shall sell at book value its ownership interest in the 2 7 facility. 2 8 DIVISION II 2 9 WIND ENERGY PRODUCTION TAX CREDITS AND REFUNDS 2 10 Sec. 2. Section 423.4, subsection 4, Code Supplement 2007, 2 11 is amended to read as follows: 2 12 4. A person in possession of a wind energy production tax 2 13 credit certificate pursuant to chapter 476B or a renewable 2 14 energy tax credit certificate issued pursuant to chapter 476C 2 15 may apply to the director for refund of the amount of sales or 2 16 use tax imposed and paid upon purchases made by the applicant. 2 17 a. The refunds may be obtained only in the following 2 18 manner and under the following conditions: 2 19 (1) On forms furnished by the department and filed by 2 20 January 31 after the end of the calendar year in which the tax 2 21 credit certificate is to be applied, the applicant shall 2 22 report to the department the total amount of sales and use tax 2 23 paid during the reporting period on purchases made by the 2 24 applicant. 2 25 (2) The applicant shall separately list the amounts of 2 26 sales and use tax paid during the reporting period. 2 27 (3) If required by the department, the applicant shall 2 28 prove that the person making the sales has included the amount 2 29 thereof in the computation of the sales price of such person 2 30 and that such person has paid the tax levied by this 2 31 subchapter or subchapter III, based upon such computation of 2 32 the sales price. 2 33 (4) The applicant shall provide the tax credit 2 34 certificates issued pursuant to chapter 476B or 476C to the 2 35 department with the forms required by this paragraph "a". 3 1 b. If satisfied that the foregoing conditions and 3 2 requirements have been complied with, the director shall 3 3 refund the amount claimed by the applicant for an amount not 3 4 greater than the amount of tax credits issued in tax credit 3 5 certificates pursuant to chapter 476B or 476C. 3 6 Sec. 3. Section 437A.17B, Code 2007, is amended to read as 3 7 follows: 3 8 437A.17B REIMBURSEMENT FOR RENEWABLE ENERGY. 3 9 A person in possession of a wind energy tax credit 3 10 certificate issued pursuant to chapter 476B or a renewable 3 11 energy tax credit certificate issued pursuant to chapter 476C 3 12 may apply to the director for a reimbursement of the amount of 3 13 taxes imposed and paid by the person pursuant to this chapter 3 14 in an amount not more than the person received in wind energy 3 15 tax credit certificates pursuant to chapter 476B or renewable 3 16 energy tax credit certificates pursuant to chapter 476C. To 3 17 obtain the reimbursement, the person shall attach to the 3 18 return required under section 437A.8 the wind energy tax 3 19 credit certificates issued to the person pursuant to chapter 3 20 476B, or the renewable energy tax credit certificates issued 3 21 to the person pursuant to chapter 476C, and provide any other 3 22 information the director may require. The director shall 3 23 direct a warrant to be issued to the person for an amount 3 24 equal to the tax imposed and paid by the person pursuant to 3 25 this chapter but for not more than the amount of the wind 3 26 energy tax credit certificates or renewable energy tax credit 3 27 certificates attached to the return. 3 28 Sec. 4. Section 476B.1, subsection 4, paragraph c, Code 3 29 2007, is amended to read as follows: 3 30 c. Was originally placed in service on or after July 1, 3 31 2005, but before July 1,20092012. 3 32 Sec. 5. Section 476B.1, subsection 4, Code 2007, is 3 33 amended by adding the following new paragraph: 3 34 NEW PARAGRAPH. d. For applications filed on or after 3 35 March 1, 2008, consists of one or more wind turbines connected 4 1 to a common gathering line which have a combined nameplate 4 2 capacity of no less than two megawatts. 4 3 Sec. 6. Section 476B.2, Code 2007, is amended to read as 4 4 follows: 4 5 476B.2 GENERAL RULE. 4 6 The owner of a qualified facility shall, for each 4 7 kilowatt=hour of qualified electricity that the owner sells or 4 8 uses for on=site consumption during the ten=year period 4 9 beginning on the date the qualified facility was originally 4 10 placed in service, be allowed a wind energy production tax 4 11 credit to the extent provided in this chapter against the tax 4 12 imposed in chapter 422, divisions II, III, and V, and chapter 4 13 432, and may claim a refund of tax imposed by chapter 423 or 4 14 437A for any tax year within the time period set forth in 4 15 section 423.47 or 437A.14. 4 16 Sec. 7. Section 476B.3, Code 2007, is amended to read as 4 17 follows: 4 18 476B.3 CREDIT AMOUNT. 4 19 The wind energy production tax credit allowed under this 4 20 chapter equals the product of one cent multiplied by the 4 21 number of kilowatt=hours of qualified electricity sold or used 4 22 for on=site consumption by the owner during the taxable year. 4 23 Sec. 8. Section 476B.5, subsection 1, paragraph e, Code 4 24 2007, is amended to read as follows: 4 25 e.AExcept when electricity is used for on=site 4 26 consumption, a copy of an executed power purchase agreement or 4 27 other agreement to purchase electricity upon completion of the 4 28 project. An executed interconnection agreement or 4 29 transmission service agreement shall be accepted by the board 4 30 under this paragraph if the owner of the facility has agreed 4 31 to sell electricity from the facility directly or indirectly 4 32 to a wholesale power pool market. 4 33 Sec. 9. Section 476B.6, subsection 2, Code 2007, is 4 34 amended by adding the following new paragraph: 4 35 NEW PARAGRAPH. f. For a facility in which electricity is 5 1 used for on=site consumption, the requirements of paragraphs 5 2 "c" and "d" shall not be applicable. For such facilities, the 5 3 owner must submit a certification under penalty of perjury 5 4 that the claimed amount of electricity was generated by the 5 5 qualified facility and consumed by the owner. 5 6 Sec. 10. Section 476B.6, subsection 3, Code 2007, is 5 7 amended to read as follows: 5 8 3. The board shall notify the department of the amount of 5 9 kilowatt=hours generated and purchased from a qualified 5 10 facility or generated and used on=site by a qualified 5 11 facility. The department shall calculate the amount of the 5 12 tax credit for which the applicant is eligible and shall issue 5 13 the tax credit certificate for that amount or notify the 5 14 applicant in writing of its refusal to do so. An applicant 5 15 whose application is denied may file an appeal with the 5 16 department within sixty days from the date of the denial 5 17 pursuant to the provisions of chapter 17A. 5 18 Sec. 11. Section 476B.6, subsection 5, paragraph d, Code 5 19 2007, is amended to read as follows: 5 20 d. If the tax credit application is filed by a 5 21 partnership, limited liability company, S corporation, estate, 5 22 trust, or other reporting entity, all of whose income is taxed 5 23 directly to its equity holders or beneficiaries for the taxes 5 24 imposed under chapter 422, division V, or under chapter 423, 5 25 432, or 437A, the tax credit certificate shall be issued 5 26 directly to the partnership, limited liability company, S 5 27 corporation, estate, trust, or other reporting entity. 5 28 Sec. 12. Section 476B.7, Code 2007, is amended to read as 5 29 follows: 5 30 476B.7 TRANSFER OF TAX CREDIT CERTIFICATES. 5 31 Wind energy production tax credit certificates issued under 5 32 this chapter may be transferred to any person or entity. 5 33 Within thirty days of transfer, the transferee must submit the 5 34 transferred tax credit certificate to the department along 5 35 with a statement containing the transferee's name, tax 6 1 identification number, and address, and the denomination that 6 2 each replacement tax credit certificate is to carry and any 6 3 other information required by the department. Within thirty 6 4 days of receiving the transferred tax credit certificate and 6 5 the transferee's statement, the department shall issue one or 6 6 more replacement tax credit certificates to the transferee. 6 7 Each replacement certificate must contain the information 6 8 required under section 476B.6 and must have the same effective 6 9 taxable year and the same expiration date that appeared in the 6 10 transferred tax credit certificate. Tax credit certificate 6 11 amounts of less than the minimum amount established by rule of 6 12 the board shall not be transferable. A tax credit shall not 6 13 be claimed by a transferee under this chapter until a 6 14 replacement tax credit certificate identifying the transferee 6 15 as the proper holder has been issued. A replacement tax 6 16 credit certificate may reflect a different type of tax than 6 17 the type of tax noted on the original tax credit certificate. 6 18 The tax credit shallonly be transferred oncebe freely 6 19 transferable. The transferee may use the amount of the tax 6 20 credit transferred against the taxes imposed under chapter 6 21 422, divisions II, III, and V, and chapter 432 for any tax 6 22 year the original transferor could have claimed the tax 6 23 credit. The transferee may claim a refund under chapter 423 6 24 or 437A for any tax year within the time period set forth in 6 25 section 423.47 or 437A.14 for which the original transferor 6 26 could have claimed a refund. Any consideration received for 6 27 the transfer of the tax credit shall not be included as income 6 28 under chapter 422, divisions II, III, and V. Any 6 29 consideration paid for the transfer of the tax credit shall 6 30 not be deducted from income under chapter 422, divisions II, 6 31 III, and V. 6 32 Sec. 13. Section 476B.8, Code 2007, is amended to read as 6 33 follows: 6 34 476B.8 USE OF TAX CREDIT CERTIFICATES. 6 35 To claim a wind energy production tax credit under this 7 1 chapter, a taxpayer must attach one or more tax credit 7 2 certificates to the taxpayer's tax return, or if used against 7 3 taxes imposed under chapter 423, the taxpayer shall comply 7 4 with section 423.4, subsection 4, or if used against taxes 7 5 imposed under chapter 437A, the taxpayer shall comply with 7 6 section 437A.17B. A tax credit certificate shall not be used 7 7 or attached to a return filed for a taxable year beginning 7 8 prior to July 1, 2006. The tax credit certificate or 7 9 certificates attached to the taxpayer's tax return shall be 7 10 issued in the taxpayer's name, expire on or after the last day 7 11 of the taxable year for which the taxpayer is claiming the tax 7 12 credit, and show a tax credit amount equal to or greater than 7 13 the tax credit claimed on the taxpayer's tax return. Any tax 7 14 credit in excess of the taxpayer's tax liability for the 7 15 taxable year may be credited to the taxpayer's tax liability 7 16 for the following seven taxable years or until depleted, 7 17 whichever is the earlier. If the tax credit is applied 7 18 against the taxes imposed under chapter 423 or 437A, any 7 19 credit in excess of the taxpayer's tax liability is carried 7 20 over and can be filed with the refund claim for the following 7 21 seven tax years or until depleted, whichever is earlier. 7 22 However, the certificate shall not be used to reduce tax 7 23 liability for a tax period ending after the expiration date of 7 24 the certificate. 7 25 DIVISION III 7 26 MISCELLANEOUS 7 27 Sec. 14. NEW SECTION. 476.44A TRADING OF CREDITS. 7 28 The board may establish or participate in a program to 7 29 track, record, and verify the trading of credits or attributes 7 30 relating to electricity generated from alternate energy 7 31 production facilities or renewable energy sources among 7 32 electric generators, utilities, and other interested entities, 7 33 within this state and with similar entities in other states. 7 34 Sec. 15. EFFECTIVE AND APPLICABILITY DATES. This Act, 7 35 being deemed of immediate importance, takes effect upon 8 1 enactment and is retroactively applicable to taxable years 8 2 beginning on or after January 1, 2008, for tax credits issued 8 3 pursuant to this Act. 8 4 8 5 8 6 8 7 JOHN P. KIBBIE 8 8 President of the Senate 8 9 8 10 8 11 8 12 PATRICK J. MURPHY 8 13 Speaker of the House 8 14 8 15 I hereby certify that this bill originated in the Senate and 8 16 is known as Senate File 2405, Eighty=second General Assembly. 8 17 8 18 8 19 8 20 MICHAEL E. MARSHALL 8 21 Secretary of the Senate 8 22 Approved , 2008 8 23 8 24 8 25 8 26 CHESTER J. CULVER 8 27 Governor