House File 2563
HOUSE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO HF 2382)
(SUCCESSOR TO HSB 529)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing income, franchise, and insurance premiums tax
2 credits for equity investments in businesses that are
3 primarily engaged in the business of the production of value=
4 added agricultural products and including a retroactive
5 applicability date provision.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 15E.115 EQUITY INVESTMENT TAX
1 2 CREDIT == VALUE=ADDED AGRICULTURAL PRODUCTS.
1 3 1. An equity investor may claim an equity investment tax
1 4 credit equal to fifty percent, in the manner specified in
1 5 subsection 2, of the amount of an equity investment in a
1 6 business which primarily involves the production of value=
1 7 added agricultural products and whose principal business
1 8 operations are located in the state. The credit may be used
1 9 to reduce the tax liability imposed under chapter 422,
1 10 division II, III, or V, or chapter 432. The taxpayer shall
1 11 not be entitled to the credit unless the credit is preapproved
1 12 by the department of revenue as provided in subsection 5. The
1 13 taxpayer shall not take a credit under this section if a
1 14 credit is taken pursuant to section 15E.43 or any other
1 15 provision of the Code for the same investment.
1 16 2. The amount of the tax credit shall be claimed over five
1 17 tax years as follows:
1 18 a. One=fifth of the amount of the credit for the third tax
1 19 year following the tax year in which the equity investment is
1 20 made.
1 21 b. One=fifth of the amount of the credit for each of the
1 22 four tax years following the tax year for which the credit was
1 23 first claimed under paragraph "a".
1 24 An equity investment shall be deemed to have been made on
1 25 the same date as the date of acquisition of the equity
1 26 interest as determined under the Internal Revenue Code.
1 27 3. Any credit in excess of the taxpayer's liability for
1 28 the tax year may be credited to the tax liability for the
1 29 following five tax years or until depleted, whichever is
1 30 earlier.
1 31 4. An individual may claim an equity investment tax credit
1 32 allowed a partnership, limited liability company, S
1 33 corporation, estate, or trust electing to have the income
1 34 taxed directly to the individual. The amount claimed by the
1 35 individual shall be based upon the pro rata share of the
2 1 individual's earnings of the partnership, limited liability
2 2 company, S corporation, estate, or trust.
2 3 5. To receive the tax credit, the taxpayer shall apply for
2 4 the credit to the department of revenue within the first
2 5 thirty days following the end of the tax year in which the
2 6 equity investment was made. If the taxpayer and investment
2 7 qualify, the department shall approve the application for
2 8 credit and so notify the taxpayer within sixty days following
2 9 the fiscal year in which the application was received.
2 10 However, the department of revenue shall only grant approval
2 11 under this section for a total of five million dollars in a
2 12 fiscal year. If the qualified applications total more than
2 13 five million dollars, the department shall reduce the amount
2 14 of credit approved for each taxpayer on a pro rata basis and
2 15 shall so notify the taxpayer of the percentage of equity
2 16 investment to which the credit is equal.
2 17 Sec. 2. NEW SECTION. 422.11J EQUITY INVESTMENT TAX
2 18 CREDIT == VALUE=ADDED AGRICULTURAL PRODUCTS.
2 19 The taxes imposed under this division, less the credits
2 20 allowed under sections 422.12 and 422.12B, shall be reduced by
2 21 an equity investment tax credit authorized pursuant to section
2 22 15E.115.
2 23 Sec. 3. Section 422.33, Code Supplement 2003, is amended
2 24 by adding the following new subsection:
2 25 NEW SUBSECTION. 16. The taxes imposed under this division
2 26 shall be reduced by an equity investment tax credit authorized
2 27 pursuant to section 15E.115.
2 28 Sec. 4. Section 422.60, Code Supplement 2003, is amended
2 29 by adding the following new subsection:
2 30 NEW SUBSECTION. 8. The taxes imposed under this division
2 31 shall be reduced by an equity investment tax credit authorized
2 32 pursuant to section 15E.115.
2 33 Sec. 5. NEW SECTION. 432.12E EQUITY INVESTMENT TAX
2 34 CREDIT == VALUE=ADDED AGRICULTURAL PRODUCTS.
2 35 The taxes imposed under this chapter shall be reduced by an
3 1 equity investment tax credit authorized pursuant to section
3 2 15E.115.
3 3 Sec. 6. RETROACTIVE APPLICABILITY DATE. This Act applies
3 4 retroactively to January 1, 2004, for tax years beginning on
3 5 or after that date.
3 6 EXPLANATION
3 7 This bill provides for an individual and corporate tax
3 8 credit, a franchise tax credit, and a gross premiums tax
3 9 credit for equity investments made in a business that
3 10 primarily involves the production of value=added agricultural
3 11 products and whose principal business operations are located
3 12 in the state. The amount of the credit equals 50 percent of
3 13 the investment, which must be taken over five tax years. The
3 14 tax credit equals 10 percent for each tax year beginning with
3 15 the third tax year following the tax year in which the
3 16 investment is made. Preapproval of the credit by the
3 17 department of revenue is required. However, only $5 million
3 18 in credits are to be approved in any fiscal year. If more
3 19 than $5 million in credits are applied for, the department
3 20 shall prorate the amount of each credit. The credit is
3 21 nonrefundable, but any excess credit may be carried forward
3 22 for up to five tax years. If the taxpayer claims this credit,
3 23 the taxpayer shall not claim a credit under any other
3 24 provision of the Code for the same investment.
3 25 The bill applies retroactively to January 1, 2004, for tax
3 26 years beginning on or after that date.
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