House File 399
HOUSE FILE
BY COMMITTEE ON ECONOMIC
GROWTH
(SUCCESSOR TO HSB 58)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the new jobs and income program and providing
2 a tax credit.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 15.330, Code 2003, is amended to read
1 2 as follows:
1 3 15.330 AGREEMENT == NONCOMPLIANCE == PENALTIES.
1 4 1. A business or group of businesses shall enter into an
1 5 agreement with the department specifying the requirements
1 6 which must be met to satisfy the criteria of section 15.329.
1 7 The department shall consult with the community during
1 8 negotiations relating to the agreement. The agreement shall
1 9 contain the following provisions:
1 10 1. a. If the business or group of businesses has not met
1 11 more than ninety percent of the job creation requirement in
1 12 section 15.329, subsection 1, paragraph "f", it shall pay a
1 13 percentage of the incentive received under section 15.334, or
1 14 if the business or group of businesses does not receive the
1 15 incentive under section 15.334, then under section 15.333 as
1 16 follows:
1 17 a. (1) If the business or group of businesses has met
1 18 fifty percent or less of the requirement, the business or
1 19 group of businesses shall pay the same percentage in benefits
1 20 as the business or group of businesses failed to create in
1 21 jobs.
1 22 b. (2) If the business or group of businesses has met more
1 23 than fifty percent but not more than seventy=five percent of
1 24 the requirement, the business or group of businesses shall pay
1 25 one=half of the percentage in benefits as the business or
1 26 group of businesses failed to create in jobs.
1 27 c. (3) If the business or group of businesses has met more
1 28 than seventy=five percent but not more than ninety percent of
1 29 the requirement, the business or group of businesses shall pay
1 30 one quarter of the percentage in benefits as the business or
1 31 group of businesses failed to create in jobs.
1 32 2. b. If a business or group of businesses does not meet
1 33 the wage requirement of section 15.329, subsection 1, or any
1 34 of the three criteria selected by the business or group of
1 35 businesses under section 15.329, subsection 2, in any one
2 1 year, it must meet that requirement in the following year or
2 2 forfeit the incentives for that year.
2 3 c. If a business or group of businesses approved to
2 4 receive incentives under this part experiences a layoff within
2 5 the state or closes any of its facilities within the state
2 6 prior to receiving the incentives, the department may reduce
2 7 or eliminate some or all of the incentives. If a business or
2 8 group of businesses receives incentives under this part and
2 9 experiences a layoff within the state or closes any of its
2 10 facilities within the state, the business or group of
2 11 businesses may be subject to repayment of some or all of the
2 12 incentives received by the business or group of businesses.
2 13 2. The department shall adopt rules for repayment of
2 14 incentives by the business or group of businesses if the
2 15 business or group of businesses has not met any of the
2 16 requirements of this part.
2 17 Sec. 2. NEW SECTION. 15.333B FRANCHISE TAX CREDITS.
2 18 1. An eligible business may claim a franchise tax credit
2 19 up to a maximum of ten percent of the new investment directly
2 20 related to new jobs created by the location or expansion of an
2 21 eligible business under the program. Any credit in excess of
2 22 the tax liability for the tax year may be credited to the tax
2 23 liability for the following seven years or until depleted,
2 24 whichever occurs earlier.
2 25 For purposes of this section, "new investment directly
2 26 related to new jobs created by the location or expansion of an
2 27 eligible business under the program" means the cost of
2 28 machinery and equipment, as described in section 427A.1,
2 29 subsection 1, paragraphs "e" and "j", purchased for use in the
2 30 operation of the eligible business, the purchase price of
2 31 which has been depreciated in accordance with generally
2 32 accepted accounting principles, and the cost of improvements
2 33 made to real property which is used in the operation of the
2 34 eligible business.
2 35 For purposes of this section, the purchase price of real
3 1 property and any buildings and structures located on the real
3 2 property is considered a "new investment in the location or
3 3 expansion of an eligible business". However, if within five
3 4 years of purchase, the eligible business sells, disposes of,
3 5 razes, or otherwise renders unusable all or a part of the
3 6 land, buildings, or other existing structures for which a
3 7 franchise tax credit was claimed under this section, the
3 8 franchise tax liability of the eligible business for the year
3 9 in which all or part of the property is sold, disposed of,
3 10 razed, or otherwise rendered unusable shall be increased by
3 11 one of the following amounts:
3 12 a. One hundred percent of the tax credit claimed under
3 13 this section if the property ceases to be eligible for the tax
3 14 credit within one year after being placed in service.
3 15 b. Eighty percent of the tax credit claimed under this
3 16 section if the property ceases to be eligible for the tax
3 17 credit within two years after being placed in service.
3 18 c. Sixty percent of the tax credit claimed under this
3 19 section if the property ceases to be eligible for the tax
3 20 credit within three years after being placed in service.
3 21 d. Forty percent of the tax credit claimed under this
3 22 section if the property ceases to be eligible for the tax
3 23 credit within four years after being placed in service.
3 24 e. Twenty percent of the tax credit claimed under this
3 25 section if the property ceases to be eligible for the tax
3 26 credit within five years after being placed in service.
3 27 2. An eligible business which has entered into an
3 28 agreement under chapter 260E and which has increased its base
3 29 employment level by at least ten percent within the time set
3 30 in the agreement or, in the case of a business without a base
3 31 employment level, adds new jobs within the time set in the
3 32 agreement is entitled to a new jobs franchise tax credit for
3 33 the tax year selected by the business. In determining if the
3 34 business has increased its base employment level by ten
3 35 percent or added new jobs, only the new jobs directly
4 1 resulting from the project covered by the agreement and the
4 2 new jobs directly related to those new jobs shall be counted.
4 3 The amount of the credit is equal to the product of six
4 4 percent of the taxable wages upon which an employer is
4 5 required to contribute to the state unemployment compensation
4 6 fund, as defined in section 96.19, subsection 37, times the
4 7 number of new jobs existing in the tax year that directly
4 8 result from the project covered by the agreement or new jobs
4 9 that directly result from those new jobs. The tax year chosen
4 10 by the business shall either begin or end during the period
4 11 beginning with the date by which the project is to be
4 12 completed under the agreement. Any credit in excess of the
4 13 tax liability for the tax year may be credited to the tax
4 14 liability for the following seven years or until depleted,
4 15 whichever occurs earlier. For purposes of this subsection,
4 16 "agreement", "new job", and "project" mean the same as defined
4 17 in section 260E.2 and "base employment level" means the number
4 18 of full=time jobs a business employs at the site which is
4 19 covered by an agreement under chapter 260E on the date of that
4 20 agreement.
4 21 Sec. 3. Section 422.60, Code 2003, is amended by adding
4 22 the following new subsection:
4 23 NEW SUBSECTION. 7. The taxes imposed under this division
4 24 shall be reduced by a franchise tax credit authorized pursuant
4 25 to section 15.333B.
4 26 Sec. 4. Section 427B.17, subsection 5, unnumbered
4 27 paragraph 2, Code 2003, is amended to read as follows:
4 28 Any electric power generating plant which operated during
4 29 the preceding assessment year at a net capacity factor of more
4 30 than twenty percent, shall not receive the benefits of this
4 31 section or of sections section 15.332 and 15.334. For
4 32 purposes of this section, "electric power generating plant"
4 33 means any nameplate rated electric power generating plant, in
4 34 which electric energy is produced from other forms of energy,
4 35 including all taxable land, buildings, and equipment used in
5 1 the production of such energy. "Net capacity factor" means
5 2 net actual generation divided by the product of net maximum
5 3 capacity times the number of hours the unit was in the active
5 4 state during the assessment year. Upon commissioning, a unit
5 5 is in the active state until it is decommissioned. "Net
5 6 actual generation" means net electrical megawatt hours
5 7 produced by the unit during the preceding assessment year.
5 8 "Net maximum capacity" means the capacity the unit can sustain
5 9 over a specified period when not restricted by ambient
5 10 conditions or equipment deratings, minus the losses associated
5 11 with station service or auxiliary loads.
5 12 Sec. 5. Sections 15.334 and 15.334A, Code 2003, are
5 13 repealed.
5 14 EXPLANATION
5 15 This bill makes statutory changes to the new jobs and
5 16 income program administered by the department of economic
5 17 development.
5 18 The bill adds a requirement to be included in new jobs and
5 19 income program agreements. The bill provides that agreements
5 20 shall include a provision that if a business or group of
5 21 businesses is approved to receive or actually receives
5 22 incentives under the program and the business or group of
5 23 businesses experiences a layoff within the state or closes any
5 24 of its facilities within the state, the department may reduce
5 25 or eliminate incentives that have not yet been received or may
5 26 require repayment of some or all of the incentives received.
5 27 The bill allows an eligible business under the program to
5 28 claim a tax credit of up to 10 percent of the new investment
5 29 directly related to new jobs created by the location or
5 30 expansion of an eligible business under the program. The bill
5 31 provides that new investment directly related to new jobs
5 32 means the cost of machinery and equipment purchased for use in
5 33 the operation of the eligible business. The eligible business
5 34 may claim the tax credit against franchise tax liability for
5 35 financial institutions. The bill allows the tax credit to be
6 1 carried forward for a period of seven years or until depleted,
6 2 whichever occurs first. The bill allows the purchase price of
6 3 real property and any buildings and structures located on the
6 4 real property to be considered new investment in the location
6 5 or expansion of an eligible business, unless, within five
6 6 years of purchase, the eligible business sells, disposes of,
6 7 razes, or otherwise renders unusable the real property, in
6 8 which case the franchise tax liability is increased by a
6 9 certain percentage of the tax credit claimed. The bill allows
6 10 an eligible business which has entered into an agreement under
6 11 Code chapter 260E and which has increased its base employment
6 12 level by at least 10 percent within the time set in the
6 13 agreement or, in the case of a business without a base
6 14 employment level, adds new jobs within the time set in the
6 15 agreement to claim a new jobs franchise tax credit for a tax
6 16 year selected by the business.
6 17 The bill repeals two provisions in the new jobs and income
6 18 program relating to a property tax exemption and a sales and
6 19 use tax exemption for machinery, equipment, and computers.
6 20 The bill makes conforming amendments to the repeals.
6 21 LSB 1263HV 80
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