Senate File 426
SENATE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO SF 268)
(SUCCESSOR TO SSB 1066)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to tax credits and associated refunds for
2 cooperatives engaged in the production of value=added
3 agricultural products, and providing for its applicability.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 15.333, subsection 1, unnumbered
1 2 paragraph 1, Code 2003, is amended to read as follows:
1 3 An eligible business may claim a corporate tax credit up to
1 4 a maximum of ten percent of the new investment which is
1 5 directly related to new jobs created by the location or
1 6 expansion of an eligible business under the program. Any
1 7 credit in excess of the tax liability for the tax year may be
1 8 credited to the tax liability for the following seven years or
1 9 until depleted, whichever occurs earlier. Subject to prior
1 10 approval by the department of economic development in
1 11 consultation with the department of revenue and finance, an
1 12 eligible business whose project primarily involves the
1 13 production of value=added agricultural products may elect to
1 14 receive a refund of all or a portion of an unused tax credit.
1 15 For purposes of this section, an eligible business includes a
1 16 cooperative described in section 521 of the Internal Revenue
1 17 Code which is not required to file an Iowa corporate income
1 18 tax return, and whose project primarily involves the
1 19 production of ethanol. The refund may be used against a tax
1 20 liability imposed under chapter 422, division II, III, or V.
1 21 If the business is a partnership, S corporation, limited
1 22 liability company, cooperative organized under chapter 501 and
1 23 filing as a partnership for federal tax purposes, or estate or
1 24 trust electing to have the income taxed directly to the
1 25 individual, an individual may claim the tax credit allowed.
1 26 The amount claimed by the individual shall be based upon the
1 27 pro rata share of the individual's earnings of the
1 28 partnership, S corporation, limited liability company,
1 29 cooperative organized under chapter 501 and filing as a
1 30 partnership for federal tax purposes, or estate or trust.
1 31 Sec. 2. Section 15.333, subsection 2, Code 2003, is
1 32 amended to read as follows:
1 33 2. An eligible business whose project primarily involves
1 34 the production of value=added agricultural products, that
1 35 elects to receive a refund of all or a portion of an unused
2 1 tax credit, shall apply to the department of economic
2 2 development for tax credit certificates. An eligible business
2 3 whose project primarily involves the production of value=added
2 4 agricultural products shall not claim a tax credit under this
2 5 section unless a tax credit certificate issued by the
2 6 department of economic development is attached to the
2 7 taxpayer's tax return for the tax year for which the tax
2 8 credit is claimed. For purposes of this section, an eligible
2 9 business includes a cooperative described in section 521 of
2 10 the Internal Revenue Code which is not required to file an
2 11 Iowa corporate income tax return, and whose project primarily
2 12 involves the production of ethanol. For purposes of this
2 13 section, an eligible business also includes a cooperative
2 14 described in section 521 of the Internal Revenue Code which is
2 15 required to file an Iowa corporate income tax return and whose
2 16 project primarily involves the production of ethanol. The
2 17 department shall not issue tax credit certificates to eligible
2 18 businesses until the department has received all applications
2 19 for the issuance of the tax credit certificates for a
2 20 succeeding fiscal year on a date established by departmental
2 21 rule. The department shall not approve an application from a
2 22 cooperative whose project does not primarily involve the
2 23 production of ethanol if all of the following apply:
2 24 a. The department receives an application from a
2 25 cooperative whose project involves the production of ethanol
2 26 which receives a tax credit certificate.
2 27 b. The department issues tax credit certificates totaling
2 28 more than four million dollars to all eligible businesses,
2 29 other than cooperatives whose projects do not primarily
2 30 involve the production of ethanol, for that fiscal year.
2 31 Such cooperative may elect to transfer all or a portion of
2 32 its tax credit to its members. The amount of tax credit
2 33 transferred and claimed by a member shall be based upon the
2 34 pro rata share of the member's earnings of the cooperative.
2 35 A tax credit certificate shall not be valid until the tax
3 1 year following the date of the project completion. A tax
3 2 credit certificate shall contain the taxpayer's name, address,
3 3 tax identification number, the date of project completion, the
3 4 amount of the tax credit, and other information required by
3 5 the department of revenue and finance. The department of
3 6 economic development shall not issue tax credit certificates
3 7 which total more than four million dollars during a fiscal
3 8 year. If the department receives applications for tax credit
3 9 certificates in excess of four million dollars, the applicants
3 10 shall receive certificates for a prorated amount. The tax
3 11 credit certificates shall not be transferred except as
3 12 provided in this subsection for a cooperative described in
3 13 section 521 of the Internal Revenue Code which is required to
3 14 file an Iowa corporate income tax return and whose project
3 15 primarily involves the production of ethanol. For a
3 16 cooperative described in section 521 of the Internal Revenue
3 17 Code, the department of economic development shall require
3 18 that the cooperative submit a list of its members and the
3 19 share of each member's interest in the cooperative. The
3 20 department shall issue a tax credit certificate to each member
3 21 contained on the submitted list.
3 22 Sec. 3. APPLICABILITY DATE. This Act applies to tax years
3 23 beginning on or after July 1, 2003.
3 24 EXPLANATION
3 25 This bill eliminates a requirement that a cooperative must
3 26 be engaged in ethanol production to be eligible to claim a
3 27 special tax credit or refund available to an eligible business
3 28 involved in the production of value=added agricultural
3 29 products. A tax credit is available after the department of
3 30 economic development issues a certificate after approving an
3 31 application as an eligible business.
3 32 The bill provides that a preference is given to
3 33 applications submitted by cooperatives whose projects involve
3 34 the production of ethanol over applications by cooperatives
3 35 whose projects do not involve the production of ethanol.
4 1 The bill amends provisions in Code section 15.333, which
4 2 provides that an eligible business may claim a tax credit of
4 3 up to 10 percent of a new investment that involves the
4 4 creation of new jobs. The Code section provides that an
4 5 eligible business involved in the production of value=added
4 6 agricultural products may elect to receive a refund of all or
4 7 a portion of the unused tax credit. The business must receive
4 8 a certificate issued by the department of economic development
4 9 in order to receive the tax credit or refund. The provision
4 10 allowing a cooperative to claim a tax credit or refund was
4 11 enacted during the 2001 Session in House File 716 (2001 Acts,
4 12 chapter 123).
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