House File 2728 - Introduced
HOUSE FILE
BY COMMITTEE ON ECONOMIC GROWTH
(SUCCESSOR TO HSB 751)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to software and technology=related incentives and
2 tax credits and including effective and retroactive
3 applicability date provisions.
4 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.361 SOFTWARE DEVELOPMENT TAX
1 2 CREDIT.
1 3 For tax years beginning on or after January 1, 2006, a tax
1 4 credit shall be allowed against the taxes imposed in chapter
1 5 422, divisions II and III, equal to twenty percent of the
1 6 total value of the software developed and used by the taxpayer
1 7 originally for internal purposes. In order to claim a tax
1 8 credit under this section, a taxpayer must receive approval
1 9 from the department that the software for which a tax credit
1 10 is claimed was developed and used by the taxpayer originally
1 11 for internal purposes. Upon approval, the department of
1 12 economic development shall notify the department of revenue
1 13 that approval has been given for the software. An individual
1 14 may claim a tax credit under this section of a partnership,
1 15 limited liability company, S corporation, estate, or trust
1 16 electing to have income taxed directly to the individual. The
1 17 amount claimed by the individual shall be based upon the pro
1 18 rata share of the individual's earnings from the partnership,
1 19 limited liability company, S corporation, estate, or trust.
1 20 Any tax credit in excess of the taxpayer's tax liability for
1 21 the tax year may be credited to the tax liability for the
1 22 following five years or until depleted, whichever occurs
1 23 first. A tax credit shall not be carried back to a tax year
1 24 prior to the tax year in which the taxpayer claims the tax
1 25 credit. The aggregate amount of tax credits authorized
1 26 pursuant to this section shall not exceed a total of two
1 27 million dollars each fiscal year. The department of economic
1 28 development, in cooperation with the department of revenue,
1 29 shall develop a system for registration and authorization of
1 30 tax credits under this section.
1 31 Sec. 2. NEW SECTION. 15E.362 ENTREPRENEURIAL GRANT
1 32 PROGRAM == FUND.
1 33 1. The department shall establish and administer an
1 34 entrepreneurial grant program for purposes of encouraging
1 35 start=up companies in the areas of information technology
2 1 designated by the department through the awarding of grants
2 2 from moneys in the entrepreneurial grant fund created in
2 3 subsection 2. In awarding grants under the program, the
2 4 department shall consult with a statewide member=based
2 5 association focusing on the technology industry. A grant
2 6 under the program shall not exceed twenty=five thousand
2 7 dollars per start=up business. Each fiscal year, the
2 8 department shall not award an aggregate amount of more than
2 9 two hundred fifty thousand dollars under the program. In
2 10 order to be eligible to receive a grant under the program, an
2 11 applicant must meet all of the following criteria:
2 12 a. The resulting business must be an Iowa business and the
2 13 applicant must be a resident of this state.
2 14 b. The applicant must have successfully completed a
2 15 recognized entrepreneurial venture development curriculum.
2 16 2. An entrepreneurial grant fund is created in the state
2 17 treasury under the control of the department and consisting of
2 18 any moneys appropriated by the general assembly and any other
2 19 moneys available to and obtained or accepted by the department
2 20 for placement in the fund. Payments of interest and
2 21 recaptures of grants shall be deposited in the fund. The fund
2 22 shall be used to provide grants under the entrepreneurial
2 23 grant program established in subsection 1. Moneys in the fund
2 24 are not subject to section 8.33. Notwithstanding section
2 25 12C.7, interest or earnings on moneys in the fund shall be
2 26 credited to the fund.
2 27 Sec. 3. NEW SECTION. 422.11M SOFTWARE DEVELOPMENT TAX
2 28 CREDIT.
2 29 The taxes imposed under this division, less the credits
2 30 allowed under sections 422.12 and 422.12B, shall be reduced by
2 31 a software development tax credit authorized pursuant to
2 32 section 15E.361.
2 33 Sec. 4. Section 422.33, Code Supplement 2005, is amended
2 34 by adding the following new subsection:
2 35 NEW SUBSECTION. 20. The taxes imposed under this division
3 1 shall be reduced by a software development tax credit
3 2 authorized pursuant to section 15E.361.
3 3 Sec. 5. EFFECTIVE AND RETROACTIVE APPLICABILITY DATES.
3 4 This Act, being deemed of immediate importance, takes effect
3 5 upon enactment and applies retroactively to January 1, 2006,
3 6 for tax years beginning on or after January 1, 2006.
3 7 EXPLANATION
3 8 This bill relates to software and technology=related
3 9 incentives and tax credits.
3 10 The bill allows a taxpayer to claim a tax credit equal to
3 11 20 percent of the total value of the software developed and
3 12 used by the taxpayer originally for internal purposes. The
3 13 tax credit is allowed against personal and corporate income
3 14 tax liabilities. The bill provides that, in order to claim
3 15 the tax credit, a taxpayer must receive approval from the
3 16 department of economic development that the software for which
3 17 a tax credit is claimed was developed and used by the taxpayer
3 18 originally for internal purposes. The bill provides that any
3 19 tax credit in excess of the taxpayer's tax liability for a tax
3 20 year may be credited to the tax liability for the following
3 21 five years or until depleted, whichever occurs first. The
3 22 bill provides that a tax credit shall not be carried back to a
3 23 tax year prior to the tax year in which the taxpayer claims
3 24 the tax credit. The bill limits the aggregate amount of tax
3 25 credits that may be authorized to not more than $2 million per
3 26 fiscal year.
3 27 The bill requires the department to establish and
3 28 administer an entrepreneurial grant program for purposes of
3 29 encouraging start=up companies in the areas of information
3 30 technology designated by the department through the awarding
3 31 of grants from moneys in the entrepreneurial grant fund. The
3 32 bill provides that a grant under the program shall not exceed
3 33 $25,000 per start=up business. The bill provides that the
3 34 department shall not award an aggregate amount of more than
3 35 $250,000. The bill provides that, in order to be eligible to
4 1 receive a grant under the program, the resulting business must
4 2 be an Iowa business and the applicant must be a resident of
4 3 the state and must have successfully completed a recognized
4 4 entrepreneurial venture development curriculum. The bill
4 5 creates an entrepreneurial grant fund in the state treasury
4 6 under the control of the department to be used for purposes of
4 7 the entrepreneurial grant program.
4 8 The bill takes effect upon enactment and applies
4 9 retroactively to January 1, 2006, for tax years beginning on
4 10 or after January 1, 2006.
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