House File 2762 - Introduced
HOUSE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO HF 2685)
(SUCCESSOR TO HSB 699)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to state tax benefits for use of soy=based
2 transformer fluid by electric utilities and including
3 effective and applicability date provisions.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 6456HZ 81
6 mg/gg/14
PAG LIN
1 1 Section 1. NEW SECTION. 422.11M SOY=BASED TRANSFORMER
1 2 FLUID TAX CREDIT.
1 3 The taxes imposed under this division, less the credits
1 4 allowed under sections 422.12 and 422.12B, shall be reduced by
1 5 a soy=based transformer fluid tax credit allowed under chapter
1 6 476D.
1 7 This section is repealed December 31, 2008.
1 8 Sec. 2. Section 422.33, Code Supplement 2005, is amended
1 9 by adding the following new subsection:
1 10 NEW SUBSECTION. 20. The taxes imposed under this division
1 11 shall be reduced by a soy=based transformer fluid tax credit
1 12 allowed under chapter 476D.
1 13 This subsection is repealed December 31, 2008.
1 14 Sec. 3. Section 423.4, Code Supplement 2005, is amended by
1 15 adding the following new subsection:
1 16 NEW SUBSECTION. 6. A person in possession of a soy=based
1 17 transformer fluid tax credit certificate issued pursuant to
1 18 chapter 476D may apply to the director for refund of the
1 19 amount of sales or use tax imposed and paid upon purchases
1 20 made by the applicant.
1 21 a. The refunds may be obtained only in the following
1 22 manner and under the following conditions:
1 23 (1) On forms furnished by the department and filed by
1 24 January 31 after the end of the calendar year in which the tax
1 25 credit certificate is to be applied, the applicant shall
1 26 report to the department the total amount of sales and use tax
1 27 paid during the reporting period on purchases made by the
1 28 applicant.
1 29 (2) The applicant shall separately list the amounts of
1 30 sales and use tax paid during the reporting period.
1 31 (3) If required by the department, the applicant shall
1 32 prove that the person making the sale has included the amount
1 33 thereof in the computation of the sales price of such person
1 34 and that such person has paid the tax levied by this
1 35 subchapter or subchapter III, based upon such computation of
2 1 the sales price.
2 2 (4) The applicant shall provide the tax credit
2 3 certificates issued pursuant to chapter 476D to the department
2 4 with the forms required by this paragraph "a".
2 5 b. If satisfied that the foregoing conditions and
2 6 requirements have been complied with, the director shall
2 7 refund the amount claimed by the applicant for an amount not
2 8 greater than the amount of tax credits issued in tax credit
2 9 certificates pursuant to chapter 476D.
2 10 c. This subsection is repealed December 31, 2008.
2 11 Sec. 4. NEW SECTION. 437A.17C REIMBURSEMENT FOR SOY=
2 12 BASED TRANSFORMER FLUID.
2 13 A person in possession of a soy=based transformer fluid tax
2 14 credit certificate issued pursuant to chapter 476D may apply
2 15 to the director for a reimbursement of the amount of taxes
2 16 imposed and paid by the person pursuant to this chapter in an
2 17 amount not more than the person received in soy=based
2 18 transformer fluid tax credit certificates pursuant to chapter
2 19 476D. To obtain the reimbursement, the person shall attach to
2 20 the return required under section 437A.8 the soy=based
2 21 transformer fluid tax credit certificates issued to the person
2 22 pursuant to chapter 476D and provide any other information the
2 23 director may require. The director shall direct a warrant to
2 24 be issued to the person for an amount equal to the tax imposed
2 25 and paid by the person pursuant to this chapter but for not
2 26 more than the amount of the soy=based transformer fluid tax
2 27 credit certificates attached to the return.
2 28 This section is repealed December 31, 2008.
2 29 Sec. 5. NEW SECTION. 476D.1 DEFINITIONS.
2 30 As used in this chapter, unless the context otherwise
2 31 requires:
2 32 1. "Department" means the department of revenue.
2 33 2. "Electric utility" means a public utility furnishing
2 34 electricity as defined in section 476.1, a city utility as
2 35 defined in section 390.1, and an electric cooperative as
3 1 defined in section 390.1.
3 2 3. "Soy=based transformer fluid" means dielectric fluid
3 3 that contains at least ninety=eight percent soy=based
3 4 products.
3 5 Sec. 6. NEW SECTION. 476D.2 SOY=BASED TRANSFORMER FLUID
3 6 TAX CREDIT == LIMIT.
3 7 1. An electric utility is eligible to receive a soy=based
3 8 transformer fluid tax credit which is equal to the costs
3 9 incurred by the utility during the tax year for the purchase
3 10 and replacement costs relating to the transition from using
3 11 nonsoy=based transformer fluid to using soy=based transformer
3 12 fluid. The costs eligible for the credit are limited to those
3 13 costs meeting all of the following requirements:
3 14 a. The costs were incurred after June 30, 2006, and before
3 15 January 1, 2008.
3 16 b. The costs were incurred in the first eighteen months of
3 17 the transition from using nonsoy=based transformer fluid to
3 18 using soy=based transformer fluid.
3 19 c. The credit for the purchase and replacement of soy=
3 20 based transformer fluid used in the transition is limited to
3 21 two dollars per gallon. The total number of gallons used in
3 22 the transition shall not exceed twenty thousand gallons per
3 23 electric utility.
3 24 If the electric utility elects to take the soy=based
3 25 transformer fluid tax credit, the electric utility shall not
3 26 deduct for Iowa tax purposes any amount of the costs incurred
3 27 in the transition to using soy=based transformer fluid which
3 28 is deductible for federal tax purposes.
3 29 2. Any credit used under chapter 422, division II or III,
3 30 which is in excess of the tax liability shall be refunded with
3 31 interest computed under section 422.25. In lieu of claiming a
3 32 refund, a taxpayer may elect to have the overpayment shown on
3 33 the taxpayer's final, completed return credited to the tax
3 34 liability for the following tax year.
3 35 3. An individual may claim the tax credit under chapter
4 1 422, division II, allowed a partnership, limited liability
4 2 company, S corporation, estate, or trust electing to have the
4 3 income taxed directly to the individual. The amount claimed
4 4 by the individual shall be based upon the pro rata share of
4 5 the individual's earnings of the partnership, limited
4 6 liability company, S corporation, estate, or trust.
4 7 4. The total amount of soy=based transformer fluid
4 8 eligible for a tax credit shall not exceed sixty thousand
4 9 gallons.
4 10 Sec. 7. NEW SECTION. 476D.3 TAX CREDIT CERTIFICATE
4 11 PROCEDURE.
4 12 1. An electric utility may apply to the department for the
4 13 soy=based transformer fluid tax credit by submitting to the
4 14 department all of the following:
4 15 a. A completed application in a form prescribed by the
4 16 department.
4 17 b. The receipts for the purchase and replacement costs
4 18 related to the transition from using nonsoy=based to soy=
4 19 based transformer fluid.
4 20 c. Any other information the department deems necessary.
4 21 2. An electric utility may seek assurance of the
4 22 availability of tax credits by getting approval from the
4 23 department for the tax credits by submitting an estimate of
4 24 the soy=based transformer fluid to be used during the
4 25 transition period prior to the utility entering into any
4 26 agreement to purchase the soy=based transformer fluid and
4 27 prior to the start of its transition period. If tax credits
4 28 are available, the department shall reserve the tax credits
4 29 for the electric utility. Prior approval under this
4 30 subsection shall be granted based upon the earliest date of
4 31 application. Prior approval under this subsection does not
4 32 eliminate the requirement for the electric utility to file the
4 33 application under subsection 1.
4 34 3. The department shall calculate the amount of the tax
4 35 credit for which the applicant is eligible and shall issue, or
5 1 in the case of prior approval under subsection 2, shall
5 2 reserve the tax credit certificate for that amount or notify
5 3 the applicant in writing of its refusal to do so. An
5 4 applicant whose application is denied may file an appeal with
5 5 the department within sixty days from the date of the denial
5 6 pursuant to the provisions of chapter 17A. However, the
5 7 denial of an application solely because of the lack of the
5 8 availability of tax credits is not appealable.
5 9 4. Each tax credit certificate shall contain the person's
5 10 name, address, and tax identification number, the amount of
5 11 tax credits, the first taxable year the certificate may be
5 12 used, the type of tax to which the tax credits shall be
5 13 applied, and any other information required by the department.
5 14 The tax credit certificate shall only list one type of tax to
5 15 which the amount of the tax credit may be applied. Once
5 16 issued by the department, the tax credit certificate shall not
5 17 be terminated or rescinded.
5 18 5. Once a tax credit certificate is issued pursuant to
5 19 this section, the tax credit may only be claimed against the
5 20 type of tax reflected on the certificate.
5 21 Sec. 8. NEW SECTION. 476D.4 RULES.
5 22 The department may adopt rules pursuant to chapter 17A for
5 23 the administration and enforcement of this chapter.
5 24 Sec. 9. NEW SECTION. 476D.5 APPLICABILITY == REPEAL.
5 25 1. This chapter applies to tax years ending after June 30,
5 26 2006, and beginning before January 1, 2008.
5 27 2. This chapter is repealed December 31, 2008.
5 28 Sec. 10. EFFECTIVE DATE. This Act, being deemed of
5 29 immediate importance, takes effect upon enactment.
5 30 EXPLANATION
5 31 This bill provides a soy=based transformer fluid tax credit
5 32 under the individual and corporate income, sales and use, and
5 33 replacement taxes. Soy=based transformer fluid is
5 34 nonconductible fluid that contains at least 98 percent soy=
5 35 based products. The tax credit equals the costs incurred for
6 1 the purchase and replacement costs for electric utilities
6 2 related to the transition from using nonsoy=based transformer
6 3 fluid to using soy=based transformer fluid. The costs must
6 4 meet three other requirements: They were incurred after June
6 5 30, 2006, and before January 1, 2008, they were incurred in
6 6 the first 18 months of the transition to using soy=based
6 7 transformer fluid, and the credit of the soy=based transformer
6 8 fluid used in the transition is limited to $2 per gallon, up
6 9 to 20,000 gallons per electric utility. The total amount of
6 10 soy=based transformer fluid eligible for a tax credit is not
6 11 to exceed 60,000 gallons. Any excess credit is refundable.
6 12 In order for an electric utility to know if the tax credits
6 13 are available, it may seek prior approval of the tax credit by
6 14 applying prior to purchase of the soy=based transformer fluid
6 15 and the transition period. If prior approval is granted, the
6 16 estimated amount of tax credits would be reserved for the
6 17 electric utility. The credit applies to tax years ending
6 18 after June 30, 2006, and beginning before January 1, 2008.
6 19 The credit is repealed December 31, 2008.
6 20 LSB 6456HZ 81
6 21 mg:nh/gg/14