Senate Study Bill 1177
SENATE FILE
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CO=CHAIRPERSONS BOLKCOM
AND ZIEMAN)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing individual and corporate income tax credits for
2 soy=based cutting tool oil and including an applicability date
3 provision.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 2023SC 81
6 mg/cf/24
PAG LIN
1 1 Section 1. NEW SECTION. 422.11K SOY=BASED CUTTING TOOL
1 2 OIL TAX CREDIT.
1 3 1. 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 cutting tool oil tax credit. A manufacturer, as
1 6 defined in section 428.20, is eligible to receive a soy=based
1 7 cutting tool oil tax credit which is equal to the costs
1 8 incurred by the manufacturer during the tax year for the
1 9 purchase and replacement costs relating to the transition from
1 10 using nonsoy=based cutting tool oil to using soy=based cutting
1 11 tool oil. The costs eligible for the credit are limited to
1 12 those costs meeting all of the following requirements:
1 13 a. The costs were incurred after June 30, 2005, and before
1 14 January 1, 2007.
1 15 b. The costs were incurred in the first twelve months of
1 16 the transition from using nonsoy=based cutting tool oil to
1 17 using soy=based cutting tool oil.
1 18 c. The costs of the purchase and replacement do not exceed
1 19 two dollars per gallon of soy=based cutting tool oil used in
1 20 the transition. The total number of gallons used in the
1 21 transition under this paragraph shall not exceed two thousand
1 22 gallons.
1 23 If the manufacturer elects to take the soy=based cutting
1 24 tool oil tax credit, the manufacturer shall not deduct for
1 25 Iowa tax purposes any amount of the costs incurred in the
1 26 transition to using soy=based cutting tool oil which is
1 27 deductible for federal tax purposes.
1 28 2. Any credit in excess of the tax liability shall be
1 29 refunded with interest computed under section 422.25. In lieu
1 30 of claiming a refund, a taxpayer may elect to have the
1 31 overpayment shown on the taxpayer's final, completed return
1 32 credited to the tax liability for the following tax year.
1 33 3. An individual may claim the tax credit allowed a
1 34 partnership, limited liability company, S corporation, estate,
1 35 or trust electing to have the income taxed directly to the
2 1 individual. The amount claimed by the individual shall be
2 2 based upon the pro rata share of the individual's earnings of
2 3 the partnership, limited liability company, S corporation,
2 4 estate, or trust.
2 5 4. For purposes of this section, "soy=based cutting tool
2 6 oil" means cutting tool oil that contains ninety percent soy=
2 7 based products.
2 8 5. This section is repealed December 31, 2007.
2 9 Sec. 2. Section 422.33, Code 2005, is amended by adding
2 10 the following new subsection:
2 11 NEW SUBSECTION. 17. a. The taxes imposed under this
2 12 division shall be reduced by a soy=based cutting tool oil tax
2 13 credit. A manufacturer, as defined in section 428.20, is
2 14 eligible to receive a soy=based cutting tool oil tax credit
2 15 which is equal to the costs incurred by the manufacturer
2 16 during the tax year for the purchase and replacement costs
2 17 relating to the transition from using nonsoy=based cutting
2 18 tool oil to using soy=based cutting tool oil. The costs
2 19 eligible for the credit are limited to those costs meeting all
2 20 of the following requirements:
2 21 (1) The costs were incurred after June 30, 2005, and
2 22 before January 1, 2007.
2 23 (2) The costs were incurred in the first twelve months of
2 24 the transition to using soy=based cutting tool oil.
2 25 (3) The costs of the purchase and replacement do not
2 26 exceed two dollars per gallon of soy=based cutting tool oil
2 27 used in the transition. The total number of gallons used in
2 28 the transition under this subparagraph shall not exceed two
2 29 thousand gallons.
2 30 If the manufacturer elects to take the soy=based cutting
2 31 tool oil tax credit, the manufacturer shall not deduct for
2 32 Iowa tax purposes any amount of the costs incurred in the
2 33 transition to using soy=based cutting tool oil which is
2 34 deductible for federal tax purposes.
2 35 b. Any credit in excess of the tax liability shall be
3 1 refunded with interest computed under section 422.25. In lieu
3 2 of claiming a refund, a taxpayer may elect to have the
3 3 overpayment shown on the taxpayer's final, completed return
3 4 credited to the tax liability for the following tax year.
3 5 c. For purposes of this subsection, "soy=based cutting
3 6 tool oil" means cutting tool oil that contains ninety percent
3 7 soy=based products.
3 8 d. This subsection is repealed December 31, 2007.
3 9 Sec. 3. APPLICABILITY DATES. This Act applies to tax
3 10 years ending after June 30, 2005, and beginning before January
3 11 1, 2007.
3 12 EXPLANATION
3 13 This bill provides a soy=based cutting tool oil tax credit
3 14 under the individual and corporate income taxes. The tax
3 15 credit equals the costs incurred for the purchase and
3 16 replacement costs related to the transition from using nonsoy=
3 17 based cutting tool oil to using soy=based cutting tool oil in
3 18 the manufacturing process. The costs must meet three other
3 19 requirements: They were incurred after June 30, 2005, and
3 20 before January 1, 2007, they were incurred in the first 12
3 21 months of the transition to using soy=based cutting tool oil,
3 22 and they do not exceed $2 per gallon of the soy=based cutting
3 23 tool oil used in the transition, up to 2,000 gallons. Any
3 24 excess credit is refundable. The credit applies to tax years
3 25 ending after June 30, 2005, and beginning before January 1,
3 26 2007. The credit is repealed December 31, 2007.
3 27 LSB 2023SC 81
3 28 mg:nh/cf/24