House File 246 - Introduced



                                       HOUSE FILE       
                                       BY  WISE


    Passed House,  Date               Passed Senate, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act establishing a tax credit certificate transfer program.
  2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  3 TLSB 2053HH 82
  4 tm/gg/14

PAG LIN



  1  1    Section 1.  NEW SECTION.  421.58  SALE OR TRANSFER OF NET
  1  2 OPERATING LOSS CARRYOVER.
  1  3    1.  As used in this section, unless the context otherwise
  1  4 requires:
  1  5    a.  "Biotechnology enterprise" means the same as defined in
  1  6 section 15E.202.
  1  7    b.  "Department" means the department of revenue.
  1  8    c.  "Net operating loss" means the same as defined in
  1  9 section 172 of the Internal Revenue Code.  "Net operating
  1 10 loss" may include up to a maximum salary allocation of one
  1 11 hundred thirty percent of the average annual county wage.
  1 12    d.  "Targeted industry business" means the same as defined
  1 13 in section 15E.223.
  1 14    2.  The department shall establish and administer a tax
  1 15 credit certificate transfer program for purposes of allowing a
  1 16 biotechnology enterprise or a targeted industry business with
  1 17 twenty or fewer employees to transfer a tax credit certificate
  1 18 to another taxpayer in return for private financial assistance
  1 19 for a net operating loss carryover.
  1 20    3.  A biotechnology enterprise or a targeted industry
  1 21 business with twenty or fewer employees that has a net
  1 22 operating loss carryover in a single tax year may apply to the
  1 23 department for the issuance of a tax credit certificate in the
  1 24 amount of the loss carryover for sale under this section to a
  1 25 qualifying, nonaffiliated business.  Upon the department's
  1 26 approval of an application, a tax credit certificate shall be
  1 27 issued containing the taxpayer's name, address, tax
  1 28 identification number, the amount of the tax credit, and other
  1 29 information required by the department.  The proceeds from the
  1 30 sale of a tax credit shall be used by the biotechnology
  1 31 enterprise or targeted industry business for expenses
  1 32 including but not limited to the expenses of fixed assets such
  1 33 as the acquisition, development, and construction of real
  1 34 property, materials, salaries, and research and development
  1 35 expenditures.
  2  1    4.  A taxpayer willing to enter into an agreement to
  2  2 receive a tax credit certificate from a biotechnology
  2  3 enterprise or a targeted industry business in exchange for
  2  4 providing private financial assistance shall submit an
  2  5 application to the department.  The application to receive a
  2  6 tax credit certificate shall identify the amount of private
  2  7 financial assistance that the applicant is willing to provide
  2  8 in exchange for a tax credit certificate.
  2  9    5.  A taxpayer willing to provide private financial
  2 10 assistance to a biotechnology enterprise or targeted industry
  2 11 business in exchange for a tax credit certificate may use the
  2 12 amount of the tax credit transferred against the taxes imposed
  2 13 under chapter 422, division II, III, or V, or chapter 432 for
  2 14 any tax year the original transferor could have claimed the
  2 15 net operating loss carryover.  Any consideration received for
  2 16 the transfer of the tax credit shall not be included as income
  2 17 under chapter 422, division II, III, or V.  Any consideration
  2 18 paid for the transfer of a tax credit under this section shall
  2 19 not be deducted from income under chapter 422, division II,
  2 20 III, or V.  Any tax credit in excess of the tax liability for
  2 21 the tax year may be credited to the tax liability for the
  2 22 following seven years or until depleted, whichever occurs
  2 23 first.
  2 24    6.  The department shall adopt rules pursuant to chapter
  2 25 17A to establish the procedures for the application, review,
  2 26 selection, issuance, and transfer of tax credit certificates
  2 27 and to provide for the method to be used to determine for
  2 28 which fiscal year the tax credits are available.
  2 29    7.  The department or a designee shall match applications
  2 30 submitted under this section in a manner that can best
  2 31 stimulate and encourage the extension of private financial
  2 32 assistance to biotechnology enterprises or targeted industry
  2 33 businesses in the state.  As part of approving an application,
  2 34 the department shall require all of the following from
  2 35 applicants:
  3  1    a.  A written agreement concerning the terms and conditions
  3  2 of providing private financial assistance in exchange for a
  3  3 tax credit certificate issued pursuant to this section.
  3  4    b.  Private financial assistance supplied by a taxpayer
  3  5 must be equal to at least seventy=five percent of the value of
  3  6 the tax credit certificate issued pursuant to this section.
  3  7    c.  Private financial assistance received under this
  3  8 section shall be used for the operation or expansion of a
  3  9 biotechnology enterprise or a targeted industry business.
  3 10    8.  The total amount of tax credits that may be approved
  3 11 for a fiscal year under this section shall not exceed five
  3 12 million dollars.  A biotechnology enterprise or a targeted
  3 13 industry business shall not receive more than five hundred
  3 14 thousand dollars in any fiscal year of private financial
  3 15 assistance under the program.  Tax credits issued under this
  3 16 section shall not be prorated.
  3 17    9.  A biotechnology enterprise or a targeted industry
  3 18 business receiving private financial assistance under the
  3 19 program shall not receive a wage=benefits tax credit under
  3 20 section 15I.2.
  3 21                           EXPLANATION
  3 22    This bill establishes a tax credit certificate transfer
  3 23 program.
  3 24    The bill requires the department of revenue to establish
  3 25 and administer a tax credit certificate transfer program for
  3 26 purposes of allowing a biotechnology enterprise or a targeted
  3 27 industry business with 20 or fewer employees to transfer a tax
  3 28 credit certificate to another taxpayer in return for private
  3 29 financial assistance for a net operating loss carryover.
  3 30    The bill allows a biotechnology enterprise or a targeted
  3 31 industry business with 20 or fewer employees that has a net
  3 32 operating loss carryover in a single tax year to apply to the
  3 33 department for the issuance of a tax credit certificate in the
  3 34 amount of the loss carryover for sale under the bill to a
  3 35 qualifying, nonaffiliated business.  The bill provides that
  4  1 private financial assistance is to be used for expenses
  4  2 including but not limited to the expenses of fixed assets such
  4  3 as the acquisition, development, and construction of real
  4  4 property, materials, salaries, and research and development
  4  5 expenditures.
  4  6    The bill requires that a taxpayer willing to provide
  4  7 private financial assistance shall submit an application to
  4  8 the department identifying the amount of private financial
  4  9 assistance that the applicant is willing to provide.
  4 10    The bill provides that tax credits transferred under the
  4 11 program may be used against personal and corporate income
  4 12 taxes, against the franchise tax for financial institutions,
  4 13 and against the insurance premium tax.  The bill provides that
  4 14 any consideration received for the transfer of a tax credit
  4 15 shall not be considered income and any consideration paid for
  4 16 the transfer shall not be deducted from income.  The bill
  4 17 allows any tax credit in excess of the tax liability for the
  4 18 tax year to be credited to the tax liability for the following
  4 19 seven years or until depleted, whichever occurs first.
  4 20    The bill requires the department to match applications
  4 21 submitted under the program in a manner that can best
  4 22 stimulate and encourage the extension of private financial
  4 23 assistance in the state.
  4 24    The bill provides that the total amount of tax credits that
  4 25 may be approved for transfer under the program for a fiscal
  4 26 year shall not exceed $5 million and a biotechnology
  4 27 enterprise or a targeted industry business shall not receive
  4 28 more than $500,000 in any fiscal year of private financial
  4 29 assistance under the program.
  4 30    The bill prohibits a biotechnology enterprise or a targeted
  4 31 industry business that receives private financial assistance
  4 32 under the program from receiving a wage=benefits tax credit
  4 33 under Code section 15I.2.
  4 34 LSB 2053HH 82
  4 35 tm:rj/gg/14.1