House File 809 - Introduced
HOUSE FILE
BY COMMITTEE ON ECONOMIC
GROWTH
(SUCCESSOR TO HF 246)
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 and
2 including a retroactive applicability provision.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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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 seventy=five or fewer employees to transfer a tax credit
1 18 certificate to another taxpayer in return for private
1 19 financial assistance for a net operating loss carryover.
1 20 3. A biotechnology enterprise or a targeted industry
1 21 business with seventy=five 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. For any tax year beginning on or after January 1, 2007,
2 10 a taxpayer willing to provide private financial assistance to
2 11 a biotechnology enterprise or targeted industry business in
2 12 exchange for a tax credit certificate may use the amount of
2 13 the tax credit transferred against the taxes imposed under
2 14 chapter 422, division II, III, or V, or chapter 432 for any
2 15 tax year the original transferor could have claimed the net
2 16 operating loss carryover. Any consideration received for the
2 17 transfer of the tax credit shall not be included as income
2 18 under chapter 422, division II, III, or V. Any consideration
2 19 paid for the transfer of a tax credit under this section shall
2 20 not be deducted from income under chapter 422, division II,
2 21 III, or V. Any tax credit in excess of the tax liability for
2 22 the tax year may be credited to the tax liability for the
2 23 following seven years or until depleted, whichever occurs
2 24 first.
2 25 6. The department shall adopt rules pursuant to chapter
2 26 17A to establish the procedures for the application, review,
2 27 selection, issuance, and transfer of tax credit certificates
2 28 and to provide for the method to be used to determine for
2 29 which fiscal year the tax credits are available.
2 30 7. The department or a designee shall match applications
2 31 submitted under this section in a manner that can best
2 32 stimulate and encourage the extension of private financial
2 33 assistance to biotechnology enterprises or targeted industry
2 34 businesses in the state. As part of approving an application,
2 35 the department shall require all of the following from
3 1 applicants:
3 2 a. A written agreement concerning the terms and conditions
3 3 of providing private financial assistance in exchange for a
3 4 tax credit certificate issued pursuant to this section.
3 5 b. Private financial assistance supplied by a taxpayer
3 6 must be equal to at least seventy=five percent of the value of
3 7 the tax credit certificate issued pursuant to this section.
3 8 c. Private financial assistance received under this
3 9 section shall be used for the operation or expansion of a
3 10 biotechnology enterprise or a targeted industry business.
3 11 8. The total amount of tax credits that may be approved
3 12 for a fiscal year under this section shall not exceed five
3 13 million dollars. A biotechnology enterprise or a targeted
3 14 industry business shall not receive more than five hundred
3 15 thousand dollars in any fiscal year of private financial
3 16 assistance under the program. Tax credits issued under this
3 17 section shall not be prorated.
3 18 9. A biotechnology enterprise or a targeted industry
3 19 business receiving private financial assistance under the
3 20 program shall not receive a wage=benefits tax credit under
3 21 section 15I.2.
3 22 Sec. 2. RETROACTIVE APPLICABILITY. This Act is
3 23 retroactively applicable to January 1, 2007, and is applicable
3 24 on and after that date.
3 25 EXPLANATION
3 26 This bill establishes a tax credit certificate transfer
3 27 program.
3 28 The bill requires the department of revenue to establish
3 29 and administer a tax credit certificate transfer program for
3 30 purposes of allowing a biotechnology enterprise or a targeted
3 31 industry business with 75 or fewer employees to transfer a tax
3 32 credit certificate to another taxpayer in return for private
3 33 financial assistance for a net operating loss carryover.
3 34 The bill allows a biotechnology enterprise or a targeted
3 35 industry business with 75 or fewer employees that has a net
4 1 operating loss carryover in a single tax year to apply to the
4 2 department for the issuance of a tax credit certificate in the
4 3 amount of the loss carryover for sale under the bill to a
4 4 qualifying, nonaffiliated business. The bill provides that
4 5 private financial assistance is to be used for expenses
4 6 including but not limited to the expenses of fixed assets such
4 7 as the acquisition, development, and construction of real
4 8 property, materials, salaries, and research and development
4 9 expenditures.
4 10 The bill requires that a taxpayer willing to provide
4 11 private financial assistance shall submit an application to
4 12 the department identifying the amount of private financial
4 13 assistance that the applicant is willing to provide.
4 14 The bill provides that, for any tax year beginning on or
4 15 after January 1, 2007, tax credits transferred under the
4 16 program may be used against personal and corporate income
4 17 taxes, against the franchise tax for financial institutions,
4 18 and against the insurance premium tax. The bill provides that
4 19 any consideration received for the transfer of a tax credit
4 20 shall not be considered income and any consideration paid for
4 21 the transfer shall not be deducted from income. The bill
4 22 allows any tax credit in excess of the tax liability for the
4 23 tax year to be credited to the tax liability for the following
4 24 seven years or until depleted, whichever occurs first.
4 25 The bill requires the department to match applications
4 26 submitted under the program in a manner that can best
4 27 stimulate and encourage the extension of private financial
4 28 assistance in the state.
4 29 The bill provides that the total amount of tax credits that
4 30 may be approved for transfer under the program for a fiscal
4 31 year shall not exceed $5 million and a biotechnology
4 32 enterprise or a targeted industry business shall not receive
4 33 more than $500,000 in any fiscal year of private financial
4 34 assistance under the program.
4 35 The bill prohibits a biotechnology enterprise or a targeted
5 1 industry business that receives private financial assistance
5 2 under the program from receiving a wage=benefits tax credit
5 3 under Code section 15I.2.
5 4 The bill is retroactively applicable to January 1, 2007.
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