House File 868HOUSE FILE BY MAY Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to an infrastructure project tax credit program 2 for certain county fairs and providing a retroactive 3 applicability date. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1359YH 82 6 mg/gg/14 PAG LIN 1 1 Section 1. NEW SECTION. 174.25 COUNTY FAIR PROJECT TAX 1 2 CREDIT. 1 3 1. a. An eligible fair may claim a tax credit equal to 1 4 the amount calculated under subsection 2 for an infrastructure 1 5 project involving the construction of new buildings or 1 6 improvements to existing land and buildings on the 1 7 fairgrounds. The infrastructure project shall have a minimum 1 8 cost of one hundred thousand dollars. The tax credit shall be 1 9 allowed against taxes imposed under chapter 422, divisions II, 1 10 III, and V, and under chapter 432. 1 11 b. For purposes of this section, "eligible fair" means an 1 12 organization that operates a county fair event that meets all 1 13 of the following: 1 14 (1) Is located in a county with a population of at least 1 15 fifteen thousand but not more than eighteen thousand and whose 1 16 county seat has a population of at least eleven thousand but 1 17 not more than fifteen thousand. 1 18 (2) Has an average annual attendance at the fair event 1 19 during the last three calendar years of at least one hundred 1 20 fifty thousand individuals. 1 21 (3) Has an infrastructure project involving the 1 22 construction of new buildings or improvements to land and 1 23 existing buildings that is underway at the fairgrounds where 1 24 the county fair event is held or contracts have been let for 1 25 such infrastructure project where construction will begin 1 26 within six months. 1 27 2. The amount of tax credit shall be calculated as 1 28 provided in this subsection as follows: 1 29 a. For the first tax year for which the tax credit is 1 30 claimed, determine the tax credit as follows: 1 31 (1) Calculate the average daily state sales tax collected 1 32 in the city nearest the fairgrounds where the eligible fair is 1 33 held during the base period multiplied by the number of days 1 34 of the county fair event beginning after the base period. 1 35 (2) Calculate the sum of the state sales tax collected in 2 1 the city nearest the fairgrounds during the time the county 2 2 fair event is held after the base period plus the state sales 2 3 tax collected during the county fair event held after the base 2 4 period. 2 5 (3) Subtract the amount computed under subparagraph (1) 2 6 from the amount computed under subparagraph (2). This is the 2 7 amount of the tax credit. 2 8 For purposes of the calculation in this paragraph "a", 2 9 "base period" means the two calendar quarters ending 2 10 immediately before the county fair event that is held in the 2 11 calendar year preceding the calendar year in which the tax 2 12 year for which the tax credit will first be claimed. 2 13 b. The tax credit computed in paragraph "a" shall be 2 14 allowed for up to four consecutive tax years. However, the 2 15 total amount of the tax credits for the eligible fair shall 2 16 not exceed the lesser of the following: 2 17 (1) The cost of the infrastructure project. 2 18 (2) One million six hundred thousand dollars. 2 19 3. Any credit in excess of the tax liability is not 2 20 refundable but the excess for the tax year may be credited to 2 21 the tax liability for the following ten tax years or until 2 22 depleted, whichever is earlier. 2 23 4. An individual may claim the tax credit allowed a 2 24 partnership, limited liability company, S corporation, estate, 2 25 or trust electing to have the income taxed directly to the 2 26 individual. The amount claimed by the individual shall be 2 27 based upon the pro rata share of the individual's earnings of 2 28 the partnership, limited liability company, S corporation, 2 29 estate, or trust. 2 30 5. a. To claim the tax credit, the eligible fair shall 2 31 file an application with the department of revenue on forms 2 32 approved by the director of revenue establishing its 2 33 eligibility, the total cost of the infrastructure project for 2 34 which the claim is made, and other information required by the 2 35 department. 3 1 b. After verifying the eligibility for the tax credit, the 3 2 department of revenue shall issue a county fair project tax 3 3 credit certificate to be attached to the person's tax return. 3 4 The tax credit certificate shall contain the taxpayer's name, 3 5 address, tax identification number, the date of project 3 6 completion, the amount of credit, other information required 3 7 by the department of revenue, and a place for the name and tax 3 8 identification number of a transferee and the amount of the 3 9 tax credit being transferred. 3 10 6. a. Tax credit certificates issued under this section 3 11 may be transferred to any person or entity. Within ninety 3 12 days of transfer, the transferee must submit the transferred 3 13 tax credit certificate to the department of revenue along with 3 14 a statement containing the transferee's name, tax 3 15 identification number, and address, and the denomination that 3 16 each replacement tax credit certificate is to carry and any 3 17 other information required by the department of revenue. 3 18 Within thirty days of receiving the transferred tax credit 3 19 certificate and the transferee's statement, the department of 3 20 revenue shall issue one or more replacement tax credit 3 21 certificates to the transferee. Each replacement certificate 3 22 must contain the information required under subsection 5, 3 23 paragraph "b", that appeared on the transferred tax credit 3 24 certificate. Tax credit certificate amounts of less than the 3 25 minimum amount established by rule of the department shall not 3 26 be transferable. A tax credit shall not be claimed by a 3 27 transferee under this section until a replacement tax credit 3 28 certificate identifying the transferee as the proper holder 3 29 has been issued. 3 30 b. The transferee may use the amount of the tax credit 3 31 transferred against the taxes imposed under chapter 422, 3 32 divisions II, III, and V, and chapter 432 for any tax year the 3 33 original transferor could have claimed the tax credit. Any 3 34 consideration received for the transfer of the tax credit 3 35 shall not be included as income under chapter 422, divisions 4 1 II, III, and V. Any consideration paid for the transfer of 4 2 the tax credit shall not be deducted from income under chapter 4 3 422, divisions II, III, and V. 4 4 Sec. 2. NEW SECTION. 422.11T COUNTY FAIR PROJECT TAX 4 5 CREDIT. 4 6 The taxes imposed under this division, less the credits 4 7 allowed under sections 422.12 and 422.12B, shall be reduced by 4 8 a county fair project tax credit as provided in section 4 9 174.25. 4 10 Sec. 3. Section 422.33, Code 2007, is amended to read by 4 11 adding the following new subsection: 4 12 NEW SUBSECTION. 24. The taxes imposed under this division 4 13 shall be reduced by a county fair project tax credit as 4 14 provided in section 174.25. 4 15 Sec. 4. Section 422.60, Code 2007, is amended by adding 4 16 the following new subsection: 4 17 NEW SUBSECTION. 13. The taxes imposed under this division 4 18 shall be reduced by a county fair project tax credit as 4 19 provided in section 174.25. 4 20 Sec. 5. NEW SECTION. 432.12J COUNTY FAIR PROJECT TAX 4 21 CREDIT. 4 22 The taxes imposed under this chapter shall be reduced by a 4 23 county fair project tax credit as provided in section 174.25. 4 24 Sec. 6. RETROACTIVE APPLICABILITY DATE. This Act applies 4 25 retroactively to January 1, 2007, for tax years beginning on 4 26 or after that date. 4 27 EXPLANATION 4 28 This bill provides a tax credit for a fair organization 4 29 that operates a county fair located in a county with a 4 30 population of 15,000 to 18,000, where the county seat has a 4 31 population of 11,000 to 15,000, and the average annual 4 32 attendance at the county fair for the last three years has 4 33 been 150,000 people. To receive the tax credit the fair 4 34 organization must be or will be involved in the construction 4 35 of new buildings or improvements to land and existing 5 1 buildings at the fairgrounds. 5 2 The tax credit may be used to offset the tax liability 5 3 under the individual and corporate income taxes, franchise 5 4 tax, and insurance premium tax. The tax credit is 5 5 transferable. The tax credit is nonrefundable but may be 5 6 carried forward for up to 10 tax years or until used up. 5 7 The amount of the tax credit equals the excess of the state 5 8 sales tax collected at the fair plus at establishments in the 5 9 closest city to the fairgrounds over the average daily amount 5 10 collected at those same establishments multiplied by the 5 11 number of days of the county fair. 5 12 The amount of tax credit may be claimed for up to four tax 5 13 years. However, the total amount of tax credit for the fair 5 14 organization cannot exceed the cost of the infrastructure 5 15 project or $1.6 million, whichever is the lesser. 5 16 The bill applies retroactively to January 1, 2007, for tax 5 17 years beginning on or after that date. 5 18 LSB 1359YH 82 5 19 mg:nh/gg/14