HF 2006 (LSB 5033HH (10) 83)

HOUSE FILE 2006

BY  ISENHART

A BILL FOR

An Act providing for the periodic repeal of state and local tax expenditures and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  421C.1  Tax expenditures repealed.
   1.  Beginning on June 30, 2011, and every fourth year thereafter, each Code provision in effect that provides for a state or local tax expenditure is repealed. For purposes of this section, “tax expenditure” means an exclusion from the operation or collection of a tax imposed in this state. Tax expenditures include tax credits, exemptions, deductions, and rebates. Tax expenditures also include sales tax refunds issued pursuant to section 423.4.
   2.  Every four years, the general assembly and the governor shall review all tax expenditures of the state and its political subdivisions and shall give consideration to reenactment of those tax expenditures which are found to achieve the public policy goals for which they were originally enacted. 
   3.  a.  The repeal of a tax expenditure shall be applicable beginning with the tax year, assessment year, or fiscal year, as applicable, following the date of the repeal.
   b.  The repeal of a tax expenditure originally taken prior to its repeal that authorized the carryforward of an unused portion of the tax expenditure shall continue to be valid after its repeal until the unused portion is depleted or until expiration of the carryforward period provided for in the statutory authorization for the tax expenditure, whichever is earlier. The repeal of a tax expenditure shall not apply to a taxpayer who was authorized to take the tax expenditure pursuant to a contract entered into with a state agency until such time as the contract is voided or expires. A tax expenditure authorized for multiple years that is repealed pursuant to this section shall continue after the date of repeal until its expiration provided for in the statutory authorization for the tax expenditure.
    Sec. 2.  APPLICABILITY.  This Act applies to tax expenditures in effect on and after June 30, 2011.
EXPLANATION
   This bill provides for the automatic repeal of all state and local tax expenditures every fourth year, beginning on June 30, 2011. A “tax expenditure” is an exclusion from the operation or collection of a tax imposed in this state. Tax expenditures include tax credits, exemptions, deductions, and rebates. Tax expenditures also include sales tax refunds issued pursuant to section 423.4.
   Every four years, the general assembly and the governor must review all tax expenditures of the state and its political subdivisions and give consideration to reenactment of those tax expenditures which are found to achieve the public policy goals for which they were originally enacted.
   The repeal of a tax expenditure is applicable beginning with the tax year, assessment year, or fiscal year following the date of the repeal. The repeal of a tax expenditure originally taken prior to its repeal that authorized the carryforward of an unused portion of the tax expenditure continues to be valid after its repeal until the unused portion is depleted or until the statutory carryforward period has expired, whichever is earlier. The repeal of a tax expenditure does not apply to a taxpayer who was authorized to take the tax expenditure pursuant to a contract entered into with a state agency until such time as the contract is voided or expires. A tax expenditure authorized for multiple years that is repealed continues to be valid after the date of repeal until its statutory expiration.
   The bill applies to tax expenditures in effect on and after June 30, 2011.