Senate Study Bill 3236 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR An Act establishing a local farmer and food security income 1 tax credit for individual and corporate income taxpayers, 2 providing for its future repeal, and including effective 3 date and retroactive applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5180XC (5) 83 sc/rj

S.F. _____ Section 1. NEW SECTION . 159B.1 Short title. 1 This Act shall be known and may be cited as the “Local Farmer 2 and Food Security Act” . 3 Sec. 2. NEW SECTION . 159B.2 Definitions. 4 For purposes of this chapter, unless the context otherwise 5 requires: 6 1. “Grocer” means a business with a physical location in 7 this state that is primarily engaged in the sale of food at 8 retail and that receives a majority of its income from the 9 retail sale of food. “Grocer” does not include a business 10 primarily engaged in food service or food preparation services. 11 2. “Local food and farm products” means fruits and 12 vegetables, grain, and meat. 13 3. “Producer” means an individual, partnership, or family 14 farm corporation or family farm limited liability company as 15 defined in section 9H.1, that produces raw fruits, vegetables, 16 grains, or meat and includes a cooperative comprised of only 17 such producers. 18 Sec. 3. NEW SECTION . 159B.3 Local farmer and food security 19 tax credit. 20 1. A local farmer and food security tax credit shall be 21 allowed against the taxes imposed in chapter 422, divisions II 22 and III, for a portion of the value of a taxpayer’s contracts 23 for the wholesale purchase of local food and farm products 24 as provided in this section. An individual may claim a tax 25 credit under this section of a partnership, limited liability 26 company, S corporation, estate, or trust electing to have 27 income taxed directly to the individual. The amount claimed 28 by the individual shall be based upon the pro rata share of the 29 individual’s earnings from the partnership, limited liability 30 company, S corporation, estate, or trust. 31 2. The amount of a tax credit equals twenty percent of the 32 costs paid during the tax year under all eligible contracts. 33 3. An eligible contract under this section must meet all of 34 the following conditions: 35 -1- LSB 5180XC (5) 83 sc/rj 1/ 4

S.F. _____ a. The parties to the contract are a grocer and a producer 1 whose raw fruits, vegetables, grains, or meat are produced 2 within one hundred fifty miles of the grocer’s retail business. 3 b. The contract was entered into at least forty-five days 4 prior to initial delivery of the local food and farm products 5 that are the subject of the contract. 6 c. (1) The contract specifies that the local food and farm 7 products shall be delivered to the grocer in an unprocessed or 8 minimally processed form. For purposes of this paragraph “c” , 9 “minimally processed” means: 10 (a) For fruits and vegetables, the produce is, at most, 11 washed and packaged prior to delivery. 12 (b) For meats, the meats are offered whole or in traditional 13 cuts. 14 (c) For grains, the grains are, at most, cleaned and in 15 whole or ground form. 16 (2) The processing described in subparagraph (1), 17 subparagraph divisions (a) through (c), may occur beyond one 18 hundred fifty miles of the grocer’s retail business. 19 4. Any credit in excess of the tax liability for the taxable 20 year shall be refunded with interest computed under section 21 422.25. In lieu of claiming a refund, a taxpayer may elect 22 to have the overpayment shown on its final, completed return 23 credited to the taxpayer’s tax liability for the following 24 taxable year. 25 5. The department of revenue shall, by January 15, 2015, 26 issue a report to the general assembly containing the amount 27 of claims made by grocers under this section per tax year for 28 the tax years beginning in calendar years beginning January 29 1, 2010, January 1, 2011, January 1, 2012, January 1, 2013, 30 and January 1, 2014, and the portion of the claims issued as 31 refunds, for all claims processed during those years. 32 Sec. 4. NEW SECTION . 159B.4 Rules. 33 The department of revenue may adopt rules pursuant to 34 chapter 17A for the administration and enforcement of the tax 35 -2- LSB 5180XC (5) 83 sc/rj 2/ 4

S.F. _____ credit provided under this chapter. 1 Sec. 5. NEW SECTION . 159B.5 Future repeal. 2 This chapter is repealed December 31, 2015, for tax years 3 beginning after that date. The repeal of this chapter does 4 not affect the ability to carry forward tax credits claimed 5 under this chapter from a tax year beginning prior to January 6 1, 2016. 7 Sec. 6. NEW SECTION . 422.11Y Local farmer and food security 8 tax credit. 9 The tax imposed under this division, less the credits 10 allowed under section 422.12, shall be reduced by a local 11 farmer and food security tax credit authorized pursuant to 12 section 159B.3. 13 Sec. 7. Section 422.33, Code Supplement 2009, is amended by 14 adding the following new subsection: 15 NEW SUBSECTION . 29. The tax imposed under this division 16 shall be reduced by a local farmer and food security tax credit 17 authorized pursuant to section 159B.3. 18 Sec. 8. EFFECTIVE UPON ENACTMENT AND RETROACTIVE 19 APPLICABILITY. This Act, being deemed of immediate importance, 20 takes effect upon enactment and applies retroactively to 21 January 1, 2010, for tax years beginning on or after that date. 22 EXPLANATION 23 This bill creates a local farmer and food security income 24 tax credit for individual and corporate income taxpayers. 25 The credit is available to grocers who contract with local 26 producers for unprocessed or minimally processed fruits and 27 vegetables, grains, and meat. The credit is an amount equal 28 to 20 percent of the costs paid during the tax year under 29 contracts entered into between a grocer and producers located 30 within 150 miles of the grocer. “Grocer” and “producer” are 31 defined in the bill. 32 The tax credit is refundable but may be credited against 33 tax liability in the following tax year. The tax credit is 34 repealed December 31, 2015. 35 -3- LSB 5180XC (5) 83 sc/rj 3/ 4

S.F. _____ The bill requires the department of revenue to report to the 1 general assembly by January 15, 2015, on the amount of claims 2 made and refunds issued for tax years beginning during the 3 period of January 1, 2010, and December 31, 2014. 4 The bill takes effect upon enactment and applies 5 retroactively to January 1, 2010, for tax years beginning on 6 or after that date. 7 -4- LSB 5180XC (5) 83 sc/rj 4/ 4