H.F. 555 Section 1. Section 2.48, subsection 3, paragraph d, 1 subparagraph (5), Code 2011, is amended to read as follows: 2 (5) The ethanol E-15 promotion tax credits available under 3 section 422.11N . 4 Sec. 2. Section 422.11N, subsection 1, paragraph f, Code 5 2011, is amended to read as follows: 6 f. “Tax credit” means the ethanol E-15 promotion tax credit 7 as provided in this section . 8 Sec. 3. Section 422.11N, subsection 3, Code 2011, is amended 9 to read as follows: 10 3. The taxes imposed under this division , less the tax 11 credits allowed under section 422.12 , shall be reduced by an 12 ethanol E-15 gasoline promotion tax credit for each tax year 13 that the taxpayer is eligible to claim the tax credit under 14 this section . In order to be eligible, all of the following 15 must apply: 16 a. The taxpayer is a retail dealer who sells and dispenses 17 ethanol blended gasoline designated as E-15 or higher pursuant 18 to section 214A.2 through a motor fuel pump in the tax year in 19 which the tax credit is claimed. 20 b. The retail dealer complies with requirements of the 21 department to administer this section . 22 Sec. 4. Section 422.11N, subsection 4, paragraph d, Code 23 2011, is amended by striking the paragraph. 24 Sec. 5. Section 422.11N, subsection 5, paragraph a, 25 unnumbered paragraph 1, Code 2011, is amended to read as 26 follows: 27 For a retail dealer whose tax year is the same as a 28 determination period beginning on January 1 and ending on 29 December 31, the retail dealer’s tax credit is calculated by 30 multiplying the retail dealer’s total ethanol gallonage from 31 ethanol blended gasoline designated as E-15 or higher, pursuant 32 to section 214A.2, by a tax credit rate, which may be adjusted 33 based on the retail dealer’s biofuel threshold percentage 34 disparity. The tax credit rate is as follows: 35 -1- LSB 1833HV (1) 84 da/rj 1/ 5

H.F. 555 Sec. 6. Section 422.11N, subsection 5, paragraph a, 1 subparagraph (1), Code 2011, is amended to read as follows: 2 (1) For any tax year in which the retail dealer has attained 3 a biofuel threshold percentage for the determination period, 4 the tax credit rate is six sixteen and one-half cents. 5 Sec. 7. Section 422.11N, subsection 5, paragraph a, 6 subparagraph (2), subparagraph divisions (a) and (b), Code 7 2011, are amended to read as follows: 8 (a) If the retail dealer’s biofuel threshold percentage 9 disparity equals two percent or less, the tax credit rate is 10 four fourteen and one-half cents. 11 (b) If the retail dealer’s biofuel threshold percentage 12 disparity equals more than two percent but not more than four 13 percent, the tax credit rate is two twelve and one-half cents. 14 Sec. 8. Section 422.11N, subsection 6, Code 2011, is amended 15 to read as follows: 16 6. A retail dealer is eligible to claim an ethanol E-15 17 gasoline promotion tax credit as provided in this section even 18 though the retail dealer claims an E-85 gasoline promotion tax 19 credit pursuant to section 422.11O for the same tax year and 20 for the same ethanol gallonage. 21 Sec. 9. Section 422.11O, subsection 5, Code 2011, is amended 22 to read as follows: 23 5. A retail dealer is eligible to claim an E-85 gasoline 24 promotion tax credit as provided in this section even though 25 the retail dealer claims an ethanol E-15 gasoline promotion tax 26 credit pursuant to section 422.11N for the same tax year for 27 the same ethanol gallonage. 28 Sec. 10. Section 422.33, subsection 11A, unnumbered 29 paragraph 1, Code 2011, is amended to read as follows: 30 The taxes imposed under this division shall be reduced by 31 an ethanol E-15 promotion tax credit for each tax year that 32 the taxpayer is eligible to claim the tax credit under this 33 subsection . 34 Sec. 11. Section 422.33, subsection 11A, paragraphs a and b, 35 -2- LSB 1833HV (1) 84 da/rj 2/ 5

H.F. 555 Code 2011, are amended to read as follows: 1 a. The taxpayer shall claim the tax credit in the same 2 manner as provided in section 422.11N . The taxpayer may claim 3 the tax credit according to the same requirements, for the same 4 amount, and calculated in the same manner, as provided for the 5 ethanol E-15 promotion tax credit pursuant to section 422.11N . 6 b. Any ethanol E-15 promotion tax credit which is in excess 7 of the taxpayer’s tax liability shall be refunded or may be 8 shown on the taxpayer’s final, completed return credited to the 9 tax liability for the following tax year in the same manner as 10 provided in section 422.11N . 11 Sec. 12. Section 452A.31, subsection 2, paragraph a, 12 subparagraph (1), Code 2011, is amended to read as follows: 13 (1) The total ethanol blended gasoline gallonage which 14 is the retail dealer’s total number of gallons of ethanol 15 blended gasoline and which includes any subclassification 16 required by the department. However, the total ethanol blended 17 gasoline gallonage must at least include all of the following 18 subclassifications: 19 (a) The total E-xx E-10 gasoline gallonage which is the 20 total number of gallons of ethanol blended gasoline other than 21 E-85 gasoline designated as E-9 or E-10 . 22 (b) The total E-15 gasoline gallonage which is the total 23 number of gallons of ethanol blended gasoline designated as 24 E-11 to E-15. 25 (c) The total E-85 flexible fuel gasoline gallonage which 26 is the total number of gallons of ethanol blended gasoline 27 designated as E-16 to E-85 gasoline . 28 Sec. 13. Section 452A.31, subsection 4, paragraph a, 29 subparagraph (1), Code 2011, is amended by striking the 30 subparagraph and inserting in lieu thereof the following: 31 (1) The aggregate ethanol blended gasoline gallonage which 32 is the aggregate total number of gallons of ethanol blended 33 gasoline and which includes the aggregate ethanol blended 34 gasoline gallonage for each subclassification provided for in 35 -3- LSB 1833HV (1) 84 da/rj 3/ 5

H.F. 555 subsection 2. 1 Sec. 14. NEW SECTION . 452A.34 Classification of ethanol 2 blended fuel. 3 For purposes of this division, ethanol blended fuel shall be 4 classified in the same manner as provided in section 214A.2. 5 Sec. 15. 2006 Iowa Acts, chapter 1142, section 49, 6 subsection 2, as amended by 2006 Iowa Acts, chapter 1175, 7 section 17, is amended to read as follows: 8 2. For a retail dealer who may claim an ethanol E-15 9 promotion tax credit under section 422.11N or 422.33, 10 subsection 11A, as enacted in this Act and amended in 11 subsequent Acts , in calendar year 2020 and whose tax year ends 12 prior to December 31, 2020, the retail dealer may continue to 13 claim the tax credit in the retail dealer’s following tax year. 14 In that case, the tax credit shall be calculated in the same 15 manner as provided in section 422.11N or 422.33, subsection 16 11A, as enacted in this Act and amended in subsequent Acts , 17 for the remaining period beginning on the first day of the 18 retail dealer’s new tax year until December 31, 2020. For 19 that remaining period, the tax credit shall be calculated in 20 the same manner as a retail dealer whose tax year began on the 21 previous January 1 and who is calculating the tax credit on 22 December 31, 2020. 23 Sec. 16. EFFECTIVE DATE. This Act takes effect January 1, 24 2012. 25 Sec. 17. APPLICABILITY. The sections of this Act amending 26 section 422.11N and section 422.33, subsection 11A, and the 27 section of this Act amending 2006 Iowa Acts, chapter 1142, 28 section 49, subsection 2, as amended by 2006 Iowa Acts, chapter 29 1175, section 17, apply to tax years beginning on or after 30 January 1, 2012. 31 EXPLANATION 32 GENERALLY. The bill relates to ethanol blended gasoline 33 regulated by the department of agriculture and land stewardship 34 pursuant to Code chapter 214A and classified according to the 35 -4- LSB 1833HV (1) 84 da/rj 4/ 5

H.F. 555 percentage of ethanol blended into the gasoline (e.g., E-10 1 means a gallon of gasoline containing 10 percent ethanol). 2 ETHANOL PROMOTION TAX CREDIT. The bill amends the ethanol 3 promotion tax credit which is calculated separately for each 4 retail motor fuel site from which the retail dealer sells and 5 dispenses ethanol blended gasoline (Code sections 422.11N and 6 422.33, subsection 11A). The tax credit rate depends upon the 7 number of gallons of ethanol blended gasoline and biodiesel 8 blended fuel that a retail dealer sold throughout a calendar 9 year (referred to as a determination period). The amount of 10 the tax credit depends upon whether the retail dealer met that 11 biofuel threshold. This bill renames the tax credit as the 12 E-15 promotion tax credit, and provides that the tax credit 13 applies only to those gallons of ethanol blended gasoline 14 designated as E-15 or higher. It also allows a retail dealer 15 filing a tax return on a noncalendar year basis to claim the 16 tax credit. The tax credit is eliminated on January 1, 2021. 17 REPORTING. The bill also amends reporting requirements 18 by retail dealers and the department of revenue. A retail 19 dealer’s report calculates the total motor fuel gallonage, 20 and further divides that number based on a number of 21 classifications depending upon the type of motor fuel sold, 22 including ethanol blended gasoline gallonage. The department 23 then calculates the aggregate total for the motor fuel 24 gallonage including by classification for the determination 25 period. The bill revises the reporting classifications for 26 ethanol blended gasoline, by including subclassifications for 27 E-9 and E-10, E-11 to E-15, and E-16 to E-85. It provides that 28 the department may establish additional subclassifications. 29 The bill is effective on January 1, 2012, and tax credit 30 provisions are applicable to the tax years beginning on or 31 after that date. 32 -5- LSB 1833HV (1) 84 da/rj 5/ 5