HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON SWEENEY)

A BILL FOR

An Act relating to ethanol by providing for tax credits and reporting for ethanol blended gasoline, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 2.48, subsection 3, paragraph d, subparagraph (5), Code 2011, is amended to read as follows:
   (5)  The ethanol E-15 promotion tax credits available under section 422.11N.
   Sec. 2.  Section 422.11N, subsection 1, paragraph f, Code 2011, is amended to read as follows:
   f.  “Tax credit” means the ethanol E-15 promotion tax credit as provided in this section.
   Sec. 3.  Section 422.11N, subsection 3, Code 2011, is amended to read as follows:
   3.  The taxes imposed under this division, less the tax credits allowed under section 422.12, shall be reduced by an ethanol E-15 gasoline promotion tax credit for each tax year that the taxpayer is eligible to claim the tax credit under this section. In order to be eligible, all of the following must apply:
   a.  The taxpayer is a retail dealer who sells and dispenses ethanol blended gasoline designated as E-15 or higher pursuant to section 214A.2 through a motor fuel pump in the tax year in which the tax credit is claimed.
   b.  The retail dealer complies with requirements of the department to administer this section.
   Sec. 4.  Section 422.11N, subsection 4, paragraph d, Code 2011, is amended by striking the paragraph.
   Sec. 5.  Section 422.11N, subsection 5, paragraph a, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   For a retail dealer whose tax year is the same as a determination period beginning on January 1 and ending on December 31, the retail dealer’s tax credit is calculated by multiplying the retail dealer’s total ethanol gallonage from ethanol blended gasoline designated as E-15 or higher, pursuant to section 214A.2, by a tax credit rate, which may be adjusted based on the retail dealer’s biofuel threshold percentage disparity. The tax credit rate is as follows:
   Sec. 6.  Section 422.11N, subsection 5, paragraph a, subparagraph (1), Code 2011, is amended to read as follows:
   (1)  For any tax year in which the retail dealer has attained a biofuel threshold percentage for the determination period, the tax credit rate is six sixteen and one-half cents.
   Sec. 7.  Section 422.11N, subsection 5, paragraph a, subparagraph (2), subparagraph divisions (a) and (b), Code 2011, are amended to read as follows:
   (a)  If the retail dealer’s biofuel threshold percentage disparity equals two percent or less, the tax credit rate is four fourteen and one-half cents.
   (b)  If the retail dealer’s biofuel threshold percentage disparity equals more than two percent but not more than four percent, the tax credit rate is two twelve and one-half cents.
   Sec. 8.  Section 422.11N, subsection 6, Code 2011, is amended to read as follows:
   6.  A retail dealer is eligible to claim an ethanol E-15 gasoline promotion tax credit as provided in this section even though the retail dealer claims an E-85 gasoline promotion tax credit pursuant to section 422.11O for the same tax year and for the same ethanol gallonage.
   Sec. 9.  Section 422.11O, subsection 5, Code 2011, is amended to read as follows:
   5.  A retail dealer is eligible to claim an E-85 gasoline promotion tax credit as provided in this section even though the retail dealer claims an ethanol E-15 gasoline promotion tax credit pursuant to section 422.11N for the same tax year for the same ethanol gallonage.
   Sec. 10.  Section 422.33, subsection 11A, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   The taxes imposed under this division shall be reduced by an ethanol E-15 promotion tax credit for each tax year that the taxpayer is eligible to claim the tax credit under this subsection.
   Sec. 11.  Section 422.33, subsection 11A, paragraphs a and b, Code 2011, are amended to read as follows:
   a.  The taxpayer shall claim the tax credit in the same manner as provided in section 422.11N. The taxpayer may claim the tax credit according to the same requirements, for the same amount, and calculated in the same manner, as provided for the ethanol E-15 promotion tax credit pursuant to section 422.11N.
   b.  Any ethanol E-15 promotion tax credit which is in excess of the taxpayer’s tax liability shall be refunded or may be shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year in the same manner as provided in section 422.11N.
   Sec. 12.  Section 452A.31, subsection 2, paragraph a, subparagraph (1), Code 2011, is amended to read as follows:
   (1)  The total ethanol blended gasoline gallonage which is the retail dealer’s total number of gallons of ethanol blended gasoline and which includes any subclassification required by the department. However, the total ethanol blended gasoline gallonage must at least include all of the following subclassifications:
   (a)  The total E-xx E-10 gasoline gallonage which is the total number of gallons of ethanol blended gasoline other than E-85 gasoline designated as E-9 or E-10.
   (b)  The total E-15 gasoline gallonage which is the total number of gallons of ethanol blended gasoline designated as E-11 to E-15.
   (c)  The total E-85 flexible fuel gasoline gallonage which is the total number of gallons of ethanol blended gasoline designated as E-16 to E-85 gasoline.
   Sec. 13.  Section 452A.31, subsection 4, paragraph a, subparagraph (1), Code 2011, is amended by striking the subparagraph and inserting in lieu thereof the following:
   (1)  The aggregate ethanol blended gasoline gallonage which is the aggregate total number of gallons of ethanol blended gasoline and which includes the aggregate ethanol blended gasoline gallonage for each subclassification provided for in subsection 2.
   Sec. 14.  NEW SECTION.  452A.34  Classification of ethanol blended fuel.
   For purposes of this division, ethanol blended fuel shall be classified in the same manner as provided in section 214A.2.
   Sec. 15.  2006 Iowa Acts, chapter 1142, section 49, subsection 2, as amended by 2006 Iowa Acts, chapter 1175, section 17, is amended to read as follows:
   2.  For a retail dealer who may claim an ethanol E-15 promotion tax credit under section 422.11N or 422.33, subsection 11A, as enacted in this Act and amended in subsequent Acts, in calendar year 2020 and whose tax year ends prior to December 31, 2020, the retail dealer may continue to claim the tax credit in the retail dealer’s following tax year. In that case, the tax credit shall be calculated in the same manner as provided in section 422.11N or 422.33, subsection 11A, as enacted in this Act and amended in subsequent Acts, for the remaining period beginning on the first day of the retail dealer’s new tax year until December 31, 2020. For that remaining period, the tax credit shall be calculated in the same manner as a retail dealer whose tax year began on the previous January 1 and who is calculating the tax credit on December 31, 2020.
   Sec. 16.  EFFECTIVE DATE.  This Act takes effect January 1, 2012.
   Sec. 17.  APPLICABILITY.  The sections of this Act amending section 422.11N and section 422.33, subsection 11A, and the section of this Act amending 2006 Iowa Acts, chapter 1142, section 49, subsection 2, as amended by 2006 Iowa Acts, chapter 1175, section 17, apply to tax years beginning on or after January 1, 2012.
EXPLANATION
   GENERALLY. The bill relates to ethanol blended gasoline regulated by the department of agriculture and land stewardship pursuant to Code chapter 214A and classified according to the percentage of ethanol blended into the gasoline (e.g., E-10 means a gallon of gasoline containing 10 percent ethanol).
   ETHANOL PROMOTION TAX CREDIT. The bill amends the ethanol promotion tax credit which is calculated separately for each retail motor fuel site from which the retail dealer sells and dispenses ethanol blended gasoline (Code sections 422.11N and 422.33, subsection 11A). The tax credit rate depends upon the number of gallons of ethanol blended gasoline and biodiesel blended fuel that a retail dealer sold throughout a calendar year (referred to as a determination period). The amount of the tax credit depends upon whether the retail dealer met that biofuel threshold. This bill renames the tax credit as the E-15 promotion tax credit, and provides that the tax credit applies only to those gallons of ethanol blended gasoline designated as E-15 or higher. It also allows a retail dealer filing a tax return on a noncalendar year basis to claim the tax credit. The tax credit is eliminated on January 1, 2021.
   REPORTING. The bill also amends reporting requirements by retail dealers and the department of revenue. A retail dealer’s report calculates the total motor fuel gallonage, and further divides that number based on a number of classifications depending upon the type of motor fuel sold, including ethanol blended gasoline gallonage. The department then calculates the aggregate total for the motor fuel gallonage including by classification for the determination period. The bill revises the reporting classifications for ethanol blended gasoline, by including subclassifications for E-9 and E-10, E-11 to E-15, and E-16 to E-85. It provides that the department may establish additional subclassifications.
   The bill is effective on January 1, 2012, and tax credit provisions are applicable to the tax years beginning on or after that date.