House Study Bill 182 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON SWEENEY) A BILL FOR An Act providing for a cow-calf tax credit, providing for an 1 appropriation, and including applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2234YC (2) 84 da/rj

H.F. _____ Section 1. NEW SECTION . 422.120 Cow-calf tax credit 1 allowed. 2 1. a. There is allowed a cow-calf tax credit for cow-calf 3 operations located in the state. The amount of the tax credit 4 equals ten cents for each corn equivalent consumed by the 5 qualified livestock in the cow-calf operation as specified 6 under this section. The tax credit shall be refunded as 7 provided in section 422.122. 8 b. (1) The tax credit shall be available to an individual 9 or corporate taxpayer if the taxpayer’s federal taxable income 10 is not more than ninety-nine thousand six hundred dollars for 11 the tax year. In the case of married taxpayers, their combined 12 federal taxable income shall be used to determine if they 13 qualify for the credit. 14 (2) For each subsequent tax year, the maximum taxable income 15 amount specified in subparagraph (1) shall be multiplied by the 16 cumulative index factor for that tax year. “Cumulative index 17 factor” means the product of the annual index factor for the 18 2012 calendar year and all annual index factors for subsequent 19 calendar years. The cumulative index factor applies to all tax 20 years beginning on or after January 1 of the calendar year for 21 which the latest annual index factor has been determined. 22 (3) The annual index factor for the 2012 calendar year is 23 one hundred percent. For each subsequent calendar year, the 24 annual index factor equals the annual inflation factor for that 25 calendar year as computed in section 422.4 for purposes of the 26 individual income tax. 27 2. a. The amount of the tax credit per cow-calf operation 28 is determined by adding together for each head of qualified 29 livestock in the cow-calf operation the product of ten cents 30 times the number of corn equivalents consumed by that head of 31 qualified livestock. The amount of tax credit per cow-calf 32 operation per tax year shall not exceed three thousand dollars 33 and the amount of the tax credit per taxpayer per tax year 34 shall not exceed three thousand dollars. 35 -1- LSB 2234YC (2) 84 da/rj 1/ 5

H.F. _____ b. The maximum amount of corn equivalents for a head of 1 qualified livestock in a cow-calf operation is one hundred 2 eleven and one-half. 3 3. As used in this division, “cow-calf operation” means an 4 operation that includes qualified livestock of the following 5 livestock: 6 a. Mature beef cows bred or for breeding. 7 b. Bred yearling heifers. 8 c. Breeding bulls. 9 4. If the cow-calf operation is carried on partly within and 10 partly without the state, the portion of the cow-calf operation 11 attributable to this state shall be determined pursuant to 12 rules adopted by the department. The department may adjust the 13 allocation upon request of the taxpayer in order to reflect the 14 actual cow-calf operation carried on within this state. 15 5. In calculating the tax credit for cow-calf operations 16 for tax years beginning in the 2012 calendar year, mature beef 17 cows bred or for breeding, bred yearling heifers, and breeding 18 bulls in the operations’ inventory on December 31 of the tax 19 year which were also in the operations’ inventory on July 1 of 20 the tax year and stockers and feeders sold during the tax year 21 may be counted. In calculating the tax credit for cow-calf 22 operations for tax years beginning on or after January 1, 2013, 23 only those bred cows, bred heifers, and breeding bulls in the 24 operations’ inventory on December 31 of the tax year which were 25 also in the operations’ inventory on July 1 of the tax year may 26 be counted. 27 6. An individual may claim the tax credit allowed 28 a partnership, limited liability company, subchapter S 29 corporation, or estate or trust electing to have the income 30 taxed directly to the individual. The amount claimed by the 31 individual shall be based upon the pro rata share of the 32 individual’s earning of the partnership, limited liability 33 company, subchapter S corporation, or estate or trust. 34 7. A fraudulent claim for a credit refund under this 35 -2- LSB 2234YC (2) 84 da/rj 2/ 5

H.F. _____ division shall cause the forfeiture of any right or interest 1 to a tax credit refund in subsequent tax years under this 2 division. 3 Sec. 2. NEW SECTION . 422.121 Appropriation —— limitation. 4 Beginning with the fiscal year beginning July 1, 2011, there 5 is appropriated annually from the general fund of the state two 6 million dollars to refund the tax credit allowed under this 7 division. 8 Sec. 3. NEW SECTION . 422.122 Refund of cow-calf tax credit 9 claims. 10 1. Each tax year the total amount of tax credit for cow-calf 11 operations refund claims that shall be paid pursuant to section 12 422.120 shall not exceed the amount appropriated by the general 13 assembly for that purpose. If the total dollar amount of the 14 refund claims exceeds that amount, each claim shall be paid an 15 amount equal to that total dollar amount divided by the total 16 number of claims, not to exceed the amount of the taxpayer’s 17 claim. Remaining funds shall be prorated among those claims 18 not paid in full in the proportion that each such claim bears 19 to the total amount of such claims not paid in full. 20 2. In the case where refund claims are not paid in full, the 21 amount of the refund to which the taxpayer is entitled is the 22 amount computed in subsection 1, and paid to the taxpayer, and 23 the taxpayer is not entitled to any unpaid portion of a claim 24 and is not entitled to carry forward or backward to another tax 25 year any unpaid portion of a claim. A taxpayer shall not use a 26 refund as an estimated payment for the succeeding tax year. 27 3. A taxpayer must file a claim for refund within ten months 28 from the last day of the taxpayer’s tax year. An extension for 29 filing shall not be allowed. The department shall determine by 30 February 28 of the calendar year following the calendar year in 31 which the claims were filed if the total amount of claims for 32 refund exceeds the amount appropriated for that purpose by the 33 general assembly for the tax year. If the claim is not payable 34 on February 28 because the taxpayer is a fiscal year filer, the 35 -3- LSB 2234YC (2) 84 da/rj 3/ 5

H.F. _____ claim shall be considered as a claim filed for the following 1 tax year. 2 4. A claim for refund shall be made on claim forms to be 3 made available by the department. In order for a taxpayer to 4 have a valid refund claim, the taxpayer must supply legible 5 copies of documents the director deems necessary to verify the 6 amount of the refund. 7 Sec. 4. DIRECTIONS TO CODE EDITOR. The Code editor shall 8 codify sections designated in this Act as 422.120 through 9 422.122 as a new division in chapter 422. 10 Sec. 5. APPLICABILITY. The sections of this Act enacting 11 sections 422.120 through 422.122, establishing a tax credit and 12 refund for cow-calf operations, apply to tax years beginning on 13 or after January 1, 2012. 14 EXPLANATION 15 This bill restores the so-called cow-calf tax credit 16 originally enacted by the general assembly in 1996 (1996 Iowa 17 Acts, ch. 1197), and repealed by the general assembly in 2009 18 (2009 Iowa Acts, ch. 179). The bill provides for a tax credit 19 for a cow-calf operations located in this state and includes 20 a standing limited appropriation to support the tax credit. 21 The bill eliminates other livestock operations which were 22 originally part of the statute but never made eligible for the 23 tax credit funding. 24 The amount of the tax credit is computed by multiplying a 25 designated amount by the amount of corn equivalents consumed 26 by qualifying livestock ($.10 x 111.5). Qualifying livestock 27 includes mature beef cows bred or for breeding, bred yearling 28 heifers, and breeding bulls. A taxpayer must have a federal 29 taxable income of not more than $99,600 for the tax year. The 30 amount of tax credit per cow-calf operation cannot exceed 31 $3,000. The tax credit is available to an individual or 32 corporate taxpayer who owns qualifying livestock. 33 The amount of the standing limited appropriation is $2 34 million per fiscal year, beginning with the FY 2011-2012. 35 -4- LSB 2234YC (2) 84 da/rj 4/ 5

H.F. _____ The bill provisions creating a tax credit and refund for 1 cow-calf operations apply to tax years beginning on and after 2 January 1, 2012. 3 -5- LSB 2234YC (2) 84 da/rj 5/ 5