House Study Bill 604 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED ECONOMIC DEVELOPMENT AUTHORITY BILL) A BILL FOR An Act relating to economic development by providing an 1 adjustment to net income for certified suppliers of anchor 2 manufacturers for purposes of state taxation and including 3 retroactive applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5279DP (5) 84 mm/sc
S.F. _____ H.F. _____ Section 1. NEW SECTION . 15.226 Definitions. 1 For purposes of this part: 2 1. “Anchor manufacturer” means a business that meets all of 3 the following: 4 a. Manufactures tangible personal property at a facility in 5 Iowa. 6 b. Exports at least fifty percent of the tangible personal 7 property produced at the facility to markets outside of the 8 state. 9 2. “Certified supplier” means a business certified pursuant 10 to section 15.227. 11 3. “Facility” means a building or buildings located in the 12 state at which tangible personal property is manufactured for 13 sale within or without the state of Iowa. 14 4. “Manufactured” or “Manufactures” means adding value to 15 personal property through a process of manufacturing, refining, 16 purifying, combining of different materials, the packaging of 17 meats, extracting and recovering natural resources, and all 18 processes of fabricating and curing, with a view to selling the 19 property for gain or profit. 20 5. “Tangible personal property” means the same as defined in 21 section 422.33, subsection 2, unnumbered paragraph 2. 22 Sec. 2. NEW SECTION . 15.227 Certification of suppliers. 23 1. A business meeting the requirements of subsection 2 may 24 apply to the authority, no later than ninety days after the 25 end of a tax year of the business, for certification under 26 this section. If a business applying to the authority meets 27 the requirements of subsection 2, the authority shall issue 28 a certificate to the business stating that the business is a 29 certified supplier. 30 2. To receive certification as a certified supplier, a 31 business must meet all of the following for the tax year 32 immediately preceding the tax year for which the requested 33 certificate will be valid: 34 a. The business manufactures tangible personal property at a 35 -1- LSB 5279DP (5) 84 mm/sc 1/ 4
S.F. _____ H.F. _____ facility in Iowa. 1 b. The business derives more than ten percent of its gross 2 sales from sales to anchor manufacturers. 3 c. The business provides a statement from an anchor 4 manufacturer, signed by an officer or authorized representative 5 of the anchor manufacturer, attesting that the anchor 6 manufacturer meets the definition of anchor manufacturer under 7 section 15.226, and provides supporting documentation in a form 8 prescribed by the authority. 9 d. The business meets one of the following criteria: 10 (1) At least ten percent of the total payroll of the 11 business is located in the state. 12 (2) The business employs at least one hundred employees at a 13 facility in the state. 14 e. The business agrees to annually provide to the authority 15 information and data on jobs created and capital investments 16 made in the state by the business. The information and data 17 shall be in a form prescribed by the authority. 18 3. A certificate is valid for one tax year and shall include 19 an expiration date. Reapplication may be made each year for 20 certification under this part. The department of revenue shall 21 accept a validly issued, unexpired certificate issued under 22 this section. 23 Sec. 3. NEW SECTION . 15.228 Eligibility for adjustment to 24 net income of certified suppliers. 25 A certified supplier shall be eligible to make the 26 adjustment to net income in section 422.35, subsection 26, for 27 a tax year if all the following apply: 28 1. The certified supplier’s net business income for the tax 29 year, allocated and apportioned to this state under section 30 422.33, subsection 2, paragraph “b” , computed without regard 31 to section 422.35, subsection 26, increased by more than ten 32 percent over the certified supplier’s net business income in 33 the prior year, allocated and apportioned to this state under 34 section 422.33, subsection 2, paragraph “b” . 35 -2- LSB 5279DP (5) 84 mm/sc 2/ 4
S.F. _____ H.F. _____ 2. The certified supplier attaches a copy of a valid, 1 unexpired certificate issued under section 15.227 to the 2 certified supplier’s tax return required under chapter 422. 3 Sec. 4. NEW SECTION . 15.229 Rules. 4 The authority and the department of revenue may adopt rules 5 for the implementation of this part. 6 Sec. 5. Section 422.35, Code Supplement 2011, is amended by 7 adding the following new subsection: 8 NEW SUBSECTION . 26. If the taxpayer is a certified supplier 9 that meets the requirements in section 15.228, subtract an 10 amount equal to the difference between the taxpayer’s net 11 business income for the tax year, allocated and apportioned 12 under section 422.33, subsection 2, paragraph “b” , computed 13 without regard to this subsection, and one hundred ten percent 14 of the taxpayer’s net business income for the prior tax year, 15 allocated and apportioned under section 422.33, subsection 2, 16 paragraph “b” . 17 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies 18 retroactively to January 1, 2012, for tax years beginning on 19 or after that date. 20 EXPLANATION 21 This bill creates an economic development program that 22 allows a certified supplier to make an adjustment to net income 23 for state corporate tax purposes. 24 To qualify as a certified supplier under the bill, a business 25 must manufacture tangible personal property in Iowa, derive 26 more than 10 percent of its gross sales from sales to anchor 27 manufacturers, supply the authority with a signed statement 28 from the anchor manufacturer attesting that the anchor 29 manufacturer qualifies as an anchor manufacturer, and must 30 either maintain at least 10 percent of its payroll in Iowa or 31 employ at least 100 employees in Iowa. “Anchor manufacturer” 32 is defined as a business that manufactures tangible personal 33 property in Iowa and exports at least 50 percent of the 34 tangible personal property produced in Iowa outside of the 35 -3- LSB 5279DP (5) 84 mm/sc 3/ 4
S.F. _____ H.F. _____ state. 1 A business that meets all of the qualifications of a 2 certified supplier may annually apply to the authority to 3 receive a certificate labeling the business as a certified 4 supplier. A business must apply for a certificate no later 5 than 90 days after the end of its tax year. The certificate is 6 valid for one year and shall include an expiration date. 7 The certified supplier will be entitled to make an 8 adjustment to its net income if it attaches the valid, 9 unexpired certificate to its tax return, and if its net 10 business income allocated and apportioned to this state, 11 computed without regard to the adjustment to net income 12 provided in the bill, increased by more than 10 percent over 13 its prior year net business income allocated and apportioned 14 to this state. 15 If both requirements are met, the certified supplier is 16 entitled to subtract from its net income an amount equal to 17 the difference between its current year net business income 18 allocated and apportioned to this state, computed without 19 regard to the adjustment to net income provided in the bill, 20 and 110 percent of its prior year net business income allocated 21 and apportioned to this state. 22 The bill provides the authority and department of revenue 23 with rulemaking authority. 24 The bill applies retroactively to January 1, 2012, for tax 25 years beginning on or after that date. 26 -4- LSB 5279DP (5) 84 mm/sc 4/ 4