House Study Bill 648 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON ECONOMIC GROWTH/REBUILD IOWA BILL BY CHAIRPERSON GRASSLEY) A BILL FOR An Act relating to the amount allowable as an innovation fund 1 investment tax credit, making the credit transferable, and 2 including effective date and retroactive applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6027HC (3) 84 mm/sc

H.F. _____ Section 1. Section 15E.52, subsection 3, Code Supplement 1 2011, is amended to read as follows: 2 3. The amount of a tax credit allowed under this section 3 shall equal twenty percent of the following percentage of the 4 taxpayer’s equity investment in an innovation fund : 5 a. For equity investments made in fiscal years beginning on 6 or after July 1, 2011, and ending on or before June 30, 2014, 7 one hundred percent . 8 b. For equity investments made in the fiscal year beginning 9 on July 1, 2014, seventy-five percent. 10 c. For equity investments made in the fiscal year beginning 11 on July 1, 2015, fifty percent. 12 d. For equity investments made in fiscal years beginning on 13 or after July 1, 2016, twenty percent. 14 Sec. 2. Section 15E.52, subsection 5, paragraph a, Code 15 Supplement 2011, is amended to read as follows: 16 a. The board shall issue certificates under this section 17 which may be redeemed for tax credits. The board shall issue 18 such certificates so that not more than the amount allocated 19 for such tax credits under section 15.119, subsection 2 , may be 20 claimed. The certificates shall not be transferable. 21 Sec. 3. Section 15E.52, subsection 5, Code Supplement 2011, 22 is amended by adding the following new paragraph: 23 NEW PARAGRAPH . c. (1) Tax credit certificates issued 24 under this section may be transferred to any person or entity. 25 Within ninety days of transfer, the transferee shall submit the 26 transferred tax credit certificate to the department of revenue 27 along with a statement containing the transferee’s name, tax 28 identification number, and address, the denomination that each 29 replacement tax credit certificate is to carry, and any other 30 information required by the department of revenue. 31 (2) Within thirty days of receiving the transferred 32 tax credit certificate and the transferee’s statement, the 33 department of revenue shall issue one or more replacement 34 tax credit certificates to the transferee. Each replacement 35 -1- LSB 6027HC (3) 84 mm/sc 1/ 3

H.F. _____ tax credit certificate must contain the information required 1 for the original tax credit certificate and must have the 2 same expiration date that appeared in the original tax credit 3 certificate. Tax credit certificate amounts of less than the 4 minimum amount established by rule of the economic development 5 authority shall not be transferable. 6 (3) A tax credit shall not be claimed by a transferee 7 under this section until a replacement tax credit certificate 8 identifying the transferee as the proper holder has been 9 issued. The transferee may use the amount of the tax credit 10 transferred against the taxes imposed in chapter 422, divisions 11 II, III, and V, and in chapter 432, and against the moneys and 12 credits tax imposed in section 533.329, for any tax year the 13 original transferor could have claimed the tax credit. Any 14 consideration received for the transfer of the tax credit shall 15 not be included as income under chapter 422, divisions II, III, 16 and V, under chapter 432, or against the moneys and credits tax 17 imposed in section 533.329. Any consideration paid for the 18 transfer of the tax credit shall not be deducted from income 19 under chapter 422, divisions II, III, and V, under chapter 20 432, or against the moneys and credits tax imposed in section 21 533.329. 22 Sec. 4. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 23 immediate importance, takes effect upon enactment. 24 Sec. 5. RETROACTIVE APPLICABILITY. This Act applies 25 retroactively to July 1, 2011, for innovation fund tax credit 26 certificates issued on or after that date. 27 EXPLANATION 28 This bill changes the amount allowable as an innovation 29 fund investment tax credit under Code section 15E.52. Under 30 current law, the credit is equal to 20 percent of a taxpayer’s 31 equity investment in an innovation fund. The bill changes the 32 credit amount to 100 percent of an equity investment made in 33 fiscal years beginning July 1, 2011, July 1, 2012, and July 1, 34 2013, 75 percent for the fiscal year beginning July 1, 2014, 35 -2- LSB 6027HC (3) 84 mm/sc 2/ 3

H.F. _____ 50 percent for the fiscal year beginning July 1, 2015, and 20 1 percent for fiscal years beginning on or after July 1, 2016. 2 The bill also makes the tax credit transferable and 3 establishes procedures for transferring the credit to another 4 person or entity. The bill is effective upon enactment and 5 applies retroactively to July 1, 2011, for innovation fund tax 6 credit certificates issued on or after that date. 7 -3- LSB 6027HC (3) 84 mm/sc 3/ 3