SENATE FILE 145

BY  DANDEKAR and SODDERS

A BILL FOR

An Act providing for a manufacturing jobs program and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

MANUFACTURING JOBS PROGRAM
   Section 1.  NEW SECTION.  15.321  Short title.
   This part shall be known and may be cited as the “Manufacturing Jobs Program”.
   Sec. 2.  NEW SECTION.  15.322  Definitions.
   1.  “Capital investment” means expenditures that are made by an eligible manufacturer to retool or reconfigure a facility and that are directly related to the manufacturing of a new product or to the expansion of production capacity for an existing product.
   2.  “Department” means the department of economic development.
   3.  “Eligible manufacturer” means a manufacturer meeting the requirements of section 15.323.
   4.  “Facility” means a building or other structure at which an eligible manufacturer manufactures a product.
   5.  “Program” means the manufacturing jobs program established pursuant to this part.
   Sec. 3.  NEW SECTION.  15.323  Eligible manufacturer.

   1.  To be eligible to receive incentives under the program described in this part, a manufacturer shall meet all of the following conditions:
   a.  Be an Iowa-based business manufacturing goods at a facility in Iowa.
   b.  Have a North American industry classification system code within the manufacturing sector range 31-33.
   c.  Increase manufacturing activities in the state either by manufacturing a new product or by expanding production capacity for an existing product.
   d.  Make a minimum capital investment. For purposes of this paragraph, the amount of the minimum capital investment shall be:
   (1)  Twenty-five thousand dollars per job, in the case of a new product.
   (2)  Fifteen thousand dollars per job, in the case of expanded capacity for an existing product.
   e.  Meet all of the requirements of an eligible business under section 15.329 except the qualifying investment amount in section 15.329, subsection 1, paragraph “a”.
   2.  A manufacturer receiving assistance under this part shall not be eligible for assistance under the high quality jobs program described in part 13 of this subchapter.
   Sec. 4.  NEW SECTION.  15.324  Agreement.
   1.  An eligible manufacturer receiving financial assistance under the program shall enter into an agreement with the department specifying the requirements that must be met to confirm eligibility pursuant to this part.
   2.  An agreement entered into under the program shall conform to the minimum requirements specified in section 15.330.
   Sec. 5.  NEW SECTION.  15.325  Manufacturing activities tax credit.
   1.
  a.  An eligible manufacturer may claim a tax credit against the taxes imposed in chapter 422, division II or III equal to one hundred percent of the amount of capital investment directly related to increasing manufacturing activities in the state.
   b.  An individual may claim the tax credit under this subsection of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
   c.  Any tax credit in excess of the tax liability for the tax year may be credited to the tax liability for the following ten years or until depleted, whichever occurs first.
   d.
  (1)  Subject to prior approval by the department, in consultation with the department of revenue, an eligible manufacturer may elect to receive a refund of all or a portion of any unused tax credit in excess of the tax liability.
   (2)  If the eligible manufacturer is a partnership, S corporation, limited liability company, or estate or trust electing to have the income taxed directly to the individual, an individual may claim the refund allowed under subparagraph (1). The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, S corporation, limited liability company, estate, or trust.
   2.
  a.  An eligible manufacturer shall apply to the department of economic development for a tax credit certificate. After reviewing the application and verifying the eligibility of a taxpayer for a tax credit pursuant to this section, the department shall forward the application to the board with a recommendation on whether or not to issue a tax credit certificate to the taxpayer. If the board approves the application, the department shall issue a tax credit certificate to the taxpayer. The tax credit certificate shall contain the taxpayer’s name, address, tax identification number, the amount of the credit, the certificate expiration date, and any other information required by the department of revenue.
   b.  To claim a tax credit under this section, a taxpayer must attach one or more tax credit certificates to the taxpayer’s tax return. The tax credit certificate or certificates attached to the taxpayer’s tax return shall be issued in the taxpayer’s name, and the expiration date on the certificate shall be a date that falls on or after the last day of the taxable year for which the taxpayer is claiming the tax credit. 
   c.  The tax credit certificate, unless otherwise void, shall be accepted by the department of revenue as payment for taxes imposed pursuant to chapter 422, division II or III, subject to any conditions or restrictions placed by the department of economic development upon the face of the tax credit certificate and subject to the limitations of this section.
   d.  A tax credit certificate issued under this section is not transferable to any person or entity.
   3.  The maximum amount of tax credit that may be claimed under this section by an eligible manufacturer is five million dollars.
   4.  The total amount of tax credits that may be approved by the board under this section is fifteen million dollars.
   Sec. 6.  NEW SECTION.  15.325A  Repeal.
   This part is repealed on December 31, 2020.
   Sec. 7.  NEW SECTION.  422.11Y  Manufacturing activities tax credit.
   The taxes imposed under this division shall be reduced by a manufacturing activities tax credit in the same manner, for the same amount, and under the same conditions as provided in chapter 15, subchapter II, part 12.
   Sec. 8.  Section 422.33, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  29.  The taxes imposed under this division shall be reduced by a manufacturing activities tax credit in the same manner, for the same amount, and under the same conditions as provided in chapter 15, subchapter II, part 12.
   Sec. 9.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2011, for tax years beginning on or after that date.

DIVISION II

CONFORMING CHANGES
   Sec. 10.  Section 2.48, subsection 3, paragraph e, Code 2011, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (10)  The manufacturing activities tax credits available under the manufacturing jobs program in chapter 15, subchapter II, part 12.
   Sec. 11.  Section 15.104, subsection 8, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  n.  Manufacturing jobs.  Data on all assistance provided to eligible manufacturers under the manufacturing jobs program described in sections 15.321 through 15.325A.
EXPLANATION
   This bill creates a manufacturing jobs program within the department of economic development.
   Division I of the bill creates the program. The program provides corporate and individual income tax credits to eligible manufacturers for 100 percent of their capital investment directly related to increasing manufacturing activities in the state. To be eligible, a manufacturer must be an Iowa-based business manufacturing goods at a facility in Iowa, have a North American Industry Classification System code within the manufacturing sector range 31-33, increase manufacturing activities either by manufacturing a new product or by expanding production capacity for an existing product, make a minimum capital investment, and meet all the requirements of an eligible business under the high quality jobs program specified in Code section 15.329. Meeting the requirements of the high quality jobs program, by operation of law, requires a manufacturer to meet certain job creation and wage threshold requirements also required in that program and in the grow Iowa values fund and financial assistance program. A manufacturer receiving assistance under the manufacturing jobs program is not eligible for assistance under the high quality jobs program.
   The division provides that the tax credits are available against the individual and corporate income taxes. The tax credits are refundable subject to the approval of the department of economic development or, at the taxpayer’s election, may be carried forward against future tax liability for up to 10 years or until depleted, whichever occurs first. The tax credits are not transferable. The maximum amount of tax credit that an eligible manufacturer may claim is $5 million. The total amount of tax credits that may be approved under the program is $15 million.
   The division applies retroactively to January 1, 2011, for tax years beginning on or after that date.
   The program is repealed on December 31, 2020.
   Division II of the bill adds the program to the list of tax credit programs to be reviewed in 2015 by the general assembly’s tax expenditure committee.
   The division also requires the economic development board to report annually on the assistance provided to eligible manufacturers under the program.