SENATE FILE 501

BY  FEENSTRA

A BILL FOR

An Act relating to taxation by modifying provisions relating to the percentage of actual value at which certain classifications of property are assessed for property tax purposes, establishing tax credits for certain commercial property taxes paid, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  NEW SECTION.  422.11Y  Commercial property tax credit.
   1.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a commercial property tax credit. An owner of real property assessed as commercial property, or new commercial property, as defined in section 441.21, located in the state is eligible to receive a tax credit equal to three percent of the total amount of property taxes paid by the owner during the tax year on all such commercial property or new commercial property owned by the person within the state.
   2.  For purposes of this section, an individual may claim a commercial property tax credit incurred by a partnership, S corporation, limited liability company, estate, or trust electing to have the 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 of a partnership, S corporation, limited liability company, estate, or trust.
   3.  Any credit in excess of the tax liability imposed by section 422.5 less the amounts of nonrefundable credits allowed under this division for the taxable year shall be refunded with interest computed under section 422.25. In lieu of claiming a refund, a taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following taxable year.
   Sec. 2.  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 commercial property tax credit. A corporation that owns real property assessed as commercial property, or new commercial property, as defined in section 441.21, located in the state is eligible to receive a tax credit equal to three percent of the total amount of property taxes paid during the tax year on all such commercial property or new commercial property owned by the corporation within the state. Any credit in excess of the tax liability for the taxable year shall be refunded with interest computed under section 422.25. In lieu of claiming a refund, a taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following taxable year.
   Sec. 3.  Section 422.60, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  13.  The taxes imposed under this division shall be reduced by a commercial property tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11Y.
   Sec. 4.  NEW SECTION.  432.12M  Commercial property tax credit.
   The taxes imposed under this chapter shall be reduced by a commercial property tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11Y.
   Sec. 5.  Section 441.21, subsection 5, Code 2011, is amended to read as follows:
   5.
  a.  For valuations established as of January 1, 1979, commercial property and industrial property, excluding properties referred to in section 427A.1, subsection 8, shall be assessed as a percentage of the actual value of each class of property. The percentage shall be determined for each class of property by the director of revenue for the state in accordance with the provisions of this section. For valuations established as of January 1, 1979, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend for each class of property shall be the total actual valuation for each class of property established for 1978, plus six percent of the amount so determined. The divisor for each class of property shall be the valuation for each class of property established for 1978, as reported by the assessors on the abstracts of assessment for 1978, plus the amount of value added to the total actual value by the revaluation of existing properties in 1979 as equalized by the director of revenue pursuant to section 441.49. For valuations established as of January 1, 1979, property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be considered as one class of property and shall be assessed as a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1979, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1978 by the department of revenue, plus ten percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be the valuation established for 1978, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1979. For valuations established as of January 1, 1980, commercial property and industrial property, excluding properties referred to in section 427A.1, subsection 8, shall be assessed at a percentage of the actual value of each class of property. The percentage shall be determined for each class of property by the director of revenue for the state in accordance with the provisions of this section. For valuations established as of January 1, 1980, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend for each class of property shall be the dividend as determined for each class of property for valuations established as of January 1, 1979, adjusted by the product obtained by multiplying the percentage determined for that year by the amount of any additions or deletions to actual value, excluding those resulting from the revaluation of existing properties, as reported by the assessors on the abstracts of assessment for 1979, plus four percent of the amount so determined. The divisor for each class of property shall be the total actual value of all such property in 1979, as equalized by the director of revenue pursuant to section 441.49, plus the amount of value added to the total actual value by the revaluation of existing properties in 1980. The director shall utilize information reported on the abstracts of assessment submitted pursuant to section 441.45 in determining such percentage. For valuations established as of January 1, 1980, property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be assessed at a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1980, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1979 by the department of revenue, plus eight percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be the valuation established for 1979, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1980. For valuations established as of January 1, 1981, and each year thereafter, the percentage of actual value as equalized by the director of revenue as provided in section 441.49 at which commercial property that is not new commercial property, as defined in paragraph “b”, and industrial property, excluding properties referred to in section 427A.1, subsection 8, shall be assessed shall be calculated in accordance with the methods provided herein, except that any references to six percent in this subsection shall be four percent. For valuations established as of January 1, 1981, and each year thereafter, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be assessed shall be calculated in accordance with the methods provided herein, except that any references to ten percent in this subsection shall be eight percent. Beginning with valuations established as of January 1, 1979, and each year thereafter, property valued by the department of revenue pursuant to chapter 434 shall also be assessed at a percentage of its actual value which percentage shall be equal to the percentage determined by the director of revenue for commercial property, industrial property, or property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438, whichever is lowest.
   b.
  (1)  For valuations established on or after January 1, 2012, but before January 1, 2016, new commercial property, excluding properties referred to in section 427A.1, subsection 8, shall be assessed as a percentage of the actual value as determined in this paragraph “b”.
   (2)  For valuations established for assessment years beginning on or after January 1, 2012, but before January 1, 2016, the percentage of actual value as equalized by the director of revenue as provided in section 441.49 at which new commercial property shall be assessed shall be sixty percent.
   (3)  For purposes of this section, “new commercial property” means a parcel of real estate containing no buildings or structures on July 1, 2011, upon which the construction of buildings or structures is commenced after July 1, 2011, and that, but for this paragraph, would be assessed under paragraph “a”.“New commercial property” shall be considered a separate classification of property.
   Sec. 6.  Section 441.21, subsection 8, paragraph b, Code 2011, is amended to read as follows:
   b.  Notwithstanding paragraph “a”, any construction or installation of a solar energy system on property classified as agricultural, residential, commercial, new commercial, or industrial property shall not increase the actual, assessed and taxable values of the property for five full assessment years.
   Sec. 7.  Section 441.21, subsections 9 and 10, Code 2011, are amended to read as follows:
   9.  Not later than November 1, 1979, and November 1 of each subsequent year, the director shall certify to the county auditor of each county the percentages of actual value at which residential property, agricultural property, commercial property, new commercial property, industrial property, and property valued by the department of revenue pursuant to chapters 428, 433, 434, 437, and 438 in each assessing jurisdiction in the county shall be assessed for taxation. The county auditor shall proceed to determine the assessed values of agricultural property, residential property, commercial property, new commercial property, industrial property, and property valued by the department of revenue pursuant to chapters 428, 433, 434, 437, and 438 by applying such percentages to the current actual value of such property, as reported to the county auditor by the assessor, and the assessed values so determined shall be the taxable values of such properties upon which the levy shall be made.
   10.  The percentage of actual value computed by the director for agricultural property, residential property, commercial property, new commercial property, industrial property, and property valued by the department of revenue pursuant to chapters 428, 433, 434, 437, and 438 and used to determine assessed values of those classes of property does not constitute a rule as defined in section 17A.2, subsection 11.
   Sec. 8.  Section 533.329, subsection 2, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  l.  The moneys and credits tax imposed under this section shall be reduced by a commercial property tax credit in the same manner, for the same amount, and under the same conditions as provided in section 422.11Y.
   Sec. 9.  APPLICABILITY.
   1.  The sections of this Act amending section 441.21 apply to property tax assessment years beginning on or after January 1, 2012.
   2.  The sections of this Act enacting section 422.11Y, section 422.33, subsection 29, section 422.60, subsection 13, section 432.12M, and section 533.329, subsection 2, paragraph “l”, apply to tax years beginning on or after January 1, 2012.
EXPLANATION
   This bill establishes a new commercial property classification. “New commercial property” is defined in the bill as a parcel of real estate containing no buildings or structures on July 1, 2011, upon which the construction of buildings or structures is commenced after July 1, 2011, and that, but for the classification, would be assessed as commercial property. For assessment years beginning on or after January 1, 2012, the percentage of actual value at which new commercial property is assessed is 60 percent.
   The bill also makes corresponding changes to other provisions of Code section 441.21.
   The bill establishes an individual income tax credit for persons who own and pay property taxes on commercial property or new commercial property, as defined in the bill, located in the state. Each person is eligible to receive an income tax credit equal to 3 percent of the total amount of property taxes paid by the person during the tax year on all commercial property owned by the person within the state. The tax credit is refundable.
   The bill establishes a corporate income tax credit for corporations that own and pay property taxes on commercial property or new commercial property, as defined in the bill, located in the state. Each corporation that owns and pays property taxes on commercial property or new commercial property located in the state is eligible to receive a tax credit equal to 3 percent of the total amount of property taxes paid during the tax year on all commercial property or new commercial property owned by the corporation within the state. Any credit in excess of the tax liability is refundable.
   The bill also provides a commercial property tax credit against the franchise tax, the insurance premiums tax, and the moneys and credits tax imposed under Code chapters 422, 432, and 533, respectively. Such credits are for the same amount and are administered in the same manner as the individual income tax credit created in the bill.
   The bill applies to property tax assessment years beginning on or after January 1, 2012. The sections of the bill enacting new Code sections 422.11Y and 432.12M, Code section 422.33, new subsection 29, Code section 422.60, new subsection 13, and Code section 533.329, subsection 2, new paragraph “l”, apply to tax years beginning on or after January 1, 2012.