S.F. 516 Section 1. NEW SECTION . 422.11Y Energy system tax credits. 1 The taxes imposed under this division, less the credits 2 allowed under sections 422.12 and 422.12B, shall be reduced by 3 a solar energy system tax credit and a wind energy system tax 4 credit under section 473B.2. 5 Sec. 2. Section 422.33, Code 2011, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 29. The taxes imposed under this division 8 shall be reduced by a solar energy system tax credit and a wind 9 energy system tax credit under section 473B.2. 10 Sec. 3. NEW SECTION . 473B.1 Definitions. 11 As used in this chapter, unless the context otherwise 12 requires: 13 1. “Allowable costs” means amounts incurred in the 14 construction or installation of a solar energy system or a wind 15 energy system which are determined by the department by rule to 16 qualify for the tax credit issued pursuant to section 473B.2. 17 2. “Department” means the department of revenue. 18 3. “Solar energy system” means a solar energy facility which 19 collects and converts incident solar radiation into energy to 20 generate electricity, or a solar thermal system. 21 4. “Wind energy system” means a wind energy conversion 22 system that collects and converts wind into energy to generate 23 electricity, with a nameplate generating capacity of less than 24 or equal to five hundred kilowatts. 25 Sec. 4. NEW SECTION . 473B.2 Tax credits. 26 1. A solar energy system tax credit or a wind energy system 27 tax credit shall be issued for the allowable costs incurred in 28 the construction or installation of a solar energy system or 29 a wind energy system equal to thirty percent of the cost of 30 the construction or installation, subject to a maximum credit 31 of fifteen thousand dollars for commercial or agricultural 32 construction or installation, or three thousand dollars for 33 residential construction or installation. Any credit in excess 34 of the tax liability is refundable. In lieu of claiming a 35 -1- LSB 2732SV (2) 84 rn/rj 1/ 6

S.F. 516 refund, the taxpayer may elect to have the overpayment shown 1 on the taxpayer’s final, completed return credited to the tax 2 liability for the following tax year. 3 2. a. An individual may claim the tax credit allowed a 4 partnership, limited liability company, S corporation, estate, 5 or trust electing to have the income taxed directly to the 6 individual. The amount claimed by the individual shall be 7 based upon the pro rata share of the individual’s earnings of 8 the partnership, limited liability company, S corporation, 9 estate, or trust. 10 b. A taxpayer who is eligible to claim a solar energy 11 system tax credit or a wind energy system tax credit under this 12 chapter shall not be eligible to claim a wind energy production 13 tax credit under chapter 476B or a renewable energy tax credit 14 under chapter 476C. 15 3. The cumulative value of tax credit certificates issued 16 annually by the department to applicants pursuant to this 17 chapter shall not exceed ten million dollars. 18 4. For purposes of this section, “residential” means a 19 primary or vacation residence, and excludes rental property. 20 Sec. 5. NEW SECTION . 473B.3 Tax credit certificate —— 21 application and issuance. 22 1. a. To receive a tax credit as described in section 23 473B.2, a taxpayer shall file an application with the 24 department, the form and content of which shall be determined 25 by the department by rule. If upon receipt of a completed 26 application, the department finds that the person is qualified 27 for a solar energy system tax credit or a wind energy system 28 tax credit, the department shall calculate the amount of the 29 tax credit for which the person is eligible and shall issue 30 the applicable tax credit certificate to the person or notify 31 the person in writing of its refusal to do so. The tax credit 32 certificate may be applied against tax owned pursuant to 33 chapter 422, division II and III for the year in which the 34 allowable costs were incurred. 35 -2- LSB 2732SV (2) 84 rn/rj 2/ 6

S.F. 516 b. At a minimum, qualification criteria for issuance of 1 a certificate pursuant to paragraph “a” shall include the 2 following: 3 (1) An applicant shall complete and submit an energy audit 4 conducted either by or on behalf of the applicant’s electric 5 utility or through a private energy audit service. The level 6 of energy audit to be conducted shall be determined under rules 7 adopted by the department in consultation with the utilities 8 board of the utilities division of the department of commerce. 9 (2) The solar energy system or wind energy system must 10 qualify for the energy star efficiency rating developed by the 11 United States environmental protection agency, or a similar 12 certification program or status designated by the department 13 by rule, if available. 14 (3) The installation must be performed by a licensed or 15 certified installer qualified to install solar energy systems 16 or wind energy systems and related equipment, and must meet or 17 exceed all requirements of applicable local building codes and 18 ordinances. 19 2. A person whose application for a solar energy system 20 tax credit certificate or a wind energy system tax credit 21 certificate is denied may file an appeal with the department 22 within sixty days from the date of denial pursuant to the 23 provisions of chapter 17A. 24 3. If a solar energy system tax credit certificate or a wind 25 energy system tax credit certificate is allowed with respect 26 to residential, commercial, or agricultural property and such 27 property is sold, the credit for the period after the sale 28 which would have been allowable under this chapter to the prior 29 owner had the property not been sold shall be allowable to the 30 new owner. A tax credit for the year of sale shall be allocated 31 between the parties on the basis of the number of days during 32 such year that the property was owned by each. 33 Sec. 6. NEW SECTION . 473B.4 Reporting. 34 On or before January 1, annually, the department shall 35 -3- LSB 2732SV (2) 84 rn/rj 3/ 6

S.F. 516 submit a written report to the governor and the general 1 assembly regarding the number and value of tax credit 2 certificates issued under this chapter, and any other 3 information the department may deem meaningful and appropriate. 4 Sec. 7. Section 476B.4, Code 2011, is amended to read as 5 follows: 6 476B.4 Limitation. 7 1. The wind energy production tax credit shall not be 8 allowed for any kilowatt-hour of electricity that is sold to a 9 related person. For purposes of this section , persons shall 10 be treated as related to each other if such persons would be 11 treated as a single employer under the regulations prescribed 12 under section 52(b) of the Internal Revenue Code. In the case 13 of a corporation that is a member of an affiliated group of 14 corporations filing a consolidated return, such corporation 15 shall be treated as selling electricity to an unrelated person 16 if such electricity is sold to such a person by another member 17 of such group. 18 2. A taxpayer who is eligible to claim a wind energy 19 production tax credit under this chapter shall not be eligible 20 to claim a solar energy system tax credit or a wind energy 21 system tax credit under chapter 473B. 22 Sec. 8. Section 476C.2, Code 2011, is amended by adding the 23 following new subsection: 24 NEW SUBSECTION . 3. A taxpayer who is eligible to claim a 25 renewable energy tax credit under this chapter shall not be 26 eligible to claim a solar energy system tax credit or a wind 27 energy system tax credit under chapter 473B. 28 Sec. 9. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 29 immediate importance, takes effect upon enactment. 30 Sec. 10. RETROACTIVE APPLICABILITY. This Act applies 31 retroactively to tax years beginning on or after January 1, 32 2011. 33 EXPLANATION 34 This bill provides tax credits for the construction and 35 -4- LSB 2732SV (2) 84 rn/rj 4/ 6

S.F. 516 installation of solar energy systems and wind energy systems, 1 as defined in the bill. 2 The bill provides that a solar energy system tax credit and a 3 wind energy system tax credit shall be issued for the allowable 4 costs, as determined by the department of revenue, incurred in 5 the construction or installation of a solar energy system or a 6 wind energy system. The credits shall be equal to 30 percent 7 of the cost of the construction or installation, subject to 8 a maximum credit of $15,000 for commercial or agricultural 9 construction or installation or $3,000 for residential 10 construction or installation. The bill specifies that the 11 credits shall be refundable, or alternatively applied against 12 tax liability for the following tax year, and clarifies that 13 “residential” means a primary or vacation residence, excluding 14 rental property. 15 The bill provides that an individual may claim the tax 16 credit allowed a partnership, limited liability company, S 17 corporation, estate, or trust electing to have the income 18 taxed directly to the individual, with the amount claimed 19 based upon the pro rata share of the individual’s earnings of 20 the partnership, limited liability company, S corporation, 21 estate, or trust. The bill also provides that a taxpayer who 22 is eligible to claim a solar energy system tax credit or a wind 23 energy system tax credit is not eligible to claim the wind 24 energy production tax credit provided in Code chapter 476B or 25 the renewable energy tax credit provided in Code chapter 476C, 26 and places corresponding restrictions in both Code chapters. 27 Further, the bill restricts the cumulative total of solar 28 energy system or wind energy system tax credits issued for all 29 applicants to an amount not exceeding $10 million annually. 30 The bill sets forth application and issuance procedures 31 in relation to obtaining a tax credit certificate, to be 32 developed by the department by rule. The bill provides that, 33 at a minimum, qualification criteria shall include submission 34 of an energy audit at a level determined by rule conducted 35 -5- LSB 2732SV (2) 84 rn/rj 5/ 6

S.F. 516 either by or on behalf of the applicant’s electric utility or 1 through a private energy audit service, qualification of the 2 system for the energy star efficiency rating developed by the 3 United States environmental protection agency or a similar 4 certification program or status designated by the department 5 by rule, if available, installation by a licensed or certified 6 installer qualified to install solar energy or wind energy 7 systems and equipment, and meeting or exceeding all applicable 8 local building code and ordinance requirements. 9 The bill states that if the department finds that a person 10 is qualified for a solar energy system tax credit or a wind 11 energy system tax credit, the department shall calculate the 12 amount of the tax credit for which the person is eligible and 13 either issue the applicable tax credit certificate to the 14 person or notify the person in writing of its refusal to do so. 15 The tax credit certificate may be applied against individual 16 or corporate tax owed pursuant to Code chapter 422, division 17 II and III for the year in which the allowable costs were 18 incurred. 19 The bill authorizes a person whose application is denied to 20 file an appeal with the department within 60 days from the date 21 of denial, and provides for the proration or allocation of a 22 credit in the event property subject to a tax credit is sold. 23 The bill contains reporting requirements regarding the number 24 and value of tax credit certificates issued, and any other 25 information the department deems meaningful and appropriate. 26 The bill takes effect upon enactment, and applies 27 retroactively to tax years beginning on or after January 1, 28 2011. 29 -6- LSB 2732SV (2) 84 rn/rj 6/ 6