Senate Study Bill 1196 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR An Act providing income tax credits for the construction 1 and installation of solar energy systems and wind energy 2 systems, and including effective date and retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2732XC (2) 84 rn/rj

S.F. _____ 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. 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 twenty megawatts. 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. The credits shall 34 be refundable. 35 -1- LSB 2732XC (2) 84 rn/rj 1/ 5

S.F. _____ 2. For purposes of this section, “residential” means a 1 primary or vacation residence, and excludes rental property. 2 Sec. 5. NEW SECTION . 473B.3 Tax credit certificate —— 3 application and issuance. 4 1. a. To receive a tax credit as described in section 5 473B.2, a taxpayer shall file an application with the 6 department, the form and content of which shall be determined 7 by the department by rule. If upon receipt of a completed 8 application, the department finds that the person is qualified 9 for a solar energy system tax credit or a wind energy system 10 tax credit, the department shall calculate the amount of the 11 tax credit for which the person is eligible and shall issue 12 the applicable tax credit certificate to the person or notify 13 the person in writing of its refusal to do so. The tax credit 14 certificate may be applied against tax owned pursuant to 15 chapter 422, division II and III for the year in which the 16 allowable costs were incurred. 17 b. At a minimum, qualification criteria for issuance of 18 a certificate pursuant to paragraph “a” shall include the 19 following: 20 (1) An applicant shall complete and submit an energy audit 21 conducted either by or on behalf of the applicant’s electric 22 utility or through a private energy audit service. 23 (2) The solar energy system or wind energy system must 24 qualify for the energy star efficiency rating developed by the 25 United States environmental protection agency, or a similar 26 certification program or status designated by the department 27 by rule. 28 (3) The installation must be performed by a licensed or 29 certified installer qualified to install solar energy systems 30 or wind energy systems and related equipment, and must meet or 31 exceed all requirements of applicable local building codes and 32 ordinances. 33 2. A person whose application for a solar energy system 34 tax credit certificate or a wind energy system tax credit 35 -2- LSB 2732XC (2) 84 rn/rj 2/ 5

S.F. _____ certificate is denied may file an appeal with the department 1 within sixty days from the date of denial pursuant to the 2 provisions of chapter 17A. 3 3. If a solar energy system tax credit certificate or a wind 4 energy system tax credit certificate is allowed with respect 5 to residential, commercial, or agricultural property and such 6 property is sold, the credit for the period after the sale 7 which would have been allowable under this chapter to the prior 8 owner had the property not been sold shall be allowable to the 9 new owner. A tax credit for the year of sale shall be allocated 10 between the parties on the basis of the number of days during 11 such year that the property was owned by each. 12 Sec. 6. NEW SECTION . 473B.4 Reporting. 13 On or before January 1, annually, the department shall 14 submit a written report to the governor and the general 15 assembly regarding the number and value of tax credit 16 certificates issued under this chapter, and any other 17 information the department may deem meaningful and appropriate. 18 Sec. 7. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 19 immediate importance, takes effect upon enactment. 20 Sec. 8. RETROACTIVE APPLICABILITY. This Act applies 21 retroactively to tax years beginning on or after January 1, 22 2011. 23 EXPLANATION 24 This bill provides tax credits for the construction and 25 installation of solar energy systems and wind energy systems, 26 as defined in the bill. 27 The bill provides that a solar energy system tax credit 28 and a wind energy system tax credit shall be issued for the 29 allowable costs, as determined by the department of revenue, 30 incurred in the construction or installation of a solar energy 31 system or a wind energy system. The credits shall be equal to 32 30 percent of the cost of the construction or installation, 33 subject to a maximum credit of $15,000 for commercial or 34 agricultural construction or installation or $3,000 for 35 -3- LSB 2732XC (2) 84 rn/rj 3/ 5

S.F. _____ residential construction or installation. The bill specifies 1 that the credits shall be refundable, and clarifies that 2 “residential” means a primary or vacation residence, excluding 3 rental property. 4 The bill sets forth application and issuance procedures 5 in relation to obtaining a tax credit certificate, to be 6 developed by the department by rule. The bill provides that, 7 at a minimum, qualification criteria shall include submission 8 of an energy audit conducted either by or on behalf of the 9 applicant’s electric utility or through a private energy audit 10 service, qualification of the system for the energy star 11 efficiency rating developed by the United States environmental 12 protection agency or a similar certification program or 13 status designated by the department by rule, installation by 14 a licensed or certified installer qualified to install solar 15 energy or wind energy systems and equipment, and meeting or 16 exceeding all applicable local building code and ordinance 17 requirements. 18 The bill states that if the department finds that a person 19 is qualified for a solar energy system tax credit or a wind 20 energy system tax credit, the department shall calculate the 21 amount of the tax credit for which the person is eligible and 22 either issue the applicable tax credit certificate to the 23 person or notify the person in writing of its refusal to do so. 24 The tax credit certificate may be applied against individual 25 or corporate tax owed pursuant to Code chapter 422, division 26 II and III for the year in which the allowable costs were 27 incurred. 28 The bill authorizes a person whose application is denied to 29 file an appeal with the department within 60 days from the date 30 of denial, and provides for the proration or allocation of a 31 credit in the event property subject to a tax credit is sold. 32 The bill contains reporting requirements regarding the number 33 and value of tax credit certificates issued, and any other 34 information the department deems meaningful and appropriate. 35 -4- LSB 2732XC (2) 84 rn/rj 4/ 5