House File 2374 - Introduced HOUSE FILE 2374 BY COMMITTEE ON VETERANS AFFAIRS (SUCCESSOR TO HSB 650) A BILL FOR An Act creating individual income tax credits for military 1 service during certain military conflicts in Lebanon, 2 Grenada, and Panama, and for service during certain military 3 conflicts in the Persian Gulf, providing for penalties, and 4 including retroactive applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 6093HV (2) 85 mm/sc

H.F. 2374 Section 1. Section 422.7, Code 2014, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 57. a. Subtract the Lebanon, Grenada, and 3 Panama veteran tax credit provided under section 422.10A to the 4 extent that the credit increased federal adjusted gross income. 5 b. This subsection is repealed January 1, 2018. 6 NEW SUBSECTION . 58. a. Subtract the Persian Gulf veteran 7 tax credit provided under section 422.10B to the extent that 8 the credit increased federal adjusted gross income. 9 b. This subsection is repealed January 1, 2018. 10 Sec. 2. NEW SECTION . 422.10A Lebanon, Grenada, and Panama 11 veteran tax credit. 12 1. The taxes imposed under this division, less the credits 13 allowed under section 422.12, shall be reduced by a Lebanon, 14 Grenada, and Panama veteran tax credit equal to the following 15 amount: 16 a. For a taxpayer who served on active duty for not less 17 than one hundred twenty days in the armed forces of the United 18 States at any time between August 24, 1982, and July 31, 1984, 19 both dates inclusive, or between December 20, 1989, and January 20 31, 1990, both dates inclusive, and who was inducted into 21 federal active duty from the state of Iowa and was honorably 22 discharged or separated from federal active duty, or is still 23 on active duty in an honorable status, or has been retired, 24 or has been furloughed to a reserve, or has been placed 25 on inactive status, an amount equal to three hundred fifty 26 dollars. 27 2. In order to qualify for the credit in subsection 1, all 28 of the following requirements must be satisfied: 29 a. The taxpayer has not received a tax credit, bonus, or 30 compensation similar to that provided in this section from this 31 state or another state, including the Persian Gulf veteran tax 32 credit under section 422.10B. 33 b. The taxpayer was on active duty service after August 34 24, 1982, and the person did not refuse on conscientious, 35 -1- LSB 6093HV (2) 85 mm/sc 1/ 6

H.F. 2374 political, religious, or other grounds, to be subject to 1 military discipline. 2 c. The taxpayer files an application for tax credit under 3 this section with the department of veterans affairs in a 4 manner determined by the department by July 1, 2015. The 5 department of veterans affairs shall certify to the department 6 of revenue the identity of each taxpayer eligible for the 7 credit under this section and the amount of tax credit for 8 which the taxpayer is eligible. 9 3. If a taxpayer dies before claiming the credit in 10 subsection 1, the surviving unremarried widow or widower, 11 child or children, mother, father, or person standing in loco 12 parentis, in the order named and none other, of any deceased 13 taxpayer shall be eligible for the tax credit in subsection 1 14 that the deceased taxpayer would be entitled to pursuant to 15 this section, if living. 16 4. The credit provided in this section shall be allowed only 17 once per taxpayer. The credit shall be claimed by the taxpayer 18 for the tax year in which the application is successfully made 19 to the department of veterans affairs under subsection 2, 20 paragraph “c” . Any credit in excess of the tax liability is 21 refundable. Taxpayers affected by the allocation provisions 22 of section 422.8 shall be permitted a deduction for the credit 23 only in the amount fairly and equitably allocable to Iowa under 24 rules prescribed by the director of revenue. 25 5. A taxpayer who knowingly makes a false statement relating 26 to a material fact in supporting an application under this 27 section is guilty of a serious misdemeanor. A person convicted 28 pursuant to this section shall forfeit all tax credit to which 29 the taxpayer may have been entitled under this section. 30 6. The executive director of the department of veterans 31 affairs, in cooperation with the director of the department 32 of revenue, shall provide for the administration of the 33 credit authorized in this section. The department of veterans 34 affairs and the department of revenue shall each adopt rules, 35 -2- LSB 6093HV (2) 85 mm/sc 2/ 6

H.F. 2374 pursuant to chapter 17A, as necessary to administer this 1 section, including but not limited to application procedures, 2 investigation, approval or disapproval of claims, and claiming 3 of credits. 4 7. This section is repealed January 1, 2016. 5 Sec. 3. NEW SECTION . 422.10B Persian Gulf veteran tax 6 credit. 7 1. The taxes imposed under this division, less the credits 8 allowed under section 422.12, shall be reduced by a Persian 9 Gulf veteran tax credit equal to the following amount: 10 a. For a taxpayer who served on active duty for not less 11 than one hundred twenty days in the armed forces of the United 12 States at any time between January 31, 1990, and February 28, 13 1991, both dates inclusive, and who was inducted into federal 14 active duty from the state of Iowa and was honorably discharged 15 or separated from federal active duty, or is still on active 16 duty in an honorable status, or has been retired, or has been 17 furloughed to a reserve, or has been placed on inactive status, 18 an amount equal to three hundred fifty dollars. 19 2. In order to qualify for the credit in subsection 1, all 20 of the following requirements must be satisfied: 21 a. The taxpayer has not received a tax credit, bonus, or 22 compensation similar to that provided in this section from this 23 state or another state, including the Lebanon, Grenada, and 24 Panama veteran tax credit under section 422.10A. 25 b. The taxpayer was on federal active duty after January 26 31, 1990, and the taxpayer did not refuse on conscientious, 27 political, religious, or other grounds, to be subject to 28 military discipline. 29 c. The taxpayer files an application for tax credit under 30 this section with the department of veterans affairs in a 31 manner determined by the department by July 1, 2015. The 32 department of veterans affairs shall certify to the department 33 of revenue the identity of each taxpayer eligible for the 34 credit under this section and the amount of tax credit for 35 -3- LSB 6093HV (2) 85 mm/sc 3/ 6

H.F. 2374 which the taxpayer is eligible. 1 3. If a taxpayer dies before claiming the credit in 2 subsection 1, the surviving unremarried widow or widower, 3 child or children, mother, father, or person standing in loco 4 parentis, in the order named and none other, of any deceased 5 taxpayer shall be eligible for the tax credit in subsection 1 6 that the deceased taxpayer would be entitled to pursuant to 7 this section, if living. 8 4. The credit provided in this section shall be allowed only 9 once per taxpayer. The credit shall be claimed by the taxpayer 10 for the tax year in which the application is successfully made 11 to the department of veterans affairs under subsection 2, 12 paragraph “c” . Any credit in excess of the tax liability is 13 refundable. Taxpayers affected by the allocation provisions 14 of section 422.8 shall be permitted a deduction for the credit 15 only in the amount fairly and equitably allocable to Iowa under 16 rules prescribed by the director of revenue. 17 5. A taxpayer who knowingly makes a false statement relating 18 to a material fact in supporting an application under this 19 section is guilty of a serious misdemeanor. A person convicted 20 pursuant to this section shall forfeit all tax credit to which 21 the taxpayer may have been entitled under this section. 22 6. The executive director of the department of veterans 23 affairs, in cooperation with the director of the department 24 of revenue, shall provide for the administration of the 25 credit authorized in this section. The department of veterans 26 affairs and the department of revenue shall each adopt rules, 27 pursuant to chapter 17A, as necessary to administer this 28 section, including but not limited to application procedures, 29 investigation, approval or disapproval of claims, and claiming 30 of credits. 31 7. This section is repealed January 1, 2016. 32 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 33 retroactively to January 1, 2014, for tax years beginning on 34 or after that date. 35 -4- LSB 6093HV (2) 85 mm/sc 4/ 6

H.F. 2374 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill provides for the creation of two one-time 4 individual income tax credits for veterans of the United States 5 military who served during identified periods of conflict. The 6 credits are each equal to $350. 7 The first credit is available to members of the United States 8 armed forces who served in active duty during the military 9 conflicts in Lebanon, Grenada, and Panama who meet certain 10 qualifications of service. The second credit is available to 11 members of the United States armed forces who served in active 12 duty during the military conflicts in the Persian Gulf who meet 13 certain qualifications of service. A taxpayer may only claim 14 one of the credits. 15 The bill provides dates for the periods of these conflicts 16 and requires that a veteran must meet additional requirements 17 to qualify for the credit. The person must not have received a 18 similar tax credit or bonus from this state or any other state. 19 The person must not have refused to be subject to military 20 discipline on certain grounds. The bill also requires that 21 the person file an application with the department of veterans 22 affairs (department) by July 1, 2015, in order to qualify for 23 the credit. The department is required to certify to the 24 department of revenue the identify of each person who qualifies 25 for the credits and the amount of tax credit for which the 26 taxpayer is eligible. 27 Certain other persons who survive the veteran are eligible 28 for the tax credit for which the deceased person would have 29 been eligible. 30 The bill provides that knowingly making a false statement of 31 material fact supporting an application to receive one of the 32 tax credits is a serious misdemeanor. A serious misdemeanor 33 is punishable by confinement for no more than one year and a 34 fine of at least $315 but not more than $1,875. The bill also 35 -5- LSB 6093HV (2) 85 mm/sc 5/ 6

H.F. 2374 provides that a conviction on such a charge would result in 1 forfeiture of any right to claim one of the credits. 2 Each credit provided in the bill shall be allowed only once 3 per taxpayer. The taxpayer is required to claim the credit 4 for the tax year in which the tax credit application was made. 5 Any credit in excess of the tax liability is refundable. 6 Nonresident and part-year residents are allowed a tax credit 7 only in the amount fairly and equitably allocable to Iowa under 8 rules prescribed by the director of revenue. 9 The tax credits are exempt from the individual income tax to 10 the extent that they increase federal adjusted gross income. 11 The director of the department of veterans affairs, in 12 cooperation with the director of the department of revenue, is 13 to administer the tax credits. 14 The credits are repealed January 1, 2016. 15 The bill applies retroactively to January 1, 2014, for tax 16 years beginning on or after that date. 17 -6- LSB 6093HV (2) 85 mm/sc 6/ 6