HF 2374 (LSB 6093HV (2) 85)

HOUSE FILE 2374

BY  COMMITTEE ON VETERANS AFFAIRS

(SUCCESSOR TO HSB 650)

A BILL FOR

An Act creating individual income tax credits for military service during certain military conflicts in Lebanon, Grenada, and Panama, and for service during certain military conflicts in the Persian Gulf, providing for penalties, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, Code 2014, is amended by adding the following new subsections:
   NEW SUBSECTION.  57.  a.  Subtract the Lebanon, Grenada, and Panama veteran tax credit provided under section 422.10A to the extent that the credit increased federal adjusted gross income. 
   b.  This subsection is repealed January 1, 2018.
   NEW SUBSECTION.  58.  a.  Subtract the Persian Gulf veteran tax credit provided under section 422.10B to the extent that the credit increased federal adjusted gross income. 
   b.  This subsection is repealed January 1, 2018. 
    Sec. 2.  NEW SECTION.  422.10A  Lebanon, Grenada, and Panama veteran tax credit.
   1.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a Lebanon, Grenada, and Panama veteran tax credit equal to the following amount: 
   a.  For a taxpayer who served on active duty for not less than one hundred twenty days in the armed forces of the United States at any time between August 24, 1982, and July 31, 1984, both dates inclusive, or between December 20, 1989, and January 31, 1990, both dates inclusive, and who was inducted into federal active duty from the state of Iowa and was honorably discharged or separated from federal active duty, or is still on active duty in an honorable status, or has been retired, or has been furloughed to a reserve, or has been placed on inactive status, an amount equal to three hundred fifty dollars.
   2.  In order to qualify for the credit in subsection 1, all of the following requirements must be satisfied:
   a.  The taxpayer has not received a tax credit, bonus, or compensation similar to that provided in this section from this state or another state, including the Persian Gulf veteran tax credit under section 422.10B.
   b.  The taxpayer was on active duty service after August 24, 1982, and the person did not refuse on conscientious, political, religious, or other grounds, to be subject to military discipline.
   c.  The taxpayer files an application for tax credit under this section with the department of veterans affairs in a manner determined by the department by July 1, 2015. The department of veterans affairs shall certify to the department of revenue the identity of each taxpayer eligible for the credit under this section and the amount of tax credit for which the taxpayer is eligible.
   3.  If a taxpayer dies before claiming the credit in subsection 1, the surviving unremarried widow or widower, child or children, mother, father, or person standing in loco parentis, in the order named and none other, of any deceased taxpayer shall be eligible for the tax credit in subsection 1 that the deceased taxpayer would be entitled to pursuant to this section, if living.
   4.  The credit provided in this section shall be allowed only once per taxpayer. The credit shall be claimed by the taxpayer for the tax year in which the application is successfully made to the department of veterans affairs under subsection 2, paragraph “c”. Any credit in excess of the tax liability is refundable. Taxpayers affected by the allocation provisions of section 422.8 shall be permitted a deduction for the credit only in the amount fairly and equitably allocable to Iowa under rules prescribed by the director of revenue.
   5.  A taxpayer who knowingly makes a false statement relating to a material fact in supporting an application under this section is guilty of a serious misdemeanor. A person convicted pursuant to this section shall forfeit all tax credit to which the taxpayer may have been entitled under this section.
   6.  The executive director of the department of veterans affairs, in cooperation with the director of the department of revenue, shall provide for the administration of the credit authorized in this section. The department of veterans affairs and the department of revenue shall each adopt rules, pursuant to chapter 17A, as necessary to administer this section, including but not limited to application procedures, investigation, approval or disapproval of claims, and claiming of credits.
   7.  This section is repealed January 1, 2016.
    Sec. 3.  NEW SECTION.  422.10B  Persian Gulf veteran tax credit.
   1.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a Persian Gulf veteran tax credit equal to the following amount: 
   a.  For a taxpayer who served on active duty for not less than one hundred twenty days in the armed forces of the United States at any time between January 31, 1990, and February 28, 1991, both dates inclusive, and who was inducted into federal active duty from the state of Iowa and was honorably discharged or separated from federal active duty, or is still on active duty in an honorable status, or has been retired, or has been furloughed to a reserve, or has been placed on inactive status, an amount equal to three hundred fifty dollars.
   2.  In order to qualify for the credit in subsection 1, all of the following requirements must be satisfied:
   a.  The taxpayer has not received a tax credit, bonus, or compensation similar to that provided in this section from this state or another state, including the Lebanon, Grenada, and Panama veteran tax credit under section 422.10A.
   b.  The taxpayer was on federal active duty after January 31, 1990, and the taxpayer did not refuse on conscientious, political, religious, or other grounds, to be subject to military discipline.
   c.  The taxpayer files an application for tax credit under this section with the department of veterans affairs in a manner determined by the department by July 1, 2015. The department of veterans affairs shall certify to the department of revenue the identity of each taxpayer eligible for the credit under this section and the amount of tax credit for which the taxpayer is eligible. 
   3.  If a taxpayer dies before claiming the credit in subsection 1, the surviving unremarried widow or widower, child or children, mother, father, or person standing in loco parentis, in the order named and none other, of any deceased taxpayer shall be eligible for the tax credit in subsection 1 that the deceased taxpayer would be entitled to pursuant to this section, if living.
   4.  The credit provided in this section shall be allowed only once per taxpayer. The credit shall be claimed by the taxpayer for the tax year in which the application is successfully made to the department of veterans affairs under subsection 2, paragraph “c”. Any credit in excess of the tax liability is refundable. Taxpayers affected by the allocation provisions of section 422.8 shall be permitted a deduction for the credit only in the amount fairly and equitably allocable to Iowa under rules prescribed by the director of revenue. 
   5.  A taxpayer who knowingly makes a false statement relating to a material fact in supporting an application under this section is guilty of a serious misdemeanor. A person convicted pursuant to this section shall forfeit all tax credit to which the taxpayer may have been entitled under this section.
   6.  The executive director of the department of veterans affairs, in cooperation with the director of the department of revenue, shall provide for the administration of the credit authorized in this section. The department of veterans affairs and the department of revenue shall each adopt rules, pursuant to chapter 17A, as necessary to administer this section, including but not limited to application procedures, investigation, approval or disapproval of claims, and claiming of credits.
   7.  This section is repealed January 1, 2016.
    Sec. 4.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2014, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill provides for the creation of two one-time individual income tax credits for veterans of the United States military who served during identified periods of conflict. The credits are each equal to $350.
   The first credit is available to members of the United States armed forces who served in active duty during the military conflicts in Lebanon, Grenada, and Panama who meet certain qualifications of service. The second credit is available to members of the United States armed forces who served in active duty during the military conflicts in the Persian Gulf who meet certain qualifications of service. A taxpayer may only claim one of the credits.
   The bill provides dates for the periods of these conflicts and requires that a veteran must meet additional requirements to qualify for the credit. The person must not have received a similar tax credit or bonus from this state or any other state. The person must not have refused to be subject to military discipline on certain grounds. The bill also requires that the person file an application with the department of veterans affairs (department) by July 1, 2015, in order to qualify for the credit. The department is required to certify to the department of revenue the identify of each person who qualifies for the credits and the amount of tax credit for which the taxpayer is eligible. 
   Certain other persons who survive the veteran are eligible for the tax credit for which the deceased person would have been eligible.
   The bill provides that knowingly making a false statement of material fact supporting an application to receive one of the tax credits is a serious misdemeanor. A serious misdemeanor is punishable by confinement for no more than one year and a fine of at least $315 but not more than $1,875. The bill also provides that a conviction on such a charge would result in forfeiture of any right to claim one of the credits.
   Each credit provided in the bill shall be allowed only once per taxpayer. The taxpayer is required to claim the credit for the tax year in which the tax credit application was made. Any credit in excess of the tax liability is refundable. Nonresident and part-year residents are allowed a tax credit only in the amount fairly and equitably allocable to Iowa under rules prescribed by the director of revenue. 
   The tax credits are exempt from the individual income tax to the extent that they increase federal adjusted gross income. 
   The director of the department of veterans affairs, in cooperation with the director of the department of revenue, is to administer the tax credits. 
   The credits are repealed January 1, 2016.
   The bill applies retroactively to January 1, 2014, for tax years beginning on or after that date.