Senate File 2335 - Introduced SENATE FILE 2335 BY ZAUN A BILL FOR An Act providing a new business tax credit available against 1 the corporate income tax, and including effective date and 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5897XS (4) 85 mm/sc

S.F. 2335 Section 1. Section 422.33, Code 2014, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 31. a. For purposes of this subsection: 3 (1) “New business” includes any activity engaged in by 4 any person or caused to be engaged in by the person with 5 the object of gain, benefit, or advantage, either direct or 6 indirect, which activity was not previously engaged in within 7 this state or caused to be engaged in within this state by 8 that person before January 1, 2015. This subparagraph shall 9 not be construed to include activity performed or caused to be 10 performed by a person acting in the capacity of an employee, or 11 activity that meets the definition of “casual sales” in section 12 423.3. 13 (2) “New business owner” means an individual who meets all 14 the following requirements: 15 (a) The individual acquires an equity interest in a new 16 business on or after January 1, 2015. 17 (b) The individual has not engaged in or caused to be 18 engaged in by the individual within this state the activity 19 of the new business with the objective of gain, benefit, or 20 advantage, either direct or indirect, prior to the date on 21 which the individual acquires the equity interest in the new 22 business. This subparagraph division shall not be construed 23 to include activity performed or caused to be performed by a 24 person acting in the capacity of an employee, or activity that 25 meets the definition of “casual sales” in section 423.3. 26 (3) “Population” means the population shown by the latest 27 preceding certified federal census. 28 (4) “Qualified new Iowa business” means a corporation that 29 is a new business whose equity interests are all owned by new 30 business owners and whose commercial domicile is in a county 31 in this state which county ranks among the bottom twenty-five 32 percent of all Iowa counties as measured by population. 33 b. The taxes imposed under this division shall be reduced 34 by a new business tax credit to a qualified new Iowa business 35 -1- LSB 5897XS (4) 85 mm/sc 1/ 3

S.F. 2335 in an amount equal to the qualified new Iowa business’s income 1 tax payable to this state under this division, computed without 2 regard to the credit allowed under this subsection or the 3 credit for estimated tax paid in section 422.91. 4 c. The maximum amount that may be refunded to a qualified 5 new Iowa business in any tax year in which the credit allowed 6 under this subsection is claimed shall not exceed the amount 7 paid as estimated tax by the new business pursuant to division 8 VII of this chapter for the tax year. 9 d. A qualified new Iowa business may claim the credit 10 allowed under this subsection for not more than ten tax years 11 following the tax year in which the qualified new Iowa business 12 is incorporated. 13 e. In order to be eligible for the new business tax credit a 14 business must make application to the department in the manner 15 and form prescribed by the department and must be certified as 16 a qualified new Iowa business by the department. 17 Sec. 2. EFFECTIVE DATE. This Act takes effect January 1, 18 2015. 19 Sec. 3. APPLICABILITY. This Act applies to tax years 20 beginning on or after January 1, 2015. 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 This bill creates a new business tax credit available 25 against the corporate income tax. 26 The tax credit is available to qualified new Iowa businesses 27 and equals the qualified new Iowa business’s total corporate 28 income tax liability. 29 “Qualified new Iowa business” is defined as any corporation 30 that is a new business owned entirely by new business owners 31 and whose commercial domicile is located in a county in this 32 state that ranks among the bottom 25 percent of all Iowa 33 counties as measured by population. “New business” includes 34 any activity engaged in for the first time in this state by a 35 -2- LSB 5897XS (4) 85 mm/sc 2/ 3

S.F. 2335 person after January 1, 2015, with the object of gain, benefit, 1 or advantage, excluding activities performed as an employee 2 or activities that meet the definition of “casual sales” in 3 Code section 423.3. “New business owners” are individuals 4 that acquire an equity interest in a new business on or after 5 January 1, 2015, and that have not previously engaged in within 6 this state the activity of the new business with the object of 7 gain, benefit, or advantage, excluding activities performed as 8 an employee or activities that meet the definition of “casual 9 sales” in Code section 423.3. 10 The maximum amount that may be refunded to a qualified new 11 Iowa business in any tax year the credit is claimed cannot 12 exceed the total estimated tax payments made by the qualified 13 new Iowa business during the tax year. A qualified new Iowa 14 business may claim the tax credit for a period of 10 years 15 following the tax year in which the qualified new Iowa business 16 is incorporated. 17 In order to be eligible for the new business tax credit a 18 business must make application to the department of revenue and 19 be certified by the department as a qualified new Iowa business 20 by the department. 21 The bill takes effect January 1, 2015, and applies to tax 22 years beginning on or after that date. 23 -3- LSB 5897XS (4) 85 mm/sc 3/ 3