SF 2335 (LSB 5897XS (4) 85)

SENATE FILE 2335

BY  ZAUN

A BILL FOR

An Act providing a new business tax credit available against the corporate income tax, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.33, Code 2014, is amended by adding the following new subsection:
   NEW SUBSECTION.  31.  a.  For purposes of this subsection:
   (1)  “New business” includes any activity engaged in by any person or caused to be engaged in by the person with the object of gain, benefit, or advantage, either direct or indirect, which activity was not previously engaged in within this state or caused to be engaged in within this state by that person before January 1, 2015. This subparagraph shall not be construed to include activity performed or caused to be performed by a person acting in the capacity of an employee, or activity that meets the definition of “casual sales” in section 423.3.
   (2)  “New business owner” means an individual who meets all the following requirements:
   (a)  The individual acquires an equity interest in a new business on or after January 1, 2015.
   (b)  The individual has not engaged in or caused to be engaged in by the individual within this state the activity of the new business with the objective of gain, benefit, or advantage, either direct or indirect, prior to the date on which the individual acquires the equity interest in the new business. This subparagraph division shall not be construed to include activity performed or caused to be performed by a person acting in the capacity of an employee, or activity that meets the definition of “casual sales” in section 423.3.
   (3)  “Population” means the population shown by the latest preceding certified federal census.
   (4)  “Qualified new Iowa business” means a corporation that is a new business whose equity interests are all owned by new business owners and whose commercial domicile is in a county in this state which county ranks among the bottom twenty-five percent of all Iowa counties as measured by population.
   b.  The taxes imposed under this division shall be reduced by a new business tax credit to a qualified new Iowa business in an amount equal to the qualified new Iowa business’s income tax payable to this state under this division, computed without regard to the credit allowed under this subsection or the credit for estimated tax paid in section 422.91.
   c.  The maximum amount that may be refunded to a qualified new Iowa business in any tax year in which the credit allowed under this subsection is claimed shall not exceed the amount paid as estimated tax by the new business pursuant to division VII of this chapter for the tax year.
   d.  A qualified new Iowa business may claim the credit allowed under this subsection for not more than ten tax years following the tax year in which the qualified new Iowa business is incorporated.
   e.  In order to be eligible for the new business tax credit a business must make application to the department in the manner and form prescribed by the department and must be certified as a qualified new Iowa business by the department.
    Sec. 2.  EFFECTIVE DATE.  This Act takes effect January 1, 2015.
    Sec. 3.  APPLICABILITY.  This Act applies to tax years beginning on or after January 1, 2015.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill creates a new business tax credit available against the corporate income tax.
   The tax credit is available to qualified new Iowa businesses and equals the qualified new Iowa business’s total corporate income tax liability.
   “Qualified new Iowa business” is defined as any corporation that is a new business owned entirely by new business owners and whose commercial domicile is located in a county in this state that ranks among the bottom 25 percent of all Iowa counties as measured by population. “New business” includes any activity engaged in for the first time in this state by a person after January 1, 2015, with the object of gain, benefit, or advantage, excluding activities performed as an employee or activities that meet the definition of “casual sales” in Code section 423.3. “New business owners” are individuals that acquire an equity interest in a new business on or after January 1, 2015, and that have not previously engaged in within this state the activity of the new business with the object of gain, benefit, or advantage, excluding activities performed as an employee or activities that meet the definition of “casual sales” in Code section 423.3.
   The maximum amount that may be refunded to a qualified new Iowa business in any tax year the credit is claimed cannot exceed the total estimated tax payments made by the qualified new Iowa business during the tax year. A qualified new Iowa business may claim the tax credit for a period of 10 years following the tax year in which the qualified new Iowa business is incorporated.
   In order to be eligible for the new business tax credit a business must make application to the department of revenue and be certified by the department as a qualified new Iowa business by the department.
   The bill takes effect January 1, 2015, and applies to tax years beginning on or after that date.