S.F. 448 DIVISION I 1 REPEAL OF THE INDIVIDUAL INCOME TAX 2 Section 1. Section 15.293A, subsection 1, paragraphs a and 3 b, Code 2013, are amended to read as follows: 4 a. A redevelopment tax credit shall be allowed against 5 the taxes imposed in chapter 422, divisions II, III , and V , 6 and in chapter 432 , and against the moneys and credits tax 7 imposed in section 533.329 , for a portion of a taxpayer’s 8 equity investment, as provided in subsection 3 , in a qualifying 9 redevelopment project. 10 b. An individual may claim a tax credit under this 11 subsection of a partnership, limited liability company, 12 S corporation, estate, or trust electing to have income 13 taxed directly to the individual. The amount claimed by the 14 individual shall be based upon the pro rata share of the 15 individual’s earnings from the partnership, limited liability 16 company, S corporation, estate, or trust. 17 Sec. 2. Section 15.293A, subsection 2, paragraph b, 18 subparagraphs (3) and (6), Code 2013, are amended to read as 19 follows: 20 (3) The tax credit certificate, unless rescinded by the 21 authority, shall be accepted by the department of revenue as 22 payment for taxes imposed pursuant to chapter 422, divisions 23 II, III , and V , and in chapter 432 , and for the moneys and 24 credits tax imposed in section 533.329 , subject to any 25 conditions or restrictions placed by the authority upon 26 the face of the tax credit certificate and subject to the 27 limitations of this section . 28 (6) A tax credit shall not be claimed by a transferee 29 under this section until a replacement tax credit certificate 30 identifying the transferee as the proper holder has been 31 issued. The transferee may use the amount of the tax credit 32 transferred against the taxes imposed in chapter 422, divisions 33 II, III , and V , and in chapter 432 , and against the moneys and 34 credits tax imposed in section 533.329 , for any tax year the 35 -1- LSB 1867XS (6) 85 mm/sc 1/ 34

S.F. 448 original transferor could have claimed the tax credit. Any 1 consideration received for the transfer of the tax credit shall 2 not be included as income under chapter 422, divisions II, III , 3 and V . Any consideration paid for the transfer of the tax 4 credit shall not be deducted from income under chapter 422, 5 divisions II, III , and V . 6 Sec. 3. Section 15.293A, subsection 4, Code 2013, is amended 7 to read as follows: 8 4. For purposes of individual and corporate income taxes and 9 the franchise tax, the increase in the basis of the redeveloped 10 property that would otherwise result from the qualified 11 redevelopment costs shall be reduced by the amount of the 12 credit computed under this part. 13 Sec. 4. Section 15.333, subsection 1, Code 2013, is amended 14 to read as follows: 15 1. An eligible business may claim a tax credit equal to 16 a percentage of the new investment directly related to new 17 jobs created or retained by the location or expansion of an 18 eligible business under the program. The tax credit shall be 19 amortized equally over five calendar years. The tax credit 20 shall be allowed against taxes imposed under chapter 422, 21 division II, III , or V , and against the moneys and credits tax 22 imposed in section 533.329 . If the business is a partnership, 23 S corporation, limited liability company, cooperative organized 24 under chapter 501 and filing as a partnership for federal tax 25 purposes, or estate or trust electing to have the income taxed 26 directly to the individual, an individual may claim the tax 27 credit allowed. The amount claimed by the individual shall 28 be based upon the pro rata share of the individual’s earnings 29 of the partnership, S corporation, limited liability company, 30 cooperative organized under chapter 501 and filing as a 31 partnership for federal tax purposes, or estate or trust. The 32 percentage shall be determined as provided in section 15.335A . 33 Any tax credit in excess of the tax liability for the tax year 34 may be credited to the tax liability for the following seven 35 -2- LSB 1867XS (6) 85 mm/sc 2/ 34

S.F. 448 years or until depleted, whichever occurs first. 1 Sec. 5. Section 15.335, subsection 6, Code 2013, is amended 2 by striking the subsection. 3 Sec. 6. Section 15E.43, subsection 1, paragraph a, Code 4 2013, is amended to read as follows: 5 a. For tax years beginning on or after January 1, 2002, 6 a tax credit shall be allowed against the taxes imposed in 7 chapter 422, divisions II, III , and V , and in chapter 432 , and 8 against the moneys and credits tax imposed in section 533.329 , 9 for a portion of a taxpayer’s equity investment, as provided 10 in subsection 2 , in a qualifying business or a community-based 11 seed capital fund. An individual may claim a tax credit 12 under this paragraph of a partnership, limited liability 13 company, S corporation, estate, or trust electing to have 14 income taxed directly to the individual. The amount claimed 15 by the individual shall be based upon the pro rata share of the 16 individual’s earnings from the partnership, limited liability 17 company, S corporation, estate, or trust. 18 Sec. 7. Section 15E.43, subsection 1, paragraph c, Code 19 2013, is amended by striking the paragraph. 20 Sec. 8. Section 15E.44, subsection 4, Code 2013, is amended 21 to read as follows: 22 4. After verifying the eligibility of a qualifying 23 business, the authority shall issue a tax credit certificate 24 to be attached to the equity investor’s tax return. The tax 25 credit certificate shall contain the taxpayer’s name, address, 26 tax identification number, the amount of credit, the name of 27 the qualifying business, and other information required by the 28 department of revenue. The tax credit certificate, unless 29 rescinded by the authority, shall be accepted by the department 30 of revenue as payment for taxes imposed pursuant to chapter 31 422, divisions II, III , and V , and in chapter 432 , and for the 32 moneys and credits tax imposed in section 533.329 , subject to 33 any conditions or restrictions placed by the authority upon 34 the face of the tax credit certificate and subject to the 35 -3- LSB 1867XS (6) 85 mm/sc 3/ 34

S.F. 448 limitations of section 15E.43 . 1 Sec. 9. Section 15E.45, subsection 4, Code 2013, is amended 2 to read as follows: 3 4. After verifying the eligibility of the community-based 4 seed capital fund, the authority shall issue a tax credit 5 certificate to be attached to the taxpayer’s tax return. The 6 tax credit certificate shall contain the taxpayer’s name, 7 address, tax identification number, the amount of the tax 8 credit, the name of the community-based seed capital fund, and 9 other information required by the department of revenue. The 10 tax credit certificate, unless rescinded by the authority, 11 shall be accepted by the department of revenue or a local 12 taxing district, as applicable, as payment for taxes imposed 13 pursuant to chapter 422, divisions II, III , and V , and chapter 14 432 , and as payment for the moneys and credits tax imposed 15 pursuant to section 533.329 , subject to any conditions or 16 restrictions placed by the authority on the face of the tax 17 credit certificate and subject to the limitations of section 18 15E.43 . 19 Sec. 10. Section 15E.52, subsection 2, Code 2013, is amended 20 to read as follows: 21 2. a. A tax credit shall be allowed against the taxes 22 imposed in chapter 422, divisions II, III , and V , and in 23 chapter 432 , and against the moneys and credits tax imposed 24 in section 533.329 , for a portion of a taxpayer’s equity 25 investment in the form of cash in an innovation fund. 26 b. An individual may claim a tax credit under this section 27 of a partnership, limited liability company, S corporation, 28 estate, or trust electing to have income taxed directly to 29 the individual. The amount claimed by the individual shall 30 be based upon the pro rata share of the individual’s earnings 31 from the partnership, limited liability company, S corporation, 32 estate, or trust. 33 Sec. 11. Section 15E.62, subsection 6, Code 2013, is amended 34 to read as follows: 35 -4- LSB 1867XS (6) 85 mm/sc 4/ 34

S.F. 448 6. “Tax credit” means a contingent tax credit issued 1 pursuant to section 15E.66 that is available against tax 2 liabilities imposed by chapter 422, divisions II, III , and 3 V , and by chapter 432 and against the moneys and credits tax 4 imposed by section 533.329 . 5 Sec. 12. Section 15E.66, subsection 1, Code 2013, is amended 6 to read as follows: 7 1. The board may issue certificates and related tax credits 8 to designated investors which, if redeemed for the maximum 9 possible amount, shall not exceed a total aggregate of sixty 10 million dollars of tax credits. The certificates shall be 11 issued contemporaneously with a commitment to invest in the 12 Iowa fund of funds by a designated investor. A certificate 13 issued by the board shall have a specific maturity date or 14 dates designated by the board and shall be redeemable only in 15 accordance with the contingencies reflected on the certificate 16 or incorporated therein by reference. A certificate and the 17 related tax credit shall be transferable by the designated 18 investor. A tax credit shall not be claimed or redeemed except 19 by a designated investor or transferee in accordance with the 20 terms of a certificate from the board. A tax credit shall not 21 be claimed for a tax year that begins earlier than the maturity 22 date or dates stated on the certificate. An individual may 23 claim the credit of a partnership, limited liability company, 24 S corporation, estate, or trust electing to have the income 25 taxed directly to the individual. The amount claimed by the 26 individual shall be based upon the pro rata share of the 27 individual’s earnings from the partnership, limited liability 28 company, S corporation, estate, or trust. Any tax credit in 29 excess of the taxpayer’s tax liability for the tax year may be 30 credited to the tax liability for the following seven years, or 31 until depleted, whichever is earlier. 32 Sec. 13. Section 15E.193B, subsection 6, paragraph a, Code 33 2013, is amended to read as follows: 34 a. An eligible housing business may claim a tax credit up 35 -5- LSB 1867XS (6) 85 mm/sc 5/ 34

S.F. 448 to a maximum of ten percent of the new investment which is 1 directly related to the building or rehabilitating of a minimum 2 of four single-family homes located in that part of a city 3 or county in which there is a designated enterprise zone or 4 one multiple dwelling unit building containing three or more 5 individual dwelling units located in that part of a city or 6 county in which there is a designated enterprise zone. The new 7 investment that may be used to compute the tax credit shall not 8 exceed the new investment used for the first one hundred forty 9 thousand dollars of value for each single-family home or for 10 each unit of a multiple dwelling unit building containing three 11 or more units. The tax credit may be used to reduce the tax 12 liability imposed under chapter 422, division II, III , or V , or 13 chapter 432 . Any credit in excess of the tax liability for the 14 tax year may be credited to the tax liability for the following 15 seven years or until depleted, whichever occurs earlier. If 16 the business is a partnership, S corporation, limited liability 17 company, or estate or trust electing to have the income taxed 18 directly to the individual, an individual may claim the tax 19 credit allowed. The amount claimed by the individual shall be 20 based upon the pro rata share of the individual’s earnings of 21 the partnership, S corporation, limited liability company, or 22 estate or trust except as allowed for under subsection 8 when 23 low-income housing tax credits authorized under section 42 of 24 the Internal Revenue Code are used to assist in the financing 25 of the housing development. 26 Sec. 14. Section 15E.193B, subsection 8, unnumbered 27 paragraph 2, Code 2013, is amended to read as follows: 28 The transferee may use the amount of the tax credit 29 transferred against the taxes imposed under chapter 422, 30 divisions II, III , and V , and chapter 432 for any tax year the 31 original transferor could have claimed the tax credit. Any 32 consideration received for the transfer of the tax credit shall 33 not be included as income under chapter 422, divisions II, III , 34 and V . Any consideration paid for the transfer of the tax 35 -6- LSB 1867XS (6) 85 mm/sc 6/ 34

S.F. 448 credit shall not be deducted from income under chapter 422, 1 divisions II, III , and V . 2 Sec. 15. Section 15E.305, subsection 1, Code 2013, is 3 amended to read as follows: 4 1. For tax years beginning on or after January 1, 2003, 5 a tax credit shall be allowed against the taxes imposed in 6 chapter 422, divisions II, III , and V , and in chapter 432 , and 7 against the moneys and credits tax imposed in section 533.329 8 equal to twenty-five percent of a taxpayer’s endowment gift to 9 an endow Iowa qualified community foundation. An individual 10 may claim a tax credit under this section of a partnership, 11 limited liability company, S corporation, estate, or trust 12 electing to have income taxed directly to the individual. The 13 amount claimed by the individual shall be based upon the pro 14 rata share of the individual’s earnings from the partnership, 15 limited liability company, S corporation, estate, or trust. A 16 tax credit shall be allowed only for an endowment gift made to 17 an endow Iowa qualified community foundation for a permanent 18 endowment fund established to benefit a charitable cause in 19 this state. The amount of the endowment gift for which the 20 tax credit is claimed shall not be deductible in determining 21 taxable income for state income tax purposes. Any tax credit 22 in excess of the taxpayer’s tax liability for the tax year may 23 be credited to the tax liability for the following five years 24 or until depleted, whichever occurs first. A tax credit shall 25 not be carried back to a tax year prior to the tax year in which 26 the taxpayer claims the tax credit. 27 Sec. 16. Section 16.211, subsection 1, paragraph a, 28 unnumbered paragraph 1, Code 2013, is amended to read as 29 follows: 30 A tax credit shall be allowed against the taxes imposed in 31 chapter 422, divisions II and division III , for a portion of 32 a taxpayer’s qualifying investment, as provided in subsection 33 3 , in a qualifying disaster recovery housing project. To 34 qualify as a disaster recovery housing project, a property, and 35 -7- LSB 1867XS (6) 85 mm/sc 7/ 34

S.F. 448 the activities affecting the property, shall meet all of the 1 following conditions: 2 Sec. 17. Section 16.211, subsection 1, paragraph a, 3 subparagraph (1), Code 2013, is amended to read as follows: 4 (1) The property is owned by a taxpayer who is an 5 individual, a business , or corporation subject to taxation 6 under chapter 422, division II or III . 7 Sec. 18. Section 16.211, subsection 1, paragraph b, Code 8 2013, is amended by striking the paragraph. 9 Sec. 19. Section 16.211, subsection 2, paragraph c, Code 10 2013, is amended to read as follows: 11 c. The tax credit certificate, unless otherwise void, shall 12 be accepted by the department of revenue as payment for taxes 13 imposed pursuant to chapter 422, division II or III , subject 14 to any conditions or restrictions placed by the authority upon 15 the face of the tax credit certificate and subject to the 16 limitations of this section . 17 Sec. 20. Section 16.211, subsection 4, Code 2013, is amended 18 to read as follows: 19 4. For purposes of individual and corporate income taxes, 20 the increase in the basis of the property that would otherwise 21 result from the disaster recovery housing investment shall be 22 reduced by the amount of the tax credit allowed under this 23 section . 24 Sec. 21. Section 28A.24, Code 2013, is amended to read as 25 follows: 26 28A.24 Exemption from taxation. 27 Since an authority is performing essential governmental 28 functions, an authority is not required to pay any taxes or 29 assessments of any kind or nature upon any property required 30 or used by it for its purposes, or any rates, fees, rentals, 31 receipts, or incomes at any time received by it, and the 32 bonds issued by an authority, their transfer, and the income, 33 including any profits made on the sale of the bonds, is 34 deductible in determining net income for the purposes of the 35 -8- LSB 1867XS (6) 85 mm/sc 8/ 34

S.F. 448 state individual and corporate income tax under divisions II 1 and division III of chapter 422 , and shall not be taxed by any 2 political subdivision of this state. 3 Sec. 22. Section 35A.13, subsection 2, paragraph b, Code 4 2013, is amended to read as follows: 5 b. Moneys credited to the fund pursuant to an income tax 6 checkoff provided in chapter 422, division II , Code 2013, if 7 applicable. 8 Sec. 23. Section 68A.102, subsection 21, Code 2013, is 9 amended by striking the subsection. 10 Sec. 24. Section 85.61, subsection 6, paragraph b, Code 11 2013, is amended by striking the paragraph. 12 Sec. 25. Section 100B.13, subsection 2, paragraph a, Code 13 2013, is amended to read as follows: 14 a. Moneys credited to the fund pursuant to an income tax 15 checkoff provided in chapter 422, division II , Code 2013, if 16 applicable. 17 Sec. 26. Section 175.17, subsection 10, Code 2013, is 18 amended to read as follows: 19 10. Bonds and notes issued by the authority for purposes of 20 financing the beginning farmer loan program provided in section 21 175.12 are exempt from taxation by the state, and interest 22 earned on the bonds and notes is deductible in determining 23 net income for purposes of the state individual and corporate 24 income tax under divisions II and division III of chapter 422 . 25 Sec. 27. Section 175.37, subsection 1, Code 2013, is amended 26 to read as follows: 27 1. An agricultural assets transfer tax credit is allowed 28 under this section . The tax credit is allowed against the 29 taxes imposed in chapter 422, division II , as provided in 30 section 422.11M , and in chapter 422, division III , as provided 31 in section 422.33 , to facilitate the transfer of agricultural 32 assets from a taxpayer to a beginning farmer. 33 Sec. 28. Section 175.37, subsection 3, Code 2013, is amended 34 by striking the subsection. 35 -9- LSB 1867XS (6) 85 mm/sc 9/ 34

S.F. 448 Sec. 29. Section 175.37, subsection 7, Code 2013, is amended 1 to read as follows: 2 7. A tax credit in excess of the taxpayer’s liability for 3 the tax year may be credited to the tax liability for the 4 following five years or until depleted, whichever is earlier. 5 A tax credit shall not be carried back to a tax year prior to 6 the tax year in which the taxpayer redeems the tax credit. A 7 tax credit shall not be transferable to any other person other 8 than the taxpayer’s estate or trust upon the taxpayer’s death. 9 Sec. 30. Section 235A.2, subsection 1, Code 2013, is amended 10 to read as follows: 11 1. A child abuse prevention program fund is created in 12 the state treasury under the control of the department of 13 human services. The fund is composed of moneys appropriated 14 or available to and obtained or accepted by the treasurer of 15 state for deposit in the fund. The fund shall include moneys 16 transferred to the fund pursuant to an income tax checkoff 17 provided in chapter 422, division II , Code 2013, if applicable. 18 All interest earned on moneys in the fund shall be credited to 19 and remain in the fund. Section 8.33 does not apply to moneys 20 in the fund. 21 Sec. 31. Section 257.19, Code 2013, is amended to read as 22 follows: 23 257.19 Instructional support funding. 24 1. The additional funding for the instructional support 25 program for a budget year is limited to an amount not exceeding 26 ten percent of the total of regular program district cost 27 for the budget year and moneys received under section 257.14 28 as a budget adjustment for the budget year. Moneys received 29 by a district for the instructional support program are 30 miscellaneous income and may be used for any general fund 31 purpose. However, moneys received by a district for the 32 instructional support program shall not be used as, or in a 33 manner which has the effect of, supplanting funds authorized to 34 be received under sections 257.41 , 257.46 , 298.2 , and 298.4 , 35 -10- LSB 1867XS (6) 85 mm/sc 10/ 34

S.F. 448 or to cover any deficiencies in funding for special education 1 instructional services resulting from the application of the 2 special education weighting plan under section 256B.9 . 3 2. Certification of a board’s intent to participate for 4 a budget year, the method of funding, and the amount to be 5 raised shall be made to the department of management not later 6 than April 15 of the base year. Funding for the instructional 7 support program shall be obtained from instructional support 8 state aid and from local funding using either an instructional 9 support property tax or a combination of an instructional 10 support property tax and an instructional support income 11 surtax . 12 The board of directors shall determine whether the 13 instructional support property tax or the combination of the 14 instructional support property tax and instructional support 15 income surtax shall be used for the local funding. Subject to 16 the limitation specified in section 298.14 , if the board elects 17 to use the combination of the instructional support property 18 tax and instructional support income surtax, for each budget 19 year the board shall determine the percent of income surtax 20 that will be imposed, expressed as full percentage points, not 21 to exceed twenty percent. 22 Sec. 32. Section 257.21, Code 2013, is amended to read as 23 follows: 24 257.21 Computation of instructional support amount. 25 The department of management shall establish the amount 26 of instructional support property tax to be levied and the 27 amount of instructional support income surtax to be imposed 28 by a district in accordance with the decision of the board 29 under section 257.19 for each school year for which the 30 instructional support program is authorized. The department 31 of management shall determine these amounts based upon the 32 most recent figures available for the district’s valuation of 33 taxable property , individual state income tax paid, and budget 34 enrollment in the district, and shall certify to the district’s 35 -11- LSB 1867XS (6) 85 mm/sc 11/ 34

S.F. 448 county auditor the amount of instructional support property 1 tax , and to the director of revenue the amount of instructional 2 support income surtax to be imposed if an instructional support 3 income surtax is to be imposed levied . 4 The instructional support income surtax shall be imposed on 5 the state individual income tax for the calendar year during 6 which the school’s budget year begins, or for a taxpayer’s 7 fiscal year ending during the second half of that calendar year 8 and after the date the board adopts a resolution to participate 9 in the program or the first half of the succeeding calendar 10 year, and shall be imposed on all individuals residing in the 11 school district on the last day of the applicable tax year. 12 As used in this section , “state individual income tax” means 13 the taxes computed under section 422.5 , less the amounts of 14 nonrefundable credits allowed under chapter 422, division II . 15 Sec. 33. Section 257.29, subsections 3 and 4, Code 2013, are 16 amended to read as follows: 17 3. The educational improvement program shall be funded 18 by either an educational improvement property tax or by a 19 combination of an educational improvement property tax and an 20 educational improvement income surtax . The method of raising 21 the educational improvement moneys shall be determined by the 22 board. Subject to the limitation in section 298.14 , if the 23 board uses a combination of an educational improvement property 24 tax and an educational improvement income surtax, the board 25 shall determine the percent of income surtax to be imposed, 26 expressed as full percentage points, not to exceed twenty 27 percent. 28 4. The department of management shall establish the amount 29 of the educational improvement property tax to be levied or 30 the amount of the combination of the educational improvement 31 property tax to be levied and the amount of the school district 32 income surtax to be imposed for each school year that the 33 educational improvement amount is authorized. The educational 34 improvement property tax and income surtax, if an income 35 -12- LSB 1867XS (6) 85 mm/sc 12/ 34

S.F. 448 surtax is imposed, shall be levied and imposed , collected, 1 and paid to the school district in the manner provided for 2 the instructional support program in sections section 257.21 3 through 257.26 . Moneys received by a school district under the 4 educational improvement program are miscellaneous income. 5 Sec. 34. Section 279.63, subsection 2, paragraph a, Code 6 2013, is amended to read as follows: 7 a. All property tax levies , income surtaxes, and local 8 option sales taxes in place in the school district, listed by 9 type of levy, rate, amount, duration, and notification of the 10 maximum rate and amount limitations permitted by statute. 11 Sec. 35. Section 298.2, subsections 1 and 4, Code 2013, are 12 amended to read as follows: 13 1. A physical plant and equipment levy of not exceeding 14 one dollar and sixty-seven cents per thousand dollars of 15 assessed valuation in the district is established except as 16 otherwise provided in this subsection . The physical plant 17 and equipment levy consists of the regular physical plant 18 and equipment levy of not exceeding thirty-three cents per 19 thousand dollars of assessed valuation in the district and 20 a voter-approved physical plant and equipment levy of not 21 exceeding one dollar and thirty-four cents per thousand 22 dollars of assessed valuation in the district. However, the 23 voter-approved physical plant and equipment levy may consist 24 of a combination of a physical plant and equipment property 25 tax levy and a physical plant and equipment income surtax 26 as provided in subsection 4 with the maximum amount levied 27 and imposed limited to an amount that could be raised by a 28 one dollar and thirty-four cent property tax levy. The levy 29 limitations of this subsection are subject to subsection 6 . 30 4. a. The board may on its own motion, and upon the 31 written request of not less than one hundred eligible electors 32 or thirty percent of the number of eligible electors voting 33 at the last regular school election, whichever is greater, 34 shall, direct the county commissioner of elections to provide 35 -13- LSB 1867XS (6) 85 mm/sc 13/ 34

S.F. 448 for submitting the proposition of levying the voter-approved 1 physical plant and equipment levy for a period of time 2 authorized by the voters at the election, not to exceed ten 3 years. The election shall be held on a date specified in 4 section 39.2, subsection 4 , paragraph “c” . The proposition is 5 adopted if a majority of those voting on the proposition at the 6 election approves it. The voter-approved physical plant and 7 equipment levy shall be funded either by a physical plant and 8 equipment property tax or by a combination of a physical plant 9 and equipment property tax and a physical plant and equipment 10 income surtax, as determined by the board . However, if the 11 board intends to enter into a rental or lease arrangement under 12 section 279.26 , or intends to enter into a loan agreement under 13 section 297.36 , only a property tax shall be levied for those 14 purposes. Subject to the limitations of section 298.14 , if 15 the board uses a combination of a physical plant and equipment 16 property tax and a physical plant and equipment surtax, for 17 each fiscal year the board shall determine the percent of 18 income surtax to be imposed expressed as full percentage 19 points, not to exceed twenty percent. 20 b. If a combination of a property tax and income surtax 21 is used, by April 15 of the previous school year, the board 22 shall certify the percent of the income surtax to be imposed 23 and the amount to be raised to the department of management 24 and the department of management shall establish the rate of 25 the property tax and income surtax for the school year. The 26 physical plant and equipment property tax and income surtax 27 shall be levied or imposed , collected, and paid to the school 28 district in the manner provided for the instructional support 29 program in sections section 257.21 through 257.26 . 30 Sec. 36. Section 404A.1, subsection 1, paragraph a, Code 31 2013, is amended to read as follows: 32 a. A historic preservation and cultural and entertainment 33 district tax credit, subject to the availability of the 34 credit, is granted against the tax imposed under chapter 422, 35 -14- LSB 1867XS (6) 85 mm/sc 14/ 34

S.F. 448 division II, III , or V , or chapter 432 , for the substantial 1 rehabilitation of eligible property located in this state as 2 provided in this chapter . 3 Sec. 37. Section 404A.2, subsection 2, Code 2013, is amended 4 to read as follows: 5 2. For purposes of individual and corporate income taxes 6 and the franchise tax, the increase in the basis of the 7 rehabilitated property that would otherwise result from the 8 qualified rehabilitation costs shall be reduced by the amount 9 of the credit computed under this chapter . 10 Sec. 38. Section 404A.4, subsection 5, paragraph f, Code 11 2013, is amended to read as follows: 12 f. The transferee may use the amount of the tax credit 13 transferred against the taxes imposed under chapter 422, 14 divisions II, III , and V , and chapter 432 for any tax year the 15 original transferor could have claimed the tax credit. Any 16 consideration received for the transfer of the tax credit shall 17 not be included as income under chapter 422, divisions II, 18 III , and V . Any consideration paid for the transfer of the tax 19 credit shall not be deducted from income under chapter 422, 20 divisions II, III , and V . 21 Sec. 39. Section 422.1, subsection 2, Code 2013, is amended 22 to read as follows: 23 2. Division II Personal net income tax Provisions 24 related to the business tax on corporations . 25 Sec. 40. Section 422.11L, subsection 1, unnumbered 26 paragraph 1, Code 2013, is amended to read as follows: 27 The taxes imposed under this division , less the credits 28 allowed under section 422.12 , III shall be reduced by a solar 29 energy system tax credit equal to the sum of the following: 30 Sec. 41. Section 422.11L, subsection 3, Code 2013, is 31 amended to read as follows: 32 3. a. An individual may claim the tax credit allowed a 33 partnership, limited liability company, S corporation, estate, 34 or trust electing to have the income taxed directly to the 35 -15- LSB 1867XS (6) 85 mm/sc 15/ 34

S.F. 448 individual. The amount claimed by the individual shall be 1 based upon the pro rata share of the individual’s earnings of 2 the partnership, limited liability company, S corporation, 3 estate, or trust. 4 b. A taxpayer who is eligible to claim a credit under this 5 section shall not be eligible to claim a renewable energy tax 6 credit under chapter 476C . 7 Sec. 42. Section 422.11N, subsection 3, unnumbered 8 paragraph 1, Code 2013, is amended to read as follows: 9 The taxes imposed under this division , less the credits 10 allowed under section 422.12 , III shall be reduced by an 11 ethanol promotion tax credit for each tax year that the 12 taxpayer is eligible to claim the tax credit under this 13 section . In order to be eligible, all of the following must 14 apply: 15 Sec. 43. Section 422.11N, subsection 9, Code 2013, is 16 amended by striking the subsection. 17 Sec. 44. Section 422.11O, subsection 2, unnumbered 18 paragraph 1, Code 2013, is amended to read as follows: 19 The taxes imposed under this division , less the credits 20 allowed under section 422.12 , III shall be reduced by an 21 E-85 gasoline promotion tax credit for each tax year that 22 the taxpayer is eligible to claim the tax credit under this 23 subsection . 24 Sec. 45. Section 422.11O, subsection 7, Code 2013, is 25 amended by striking the subsection. 26 Sec. 46. Section 422.11P, subsection 3, unnumbered 27 paragraph 1, Code 2013, is amended to read as follows: 28 The taxes imposed under this division , less the credits 29 allowed under section 422.12 , III shall be reduced by a 30 biodiesel blended fuel tax credit for each tax year that 31 the taxpayer is eligible to claim a tax credit under this 32 subsection . 33 Sec. 47. Section 422.11P, subsection 7, Code 2013, is 34 amended by striking the subsection. 35 -16- LSB 1867XS (6) 85 mm/sc 16/ 34

S.F. 448 Sec. 48. Section 422.11S, subsection 1, Code 2013, is 1 amended to read as follows: 2 1. The taxes imposed under this division , less the credits 3 allowed under section 422.12 , III shall be reduced by a 4 school tuition organization tax credit equal to sixty-five 5 percent of the amount of the voluntary cash or noncash 6 contributions made by the taxpayer during the tax year to a 7 school tuition organization, subject to the total dollar value 8 of the organization’s tax credit certificates as computed in 9 subsection 7 . The tax credit shall be claimed by use of a tax 10 credit certificate as provided in subsection 6 . 11 Sec. 49. Section 422.11S, subsection 4, Code 2013, is 12 amended by striking the subsection. 13 Sec. 50. Section 422.11S, subsection 7, paragraph a, 14 subparagraph (2), Code 2013, is amended to read as follows: 15 (2) “Total approved tax credits” means for the tax year 16 beginning in the 2006 calendar year, two million five hundred 17 thousand dollars, for the tax year beginning in the 2007 18 calendar year, five million dollars, and for tax years 19 beginning on or after January 1, 2008, seven million five 20 hundred thousand dollars. However, for tax years beginning on 21 or after January 1, 2012, “total approved tax credits” means 22 eight million seven hundred fifty for tax years beginning on 23 or after January 1, 2014, two million one hundred eighty-seven 24 thousand five hundred dollars. 25 Sec. 51. Section 422.11Y, subsection 3, unnumbered 26 paragraph 1, Code 2013, is amended to read as follows: 27 The taxes imposed under this division , less the credits 28 allowed under section 422.12 , III shall be reduced by the 29 amount of the E-15 plus gasoline promotion tax credit for each 30 tax year that the taxpayer is eligible to claim a tax credit 31 under this subsection . 32 Sec. 52. Section 422.11Y, subsection 8, Code 2013, is 33 amended by striking the subsection. 34 Sec. 53. Section 422.15, subsections 2 and 3, Code 2013, are 35 -17- LSB 1867XS (6) 85 mm/sc 17/ 34

S.F. 448 amended by striking the subsections. 1 Sec. 54. Section 422.15, subsection 4, Code 2013, is amended 2 to read as follows: 3 4. Notwithstanding subsections subsection 1, 2, and 3 , or 4 any other provision of this chapter , withholding of income 5 tax and any reporting requirement shall not be imposed upon 6 a person, corporation, or withholding agent or any payor of 7 deferred compensation, pensions, or annuities with regard to 8 such payments made to a nonresident of the state. 9 Sec. 55. Section 422.21, Code 2013, is amended by striking 10 the section and inserting in lieu thereof the following: 11 422.21 Form and time of return. 12 Returns shall be in the form the director prescribes, and 13 shall be filed with the department on or before the last day 14 of the fourth month after the expiration of the tax year. 15 However, cooperative associations as defined in section 6072(d) 16 of the Internal Revenue Code shall file their returns on or 17 before the fifteenth day of the ninth month following the 18 close of the taxable year and nonprofit corporations subject 19 to the unrelated business income tax imposed by section 20 422.33, subsection 1A, shall file their returns on or before 21 the fifteenth day of the fifth month following the close of 22 the taxable year. If, under the Internal Revenue Code, a 23 corporation is required to file a return covering a tax period 24 of less than twelve months, the state return shall be for the 25 same period and is due forty-five days after the due date of 26 the federal tax return, excluding any extension of time to 27 file. In case of sickness, absence, or other disability, or 28 if good cause exists, the director may allow further time for 29 filing returns. The director shall cause to be prepared blank 30 forms for the returns and shall cause them to be distributed 31 throughout the state and to be furnished upon application, 32 but failure to receive or secure the form does not relieve 33 the taxpayer from the obligation of making a return that is 34 required. The department may as far as consistent with the 35 -18- LSB 1867XS (6) 85 mm/sc 18/ 34

S.F. 448 Code draft income tax forms to conform to the income tax 1 forms of the internal revenue department of the United States 2 government. 3 Sec. 56. Section 422.22, Code 2013, is amended to read as 4 follows: 5 422.22 Supplementary returns. 6 If the director shall be of the opinion that any taxpayer 7 required under this division III to file a return has failed 8 to file such a return or to include in a return filed, either 9 intentionally or through error, items of taxable income, 10 the director may require from such taxpayer a return or 11 supplementary return in such form as the director shall 12 prescribe, of all the items of income which the taxpayer 13 received during the year for which the return is made, whether 14 or not taxable under the provisions of this division III . If 15 from a supplementary return, or otherwise, the director finds 16 that any items of income, taxable under this division III , have 17 been omitted from the original return, the director may require 18 the items so omitted to be added to the original return. Such 19 supplementary return and the correction of the original return 20 shall not relieve the taxpayer from any of the penalties to 21 which the taxpayer may be liable under any provisions of this 22 division III , whether or not the director required a return or 23 a supplementary return under this section . 24 Sec. 57. Section 422.32, Code 2013, is amended to read as 25 follows: 26 422.32 Definitions. 27 1. For the purpose of this division and unless otherwise 28 required by the context: 29 a. 1. “Affiliated group” means a group of corporations as 30 defined in section 1504(a) of the Internal Revenue Code. 31 b. 2. a. “Business income” means income arising from 32 transactions and activity in the regular course of the 33 taxpayer’s trade or business; or income from tangible and 34 intangible property if the acquisition, management, and 35 -19- LSB 1867XS (6) 85 mm/sc 19/ 34

S.F. 448 disposition of the property constitute integral parts of the 1 taxpayer’s regular trade or business operations; or gain or 2 loss resulting from the sale, exchange, or other disposition of 3 real property or of tangible or intangible personal property, 4 if the property while owned by the taxpayer was operationally 5 related to the taxpayer’s trade or business carried on in 6 Iowa or operationally related to sources within Iowa, or the 7 property was operationally related to sources outside this 8 state and to the taxpayer’s trade or business carried on in 9 Iowa; or gain or loss resulting from the sale, exchange, or 10 other disposition of stock in another corporation if the 11 activities of the other corporation were operationally related 12 to the taxpayer’s trade or business carried on in Iowa while 13 the stock was owned by the taxpayer. A taxpayer may have more 14 than one regular trade or business in determining whether 15 income is business income. 16 (1) b. It is the intent of the general assembly to treat as 17 apportionable business income all income that may be treated 18 as apportionable business income under the Constitution of the 19 United States. 20 (2) c. The filing of an Iowa income tax return on a 21 combined report basis is neither allowed nor required by this 22 paragraph “b” subsection . 23 c. 3. “Commercial domicile” means the principal place from 24 which the trade or business of the taxpayer is directed or 25 managed. 26 d. 4. “Corporation” includes joint stock companies, and 27 associations organized for pecuniary profit, and partnerships 28 and limited liability companies taxed as corporations under the 29 Internal Revenue Code. 30 e. 5. “Domestic corporation” means any corporation 31 organized under the laws of this state. 32 6. “Fiduciary” means a guardian, trustee, executor, 33 administrator, receiver, conservator, or any person, whether 34 individual or corporate, acting in any fiduciary capacity for 35 -20- LSB 1867XS (6) 85 mm/sc 20/ 34

S.F. 448 any person, trust, or estate. 1 7. “Fiscal year” means an accounting period of twelve 2 months, ending on the last day of any month other than 3 December. 4 f. 8. “Foreign corporation” means any corporation other 5 than a domestic corporation. 6 9. “Foreign country” means any jurisdiction other than one 7 embraced within the United States. The words “United States” , 8 when used in a geographical sense, include the states, the 9 District of Columbia, and the possessions of the United States. 10 10. “Income year” means the calendar year or the fiscal year 11 upon the basis of which the net income is computed under this 12 division. 13 11. “Individual” means a natural person. 14 g. 12. “Internal Revenue Code” means the Internal Revenue 15 Code of 1954, prior to the date of its redesignation as the 16 Internal Revenue Code of 1986 by the Tax Reform Act of 1986, 17 or means the Internal Revenue Code of 1986 as amended to and 18 including January 1, 2012. 19 h. 13. “Nonbusiness income” means all income other than 20 business income. 21 14. The word “paid” , for the purposes of the deductions 22 under this division, means “paid or accrued” or “paid or 23 incurred”, and the terms “paid or incurred” and “paid or 24 accrued” shall be construed according to the method of 25 accounting upon the basis of which the net income is computed 26 under this division. The term “received” , for the purpose 27 of the computation of net income under this division, means 28 “received or accrued”, and the term “received or accrued” shall 29 be construed according to the method of accounting upon the 30 basis of which the net income is computed under this division. 31 15. “Resident” applies only to individuals and includes, for 32 the purpose of determining liability to the tax imposed by this 33 division upon or with reference to the income of any tax year, 34 any individual domiciled in the state, and any other individual 35 -21- LSB 1867XS (6) 85 mm/sc 21/ 34

S.F. 448 who maintains a permanent place of abode within the state. 1 i. 16. “State” means any state of the United States, the 2 District of Columbia, the Commonwealth of Puerto Rico, any 3 territory or possession of the United States, and any foreign 4 country or political subdivision thereof. 5 j. 17. “Taxable in another state”. For purposes of 6 allocation and apportionment of income under this division , a 7 taxpayer is “taxable in another state” if: 8 (1) a. In that state the taxpayer is subject to a net 9 income tax, a franchise tax measured by net income, a franchise 10 tax for the privilege of doing business, or a corporate stock 11 tax; or 12 (2) b. That state has jurisdiction to subject the taxpayer 13 to a net income tax regardless of whether, in fact, the state 14 does or does not. 15 18. a. “Tax year” means the calendar year, or the fiscal 16 year ending during such calendar year, upon the basis of which 17 the net income is computed under this division. 18 b. If a taxpayer has made the election provided by section 19 441, subsection “f”, of the Internal Revenue Code, “tax year” 20 means the annual period so elected, varying from fifty-two to 21 fifty-three weeks. 22 c. If the effective date or the applicability of a provision 23 of this division is expressed in terms of a tax year beginning, 24 including, or ending with reference to a specified date which 25 is the first or last day of a month, a tax year described in 26 paragraph “a” of this subsection shall be treated as beginning 27 with the first day of the calendar month beginning nearest to 28 the first day of the tax year or as ending with the last day of 29 the calendar month ending nearest to the last day of the tax 30 year. 31 k. 19. “Unitary business” means a business carried on 32 partly within and partly without a state where the portion 33 of the business carried on within the state depends on or 34 contributes to the business outside the state. 35 -22- LSB 1867XS (6) 85 mm/sc 22/ 34

S.F. 448 2. The words, terms, and phrases defined in division II, 1 section 422.4, subsections 4 to 6, 8, 9, 13, and 15 to 17 , when 2 used in this division , shall have the meanings ascribed to them 3 in said section except where the context clearly indicates a 4 different meaning. 5 Sec. 58. Section 422.33, subsection 28, Code 2013, is 6 amended to read as follows: 7 28. The taxes imposed under this division shall be reduced 8 by a school tuition organization tax credit allowed under 9 section 422.11S . The maximum amount of tax credits that 10 may be approved under this subsection for a tax year equals 11 twenty-five percent of the school tuition organization’s tax 12 credits that may be approved pursuant to section 422.11S, 13 subsection 7 , for a tax year. 14 Sec. 59. Section 422D.1, Code 2013, is amended to read as 15 follows: 16 422D.1 Authorization —— election —— imposition and repeal —— 17 use of revenues. 18 1. a. A county board of supervisors may offer for voter 19 approval any of the following taxes or a combination of the 20 following taxes: 21 (1) Local option income surtax. 22 (2) An an ad valorem property tax. 23 b. Revenues generated from these taxes the ad valorem 24 property tax shall be used for emergency medical services as 25 provided in section 422D.6 . 26 2. a. The taxes property tax for emergency medical services 27 shall only be imposed after an election at which a majority of 28 those voting on the question of imposing the tax or combination 29 of taxes specified in subsection 1 , paragraph “a” , subparagraph 30 (1) or (2), vote in favor of the question. However, the tax 31 or combination of taxes specified in subsection 1 shall not 32 be imposed on property within or on residents of a benefited 33 emergency medical services district under chapter 357F . The 34 question of imposing the tax or combination of the taxes may 35 -23- LSB 1867XS (6) 85 mm/sc 23/ 34

S.F. 448 be submitted at the regular city election, a special election, 1 or state general election. Notice of the question shall be 2 provided by publication at least sixty days before the time of 3 the election and shall identify the tax or combination of taxes 4 and the levy rate or rates, as applicable . If a majority of 5 those voting on the question approve the imposition of the tax 6 or combination of taxes , the tax or combination of taxes shall 7 be imposed as follows: 8 (1) A local option income surtax shall be imposed for tax 9 years beginning on or after January 1 of the fiscal year in 10 which the favorable election was held. 11 (2) An ad valorem property tax shall be imposed levied for 12 the fiscal year in which the election was held. 13 b. Before a county imposes an income surtax as specified 14 in subsection 1 , paragraph “a” , subparagraph (1), a benefited 15 emergency medical services district in the county shall be 16 dissolved, and the county shall be liable for the outstanding 17 obligations of the benefited district. If the benefited 18 district extends into more than one county, the county imposing 19 the income surtax shall be liable for only that portion of the 20 obligations relating to the portion of the benefited district 21 in the county. 22 3. Revenues received by the county from the taxes imposed 23 tax levied under this chapter shall be deposited into the 24 emergency medical services trust fund created pursuant to 25 section 422D.6 and shall be used as provided in that section. 26 4. Any tax or combination of taxes imposed levied under this 27 chapter shall be for a maximum period of five years. 28 Sec. 60. Section 425.23, subsection 4, paragraph b, Code 29 2013, is amended to read as follows: 30 b. The annual adjustment factor for the 1998 base year is 31 one hundred percent. For each subsequent base year, the annual 32 adjustment factor equals the annual inflation factor for the 33 calendar year, in which the base year begins, as computed in 34 section 422.4 for purposes of the individual income tax , Code 35 -24- LSB 1867XS (6) 85 mm/sc 24/ 34

S.F. 448 2013 . 1 Sec. 61. Section 476.20, subsection 3, paragraph b, Code 2 2013, is amended to read as follows: 3 b. A qualified applicant for the low income home energy 4 assistance program or the weatherization assistance program who 5 is also a “head of household”, as defined in section 422.4, 6 subsection 7 , head of household shall be promptly certified 7 by the local agency administering the applicant’s program to 8 the applicant’s public utility that the resident is a “head 9 of household” as defined in section 422.4, subsection 7 , head 10 of household and is qualified for the low income home energy 11 assistance program or weatherization assistance program. 12 Notwithstanding subsection 1 , a public utility furnishing gas 13 or electricity shall not disconnect service from November 1 14 through April 1 to a residence which has a resident that has 15 been certified under this paragraph. For purposes of this 16 paragraph, “head of household” has the same meaning as provided 17 by the Internal Revenue Code. 18 Sec. 62. Section 476B.2, Code 2013, is amended to read as 19 follows: 20 476B.2 General rule. 21 The owner of a qualified facility shall, for each 22 kilowatt-hour of qualified electricity that the owner sells 23 or uses for on-site consumption during the ten-year period 24 beginning on the date the qualified facility was originally 25 placed in service, be allowed a wind energy production tax 26 credit to the extent provided in this chapter against the tax 27 imposed in chapter 422, divisions II, III , and V, and chapter 28 432 , and may claim a refund of tax imposed by chapter 423 or 29 437A for any tax year within the time period set forth in 30 section 423.47 or 437A.14 . 31 Sec. 63. Section 476B.6, subsection 5, paragraphs a through 32 c, Code 2013, are amended to read as follows: 33 a. If the tax credit application is filed by a partnership, 34 limited liability company, S corporation, estate, trust, or 35 -25- LSB 1867XS (6) 85 mm/sc 25/ 34

S.F. 448 other reporting entity all of the income of which is taxed 1 directly to its equity holders or beneficiaries, for the taxes 2 imposed under chapter 422, division II or III, the tax credit 3 certificate shall be issued directly to equity holders or 4 beneficiaries of the applicant in proportion to their pro rata 5 share of the income of such entity. The applicant shall, in 6 the application made under this section , identify its equity 7 holders or beneficiaries, and the percentage of such entity’s 8 income that is allocable to each equity holder or beneficiary. 9 b. If the tax credit applicant under this section is 10 eligible to receive renewable electricity production credits 11 authorized under section 45 of the Internal Revenue Code, 12 as amended, and the tax credit applicant is a partnership, 13 limited liability company, S corporation, estate, trust, or 14 other reporting entity all of the income of which is taxed 15 directly to its equity holders or beneficiaries, for the taxes 16 imposed under chapter 422, division II or III , the tax credit 17 certificate may be issued to a partner if the business is a 18 partnership, a shareholder if the business is an S corporation, 19 or a member if the business is a limited liability company 20 in the amounts designated by the eligible partnership, S 21 corporation, or limited liability company. In absence of 22 such designation, the credits under this section shall flow 23 through to the partners, shareholders, or members in accordance 24 with their pro rata share of the income of the entity. The 25 applicant shall, in the application made under this section , 26 identify the holders or beneficiaries that are to receive the 27 tax credit certificates and the percentage of the tax credit 28 that is allocable to each holder or beneficiary. 29 c. If an applicant under this section is eligible to 30 receive renewable electricity production credits authorized 31 under section 45 of the Internal Revenue Code, as amended, and 32 the tax credit applicant is a partnership, limited liability 33 company, S corporation, estate, trust, or other reporting 34 entity all of the income of which is taxed directly to its 35 -26- LSB 1867XS (6) 85 mm/sc 26/ 34

S.F. 448 equity holders or beneficiaries, for the taxes imposed under 1 chapter 422, division II or III , the tax credit certificates 2 and all future rights to the tax credit in this section may be 3 distributed to an equity holder or beneficiary as a liquidating 4 distribution or portion thereof, of a holder or beneficiary’s 5 interest in the applicant entity. The applicant shall, in the 6 application made under this section , designate the percentage 7 of the tax credit allocable to the liquidating equity holder 8 or beneficiary that is to receive the current and future tax 9 credit certificates under this section . 10 Sec. 64. Section 476B.7, subsection 2, Code 2013, is amended 11 to read as follows: 12 2. The tax credit shall be freely transferable. The 13 transferee may use the amount of the tax credit transferred 14 against the taxes imposed under chapter 422, divisions II, III , 15 and V , and chapter 432 for any tax year the original transferor 16 could have claimed the tax credit. The transferee may claim 17 a refund under chapter 423 or 437A for any tax year within 18 the time period set forth in section 423.47 or 437A.14 for 19 which the original transferor could have claimed a refund. 20 Any consideration received for the transfer of the tax credit 21 shall not be included as income under chapter 422, divisions 22 II, III , and V . Any consideration paid for the transfer of the 23 tax credit shall not be deducted from income under chapter 422, 24 divisions II, III , and V . 25 Sec. 65. Section 476C.4, subsection 4, paragraph a, Code 26 2013, is amended to read as follows: 27 a. If the tax credit application is filed by a partnership, 28 limited liability company, S corporation, estate, trust, or 29 other reporting entity all of the income of which is taxed 30 directly to its equity holders or beneficiaries, for the taxes 31 imposed under chapter 422, division II or III , the tax credit 32 certificate shall be issued directly to equity holders or 33 beneficiaries of the applicant in proportion to their pro rata 34 share of the income of such entity. The applicant shall, in 35 -27- LSB 1867XS (6) 85 mm/sc 27/ 34

S.F. 448 the application made under this section , identify its equity 1 holders or beneficiaries, and the percentage of such entity’s 2 income that is allocable to each equity holder or beneficiary. 3 Sec. 66. Section 476C.4, subsection 4, paragraph b, 4 subparagraph (1), Code 2013, is amended to read as follows: 5 (1) If the tax credit applicant under this section is 6 eligible to receive renewable electricity production credits 7 authorized under section 45 of the Internal Revenue Code, 8 as amended, and the tax credit applicant is a partnership, 9 limited liability company, S corporation, estate, trust, or 10 other reporting entity all of the income of which is taxed 11 directly to its equity holders or beneficiaries, for the taxes 12 imposed under chapter 422, division II or III , the tax credit 13 certificate may be issued to a partner if the business is a 14 partnership, a shareholder if the business is an S corporation, 15 or a member if the business is a limited liability company 16 in the amounts designated by the eligible partnership, S 17 corporation, or limited liability company. In absence of such 18 designation, the credits under this section shall flow through 19 to the partners, shareholders, or members in accordance with 20 their pro rata share of the income of the entity. 21 Sec. 67. Section 476C.4, subsection 4, paragraph c, 22 subparagraph (1), Code 2013, is amended to read as follows: 23 (1) If an applicant under this section is eligible to 24 receive renewable electricity production credits authorized 25 under section 45 of the Internal Revenue Code, as amended, and 26 the tax credit applicant is a partnership, limited liability 27 company, S corporation, estate, trust, or other reporting 28 entity all of the income of which is taxed directly to its 29 equity holders or beneficiaries, for the taxes imposed under 30 chapter 422, division II or III , the tax credit certificates 31 and all future rights to the tax credit in this section may be 32 distributed to an equity holder or beneficiary as a liquidating 33 distribution or portion thereof, of a holder or beneficiary’s 34 interest in the applicant entity. 35 -28- LSB 1867XS (6) 85 mm/sc 28/ 34

S.F. 448 Sec. 68. Section 476C.6, subsection 1, paragraph b, Code 1 2013, is amended to read as follows: 2 b. The transferee may use the amount of the tax credit 3 transferred against taxes imposed under chapter 422, divisions 4 II, III , and V , and chapter 432 for any tax year the original 5 transferor could have claimed the tax credit. The transferee 6 may claim a refund under chapter 423 or 437A for any tax 7 year within the time period set forth in section 423.47 or 8 437A.14 for which the original transferor could have claimed 9 the refund. Any consideration received for the transfer of 10 the tax credit shall not be included as income under chapter 11 422, divisions II, III , and V . Any consideration paid for the 12 transfer of the tax credit shall not be deducted from income 13 under chapter 422, divisions II, III , and V . 14 Sec. 69. Section 483A.1A, subsection 10, paragraph e, Code 15 2013, is amended to read as follows: 16 e. Is a member of the armed forces of the United States 17 who is serving on active duty , and claims residency in this 18 state , and has filed a state individual income tax return 19 as a resident pursuant to chapter 422, division II , for the 20 preceding tax year, or is stationed in this state. 21 Sec. 70. REPEAL. Sections 68A.601, 257.22 through 257.26, 22 298.14, 422.4 through 422.11B, 422.11D, 422.11F, 422.11H 23 through 422.11J, 422.11M, 422.11Q, 422.11V through 422.11X, 24 422.11Z, 422.12, 422.12B through 422.12E, 422.12H, 422.12J 25 through 422.14, 422.16, 422.17, 422.19, 422.23, 422.27, 422.31, 26 422D.2 through 422D.4, Code 2013, are repealed. 27 Sec. 71. CORRESPONDING AMENDMENTS LEGISLATION. Additional 28 legislation is required to fully implement this division of 29 this Act. The director of the department of revenue shall, in 30 compliance with section 2.16, prepare draft legislation for 31 submission to the legislative services agency, as necessary, to 32 implement the repeal of the individual income tax under this 33 division of this Act and under other provisions of law. 34 Sec. 72. APPLICABILITY. This division of this Act applies 35 -29- LSB 1867XS (6) 85 mm/sc 29/ 34

S.F. 448 to tax years beginning on or after January 1, 2014. 1 DIVISION II 2 SALES AND USE TAX 3 Sec. 73. Section 423.2, subsection 1, unnumbered paragraph 4 1, Code 2013, is amended to read as follows: 5 There is imposed a tax of six eleven percent upon the sales 6 price of all sales of tangible personal property, consisting 7 of goods, wares, or merchandise, sold at retail in the state 8 to consumers or users except as otherwise provided in this 9 subchapter . 10 Sec. 74. Section 423.2, subsections 2 and 3, Code 2013, are 11 amended to read as follows: 12 2. A tax of six eleven percent is imposed upon the sales 13 price of the sale or furnishing of gas, electricity, water, 14 heat, pay television service, and communication service, 15 including the sales price from such sales by any municipal 16 corporation or joint water utility furnishing gas, electricity, 17 water, heat, pay television service, and communication service 18 to the public in its proprietary capacity, except as otherwise 19 provided in this subchapter , when sold at retail in the state 20 to consumers or users. 21 3. A tax of six eleven percent is imposed upon the 22 sales price of all sales of tickets or admissions to places 23 of amusement, fairs, and athletic events except those of 24 elementary and secondary educational institutions. A tax 25 of six eleven percent is imposed on the sales price of an 26 entry fee or like charge imposed solely for the privilege of 27 participating in an activity at a place of amusement, fair, or 28 athletic event unless the sales price of tickets or admissions 29 charges for observing the same activity are taxable under this 30 subchapter . A tax of six eleven percent is imposed upon that 31 part of private club membership fees or charges paid for the 32 privilege of participating in any athletic sports provided club 33 members. 34 Sec. 75. Section 423.2, subsection 4, paragraph a, Code 35 -30- LSB 1867XS (6) 85 mm/sc 30/ 34

S.F. 448 2013, is amended to read as follows: 1 a. A tax of six eleven percent is imposed upon the sales 2 price derived from the operation of all forms of amusement 3 devices and games of skill, games of chance, raffles, and bingo 4 games as defined in chapter 99B , and card game tournaments 5 conducted under section 99B.7B , that are operated or conducted 6 within the state, the tax to be collected from the operator in 7 the same manner as for the collection of taxes upon the sales 8 price of tickets or admission as provided in this section . 9 Nothing in this subsection shall legalize any games of skill 10 or chance or slot-operated devices which are now prohibited by 11 law. 12 Sec. 76. Section 423.2, subsection 5, Code 2013, is amended 13 to read as follows: 14 5. There is imposed a tax of six eleven percent upon the 15 sales price from the furnishing of services as defined in 16 section 423.1 . 17 Sec. 77. Section 423.2, subsection 7, paragraph a, 18 unnumbered paragraph 1, Code 2013, is amended to read as 19 follows: 20 A tax of six eleven percent is imposed upon the sales 21 price from the sales, furnishing, or service of solid waste 22 collection and disposal service. 23 Sec. 78. Section 423.2, subsection 8, paragraph a, Code 24 2013, is amended to read as follows: 25 a. A tax of six eleven percent is imposed on the sales 26 price from sales of bundled transactions. For the purposes of 27 this subsection , a “bundled transaction” is the retail sale of 28 two or more distinct and identifiable products, except real 29 property and services to real property, which are sold for one 30 nonitemized price. A “bundled transaction” does not include 31 the sale of any products in which the sales price varies, or 32 is negotiable, based on the selection by the purchaser of the 33 products included in the transaction. 34 Sec. 79. Section 423.2, subsection 9, Code 2013, is amended 35 -31- LSB 1867XS (6) 85 mm/sc 31/ 34

S.F. 448 to read as follows: 1 9. A tax of six eleven percent is imposed upon the 2 sales price from any mobile telecommunications service, 3 including all paging services, that this state is allowed 4 to tax pursuant to the provisions of the federal Mobile 5 Telecommunications Sourcing Act, Pub. L. No. 106-252, 4 U.S.C. 6 § 116 et seq. For purposes of this subsection , taxes on mobile 7 telecommunications service, as defined under the federal Mobile 8 Telecommunications Sourcing Act that are deemed to be provided 9 by the customer’s home service provider, shall be paid to 10 the taxing jurisdiction whose territorial limits encompass 11 the customer’s place of primary use, regardless of where the 12 mobile telecommunications service originates, terminates, 13 or passes through and shall in all other respects be taxed 14 in conformity with the federal Mobile Telecommunications 15 Sourcing Act. All other provisions of the federal Mobile 16 Telecommunications Sourcing Act are adopted by the state of 17 Iowa and incorporated into this subsection by reference. With 18 respect to mobile telecommunications service under the federal 19 Mobile Telecommunications Sourcing Act, the director shall, if 20 requested, enter into agreements consistent with the provisions 21 of the federal Act. 22 Sec. 80. Section 423.2, subsection 11, paragraph b, 23 subparagraph (3), Code 2013, is amended to read as follows: 24 (3) Transfer one-sixth one-eleventh of the remaining 25 revenues to the secure an advanced vision for education fund 26 created in section 423F.2 . This subparagraph (3) is repealed 27 December 31, 2029. 28 Sec. 81. Section 423.2, subsection 13, Code 2013, is amended 29 to read as follows: 30 13. The sales tax rate of six eleven percent is reduced to 31 five ten percent on January 1, 2030. 32 Sec. 82. Section 423.5, unnumbered paragraph 1, Code 2013, 33 is amended to read as follows: 34 Except as provided in subsection 3 , an excise tax at the 35 -32- LSB 1867XS (6) 85 mm/sc 32/ 34

S.F. 448 rate of six eleven percent of the purchase price or installed 1 purchase price is imposed on the following: 2 Sec. 83. Section 423.5, subsection 9, Code 2013, is amended 3 to read as follows: 4 9. The use tax rate of six eleven percent is reduced to five 5 ten percent on January 1, 2030. 6 Sec. 84. Section 423.43, subsection 1, paragraph b, Code 7 2013, is amended to read as follows: 8 b. Subsequent to the deposit into the general fund of 9 the state and after the transfer of such revenues collected 10 under chapter 423B , the department shall transfer one-sixth 11 one-eleventh of such remaining revenues to the secure an 12 advanced vision for education fund created in section 423F.2 . 13 This paragraph is repealed December 31, 2029. 14 Sec. 85. EFFECTIVE DATE. This division of this Act takes 15 effect January 1, 2014. 16 EXPLANATION 17 This bill relates to state taxes by repealing the individual 18 income tax and increasing the state sales and use tax rates. 19 Division I repeals the individual income tax and makes 20 numerous conforming changes to the Code to remove references 21 to the individual income tax and to update or move provisions 22 of the individual income tax that are also applicable by 23 reference to the corporate income tax and the franchise tax. 24 The division also repeals the emergency medical services income 25 surtax in Code chapter 422D, the instructional support income 26 surtax in Code section 257.21, the educational improvement 27 income surtax in Code section 257.29, and the physical plant 28 and equipment income surtax in Code section 298.2, because 29 income surtax revenues will no longer be generated without the 30 state individual income tax. 31 The division provides that additional legislation is 32 required to fully implement the division and requires the 33 director of the department of revenue to prepare draft 34 legislation in compliance with Code section 2.16 for submission 35 -33- LSB 1867XS (6) 85 mm/sc 33/ 34