SF 448 (LSB 1867XS (6) 85)

SENATE FILE 448

BY  ZAUN

A BILL FOR

An Act relating to state taxes by eliminating the individual income tax, increasing the sales and use tax rates, making conforming changes, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

REPEAL OF THE INDIVIDUAL INCOME TAX
    Section 1.  Section 15.293A, subsection 1, paragraphs a and b, Code 2013, are amended to read as follows:
   a.  A redevelopment tax credit shall be allowed against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, for a portion of a taxpayer’s equity investment, as provided in subsection 3, in a qualifying redevelopment project.
   b.  An individual may claim a tax credit under this subsection of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
    Sec. 2.  Section 15.293A, subsection 2, paragraph b, subparagraphs (3) and (6), Code 2013, are amended to read as follows:
   (3)  The tax credit certificate, unless rescinded by the authority, shall be accepted by the department of revenue as payment for taxes imposed pursuant to chapter 422, divisions II, III, and V, and in chapter 432, and for the moneys and credits tax imposed in section 533.329, subject to any conditions or restrictions placed by the authority upon the face of the tax credit certificate and subject to the limitations of this section.
   (6)  A tax credit shall not be claimed by a transferee under this section until a replacement tax credit certificate identifying the transferee as the proper holder has been issued. The transferee may use the amount of the tax credit transferred against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, for any tax year the original transferor could have claimed the tax credit. Any consideration received for the transfer of the tax credit shall not be included as income under chapter 422, divisions II, III, and V. Any consideration paid for the transfer of the tax credit shall not be deducted from income under chapter 422, divisions II, III, and V.
    Sec. 3.  Section 15.293A, subsection 4, Code 2013, is amended to read as follows:
   4.  For purposes of individual and corporate income taxes and the franchise tax, the increase in the basis of the redeveloped property that would otherwise result from the qualified redevelopment costs shall be reduced by the amount of the credit computed under this part.
    Sec. 4.  Section 15.333, subsection 1, Code 2013, is amended to read as follows:
   1.  An eligible business may claim a tax credit equal to a percentage of the new investment directly related to new jobs created or retained by the location or expansion of an eligible business under the program. The tax credit shall be amortized equally over five calendar years. The tax credit shall be allowed against taxes imposed under chapter 422, division II, III, or V, and against the moneys and credits tax imposed in section 533.329. If the business is a partnership, S corporation, limited liability company, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, or estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, S corporation, limited liability company, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, or estate or trust. The percentage shall be determined as provided in section 15.335A. Any tax credit in excess of the tax liability for the tax year may be credited to the tax liability for the following seven years or until depleted, whichever occurs first.
    Sec. 5.  Section 15.335, subsection 6, Code 2013, is amended by striking the subsection.
    Sec. 6.  Section 15E.43, subsection 1, paragraph a, Code 2013, is amended to read as follows:
   a.  For tax years beginning on or after January 1, 2002, a tax credit shall be allowed against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, for a portion of a taxpayer’s equity investment, as provided in subsection 2, in a qualifying business or a community-based seed capital fund. An individual may claim a tax credit under this paragraph of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
    Sec. 7.  Section 15E.43, subsection 1, paragraph c, Code 2013, is amended by striking the paragraph.
    Sec. 8.  Section 15E.44, subsection 4, Code 2013, is amended to read as follows:
   4.  After verifying the eligibility of a qualifying business, the authority shall issue a tax credit certificate to be attached to the equity investor’s tax return. The tax credit certificate shall contain the taxpayer’s name, address, tax identification number, the amount of credit, the name of the qualifying business, and other information required by the department of revenue. The tax credit certificate, unless rescinded by the authority, shall be accepted by the department of revenue as payment for taxes imposed pursuant to chapter 422, divisions II, III, and V, and in chapter 432, and for the moneys and credits tax imposed in section 533.329, subject to any conditions or restrictions placed by the authority upon the face of the tax credit certificate and subject to the limitations of section 15E.43.
    Sec. 9.  Section 15E.45, subsection 4, Code 2013, is amended to read as follows:
   4.  After verifying the eligibility of the community-based seed capital fund, the authority shall issue a tax credit certificate to be attached to the taxpayer’s tax return. The tax credit certificate shall contain the taxpayer’s name, address, tax identification number, the amount of the tax credit, the name of the community-based seed capital fund, and other information required by the department of revenue. The tax credit certificate, unless rescinded by the authority, shall be accepted by the department of revenue or a local taxing district, as applicable, as payment for taxes imposed pursuant to chapter 422, divisions II, III, and V, and chapter 432, and as payment for the moneys and credits tax imposed pursuant to section 533.329, subject to any conditions or restrictions placed by the authority on the face of the tax credit certificate and subject to the limitations of section 15E.43.
    Sec. 10.  Section 15E.52, subsection 2, Code 2013, is amended to read as follows:
   2.
  a.  A tax credit shall be allowed against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, for a portion of a taxpayer’s equity investment in the form of cash in an innovation fund.
   b.  An individual may claim a tax credit under this section of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
    Sec. 11.  Section 15E.62, subsection 6, Code 2013, is amended to read as follows:
   6.  “Tax credit” means a contingent tax credit issued pursuant to section 15E.66 that is available against tax liabilities imposed by chapter 422, divisions II, III, and V, and by chapter 432 and against the moneys and credits tax imposed by section 533.329.
    Sec. 12.  Section 15E.66, subsection 1, Code 2013, is amended to read as follows:
   1.  The board may issue certificates and related tax credits to designated investors which, if redeemed for the maximum possible amount, shall not exceed a total aggregate of sixty million dollars of tax credits. The certificates shall be issued contemporaneously with a commitment to invest in the Iowa fund of funds by a designated investor. A certificate issued by the board shall have a specific maturity date or dates designated by the board and shall be redeemable only in accordance with the contingencies reflected on the certificate or incorporated therein by reference. A certificate and the related tax credit shall be transferable by the designated investor. A tax credit shall not be claimed or redeemed except by a designated investor or transferee in accordance with the terms of a certificate from the board. A tax credit shall not be claimed for a tax year that begins earlier than the maturity date or dates stated on the certificate. An individual may claim the credit of a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust. Any tax credit in excess of the taxpayer’s tax liability for the tax year may be credited to the tax liability for the following seven years, or until depleted, whichever is earlier.
    Sec. 13.  Section 15E.193B, subsection 6, paragraph a, Code 2013, is amended to read as follows:
   a.  An eligible housing business may claim a tax credit up to a maximum of ten percent of the new investment which is directly related to the building or rehabilitating of a minimum of four single-family homes located in that part of a city or county in which there is a designated enterprise zone or one multiple dwelling unit building containing three or more individual dwelling units located in that part of a city or county in which there is a designated enterprise zone. The new investment that may be used to compute the tax credit shall not exceed the new investment used for the first one hundred forty thousand dollars of value for each single-family home or for each unit of a multiple dwelling unit building containing three or more units. The tax credit may be used to reduce the tax liability imposed under chapter 422, division II, III, or V, or chapter 432. Any credit in excess of the tax liability for the tax year may be credited to the tax liability for the following seven years or until depleted, whichever occurs earlier. If the business is a partnership, S corporation, limited liability company, or estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, S corporation, limited liability company, or estate or trust except as allowed for under subsection 8 when low-income housing tax credits authorized under section 42 of the Internal Revenue Code are used to assist in the financing of the housing development.
    Sec. 14.  Section 15E.193B, subsection 8, unnumbered paragraph 2, Code 2013, is amended to read as follows:
   The transferee may use the amount of the tax credit transferred against the taxes imposed under chapter 422, divisions II, III, and V, and chapter 432 for any tax year the original transferor could have claimed the tax credit. Any consideration received for the transfer of the tax credit shall not be included as income under chapter 422, divisions II, III, and V. Any consideration paid for the transfer of the tax credit shall not be deducted from income under chapter 422, divisions II, III, and V.
    Sec. 15.  Section 15E.305, subsection 1, Code 2013, is amended to read as follows:
   1.  For tax years beginning on or after January 1, 2003, a tax credit shall be allowed against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329 equal to twenty-five percent of a taxpayer’s endowment gift to an endow Iowa qualified community foundation. An individual may claim a tax credit under this section of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust. A tax credit shall be allowed only for an endowment gift made to an endow Iowa qualified community foundation for a permanent endowment fund established to benefit a charitable cause in this state. The amount of the endowment gift for which the tax credit is claimed shall not be deductible in determining taxable income for state income tax purposes. Any tax credit in excess of the taxpayer’s tax liability for the tax year may be credited to the tax liability for the following five years or until depleted, whichever occurs first. A tax credit shall not be carried back to a tax year prior to the tax year in which the taxpayer claims the tax credit.
    Sec. 16.  Section 16.211, subsection 1, paragraph a, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   A tax credit shall be allowed against the taxes imposed in chapter 422, divisions II and
 
division III, for a portion of a taxpayer’s qualifying investment, as provided in subsection 3, in a qualifying disaster recovery housing project. To qualify as a disaster recovery housing project, a property, and the activities affecting the property, shall meet all of the following conditions:
    Sec. 17.  Section 16.211, subsection 1, paragraph a, subparagraph (1), Code 2013, is amended to read as follows:
   (1)  The property is owned by a taxpayer who is an individual,
 
a business, or corporation subject to taxation under chapter 422, division II or III.
    Sec. 18.  Section 16.211, subsection 1, paragraph b, Code 2013, is amended by striking the paragraph.
    Sec. 19.  Section 16.211, subsection 2, paragraph c, Code 2013, is amended to read as follows:
   c.  The tax credit certificate, unless otherwise void, shall be accepted by the department of revenue as payment for taxes imposed pursuant to chapter 422, division II or III, subject to any conditions or restrictions placed by the authority upon the face of the tax credit certificate and subject to the limitations of this section.
    Sec. 20.  Section 16.211, subsection 4, Code 2013, is amended to read as follows:
   4.  For purposes of individual and corporate income taxes, the increase in the basis of the property that would otherwise result from the disaster recovery housing investment shall be reduced by the amount of the tax credit allowed under this section.
    Sec. 21.  Section 28A.24, Code 2013, is amended to read as follows:
   28A.24  Exemption from taxation.
   Since an authority is performing essential governmental functions, an authority is not required to pay any taxes or assessments of any kind or nature upon any property required or used by it for its purposes, or any rates, fees, rentals, receipts, or incomes at any time received by it, and the bonds issued by an authority, their transfer, and the income, including any profits made on the sale of the bonds, is deductible in determining net income for the purposes of the state individual and corporate income tax under divisions II and
 
division III of chapter 422, and shall not be taxed by any political subdivision of this state.
    Sec. 22.  Section 35A.13, subsection 2, paragraph b, Code 2013, is amended to read as follows:
   b.  Moneys credited to the fund pursuant to an income tax checkoff provided in chapter 422, division II,
 
Code 2013, if applicable.
    Sec. 23.  Section 68A.102, subsection 21, Code 2013, is amended by striking the subsection.
    Sec. 24.  Section 85.61, subsection 6, paragraph b, Code 2013, is amended by striking the paragraph.
    Sec. 25.  Section 100B.13, subsection 2, paragraph a, Code 2013, is amended to read as follows:
   a.  Moneys credited to the fund pursuant to an income tax checkoff provided in chapter 422, division II,
 
Code 2013, if applicable.
    Sec. 26.  Section 175.17, subsection 10, Code 2013, is amended to read as follows:
   10.  Bonds and notes issued by the authority for purposes of financing the beginning farmer loan program provided in section 175.12 are exempt from taxation by the state, and interest earned on the bonds and notes is deductible in determining net income for purposes of the state individual and corporate income tax under divisions II and
 
division III of chapter 422.
    Sec. 27.  Section 175.37, subsection 1, Code 2013, is amended to read as follows:
   1.  An agricultural assets transfer tax credit is allowed under this section. The tax credit is allowed against the taxes imposed in chapter 422, division II, as provided in section 422.11M, and in chapter 422, division III, as provided in section 422.33, to facilitate the transfer of agricultural assets from a taxpayer to a beginning farmer.
    Sec. 28.  Section 175.37, subsection 3, Code 2013, is amended by striking the subsection.
    Sec. 29.  Section 175.37, subsection 7, Code 2013, is amended to read as follows:
   7.  A tax credit in excess of the taxpayer’s liability for the tax year may be credited to the tax liability for the following five years or until depleted, whichever is earlier. A tax credit shall not be carried back to a tax year prior to the tax year in which the taxpayer redeems the tax credit. A tax credit shall not be transferable to any other person other than the taxpayer’s estate or trust upon the taxpayer’s death.
    Sec. 30.  Section 235A.2, subsection 1, Code 2013, is amended to read as follows:
   1.  A child abuse prevention program fund is created in the state treasury under the control of the department of human services. The fund is composed of moneys appropriated or available to and obtained or accepted by the treasurer of state for deposit in the fund. The fund shall include moneys transferred to the fund pursuant to an income tax checkoff provided in chapter 422, division II,
 
Code 2013, if applicable. All interest earned on moneys in the fund shall be credited to and remain in the fund. Section 8.33 does not apply to moneys in the fund.
    Sec. 31.  Section 257.19, Code 2013, is amended to read as follows:
   257.19  Instructional support funding.
   1.  The additional funding for the instructional support program for a budget year is limited to an amount not exceeding ten percent of the total of regular program district cost for the budget year and moneys received under section 257.14 as a budget adjustment for the budget year. Moneys received by a district for the instructional support program are miscellaneous income and may be used for any general fund purpose. However, moneys received by a district for the instructional support program shall not be used as, or in a manner which has the effect of, supplanting funds authorized to be received under sections 257.41, 257.46, 298.2, and 298.4, or to cover any deficiencies in funding for special education instructional services resulting from the application of the special education weighting plan under section 256B.9.
   2.  Certification of a board’s intent to participate for a budget year, the method of funding, and the amount to be raised shall be made to the department of management not later than April 15 of the base year. Funding for the instructional support program shall be obtained from instructional support state aid and from local funding using either an instructional support property tax or a combination of an instructional support property tax and an instructional support income surtax.
   The board of directors shall determine whether the instructional support property tax or the combination of the instructional support property tax and instructional support income surtax shall be used for the local funding. Subject to the limitation specified in section 298.14, if the board elects to use the combination of the instructional support property tax and instructional support income surtax, for each budget year the board shall determine the percent of income surtax that will be imposed, expressed as full percentage points, not to exceed twenty percent.
    Sec. 32.  Section 257.21, Code 2013, is amended to read as follows:
   257.21  Computation of instructional support amount.
   The department of management shall establish the amount of instructional support property tax to be levied and the amount of instructional support income surtax to be imposed by a district in accordance with the decision of the board under section 257.19 for each school year for which the instructional support program is authorized. The department of management shall determine these amounts based upon the most recent figures available for the district’s valuation of taxable property, individual state income tax paid, and budget enrollment in the district, and shall certify to the district’s county auditor the amount of instructional support property tax, and to the director of revenue the amount of instructional support income surtax to be imposed if an instructional support income surtax is to be imposed
 
levied.
   The instructional support income surtax shall be imposed on the state individual income tax for the calendar year during which the school’s budget year begins, or for a taxpayer’s fiscal year ending during the second half of that calendar year and after the date the board adopts a resolution to participate in the program or the first half of the succeeding calendar year, and shall be imposed on all individuals residing in the school district on the last day of the applicable tax year. As used in this section, “state individual income tax” means the taxes computed under section 422.5, less the amounts of nonrefundable credits allowed under chapter 422, division II.
    Sec. 33.  Section 257.29, subsections 3 and 4, Code 2013, are amended to read as follows:
   3.  The educational improvement program shall be funded by either an educational improvement property tax or by a combination of an educational improvement property tax and an educational improvement income surtax. The method of raising the educational improvement moneys shall be determined by the board. Subject to the limitation in section 298.14, if the board uses a combination of an educational improvement property tax and an educational improvement income surtax, the board shall determine the percent of income surtax to be imposed, expressed as full percentage points, not to exceed twenty percent.
   4.  The department of management shall establish the amount of the educational improvement property tax to be levied or the amount of the combination of the educational improvement property tax to be levied and the amount of the school district income surtax to be imposed for each school year that the educational improvement amount is authorized. The educational improvement property tax and income surtax, if an income surtax is imposed, shall be levied and imposed, collected, and paid to the school district in the manner provided for the instructional support program in sections
 
section 257.21 through 257.26. Moneys received by a school district under the educational improvement program are miscellaneous income.
    Sec. 34.  Section 279.63, subsection 2, paragraph a, Code 2013, is amended to read as follows:
   a.  All property tax levies, income surtaxes, and local option sales taxes in place in the school district, listed by type of levy, rate, amount, duration, and notification of the maximum rate and amount limitations permitted by statute.
    Sec. 35.  Section 298.2, subsections 1 and 4, Code 2013, are amended to read as follows:
   1.  A physical plant and equipment levy of not exceeding one dollar and sixty-seven cents per thousand dollars of assessed valuation in the district is established except as otherwise provided in this subsection. The physical plant and equipment levy consists of the regular physical plant and equipment levy of not exceeding thirty-three cents per thousand dollars of assessed valuation in the district and a voter-approved physical plant and equipment levy of not exceeding one dollar and thirty-four cents per thousand dollars of assessed valuation in the district. However, the voter-approved physical plant and equipment levy may consist of a combination of a physical plant and equipment property tax levy and a physical plant and equipment income surtax as provided in subsection 4 with the maximum amount levied and imposed limited to an amount that could be raised by a one dollar and thirty-four cent property tax levy. The levy limitations of this subsection are subject to subsection 6.
   4.
  a.  The board may on its own motion, and upon the written request of not less than one hundred eligible electors or thirty percent of the number of eligible electors voting at the last regular school election, whichever is greater, shall, direct the county commissioner of elections to provide for submitting the proposition of levying the voter-approved physical plant and equipment levy for a period of time authorized by the voters at the election, not to exceed ten years. The election shall be held on a date specified in section 39.2, subsection 4, paragraph “c”. The proposition is adopted if a majority of those voting on the proposition at the election approves it. The voter-approved physical plant and equipment levy shall be funded either by a physical plant and equipment property tax or by a combination of a physical plant and equipment property tax and a physical plant and equipment income surtax, as determined by the board. However, if the board intends to enter into a rental or lease arrangement under section 279.26, or intends to enter into a loan agreement under section 297.36, only a property tax shall be levied for those purposes. Subject to the limitations of section 298.14, if the board uses a combination of a physical plant and equipment property tax and a physical plant and equipment surtax, for each fiscal year the board shall determine the percent of income surtax to be imposed expressed as full percentage points, not to exceed twenty percent.
   b.  If a combination of a property tax and income surtax is used, by April 15 of the previous school year, the board shall certify the percent of the income surtax to be imposed and the amount to be raised to the department of management and the department of management shall establish the rate of the property tax and income surtax for the school year. The physical plant and equipment property tax and income surtax shall be levied or imposed, collected, and paid to the school district in the manner provided for the instructional support program in sections
 
section 257.21 through 257.26.
    Sec. 36.  Section 404A.1, subsection 1, paragraph a, Code 2013, is amended to read as follows:
   a.  A historic preservation and cultural and entertainment district tax credit, subject to the availability of the credit, is granted against the tax imposed under chapter 422, division II, III, or V, or chapter 432, for the substantial rehabilitation of eligible property located in this state as provided in this chapter.
    Sec. 37.  Section 404A.2, subsection 2, Code 2013, is amended to read as follows:
   2.  For purposes of individual and corporate income taxes and the franchise tax, the increase in the basis of the rehabilitated property that would otherwise result from the qualified rehabilitation costs shall be reduced by the amount of the credit computed under this chapter.
    Sec. 38.  Section 404A.4, subsection 5, paragraph f, Code 2013, is amended to read as follows:
   f.  The transferee may use the amount of the tax credit transferred against the taxes imposed under chapter 422, divisions II, III, and V, and chapter 432 for any tax year the original transferor could have claimed the tax credit. Any consideration received for the transfer of the tax credit shall not be included as income under chapter 422, divisions II, III, and V. Any consideration paid for the transfer of the tax credit shall not be deducted from income under chapter 422, divisions II, III, and V.
    Sec. 39.  Section 422.1, subsection 2, Code 2013, is amended to read as follows:
   2.  Division II              Personal net income tax
 
Provisions related to the business tax on corporations.
    Sec. 40.  Section 422.11L, subsection 1, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   The taxes imposed under this division, less the credits allowed under section 422.12,
 
III shall be reduced by a solar energy system tax credit equal to the sum of the following:
    Sec. 41.  Section 422.11L, subsection 3, Code 2013, is amended to read as follows:
   3.
  a.  An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   b.  A taxpayer who is eligible to claim a credit under this section shall not be eligible to claim a renewable energy tax credit under chapter 476C.
    Sec. 42.  Section 422.11N, subsection 3, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   The taxes imposed under this division, less the credits allowed under section 422.12,
 
III shall be reduced by an ethanol promotion tax credit for each tax year that the taxpayer is eligible to claim the tax credit under this section. In order to be eligible, all of the following must apply:
    Sec. 43.  Section 422.11N, subsection 9, Code 2013, is amended by striking the subsection.
    Sec. 44.  Section 422.11O, subsection 2, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   The taxes imposed under this division, less the credits allowed under section 422.12,
 
III shall be reduced by an E-85 gasoline promotion tax credit for each tax year that the taxpayer is eligible to claim the tax credit under this subsection.
    Sec. 45.  Section 422.11O, subsection 7, Code 2013, is amended by striking the subsection.
    Sec. 46.  Section 422.11P, subsection 3, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   The taxes imposed under this division, less the credits allowed under section 422.12,
 
III shall be reduced by a biodiesel blended fuel tax credit for each tax year that the taxpayer is eligible to claim a tax credit under this subsection.
    Sec. 47.  Section 422.11P, subsection 7, Code 2013, is amended by striking the subsection.
    Sec. 48.  Section 422.11S, subsection 1, Code 2013, is amended to read as follows:
   1.  The taxes imposed under this division, less the credits allowed under section 422.12,
 
III shall be reduced by a school tuition organization tax credit equal to sixty-five percent of the amount of the voluntary cash or noncash contributions made by the taxpayer during the tax year to a school tuition organization, subject to the total dollar value of the organization’s tax credit certificates as computed in subsection 7. The tax credit shall be claimed by use of a tax credit certificate as provided in subsection 6.
    Sec. 49.  Section 422.11S, subsection 4, Code 2013, is amended by striking the subsection.
    Sec. 50.  Section 422.11S, subsection 7, paragraph a, subparagraph (2), Code 2013, is amended to read as follows:
   (2)  “Total approved tax credits” means for the tax year beginning in the 2006 calendar year, two million five hundred thousand dollars, for the tax year beginning in the 2007 calendar year, five million dollars, and for tax years beginning on or after January 1, 2008, seven million five hundred thousand dollars. However, for tax years beginning on or after January 1, 2012, “total approved tax credits” means eight million seven hundred fifty
 
for tax years beginning on or after January 1, 2014, two million one hundred eighty-seven thousand
 
five hundred dollars.
    Sec. 51.  Section 422.11Y, subsection 3, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   The taxes imposed under this division, less the credits allowed under section 422.12,
 
III shall be reduced by the amount of the E-15 plus gasoline promotion tax credit for each tax year that the taxpayer is eligible to claim a tax credit under this subsection.
    Sec. 52.  Section 422.11Y, subsection 8, Code 2013, is amended by striking the subsection.
    Sec. 53.  Section 422.15, subsections 2 and 3, Code 2013, are amended by striking the subsections.
    Sec. 54.  Section 422.15, subsection 4, Code 2013, is amended to read as follows:
   4.  Notwithstanding subsections
 
subsection 1, 2, and 3, or any other provision of this chapter, withholding of income tax and any reporting requirement shall not be imposed upon a person, corporation, or withholding agent or any payor of deferred compensation, pensions, or annuities with regard to such payments made to a nonresident of the state.
    Sec. 55.  Section 422.21, Code 2013, is amended by striking the section and inserting in lieu thereof the following:
   422.21  Form and time of return.
   Returns shall be in the form the director prescribes, and shall be filed with the department on or before the last day of the fourth month after the expiration of the tax year. However, cooperative associations as defined in section 6072(d) of the Internal Revenue Code shall file their returns on or before the fifteenth day of the ninth month following the close of the taxable year and nonprofit corporations subject to the unrelated business income tax imposed by section 422.33, subsection 1A, shall file their returns on or before the fifteenth day of the fifth month following the close of the taxable year. If, under the Internal Revenue Code, a corporation is required to file a return covering a tax period of less than twelve months, the state return shall be for the same period and is due forty-five days after the due date of the federal tax return, excluding any extension of time to file. In case of sickness, absence, or other disability, or if good cause exists, the director may allow further time for filing returns. The director shall cause to be prepared blank forms for the returns and shall cause them to be distributed throughout the state and to be furnished upon application, but failure to receive or secure the form does not relieve the taxpayer from the obligation of making a return that is required. The department may as far as consistent with the Code draft income tax forms to conform to the income tax forms of the internal revenue department of the United States government.
    Sec. 56.  Section 422.22, Code 2013, is amended to read as follows:
   422.22  Supplementary returns.
   If the director shall be of the opinion that any taxpayer required under this division
 
III to file a return has failed to file such a return or to include in a return filed, either intentionally or through error, items of taxable income, the director may require from such taxpayer a return or supplementary return in such form as the director shall prescribe, of all the items of income which the taxpayer received during the year for which the return is made, whether or not taxable under the provisions of this division
 
III. If from a supplementary return, or otherwise, the director finds that any items of income, taxable under this division
 
III, have been omitted from the original return, the director may require the items so omitted to be added to the original return. Such supplementary return and the correction of the original return shall not relieve the taxpayer from any of the penalties to which the taxpayer may be liable under any provisions of this division
 
III, whether or not the director required a return or a supplementary return under this section.
    Sec. 57.  Section 422.32, Code 2013, is amended to read as follows:
   422.32  Definitions.
   1.  For the purpose of this division and unless otherwise required by the context:
   a.

1.  “Affiliated group” means a group of corporations as defined in section 1504(a) of the Internal Revenue Code.
   b.
  2.  a.  “Business income” means income arising from transactions and activity in the regular course of the taxpayer’s trade or business; or income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer’s regular trade or business operations; or gain or loss resulting from the sale, exchange, or other disposition of real property or of tangible or intangible personal property, if the property while owned by the taxpayer was operationally related to the taxpayer’s trade or business carried on in Iowa or operationally related to sources within Iowa, or the property was operationally related to sources outside this state and to the taxpayer’s trade or business carried on in Iowa; or gain or loss resulting from the sale, exchange, or other disposition of stock in another corporation if the activities of the other corporation were operationally related to the taxpayer’s trade or business carried on in Iowa while the stock was owned by the taxpayer. A taxpayer may have more than one regular trade or business in determining whether income is business income.
   (1)

b.  It is the intent of the general assembly to treat as apportionable business income all income that may be treated as apportionable business income under the Constitution of the United States.
   (2)

c.  The filing of an Iowa income tax return on a combined report basis is neither allowed nor required by this paragraph “b”
 
subsection.
   c.

3.  “Commercial domicile” means the principal place from which the trade or business of the taxpayer is directed or managed.
   d.

4.  “Corporation” includes joint stock companies, and associations organized for pecuniary profit, and partnerships and limited liability companies taxed as corporations under the Internal Revenue Code.
   e.

5.  “Domestic corporation” means any corporation organized under the laws of this state.
   6.  “Fiduciary” means a guardian, trustee, executor, administrator, receiver, conservator, or any person, whether individual or corporate, acting in any fiduciary capacity for any person, trust, or estate.
   7.  “Fiscal year” means an accounting period of twelve months, ending on the last day of any month other than December.
   f.

8.  “Foreign corporation” means any corporation other than a domestic corporation.
   9.  “Foreign country” means any jurisdiction other than one embraced within the United States. The words “United States”, when used in a geographical sense, include the states, the District of Columbia, and the possessions of the United States.
   10.  “Income year” means the calendar year or the fiscal year upon the basis of which the net income is computed under this division.
   11.  “Individual” means a natural person.
   g.

12.  “Internal Revenue Code” means the Internal Revenue Code of 1954, prior to the date of its redesignation as the Internal Revenue Code of 1986 by the Tax Reform Act of 1986, or means the Internal Revenue Code of 1986 as amended to and including January 1, 2012.
   h.

13.  “Nonbusiness income” means all income other than business income.
   14.  The word “paid”, for the purposes of the deductions under this division, means “paid or accrued” or “paid or incurred”, and the terms “paid or incurred” and “paid or accrued” shall be construed according to the method of accounting upon the basis of which the net income is computed under this division. The term “received”, for the purpose of the computation of net income under this division, means “received or accrued”, and the term “received or accrued” shall be construed according to the method of accounting upon the basis of which the net income is computed under this division.
   15.  “Resident” applies only to individuals and includes, for the purpose of determining liability to the tax imposed by this division upon or with reference to the income of any tax year, any individual domiciled in the state, and any other individual who maintains a permanent place of abode within the state.
   i.

16.  “State” means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political subdivision thereof.
   j.

17.  “Taxable in another state”. For purposes of allocation and apportionment of income under this division, a taxpayer is “taxable in another state” if:
   (1)

a.  In that state the taxpayer is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business, or a corporate stock tax; or
   (2)

b.  That state has jurisdiction to subject the taxpayer to a net income tax regardless of whether, in fact, the state does or does not.
   18.
  a.  “Tax year” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the net income is computed under this division.
   b.  If a taxpayer has made the election provided by section 441, subsection “f”, of the Internal Revenue Code, “tax year” means the annual period so elected, varying from fifty-two to fifty-three weeks.
   c.  If the effective date or the applicability of a provision of this division is expressed in terms of a tax year beginning, including, or ending with reference to a specified date which is the first or last day of a month, a tax year described in paragraph “a” of this subsection shall be treated as beginning with the first day of the calendar month beginning nearest to the first day of the tax year or as ending with the last day of the calendar month ending nearest to the last day of the tax year.
   k.

19.  “Unitary business” means a business carried on partly within and partly without a state where the portion of the business carried on within the state depends on or contributes to the business outside the state.

   2.  The words, terms, and phrases defined in division II, section 422.4, subsections 4 to 6, 8, 9, 13, and 15 to 17, when used in this division, shall have the meanings ascribed to them in said section except where the context clearly indicates a different meaning.
    Sec. 58.  Section 422.33, subsection 28, Code 2013, is amended to read as follows:
   28.  The taxes imposed under this division shall be reduced by a school tuition organization tax credit allowed under section 422.11S. The maximum amount of tax credits that may be approved under this subsection for a tax year equals twenty-five percent of the school tuition organization’s tax credits that may be approved pursuant to section 422.11S, subsection 7, for a tax year.
    Sec. 59.  Section 422D.1, Code 2013, is amended to read as follows:
   422D.1  Authorization —— election —— imposition and repeal —— use of revenues.
   1.
  a.  A county board of supervisors may offer for voter approval any of the following taxes or a combination of the following taxes:
   (1)  Local option income surtax.
   (2)  An
 
an ad valorem property tax.
   b.  Revenues generated from these taxes
 
the ad valorem property tax shall be used for emergency medical services as provided in section 422D.6.
   2.
  a.  The taxes
 
property tax for emergency medical services shall only be imposed after an election at which a majority of those voting on the question of imposing the tax or combination of taxes specified in subsection 1, paragraph “a”, subparagraph (1) or (2), vote in favor of the question. However, the tax or combination of taxes specified in subsection 1 shall not be imposed on property within or on residents of a benefited emergency medical services district under chapter 357F. The question of imposing the tax or combination of the taxes may be submitted at the regular city election, a special election, or state general election. Notice of the question shall be provided by publication at least sixty days before the time of the election and shall identify the tax or combination of taxes and the
 
levy rate or rates, as applicable. If a majority of those voting on the question approve the imposition of the tax or combination of taxes, the tax or combination of taxes shall be imposed as follows:
   (1)  A local option income surtax shall be imposed for tax years beginning on or after January 1 of the fiscal year in which the favorable election was held.
   (2)  An ad valorem property tax shall be imposed
 
levied for the fiscal year in which the election was held.
   b.  Before a county imposes an income surtax as specified in subsection 1, paragraph “a”, subparagraph (1), a benefited emergency medical services district in the county shall be dissolved, and the county shall be liable for the outstanding obligations of the benefited district. If the benefited district extends into more than one county, the county imposing the income surtax shall be liable for only that portion of the obligations relating to the portion of the benefited district in the county.
   3.  Revenues received by the county from the taxes imposed
 
tax levied under this chapter shall be deposited into the emergency medical services trust fund created pursuant to section 422D.6 and shall be used as provided in that section.
   4.  Any tax or combination of taxes imposed
 
levied under this chapter shall be for a maximum period of five years.
    Sec. 60.  Section 425.23, subsection 4, paragraph b, Code 2013, is amended to read as follows:
   b.  The annual adjustment factor for the 1998 base year is one hundred percent. For each subsequent base year, the annual adjustment factor equals the annual inflation factor for the calendar year, in which the base year begins, as computed in section 422.4 for purposes of the individual income tax, Code 2013.
    Sec. 61.  Section 476.20, subsection 3, paragraph b, Code 2013, is amended to read as follows:
   b.  A qualified applicant for the low income home energy assistance program or the weatherization assistance program who is also a “head of household”, as defined in section 422.4, subsection 7,
 
head of household shall be promptly certified by the local agency administering the applicant’s program to the applicant’s public utility that the resident is a “head of household” as defined in section 422.4, subsection 7,
 
head of household and is qualified for the low income home energy assistance program or weatherization assistance program. Notwithstanding subsection 1, a public utility furnishing gas or electricity shall not disconnect service from November 1 through April 1 to a residence which has a resident that has been certified under this paragraph.

For purposes of this paragraph, “head of household” has the same meaning as provided by the Internal Revenue Code.
    Sec. 62.  Section 476B.2, Code 2013, is amended to read as follows:
   476B.2  General rule.
   The owner of a qualified facility shall, for each kilowatt-hour of qualified electricity that the owner sells or uses for on-site consumption during the ten-year period beginning on the date the qualified facility was originally placed in service, be allowed a wind energy production tax credit to the extent provided in this chapter against the tax imposed in chapter 422, divisions II, III, and V, and chapter 432, and may claim a refund of tax imposed by chapter 423 or 437A for any tax year within the time period set forth in section 423.47 or 437A.14.
    Sec. 63.  Section 476B.6, subsection 5, paragraphs a through c, Code 2013, are amended to read as follows:
   a.  If the tax credit application is filed by a partnership, limited liability company, S corporation, estate, trust, or other reporting entity all of the income of which is taxed directly to its equity holders or beneficiaries, for the taxes imposed under chapter 422, division II or III, the tax credit certificate shall be issued directly to equity holders or beneficiaries of the applicant in proportion to their pro rata share of the income of such entity. The applicant shall, in the application made under this section, identify its equity holders or beneficiaries, and the percentage of such entity’s income that is allocable to each equity holder or beneficiary.
   b.  If the tax credit applicant under this section is eligible to receive renewable electricity production credits authorized under section 45 of the Internal Revenue Code, as amended, and the tax credit applicant is a partnership, limited liability company, S corporation, estate, trust, or other reporting entity all of the income of which is taxed directly to its equity holders or beneficiaries, for the taxes imposed under chapter 422, division II or III, the tax credit certificate may be issued to a partner if the business is a partnership, a shareholder if the business is an S corporation, or a member if the business is a limited liability company in the amounts designated by the eligible partnership, S corporation, or limited liability company. In absence of such designation, the credits under this section shall flow through to the partners, shareholders, or members in accordance with their pro rata share of the income of the entity. The applicant shall, in the application made under this section, identify the holders or beneficiaries that are to receive the tax credit certificates and the percentage of the tax credit that is allocable to each holder or beneficiary.
   c.  If an applicant under this section is eligible to receive renewable electricity production credits authorized under section 45 of the Internal Revenue Code, as amended, and the tax credit applicant is a partnership, limited liability company, S corporation, estate, trust, or other reporting entity all of the income of which is taxed directly to its equity holders or beneficiaries, for the taxes imposed under chapter 422, division II or III, the tax credit certificates and all future rights to the tax credit in this section may be distributed to an equity holder or beneficiary as a liquidating distribution or portion thereof, of a holder or beneficiary’s interest in the applicant entity. The applicant shall, in the application made under this section, designate the percentage of the tax credit allocable to the liquidating equity holder or beneficiary that is to receive the current and future tax credit certificates under this section.
    Sec. 64.  Section 476B.7, subsection 2, Code 2013, is amended to read as follows:
   2.  The tax credit shall be freely transferable. The transferee may use the amount of the tax credit transferred against the taxes imposed under chapter 422, divisions II, III, and V, and chapter 432 for any tax year the original transferor could have claimed the tax credit. The transferee may claim a refund under chapter 423 or 437A for any tax year within the time period set forth in section 423.47 or 437A.14 for which the original transferor could have claimed a refund. Any consideration received for the transfer of the tax credit shall not be included as income under chapter 422, divisions II, III, and V. Any consideration paid for the transfer of the tax credit shall not be deducted from income under chapter 422, divisions II, III, and V.
    Sec. 65.  Section 476C.4, subsection 4, paragraph a, Code 2013, is amended to read as follows:
   a.  If the tax credit application is filed by a partnership, limited liability company, S corporation, estate, trust, or other reporting entity all of the income of which is taxed directly to its equity holders or beneficiaries, for the taxes imposed under chapter 422, division II or III, the tax credit certificate shall be issued directly to equity holders or beneficiaries of the applicant in proportion to their pro rata share of the income of such entity. The applicant shall, in the application made under this section, identify its equity holders or beneficiaries, and the percentage of such entity’s income that is allocable to each equity holder or beneficiary.
    Sec. 66.  Section 476C.4, subsection 4, paragraph b, subparagraph (1), Code 2013, is amended to read as follows:
   (1)  If the tax credit applicant under this section is eligible to receive renewable electricity production credits authorized under section 45 of the Internal Revenue Code, as amended, and the tax credit applicant is a partnership, limited liability company, S corporation, estate, trust, or other reporting entity all of the income of which is taxed directly to its equity holders or beneficiaries, for the taxes imposed under chapter 422, division II or III, the tax credit certificate may be issued to a partner if the business is a partnership, a shareholder if the business is an S corporation, or a member if the business is a limited liability company in the amounts designated by the eligible partnership, S corporation, or limited liability company. In absence of such designation, the credits under this section shall flow through to the partners, shareholders, or members in accordance with their pro rata share of the income of the entity.
    Sec. 67.  Section 476C.4, subsection 4, paragraph c, subparagraph (1), Code 2013, is amended to read as follows:
   (1)  If an applicant under this section is eligible to receive renewable electricity production credits authorized under section 45 of the Internal Revenue Code, as amended, and the tax credit applicant is a partnership, limited liability company, S corporation, estate, trust, or other reporting entity all of the income of which is taxed directly to its equity holders or beneficiaries, for the taxes imposed under chapter 422, division II or III, the tax credit certificates and all future rights to the tax credit in this section may be distributed to an equity holder or beneficiary as a liquidating distribution or portion thereof, of a holder or beneficiary’s interest in the applicant entity.
    Sec. 68.  Section 476C.6, subsection 1, paragraph b, Code 2013, is amended to read as follows:
   b.  The transferee may use the amount of the tax credit transferred against taxes imposed under chapter 422, divisions II, III, and V, and chapter 432 for any tax year the original transferor could have claimed the tax credit. The transferee may claim a refund under chapter 423 or 437A for any tax year within the time period set forth in section 423.47 or 437A.14 for which the original transferor could have claimed the refund. Any consideration received for the transfer of the tax credit shall not be included as income under chapter 422, divisions II, III, and V. Any consideration paid for the transfer of the tax credit shall not be deducted from income under chapter 422, divisions II, III, and V.
    Sec. 69.  Section 483A.1A, subsection 10, paragraph e, Code 2013, is amended to read as follows:
   e.  Is a member of the armed forces of the United States who is serving on active duty,
 
and claims residency in this state, and has filed a state individual income tax return as a resident pursuant to chapter 422, division II, for the preceding tax year, or is stationed in this state.
    Sec. 70.  REPEAL.  Sections 68A.601, 257.22 through 257.26, 298.14, 422.4 through 422.11B, 422.11D, 422.11F, 422.11H through 422.11J, 422.11M, 422.11Q, 422.11V through 422.11X, 422.11Z, 422.12, 422.12B through 422.12E, 422.12H, 422.12J through 422.14, 422.16, 422.17, 422.19, 422.23, 422.27, 422.31, 422D.2 through 422D.4, Code 2013, are repealed.
    Sec. 71.  CORRESPONDING AMENDMENTS LEGISLATION.  Additional legislation is required to fully implement this division of this Act. The director of the department of revenue shall, in compliance with section 2.16, prepare draft legislation for submission to the legislative services agency, as necessary, to implement the repeal of the individual income tax under this division of this Act and under other provisions of law.
    Sec. 72.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2014.

DIVISION II

SALES AND USE TAX
    Sec. 73.  Section 423.2, subsection 1, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   There is imposed a tax of six
 
eleven percent upon the sales price of all sales of tangible personal property, consisting of goods, wares, or merchandise, sold at retail in the state to consumers or users except as otherwise provided in this subchapter.
    Sec. 74.  Section 423.2, subsections 2 and 3, Code 2013, are amended to read as follows:
   2.  A tax of six
 
eleven percent is imposed upon the sales price of the sale or furnishing of gas, electricity, water, heat, pay television service, and communication service, including the sales price from such sales by any municipal corporation or joint water utility furnishing gas, electricity, water, heat, pay television service, and communication service to the public in its proprietary capacity, except as otherwise provided in this subchapter, when sold at retail in the state to consumers or users.
   3.  A tax of six
 
eleven percent is imposed upon the sales price of all sales of tickets or admissions to places of amusement, fairs, and athletic events except those of elementary and secondary educational institutions. A tax of six
 
eleven percent is imposed on the sales price of an entry fee or like charge imposed solely for the privilege of participating in an activity at a place of amusement, fair, or athletic event unless the sales price of tickets or admissions charges for observing the same activity are taxable under this subchapter. A tax of six
 
eleven percent is imposed upon that part of private club membership fees or charges paid for the privilege of participating in any athletic sports provided club members.
    Sec. 75.  Section 423.2, subsection 4, paragraph a, Code 2013, is amended to read as follows:
   a.  A tax of six
 
eleven percent is imposed upon the sales price derived from the operation of all forms of amusement devices and games of skill, games of chance, raffles, and bingo games as defined in chapter 99B, and card game tournaments conducted under section 99B.7B, that are operated or conducted within the state, the tax to be collected from the operator in the same manner as for the collection of taxes upon the sales price of tickets or admission as provided in this section. Nothing in this subsection shall legalize any games of skill or chance or slot-operated devices which are now prohibited by law.
    Sec. 76.  Section 423.2, subsection 5, Code 2013, is amended to read as follows:
   5.  There is imposed a tax of six
 
eleven percent upon the sales price from the furnishing of services as defined in section 423.1.
    Sec. 77.  Section 423.2, subsection 7, paragraph a, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   A tax of six
 
eleven percent is imposed upon the sales price from the sales, furnishing, or service of solid waste collection and disposal service.
    Sec. 78.  Section 423.2, subsection 8, paragraph a, Code 2013, is amended to read as follows:
   a.  A tax of six
 
eleven percent is imposed on the sales price from sales of bundled transactions. For the purposes of this subsection, a “bundled transaction” is the retail sale of two or more distinct and identifiable products, except real property and services to real property, which are sold for one nonitemized price. A “bundled transaction” does not include the sale of any products in which the sales price varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.
    Sec. 79.  Section 423.2, subsection 9, Code 2013, is amended to read as follows:
   9.  A tax of six
 
eleven percent is imposed upon the sales price from any mobile telecommunications service, including all paging services, that this state is allowed to tax pursuant to the provisions of the federal Mobile Telecommunications Sourcing Act, Pub. L. No. 106-252, 4 U.S.C. § 116 et seq. For purposes of this subsection, taxes on mobile telecommunications service, as defined under the federal Mobile Telecommunications Sourcing Act that are deemed to be provided by the customer’s home service provider, shall be paid to the taxing jurisdiction whose territorial limits encompass the customer’s place of primary use, regardless of where the mobile telecommunications service originates, terminates, or passes through and shall in all other respects be taxed in conformity with the federal Mobile Telecommunications Sourcing Act. All other provisions of the federal Mobile Telecommunications Sourcing Act are adopted by the state of Iowa and incorporated into this subsection by reference. With respect to mobile telecommunications service under the federal Mobile Telecommunications Sourcing Act, the director shall, if requested, enter into agreements consistent with the provisions of the federal Act.
    Sec. 80.  Section 423.2, subsection 11, paragraph b, subparagraph (3), Code 2013, is amended to read as follows:
   (3)  Transfer one-sixth
 
one-eleventh of the remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This subparagraph (3) is repealed December 31, 2029.
    Sec. 81.  Section 423.2, subsection 13, Code 2013, is amended to read as follows:
   13.  The sales tax rate of six
 
eleven percent is reduced to five
 
ten percent on January 1, 2030.
    Sec. 82.  Section 423.5, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   Except as provided in subsection 3, an excise tax at the rate of six
 
eleven percent of the purchase price or installed purchase price is imposed on the following:
    Sec. 83.  Section 423.5, subsection 9, Code 2013, is amended to read as follows:
   9.  The use tax rate of six
 
eleven percent is reduced to five
 
ten percent on January 1, 2030.
    Sec. 84.  Section 423.43, subsection 1, paragraph b, Code 2013, is amended to read as follows:
   b.  Subsequent to the deposit into the general fund of the state and after the transfer of such revenues collected under chapter 423B, the department shall transfer one-sixth
 
one-eleventh of such remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This paragraph is repealed December 31, 2029.
    Sec. 85.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2014.
EXPLANATION
   This bill relates to state taxes by repealing the individual income tax and increasing the state sales and use tax rates.
   Division I repeals the individual income tax and makes numerous conforming changes to the Code to remove references to the individual income tax and to update or move provisions of the individual income tax that are also applicable by reference to the corporate income tax and the franchise tax. The division also repeals the emergency medical services income surtax in Code chapter 422D, the instructional support income surtax in Code section 257.21, the educational improvement income surtax in Code section 257.29, and the physical plant and equipment income surtax in Code section 298.2, because income surtax revenues will no longer be generated without the state individual income tax.
   The division provides that additional legislation is required to fully implement the division and requires the director of the department of revenue to prepare draft legislation in compliance with Code section 2.16 for submission to the legislative services agency to implement the repeal of the individual income tax.
   The division takes effect on January 1, 2014, and applies to tax years beginning on or after that date.
   Division II increases the state sales and use tax rate to 11 percent from 6 percent.
   The division takes effect on January 1, 2014.