HSB 216 (LSB 1380YC (5) 86)

HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS)

A BILL FOR

An Act relating to an electric or natural gas vehicle facility tax credit and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  51.  a.  A taxpayer taking a depreciation allowance under section 168 of the Internal Revenue Code for property described in section 422.11G is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of the property under section 422.11G. If a credit is taken for the purchase and installation of the property under section 422.11G, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   b.  A taxpayer taking an expensing allowance under section 179 of the Internal Revenue Code for property described in section 422.11G is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of such property under section 422.11G. If a credit is taken for the purchase and installation of the property under section 422.11G, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   c.  This subsection is repealed on January 1, 2020.
    Sec. 2.  NEW SECTION.  422.11G  Electric or natural gas vehicle facility tax credit.
   1.  As used in this section, “motor vehicle” means the same as defined in section 322.2.
   2.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by an electric or natural gas vehicle facility tax credit. In order to be eligible to claim the tax credit, the taxpayer must comply with this section and rules adopted by the director pursuant to chapter 17A necessary to administer and enforce this section.
   3.  a.  The taxpayer claiming the tax credit on an agricultural basis as provided in subsection 9 must construct, install, and place in service any of the following:
   (1)  An electric vehicle facility that serves a motor vehicle designed by a manufacturer to operate using electricity.
   (2)  A natural gas vehicle facility that serves a motor vehicle that is any of the following:
   (a)  Designed by the manufacturer to operate using compressed natural gas.
   (b)  Converted as an aftermarket alternative fuel vehicle to operate using compressed natural gas if the conversion equipment is certified by the United States environmental protection agency, including as provided in 40 C.F.R. pt. 85.
   b.  The taxpayer claiming the tax credit on a commercial basis as provided in subsection 9 must construct, install, and place in service any of the following:
   (1)  An electric vehicle facility that serves a motor vehicle designed by a manufacturer to operate using electricity.
   (2)  A natural gas vehicle facility that serves a motor vehicle that is any of the following:
   (a)  Designed by the manufacturer to operate using compressed natural gas.
   (b)  Converted as an aftermarket alternative fuel vehicle to operate using compressed natural gas if the conversion equipment is certified by the United States environmental protection agency, including as provided in 40 C.F.R. pt. 85.
   c.  The taxpayer claiming the tax credit on a residential basis as provided in subsection 9 must construct, install, and place in service an electric vehicle facility that serves a motor vehicle designed by a manufacturer to operate using electricity.
   4.  a.  After verifying the eligibility for an electric or natural gas vehicle facility tax credit as provided in this section, the department of revenue shall issue the taxpayer an electric or natural gas vehicle facility tax credit certificate which must be attached to the taxpayer’s tax return. An electric or natural gas vehicle facility tax credit certificate shall include all of the following:
   (1)  The taxpayer’s name, address, tax identification number, and any other information required by the department of revenue.
   (2)  A description of the infrastructure, equipment, or machinery being purchased and installed which is eligible for the tax credit to be claimed on the taxpayer’s tax return.
   (3)  The amount of the tax credit being claimed.
   b.  The director shall adopt rules establishing criteria for the receipt of applications for electric or natural gas vehicle facility tax credit certificates and the issuance of those certificates. A tax credit certificate shall be issued in the taxpayer’s name and shall expire on or after the last day of the taxable year for which the taxpayer is claiming the tax credit. A tax credit certificate is nontransferable.
   5.  The aggregate amount of electric or natural gas vehicle facility tax credit certificates that may be issued pursuant to this section shall not exceed five million dollars for all tax years that the tax credit is available under this section. The department shall issue the tax credit certificates on a first-come, first-served basis to qualified applicants as follows:
   a.  Two million dollars for electric vehicle facilities.
   b.  Two million dollars for natural gas vehicle facilities.
   (1)  Except as provided in subparagraph (2), a person is not entitled to apply for tax credit certificates for all natural gas vehicle facilities equal to more than two hundred thousand dollars.
   (2)  A person is not entitled to apply for tax credit certificates equal to more than four hundred thousand dollars for all natural gas vehicle facilities that are part of a business or businesses selling qualified compressed natural gas on a retail basis. A person is not eligible to apply for a tax credit under both this subparagraph and subparagraph (1).
   c.  One million dollars for electric vehicle facilities or natural gas vehicle facilities.
   d.  Any moneys allocated under paragraph “a” or “b” that are unobligated or unexpended on July 1, 2017, for either electric vehicle facilities or natural gas vehicle facilities.
   6.  An electric or natural gas vehicle facility is limited to infrastructure, equipment, or machinery used to store, dispense, dry, and meter electricity or compressed natural gas. For electricity, it may include charging equipment, infrastructure, or batteries. For compressed natural gas, it may include pipes, compressors, dryers, or vaporizers.
   7.  The amount of the electric or natural gas vehicle facility tax credit equals thirty percent of the total cost to the taxpayer of purchasing the infrastructure, equipment, or machinery and thirty percent of the total cost to the taxpayer of installing the infrastructure, equipment, or machinery.
   8.  The electric or natural gas vehicle facility must comply with any applicable federal and state standards and the latest applicable and available ASTM international specifications.
   9.  The electric or natural gas vehicle facility tax credit may be claimed by a person on an agricultural, commercial, or residential basis as follows:
   a.  A person may claim the tax credit on an agricultural basis if the electric or natural gas vehicle facility is located on land primarily used in the production of a crop as defined in section 202.1 or livestock as defined in section 717.1. The electric or natural gas vehicle facility must be used by an agricultural producer as defined in section 15E.202 or a person under the management of the agricultural producer. The tax credit must be taken in equal installments in three consecutive tax years, beginning with the tax year in which the electric or natural gas vehicle facility is placed in service. If any part of the electric or natural gas vehicle facility is taken out of service and not immediately replaced, the tax credit expires and the taxpayer cannot take any remaining installment of the tax credit.
   b.  A person may claim the tax credit on a commercial basis if the electric or natural gas vehicle facility is part of a business selling qualified electricity or compressed natural gas on a retail basis, or may claim the tax credit if the electric or natural gas vehicle facility is used by a business for its own vehicle fleet or employees. The tax credit must be taken in equal installments in three consecutive tax years, beginning with the tax year in which the electric or natural gas vehicle facility is placed in service. If any part of the electric or natural gas vehicle facility is taken out of service and not immediately replaced, the tax credit expires and the taxpayer cannot take any remaining installment of the tax credit.
   c.  A person may claim the tax credit on a residential basis only for an electric vehicle facility that is for personal, family, or household use. The entire amount of the tax credit must be claimed in the tax year in which the electric vehicle facility is first placed in service.
   10.  Any tax credit in excess of the taxpayer’s tax liability shall be refunded. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year.
   11.  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.
   12.  A person shall not claim a tax credit under this section for an electric or natural gas vehicle facility that was placed in service on or after January 1, 2018. However, a person claiming the tax credit on an agricultural or commercial basis who placed the electric or natural gas vehicle facility in service prior to January 1, 2018, may continue to claim the tax credit for tax years ending on or after January 1, 2018, as provided in subsection 9, paragraph “a” or “b”, as applicable.
   13.  This section is repealed on January 1, 2020.
    Sec. 3.  Section 422.33, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  11.  The taxes imposed under this division shall be reduced by an electric or natural gas vehicle facility tax credit for each tax year that the taxpayer is eligible to claim the tax credit under this subsection. 
   a.  The taxpayer must claim the tax credit on an agricultural or commercial basis in the same manner as provided in section 422.11G. The taxpayer must claim the tax credit according to the same requirements, for the same amount, and for the same period as provided in section 422.11G. The amount of the tax credit shall be calculated in the same manner as provided in section 422.11G. A taxpayer claiming a tax credit on an agricultural or commercial basis is subject to the same penalty for taking the electric or natural gas vehicle facility out of service as provided in section 422.11G.
   b.  This subsection is repealed on January 1, 2020.
    Sec. 4.  Section 422.35, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.  a.  A taxpayer taking a depreciation allowance under section 168 of the Internal Revenue Code for property described in section 422.33, subsection 11, is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of the property under section 422.33, subsection 11. If a credit is taken for the purchase and installation of the property under section 422.33, subsection 11, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   b.  A taxpayer taking an expensing allowance under section 179 of the Internal Revenue Code for property described in section 422.33, subsection 11, is not allowed to take the allowance for purposes of this division to the extent that a tax credit is taken for the purchase and installation of such property under section 422.33, subsection 11. If a credit is taken for the purchase and installation of the property under section 422.33, subsection 11, the taxpayer shall add the amount of the allowance taken on such property to the extent of the amount of the credit.
   c.  This subsection is repealed on January 1, 2020.
    Sec. 5.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 6.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2015, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill creates an electric or natural gas vehicle facility tax credit for persons who construct, install, and place in service an electric vehicle facility or a natural gas vehicle facility. The amount of the tax credit is 30 percent of the total cost of purchasing and of installing the facility. A person may claim the tax credit on an agricultural (farmer), commercial (business), or residential (personal, family, or household) basis. The bill provides that $5 million is dedicated for the issuance of tax credit certificates which must be attached to a person’s tax return in order to claim the tax credit. The bill establishes limits upon the amount of credit that a person may claim for either electric vehicle facilities or natural gas facilities. A person claiming the tax credit on an agricultural or commercial basis may claim the tax credit for the installation of an electric or natural gas facility. The person must claim one-third of the tax credit for each of three tax years. A person claiming the tax credit on a residential basis may claim the tax credit for the installation of an electric vehicle facility. The person must claim the tax credit in the tax year in which the electric vehicle facility was first placed in service. Any tax credit in excess of the taxpayer’s tax liability is refundable or may be used in calculating a future tax liability.
   The taxpayer must place the facility in service before January 1, 2018, but those taxpayers claiming on an agricultural or commercial basis may claim the tax credit for a previous installation after that date.
   The aggregate amount of electric or natural gas vehicle facility tax credit certificates that may be issued cannot exceed $5 million for all tax years that the tax credit is available. Two million dollars is allocated to support electric vehicle facilities, $2 million is allocated to support natural gas facilities, and $1 million is allocated to support either electric vehicle facilities or natural gas vehicle facilities. As of July 1, 2017, any remaining encumbered or expended moneys are also allocated to support either type of facility.
   The tax credit applies retroactively to tax years beginning on and after January 1, 2015. The bill’s provisions are repealed on January 1, 2020. The bill takes effect upon enactment.