HSB 244 (LSB 2425YC (3) 86)

HOUSE FILE _____

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

A BILL FOR

An Act creating a cellulosic ethanol production tax credit available against the individual and corporate income tax and including effective date and retroactive and other applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.10A  Cellulosic ethanol production tax credit.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Cellulosic biomass materials” means any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis, including energy crops grown specifically for fuel production such as switchgrass, and including agricultural plant residues such as corn stover, rice hulls, sugarcane, and cereal straws.
   b.  “Cellulosic ethanol” means ethyl alcohol for use as motor fuel that meets the current American society for testing and materials standard D4806 for ethanol that is produced from cellulosic biomass materials.
   c.  “Cellulosic ethanol producer” means an entity that uses cellulosic biomass materials to manufacture cellulosic ethanol at a location in this state.
   2.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a cellulosic ethanol production tax credit to a taxpayer who is a cellulosic ethanol producer equal to the product of twenty cents multiplied by the number of gallons of cellulosic ethanol produced in this state by the cellulosic ethanol producer during the calendar year, not to exceed five million dollars per cellulosic ethanol producer per calendar year.
   3.  Any tax credit in excess of the tax liability is refundable. 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.
   4.  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.
   5.  The department shall adopt rules pursuant to chapter 17A to administer this section.
   6.  This section is repealed January 1, 2025.
    Sec. 2.  Section 422.33, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  23.  a.  The taxes imposed under this division shall be reduced by a cellulosic ethanol production tax credit allowed under section 422.10A.
   b.  This section is repealed on January 1, 2025.
    Sec. 3.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 4.  APPLICABILITY.  This Act applies to cellulosic ethanol produced in this state on or after the effective date of this Act.
    Sec. 5.  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 a tax credit available against the individual and corporate income tax for the production of cellulosic ethanol in this state by a cellulosic ethanol producer. “Cellulosic ethanol”, “cellulosic ethanol producer”, and other related terms are defined in the bill. The tax credit is equal to the product of 20 cents multiplied by the number of gallons of cellulosic ethanol produced by a cellulosic ethanol producer in this state during a calendar year, not to exceed a maximum of $5 million per cellulosic ethanol producer per calendar year. The tax credit is refundable but may be carried forward to the following tax year in lieu of a refund. The tax credit is repealed on January 1, 2025.
   The bill takes effect upon enactment and applies to cellulosic ethanol produced in this state on or after that date. The bill applies retroactively to tax years beginning on or after January 1, 2015.