S.F. 2052 DIVISION I 1 INCOME TAX —— E-15 PLUS GASOLINE PROMOTION TAX CREDIT 2 Section 1. Section 422.11Y, subsection 9, Code 2016, is 3 amended to read as follows: 4 9. This section is repealed on January 1, 2018 2025 . 5 Sec. 2. Section 422.33, subsection 11D, paragraph c, Code 6 2016, is amended to read as follows: 7 c. This subsection is repealed on January 1, 2018 2025 . 8 Sec. 3. 2011 Iowa Acts, chapter 113, section 37, is amended 9 to read as follows: 10 SEC. 37. TAX CREDIT AVAILABILITY. For a retail dealer who 11 may claim an E-15 plus gasoline promotion tax credit under 12 section 422.11Y or 422.33, subsection 11D , as enacted in this 13 Act and amended in subsequent Acts, in calendar year 2017 14 2024 , and whose tax year ends prior to December 31, 2017 2024 , 15 the retail dealer may continue to claim the tax credit in the 16 retail dealer’s following tax year. In that case, the tax 17 credit shall be calculated in the same manner as provided in 18 section 422.11Y or 422.33, subsection 11D , as enacted in this 19 Act and amended in subsequent Acts, for the remaining period 20 beginning on the first day of the retail dealer’s new tax year 21 until December 31, 2017 2024 . For that remaining period, the 22 tax credit shall be calculated in the same manner as a retail 23 dealer whose tax year began on the previous January 1 and who 24 is calculating the tax credit on December 31, 2017 2024 . 25 DIVISION II 26 INCOME TAX —— E-85 GASOLINE PROMOTION TAX CREDIT 27 Sec. 4. Section 422.11O, subsection 8, Code 2016, is amended 28 to read as follows: 29 8. This section is repealed on January 1, 2018 2025 . 30 Sec. 5. Section 422.33, subsection 11B, paragraph c, Code 31 2016, is amended to read as follows: 32 c. This subsection is repealed on January 1, 2018 2025 . 33 Sec. 6. 2006 Iowa Acts, chapter 1142, section 49, subsection 34 3, as amended by 2011 Iowa Acts, chapter 113, section 20, is 35 -1- LSB 5598SS (1) 86 da/rj 1/ 6

S.F. 2052 amended to read as follows: 1 3. For a retail dealer who may claim an E-85 gasoline 2 promotion tax credit under section 422.11O or 422.33, 3 subsection 11B , as enacted in this Act and amended in 4 subsequent Acts, in calendar year 2017 2024 and whose tax 5 year ends prior to December 31, 2017 2024 , the retail dealer 6 may continue to claim the tax credit in the retail dealer’s 7 following tax year. In that case, the tax credit shall be 8 calculated in the same manner as provided in section 422.11O 9 or 422.33, subsection 11B , as enacted in this Act and amended 10 in subsequent Acts, for the remaining period beginning on the 11 first day of the retail dealer’s new tax year until December 12 31, 2017 2024 . For that remaining period, the tax credit shall 13 be calculated in the same manner as a retail dealer whose tax 14 year began on the previous January 1 and who is calculating the 15 tax credit on December 31, 2017 2024 . 16 DIVISION III 17 INCOME TAX —— BIODIESEL BLENDED FUEL TAX CREDIT 18 Sec. 7. Section 422.11P, subsections 4 and 8, Code 2016, are 19 amended to read as follows: 20 4. For a retail dealer whose tax year is on a calendar year 21 basis, the retail dealer shall calculate the amount of the tax 22 credit by multiplying a designated rate by the retail dealer’s 23 total biodiesel blended fuel gallonage as provided in section 24 452A.31 which qualifies under this subsection . 25 a. In calendar year 2012, in In order to qualify for the tax 26 credit, the biodiesel blended fuel must be classified as B-2 27 B-5 or higher. 28 (1) For biodiesel blended fuel classified as B-2 or higher 29 but not as high as B-5, the designated rate is two cents. 30 (2) b. (1) For biodiesel blended fuel classified as B-5 31 or higher but not as high as B-11 , the designated rate is four 32 and one-half cents. 33 b. (2) In calendar year 2013 and for each subsequent 34 calendar year, in order to qualify for the tax credit, the 35 -2- LSB 5598SS (1) 86 da/rj 2/ 6

S.F. 2052 For biodiesel blended fuel must be classified as B-5 B-11 or 1 higher . The , the designated rate for the qualifying biodiesel 2 blended fuel is four and one-half seven cents. 3 8. This section is repealed January 1, 2018 2025 . 4 Sec. 8. Section 422.33, subsection 11C, paragraph c, Code 5 2016, is amended to read as follows: 6 c. This subsection is repealed on January 1, 2018 2025 . 7 Sec. 9. 2011 Iowa Acts, chapter 113, section 31, is amended 8 to read as follows: 9 SEC. 31. TAX CREDIT AVAILABILITY. For a retail dealer 10 who may claim a biodiesel blended fuel promotion tax credit 11 under section 422.11P or 422.33, subsection 11C , as amended 12 in this Act and amended in subsequent Acts, in calendar year 13 2017 2024 , and whose tax year ends prior to December 31, 2017 14 2024 , the retail dealer may continue to claim the tax credit in 15 the retail dealer’s following tax year. In that case, the tax 16 credit shall be calculated in the same manner as provided in 17 section 422.11P or 422.33, subsection 11C , as amended in this 18 Act and amended in subsequent Acts, for the remaining period 19 beginning on the first day of the retail dealer’s new tax year 20 until December 31, 2017 2024 . For that remaining period, the 21 tax credit shall be calculated in the same manner as a retail 22 dealer whose tax year began on the previous January 1 and who 23 is calculating the tax credit on December 31, 2017 2024 . 24 Sec. 10. EFFECTIVE UPON ENACTMENT. This division of this 25 Act, being deemed of immediate importance, takes effect upon 26 enactment. 27 Sec. 11. RETROACTIVE APPLICABILITY. Section 422.11P, 28 as amended in this division of this Act, and section 422.33, 29 subsection 11C, as amended in this division of this Act and 30 applied due to this division of this Act, apply retroactively 31 to tax years beginning on and after January 1, 2016. 32 DIVISION IV 33 SALES AND USE TAX —— BIODIESEL PRODUCTION REFUND 34 Sec. 12. Section 423.4, subsection 9, paragraph e, Code 35 -3- LSB 5598SS (1) 86 da/rj 3/ 6

S.F. 2052 2016, is amended to read as follows: 1 e. This subsection is repealed on January 1, 2018 2025 . 2 DIVISION V 3 FUTURE REPEALS 4 Sec. 13. Section 422.11O, subsection 5, Code 2016, is 5 amended to read as follows: 6 5. a. A retail dealer is eligible to claim an E-85 gasoline 7 promotion tax credit as provided in this section even though 8 the retail dealer claims one or all of the following related 9 tax credits: 10 (1) The ethanol promotion tax credit pursuant to section 11 422.11N . 12 (2) The an E-15 plus gasoline promotion tax credit pursuant 13 to section 422.11Y . 14 b. (1) The retail dealer may claim the E-85 gasoline 15 promotion tax credit and one or more of the related tax credits 16 as provided in paragraph “a” for the same tax year. 17 (2) The retail dealer may claim the ethanol promotion 18 tax credit as provided in paragraph “a” for the same ethanol 19 gallonage used to calculate and claim the E-85 gasoline 20 promotion tax credit. 21 Sec. 14. Section 422.11Y, subsection 6, Code 2016, is 22 amended to read as follows: 23 6. a. A retail dealer is eligible to claim an E-15 plus 24 gasoline promotion tax credit as provided in this section even 25 though the retail dealer claims one or all of the following 26 related tax credits: 27 (1) The ethanol promotion tax credit pursuant to section 28 422.11N . 29 (2) The an E-85 gasoline promotion tax credit pursuant to 30 section 422.11O . 31 b. (1) The retail dealer may claim the E-15 plus gasoline 32 promotion tax credit and one or more of the related tax credits 33 as provided in paragraph “a” for the same tax year. 34 (2) The retail dealer may claim the ethanol promotion 35 -4- LSB 5598SS (1) 86 da/rj 4/ 6

S.F. 2052 tax credit as provided in paragraph “a” for the same ethanol 1 gallonage used to calculate and claim the E-15 plus gasoline 2 promotion tax credit. 3 Sec. 15. REPEAL. Any intervening provision effective prior 4 to the effective date of this division of this Act that amends 5 section 422.11O, subsection 5, or section 422.11Y, subsection 6 6, as amended in this division of this Act, is repealed, unless 7 that Act or another Act specifically provides otherwise. 8 Sec. 16. EFFECTIVE DATE. This division of this Act takes 9 effect January 1, 2021. 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 BIOFUELS TAX CREDIT AND REFUND EXTENSIONS. This bill 14 extends the expiration date of four biofuel tax programs from 15 January 1, 2018, to January 1, 2025, including three income tax 16 credits and one sales and use tax refund. 17 BIODIESEL FUEL TAX CREDIT —— INCREASED TAX CREDIT RATE FOR 18 B-11 OR HIGHER. The bill increases the designated tax credit 19 rate for the sale of biodiesel blended fuel classified as 20 B-11 or higher from 4.5 to 7 cents per gallon, retroactively 21 applicable to tax years beginning on or after January 1, 2016. 22 BACKGROUND. A biofuel is a substance blended with motor fuel 23 (gasoline or diesel fuel) and includes either ethanol (ethyl 24 alcohol) or biodiesel (a substance derived from vegetable 25 oils or animal fats) meeting state standards (Code section 26 214A.2). A motor fuel blended with a biofuel is referred to 27 as a renewable fuel. The amount of the tax credit or refund 28 is claimed by a taxpayer on a tax or calendar year basis after 29 multiplying the total gallonage of a qualifying renewable fuel 30 or biofuel times a designated monetary rate. 31 CURRENT INCOME TAX CREDITS. The income tax credits may 32 be claimed by a retail dealer operating a retail motor fuel 33 site and the amount of each tax credit is based on the total 34 number of gallons of a renewable fuel sold. The E-15 plus 35 -5- LSB 5598SS (1) 86 da/rj 5/ 6

S.F. 2052 gasoline promotion tax credit requires an ethanol content of 1 between 15 and 69 percent per gallon and the designated rate 2 equals 3 cents except between June 1 and September 15 when 3 the designated rate increases to 10 cents. The E-85 gasoline 4 promotion tax credit requires an ethanol content of between 5 70 and 85 percent per gallon and the designated rate equals 6 16 cents. The biodiesel blended fuel tax credit requires a 7 biodiesel content of at least 5 percent per gallon (B-5) and 8 the designated rate equals 4.5 cents. 9 SALES AND USE TAX REFUND. The sales and use tax refund may 10 be claimed by a biodiesel producer who manufactures biodiesel 11 for use in biodiesel blended fuel. The amount of the refund 12 equals the total number of gallons of biodiesel produced during 13 each calendar year quarter multiplied by a designated rate 14 of 2 cents. However, a producer cannot claim the refund on 15 more than 25 million gallons produced at any one manufacturing 16 facility. 17 FUTURE REPEAL OF REFERENCES TO THE ETHANOL PROMOTION TAX 18 CREDIT. The bill amends Code sections creating the E-85 19 gasoline promotion tax credit and the E-15 plus gasoline 20 promotion tax credit by repealing references to another tax 21 credit referred to as the ethanol promotion tax credit claimed 22 by a retail dealer who attains a certain threshold number of 23 all biofuels sold during a determination period and which is 24 based on the number of gallons of pure ethanol sold during that 25 period. The amendments become effective on January 1, 2021, 26 which is the date that the ethanol promotion tax credit is due 27 to expire. 28 -6- LSB 5598SS (1) 86 da/rj 6/ 6