SF 511 (LSB 1698SV (2) 86)

SENATE FILE 511

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO SSB 1193)

A BILL FOR

An Act modifying and enacting provisions relating to specified renewable energy tax credits, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.11K  Wind energy system tax credits.
   1.  Subject to subsection 4 of this section, the taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a wind energy system tax credit equal to the sum of the following:
   a.  Fifty percent of the federal residential energy efficient property credit related to small wind energy provided in section 25D(a)(4) of the Internal Revenue Code, not to exceed five thousand dollars.
   b.  Fifty percent of the federal energy credit related to small wind energy provided in section 48(a)(2)(A)(i)(IV) of the Internal Revenue Code, not to exceed twenty thousand dollars.
   2.  Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following ten years or until depleted, whichever is earlier. The director of revenue shall adopt rules to implement this section.
   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 tax credit under this section shall not be eligible to claim a wind energy production tax credit under chapter 476B or a renewable energy tax credit under chapter 476C.
   c.  A taxpayer may claim more than one credit under this section, but may claim only one credit per separate and distinct small wind energy system installation. The department shall establish criteria, by rule, for determining what constitutes a separate and distinct installation.
   d.  A taxpayer must submit an application to the department for each separate and distinct small wind energy installation. The application must be approved by the department in order to claim the tax credit. The application must be filed by May 1 following the year of the installation of the small wind energy system.
   4.  a.  Each tax year the total amount of small wind energy system tax credit claims that shall be paid pursuant to this section shall not exceed the amount appropriated by the general assembly for that purpose. If the total dollar amount of the claims exceeds that amount, each claim shall be paid an amount equal to the amount appropriated divided by the total number of claims, not to exceed the amount of the taxpayer’s claim.
   b.  If an amount of tax credits available for a tax year pursuant to paragraph “a” goes unclaimed, the amount of the unclaimed tax credits shall be made available for a subsequent tax year in which an appropriation under this section is made in addition to, and cumulated with, the amount appropriated for that subsequent tax year.
   5.  On or before January 1, annually, if tax credits have been claimed during the preceding tax year, the department shall submit a written report to the governor and the general assembly regarding the number and value of tax credits claimed under this section, and any other information the department may deem relevant and appropriate.
    Sec. 2.  Section 422.11L, subsection 1, Code 2015, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  Notwithstanding paragraphs “a” and “b” of this subsection, for installations occurring on or after January 1, 2016, the applicable percentages of the federal residential energy efficiency property tax credit related to solar energy and the federal energy credit related to solar energy systems shall be fifty percent.
    Sec. 3.  Section 422.11L, subsection 4, paragraph a, Code 2015, is amended to read as follows:
   a.  The cumulative value of tax credits claimed annually by applicants pursuant to this section shall not exceed four six million five hundred thousand dollars. Of this amount, at least one million dollars shall be reserved for claims associated with or resulting from residential solar energy system installations. In the event that the total amount of claims submitted for residential solar energy system installations in a tax year is an amount less than one million dollars, the remaining unclaimed reserved amount shall be made available for claims associated with or resulting from nonresidential solar energy system installations received for the tax year.
    Sec. 4.  Section 422.33, subsection 29, paragraph a, Code 2015, is amended to read as follows:
   a.  The taxes imposed under this division shall be reduced by a solar energy system tax credit equal to sixty percent of the federal energy credit related to solar energy systems provided in section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed twenty thousand dollars.  For installations occurring on or after January 1, 2016, the applicable percentage of the federal energy credit related to solar energy systems shall be fifty percent.
    Sec. 5.  Section 422.33, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  31.  a.  The taxes imposed under this division shall be reduced by a wind energy system tax credit equal to fifty percent of the federal energy credit related to small wind energy systems provided in section 48(a)(2)(A)(i)(IV) of the Internal Revenue Code, not to exceed twenty thousand dollars.
   b.  The taxpayer may claim the credit pursuant to this subsection according to the same requirements, conditions, and limitations as provided in section 422.11K.
    Sec. 6.  Section 422.60, subsection 12, paragraph a, Code 2015, is amended to read as follows:
   a.  The taxes imposed under this division shall be reduced by a solar energy system tax credit equal to sixty percent of the federal energy credit related to solar energy systems provided in section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed twenty thousand dollars.  For installations occurring on or after January 1, 2016, the applicable percentage of the federal energy credit related to solar energy systems shall be fifty percent.
    Sec. 7.  Section 422.60, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.  a.  The taxes imposed under this division shall be reduced by a wind energy system tax credit equal to fifty percent of the federal energy credit related to small wind energy systems provided in section 48(a)(2)(A)(i)(IV) of the Internal Revenue Code, not to exceed twenty thousand dollars.
   b.  The taxpayer may claim the credit pursuant to this subsection according to the same requirements, conditions, and limitations as provided in section 422.11K.
    Sec. 8.  Section 476C.1, subsection 6, paragraph d, Code 2015, is amended to read as follows:
   d.  (1)  Was initially placed into service on or after July 1, 2005, and before January 1, 2017.
   (2)  Notwithstanding subparagraph (1), the placement in service requirements for a facility that has applied for eligibility approval on or after January 1, 2008, but which is not operational as of the effective date of this Act shall be extended to January 1, 2019.
    Sec. 9.  Section 476C.3, subsection 4, paragraph a, Code 2015, is amended to read as follows:
   a.  The maximum amount of nameplate generating capacity of all wind energy conversion facilities the board may find eligible under this chapter shall not exceed three hundred sixty-three megawatts of nameplate generating capacity.  Beginning January 1, 2016, of the credits revoked pursuant to subsection 6, one megawatt of nameplate generating capacity shall be reserved for wind energy conversion facilities installed within a small wind innovation zone pursuant to section 476.48.
    Sec. 10.  Section 476C.3, subsection 4, paragraph b, Code 2015, is amended to read as follows:
   b.  The maximum amount of energy production capacity equivalent of all other facilities the board may find eligible under this chapter shall not exceed a combined output of fifty-three megawatts of nameplate generating capacity and, annually, one hundred sixty-seven billion British thermal units of heat for a commercial purpose. Of the maximum amount of energy production capacity equivalent of all other facilities found eligible under this chapter, no more than ten megawatts of nameplate generating capacity or energy production capacity equivalent shall be allocated to any one facility. Of the maximum amount of energy production capacity equivalent of all other facilities found eligible under this chapter, fifty-five billion British thermal units of heat for a commercial purpose shall be reserved annually for an eligible facility that is a refuse conversion facility for processed, engineered fuel from a multicounty solid waste management planning area. The maximum amount of energy production capacity the board may find eligible for a single refuse conversion facility is, annually, fifty-five billion British thermal units of heat for a commercial purpose. 
    Sec. 11.  Section 476C.5, Code 2015, is amended by adding the following new unnumbered paragraph:
   NEW UNNUMBERED PARAGRAPH.  For a renewable energy facility that has applied for eligibility approval on or after January 1, 2008, but which is not operational as of the effective date of this Act, renewable energy tax credit certificates shall not be issued for renewable energy purchased or produced by the facility for on-site consumption on or after December 31, 2028.
    Sec. 12.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 13.  RETROACTIVE APPLICABILITY.
   1.  The section of this Act amending section 476C.3, subsection 4, paragraph “b”, applies retroactively to January 1, 2014, for tax years beginning on or after that date.
   2.  The sections of this Act amending section 422.11L, subsection 4, paragraph “a”, section 422.33, subsection 29, paragraph “a”, and section 422.60, subsection 12, paragraph “a”, apply retroactively to January 1, 2015, for tax years beginning on or after that date.
   3.  The sections of this Act enacting section 422.11K, section 422.33, subsection 31, and section 422.60, subsection 14, apply 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 modifies existing renewable energy tax credit provisions and enacts new renewable energy tax credit provisions.
   The bill establishes a wind energy system tax credit against the individual and corporate income tax and the franchise tax. The tax credit is equal to the sum of 50 percent of the federal residential energy efficient property credit related to small wind energy provided in section 25D(a)(4) of the Internal Revenue Code, not to exceed $5,000, and 50 percent of the federal energy credit related to small wind energy provided in section 48(a)(2)(A)(i)(IV) of the Internal Revenue Code, not to exceed $20,000.
   The bill provides that any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following 10 years or until depleted, whichever is earlier.
   The bill provides that a taxpayer who is eligible to claim the wind energy system tax credit shall not be eligible to claim a wind energy production tax credit under Code chapter 476B or a renewable energy tax credit under Code chapter 476C.  A taxpayer may claim more than one wind energy system tax credit but may claim only one credit per separate and distinct small wind energy system installation. The department shall establish criteria by rule for determining what constitutes a separate and distinct installation.
   The bill requires that a taxpayer must submit an application to the department for each separate and distinct wind energy installation for approval. The application must be filed by May 1 following the year of the installation of the small wind energy system.
   The bill states that each tax year the total amount of wind energy system tax credit claims that shall be paid shall not exceed the amount appropriated by the general assembly for that purpose. If the total dollar amount of the claims exceeds that amount, each claim shall be paid an amount equal to the amount appropriated divided by the total number of claims, not to exceed the amount of the taxpayer’s claim. If an amount of tax credits available for a tax year goes unclaimed, the amount of the unclaimed tax credits shall be made available for the following tax year in which an appropriation is made in addition to, and cumulated with, the amount appropriated for that following tax year.
   The bill requires the department, on or before January 1, annually, if tax credits have been claimed during the preceding tax year, to submit a written report to the governor and the general assembly regarding the number and value of tax credits claimed and any other information the department may deem relevant and appropriate.
   The provisions enacting the wind energy system tax credit are retroactively applicable to January 1, 2015, for tax years beginning on or after that date.
   The bill modifies provisions applicable to the solar energy system tax credit. The bill provides that for solar energy system installations occurring on or after January 1, 2016, the percentages of the federal residential energy efficiency property credit related to solar energy and the federal energy credit related to solar energy which may be claimed shall be reduced from 60 percent to 50 percent. The bill increases the cumulative value of solar energy system tax credits which may be claimed annually from $4 million to $6 million. These changes are correspondingly made to the corporate and franchise solar energy system tax credit provisions contained in Code sections 422.33 and 422.60. These provisions are retroactively applicable to January 1, 2015, for tax years beginning on or after that date.
   With regard to renewable energy tax credit provisions contained in Code chapter 476C, the bill extends placement in service requirements for eligible renewable energy facilities that have applied for eligibility approval on or after January 1, 2008, but which are not operational on the bill’s effective date, from January 1, 2017, to January 1, 2019. The bill correspondingly extends the period during which renewable energy tax credit certificates may be issued for such facilities by two years, from December 31, 2026, to December 31, 2028.
   Additionally, the bill modifies references to the maximum amount of British thermal units of heat for a commercial purpose which may be included in energy production capacity equivalent qualifying for a renewable energy tax credit. Such references shall apply on an annual basis. These provisions are retroactively applicable to January 1, 2014, for tax years beginning on or after that date.
   Finally, the bill reserves one megawatt of nameplate generating capacity for wind energy conversion facilities installed within a small wind innovation zone established pursuant to Code section 476.48. This reserved capacity commences January 1, 2016.
   The bill takes effect upon enactment.