SF 38 (LSB 1216XS (5) 87)

SENATE FILE 38

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 8.57E, subsection 2, Code 2017, is amended to read as follows:
   2.  Moneys in the taxpayers trust fund shall only be used pursuant to appropriations or transfers made by the general assembly for tax relief. During each fiscal year beginning on or after July 1, 2014, in which the balance of the taxpayers trust fund equals or exceeds thirty million dollars, there is transferred from the taxpayers trust fund to the Iowa taxpayers trust fund tax credit fund created in section 422.11E, the entire balance of the taxpayers trust fund to be used for the Iowa taxpayers trust fund tax credit in accordance with section 422.11E, subsection 5.
    Sec. 2.  Section 15.293A, subsection 1, paragraph a, Code 2017, is 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.
    Sec. 3.  Section 15.293A, subsection 1, paragraph b, Code 2017, is amended by striking the paragraph.
    Sec. 4.  Section 15.293A, subsection 2, paragraphs c and f, Code 2017, are amended to read as follows:
   c.  The tax credit certificate, unless rescinded by the authority, shall be accepted by the department of revenue as payment for taxes imposed pursuant to chapter 422, divisions II, III, and V, and in chapter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.
   f.  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. 5.  Section 15.293A, subsection 4, Code 2017, 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. 6.  Section 15.319, subsection 2, Code 2017, is amended to read as follows:
   2.  The tax credit shall be allowed against taxes imposed under chapter 422, division II or III.
    Sec. 7.  Section 15.319, subsection 4, Code 2017, is amended by striking the subsection.
    Sec. 8.  Section 15.319, subsection 6, paragraph c, Code 2017, is amended to read as follows:
   c.  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 and division 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 the program.
    Sec. 9.  Section 15.333, subsection 1, Code 2017, 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 project. 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. 10.  Section 15.335, subsection 6, Code 2017, is amended by striking the subsection.
    Sec. 11.  Section 15.355, subsection 3, paragraph b, Code 2017, is amended to read as follows:
   b.  The 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.
    Sec. 12.  Section 15.355, subsection 3, paragraph c, Code 2017, is amended by striking the paragraph.
    Sec. 13.  Section 15.355, subsection 3, paragraph e, subparagraphs (3) and (6), Code 2017, 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 program.
   (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. 14.  Section 15.355, subsection 3, paragraph f, Code 2017, is amended to read as follows:
   f.  For purposes of the individual and corporate income taxes and the franchise tax, the increase in the basis of the property that would otherwise result from the qualifying new investment shall be reduced by the amount of the tax credit computed under this subsection.
    Sec. 15.  Section 15A.7, subsection 1, Code 2017, is amended to read as follows:
   1.  That the project shall be administered in the same manner as a project under chapter 260E and that a supplemental new jobs credit from withholding in an amount equal to one and one-half percent of the gross wages paid by the employer pursuant to section 422.16, Code 2017, is authorized to fund the program services for the additional project.
    Sec. 16.  Section 15E.43, subsection 1, Code 2017, is amended to read as follows:
   1.  a.  For tax years beginning on or after January 1, 2015, 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.
   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.
   c.  b.  A tax credit shall be allowed only for an investment made in the form of cash to purchase equity in a qualifying business.
   d.  c.  For a tax credit claimed against the taxes imposed in chapter 422, division II, 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. For a tax credit claimed against the taxes imposed in chapter 422, divisions III and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, any Any tax credit in excess of the taxpayer’s liability for the tax year may be credited to the tax liability for the following three 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.
    Sec. 17.  Section 15E.43, subsection 2, paragraph b, Code 2017, is amended by striking the paragraph.
    Sec. 18.  Section 15E.44, subsection 4, Code 2017, 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 included with 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. 19.  Section 15E.52, subsection 2, paragraph a, Code 2017, is amended to read as follows:
   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.
    Sec. 20.  Section 15E.52, subsection 2, paragraph b, Code 2017, is amended by striking the paragraph.
    Sec. 21.  Section 15E.52, subsection 13, Code 2017, is amended to read as follows:
   13.  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. 22.  Section 15E.62, subsection 8, Code 2017, is amended to read as follows:
   8.  “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. 23.  Section 15E.66, subsection 1, Code 2017, 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. 24.  Section 15E.305, subsection 1, Code 2017, 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. 25.  Section 16.64, subsection 2, Code 2017, is amended to read as follows:
   2.  Bonds and notes issued by the authority for purposes of financing the beginning farmer loan program provided in section 16.75 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. 26.  Section 16.80, subsection 1, Code 2017, 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 qualified beginning farmer.
    Sec. 27.  Section 16.80, subsection 3, Code 2017, is amended by striking the subsection.
    Sec. 28.  Section 16.80, subsection 6, Code 2017, is amended to read as follows:
   6.  A tax credit in excess of the taxpayer’s liability for the tax year may be credited to the tax liability for the following ten tax 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. 29.  Section 16.81, subsection 1, Code 2017, is amended to read as follows:
   1.  A custom farming contract 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 encourage taxpayers who are considering custom farming agricultural land located in this state to negotiate with qualified beginning farmers.
    Sec. 30.  Section 16.81, subsection 3, Code 2017, is amended by striking the subsection.
    Sec. 31.  Section 16.81, subsection 9, Code 2017, is amended to read as follows:
   9.  A custom farming contract tax credit in excess of the taxpayer’s liability for the tax year may be credited to the tax liability for the following ten tax 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. 32.  Section 28A.24, Code 2017, 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 chapter 422, divisions II and division III, and shall not be taxed by any political subdivision of this state.
    Sec. 33.  Section 29C.24, subsection 3, paragraph a, subparagraph (3), Code 2017, is amended to read as follows:
   (3)  The imposition of income taxes under chapter 422, divisions II and division III, including the requirement to file tax returns under sections 422.13 through 422.15 or section 422.36, as applicable, and including the requirement to withhold and remit income tax from out-of-state employees under section 422.16. In addition, the performance of disaster or emergency-related work during a disaster response period by an out-of-state business or out-of-state employee shall not require an out-of-state business to be included in a consolidated return under section 422.37, and shall not increase the amount of net income of the out-of-state business allocated and apportioned to the state under section 422.8 or 422.33, as applicable.
    Sec. 34.  Section 29C.24, subsection 3, paragraph b, subparagraph (2), Code 2017, is amended by striking the subparagraph.
    Sec. 35.  Section 35A.13, subsection 2, paragraph b, Code 2017, 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 2017, if applicable.
    Sec. 36.  Section 68A.102, subsection 21, Code 2017, is amended by striking the subsection.
    Sec. 37.  Section 85.61, subsection 6, paragraph b, Code 2017, is amended by striking the paragraph.
    Sec. 38.  Section 96.3, subsection 4, unnumbered paragraph 2, Code 2017, is amended to read as follows:

The maximum weekly benefit amount, if not a multiple of one dollar, shall be rounded to the lower multiple of one dollar. However, until such time as sixty-five percent of the statewide average weekly wage exceeds one hundred ninety dollars, the maximum weekly benefit amounts shall be determined using the statewide average weekly wage computed on the basis of wages reported for calendar year 1981. As used in this section “dependent” means dependent as defined in section 422.12, subsection 1, paragraph “a” has the same meaning as provided by the Internal Revenue Code, as if the individual claimant was a taxpayer, except that an individual claimant’s nonworking spouse shall be deemed to be a dependent under this section. “Nonworking spouse” means a spouse who does not earn more than one hundred twenty dollars in gross wages in one week.
    Sec. 39.  Section 99B.8, Code 2017, is amended to read as follows:
   99B.8  Tax on prizes.
   All prizes awarded pursuant to a gambling activity under this chapter are Iowa earned income and are subject to state and federal income tax laws. A person conducting a game of skill, game of chance, bingo, or a raffle shall deduct state income taxes, pursuant to section 422.16, subsection 1, from a cash prize awarded to an individual. An amount deducted from the prize for payment of a state tax shall be remitted to the department of revenue on behalf of the prize winner.
    Sec. 40.  Section 99D.16, Code 2017, is amended to read as follows:
   99D.16  Withholding tax on winnings.
   All winnings provided in section 99D.11 are Iowa earned income and are subject to state and federal income tax laws. An amount deducted from winnings for payment of the state tax, pursuant to section 422.16, subsection 1, shall be remitted to the department of revenue on behalf of the individual who won the wager.
    Sec. 41.  Section 99F.18, Code 2017, is amended to read as follows:
   99F.18  Tax on winnings.
   All winnings derived from slot machines operated pursuant to this chapter are Iowa earned income and are subject to state and federal income tax laws. An amount deducted from winnings for payment of the state tax, pursuant to section 422.16, subsection 1, shall be remitted to the department of revenue on behalf of the winner.
    Sec. 42.  Section 99G.31, subsection 2, paragraph i, Code 2017, is amended to read as follows:
   i.  The proceeds of any lottery prize shall be subject to state and federal income tax laws. An amount deducted from the prize for payment of a state tax, pursuant to section 422.16, subsection 1, shall be transferred by the authority to the department of revenue on behalf of the prize winner.
    Sec. 43.  Section 100B.13, subsection 2, paragraph a, Code 2017, 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 2017, if applicable.
    Sec. 44.  Section 190B.103, Code 2017, is amended to read as follows:
   190B.103  From farm to food donation tax credit.
   A from farm to food donation tax credit is allowed against the taxes imposed in chapter 422, divisions II and division III, as provided in this chapter.
    Sec. 45.  Section 216B.3, subsection 15, Code 2017, is amended to read as follows:
   15.  Develop a plan to provide telephone yellow pages information without charge to persons declared to be blind under the standards in section 422.12, subsection 2, paragraph “a”, subparagraph (5), Code 2017. The department may apply for federal funds to support the service. The program shall be limited in scope by the availability of funds.
    Sec. 46.  Section 217.39, Code 2017, is amended to read as follows:
   217.39  Persecuted victims of World War II —— reparations —— heirs.
   Notwithstanding any other law of this state, payments paid to and income from lost property of a victim of persecution for racial, ethnic, or religious reasons by Nazi Germany or any other Axis regime or as an heir of such victim which is exempt from state income tax as provided in section 422.7, subsection 35, Code 2017, shall not be considered as income or an asset for determining the eligibility for state or local government benefit or entitlement programs. The proceeds are not subject to recoupment for the receipt of governmental benefits or entitlements, and liens, except liens for child support, are not enforceable against these sums for any reason.
    Sec. 47.  Section 235A.2, subsection 1, Code 2017, 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 2017, 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. 48.  Section 257.19, Code 2017, 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. 49.  Section 257.21, Code 2017, is amended to read as follows:
   257.21  Computation of instructional support amount.
   1.  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.
   2.  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, except for the Iowa taxpayers trust fund tax credit allowed under section 422.11E.
    Sec. 50.  Section 257.29, subsections 3 and 4, Code 2017, 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. 51.  Section 260E.2, subsection 6, Code 2017, is amended to read as follows:
   6.  “Employee” means the person employed in a new job. “Employee” does not include a person who would not be subject to the withholding of Iowa income pursuant to a reciprocal agreement under section 422.8, subsection 5, Code 2017.
    Sec. 52.  Section 260E.5, subsections 2 and 6, Code 2017, are amended to read as follows:
   2.  An amount equal to one and one-half percent of the gross wages paid by the employer to each employee participating in a project shall be credited from the payment made by an employer pursuant to section 422.16, Code 2017. If the amount of the withholding by the employer is less than one and one-half percent of the gross wages paid to the employees covered by the agreement, then the employer shall receive a credit against other withholding taxes due by the employer. The employer shall remit the amount of the credit quarterly in the same manner as withholding payments are reported to the department of revenue, to the community college to be allocated to and when collected paid into a special fund of the community college to pay the principal of and interest on certificates issued by the community college to finance or refinance, in whole or in part, the project. When the principal and interest on the certificates have been paid, the employer credits shall cease and any money received after the certificates have been paid shall be remitted to the treasurer of state to be deposited in the general fund of the state.
   6.  An employee participating in a project will receive full credit for the amount withheld as provided in section 422.16, Code 2017.
    Sec. 53.  Section 260G.4A, subsections 2 and 5, Code 2017, are amended to read as follows:
   2.  Eligibility for program job credits shall be based on certification of program job positions and program job wages by the employer at the time established in the agreement. An amount up to ten percent of the gross program job wage as certified by the employer in the agreement shall be credited from the total payment made by an employer pursuant to section 422.16, Code 2017. The employer shall receive a credit against all withholding taxes due by the employer regardless of whether or not the withholding from the employer of current program job wages is less than ten percent. The employer shall remit the amount of the credit quarterly in the same manner as withholding payments are reported to the department of revenue, to the community college to be allocated to and when collected paid into a special fund of the community college to pay, in part, the program costs. When the program costs have been paid, the employer credits shall cease and any moneys received after the program costs have been paid shall be remitted to the treasurer of state to be deposited in the general fund of the state.
   5.  Employees from an employer participating in an agreement shall receive full credit for the amount withheld as provided in section 422.16, Code 2017.
    Sec. 54.  Section 279.63, subsection 2, paragraph a, Code 2017, 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. 55.  Section 298.2, subsection 1, paragraph a, Code 2017, is amended to read as follows:
   a.  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.
    Sec. 56.  Section 298.2, subsection 4, Code 2017, is amended to read as follows:
   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. 57.  Section 403.19A, subsection 3, paragraphs b and i, Code 2017, are amended to read as follows:
   b.  An amount equal to three percent of the gross wages paid by an employer to each employee under a withholding agreement shall be credited from the payment made by the employer pursuant to section 422.16, Code 2017. If the amount of the withholding by the employer is less than three percent of the gross wages paid to the employees covered by the withholding agreement, the employer shall receive a credit against other withholding taxes due by the employer or may carry the credit forward for up to ten years or until depleted, whichever is the earlier. The employer shall remit the amount of the credit quarterly, in the same manner as withholding payments are reported to the department of revenue, to the pilot project city to be allocated to and when collected paid into a designated withholding project fund for the project. All amounts so deposited shall be used or pledged by the pilot project city for a project related to the employer pursuant to the withholding agreement.
   i.  An employee whose wages are subject to a withholding agreement shall receive full credit for the amount withheld as provided in section 422.16, Code 2017.
    Sec. 58.  Section 404A.2, subsection 2, Code 2017, is amended to read as follows:
   2.  The tax credit shall be allowed against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432. 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. For an individual claiming a tax credit of an estate or trust, the amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the estate or trust. For an individual claiming a tax credit of a partnership, limited liability company, or S corporation, the amount claimed by the partner, member, or shareholder, respectively, shall be based upon the amounts designated by the eligible partnership, S corporation, or limited liability company, as applicable.
    Sec. 59.  Section 404A.2, subsection 3, paragraph c, Code 2017, is amended to read as follows:
   c.  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, 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. 60.  Section 404A.2, subsection 5, paragraph c, Code 2017, is amended to read as follows:
   c.  The tax credit certificate, unless rescinded by the authority, shall be accepted by the department of revenue as payment for taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, subject to any conditions or restrictions placed by the authority or the department of revenue upon the face of the tax credit certificate and subject to the limitations of this program.
    Sec. 61.  Section 404A.2, subsection 6, Code 2017, is amended to read as follows:
   6.  For purposes of the individual and corporate income taxes tax and the franchise tax, the increase in the basis of the rehabilitated property that would otherwise result from the qualified rehabilitation expenditures shall be reduced by the amount of the credit computed under this section.
    Sec. 62.  Section 422.1, subsection 2, Code 2017, is amended to read as follows:
   2.  Division II              Personal net income tax Provisions related to the business tax on corporations.
    Sec. 63.  Section 422.11L, subsection 1, unnumbered paragraph 1, Code 2017, 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. 64.  Section 422.11L, subsection 3, paragraph a, Code 2017, is amended by striking the paragraph.
    Sec. 65.  Section 422.11N, subsection 3, unnumbered paragraph 1, Code 2017, 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. 66.  Section 422.11N, subsection 9, Code 2017, is amended by striking the subsection.
    Sec. 67.  Section 422.11O, subsection 2, unnumbered paragraph 1, Code 2017, 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. 68.  Section 422.11O, subsection 7, Code 2017, is amended by striking the subsection.
    Sec. 69.  Section 422.11P, subsection 3, unnumbered paragraph 1, Code 2017, 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. 70.  Section 422.11P, subsection 7, Code 2017, is amended by striking the subsection.
    Sec. 71.  Section 422.11S, subsection 1, Code 2017, 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 8. The tax credit shall be claimed by use of a tax credit certificate as provided in subsection 7.
    Sec. 72.  Section 422.11S, subsections 4 and 5, Code 2017, are amended by striking the subsections.
    Sec. 73.  Section 422.11S, subsection 8, paragraph a, subparagraph (2), Code 2017, 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, for tax years beginning on or after January 1, 2008, but before January 1, 2012, seven million five hundred thousand dollars, for tax years beginning on or after January 1, 2012, but before January 1, 2014, eight million seven hundred fifty thousand dollars, and for tax years beginning on or after January 1, 2014, twelve for tax years beginning on or after January 1, 2017, three million dollars.
    Sec. 74.  Section 422.11Y, subsection 3, unnumbered paragraph 1, Code 2017, 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. 75.  Section 422.11Y, subsection 8, Code 2017, is amended by striking the subsection.
    Sec. 76.  Section 422.15, subsections 2 and 3, Code 2017, are amended by striking the subsections.
    Sec. 77.  Section 422.15, subsection 4, Code 2017, 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. 78.  Section 422.21, Code 2017, 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. 79.  Section 422.22, Code 2017, 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. 80.  Section 422.32, Code 2017, 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.
   g.  10.  “Income from sources within this state” means income from real, tangible, or intangible property located or having a situs in this state.
   11.  “Income year” means the calendar year or the fiscal year upon the basis of which the net income is computed under this division.
   12.  “Individual” means a natural person.
   h.  13.  “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, 2015.
   i.  14.  “Nonbusiness income” means all income other than business income.
   15.  “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.
   16.  “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.
   j.  17.  “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.
   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(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.  “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.
   l.  20.  “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 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. 81.  Section 422.33, subsection 28, Code 2017, 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 8, for a tax year.
    Sec. 82.  Section 422.35, subsection 2, Code 2017, is amended to read as follows:
   2.  Add interest and dividends from foreign securities, from securities of state and other political subdivisions, and from regulated investment companies exempt from federal income tax under the Internal Revenue Code, except for those securities the interest and dividends from which are exempt from taxation by the state of Iowa as otherwise provided by law, including those set forth in section 422.7, subsection 2.:
   a.  Vision Iowa program bonds pursuant to section 12.71, subsection 8.
   b.  School infrastructure program bonds pursuant to section 12.81, subsection 8. 
   c.  Iowa jobs program revenue bonds pursuant to section 12.87, subsection 8.
   d.  Iowa utility board and Iowa consumer advocate building project bonds pursuant to section 12.91, subsection 9.
   e.  Iowa finance authority beginning farmer loan program bonds pursuant to section 16.64, subsection 2.
   f.  Water pollution control works and drinking facilities financing program bonds pursuant to section 16.131, subsection 5.
   g.  Iowa prison infrastructure revenue bonds pursuant to section 12.80, subsection 3, and section 16.177, subsection 8.
   h.  Quad cities interstate metropolitan authority bonds pursuant to section 28A.24.
   i.  Iowa finance authority E911 program bonds pursuant to section 34A.20, subsection 6.
   j.  Soil and water conservation subdistrict bonds pursuant to section 161A.22.
   k.  Community college residence hall and dormitory bonds pursuant to section 260C.61.
   l.  Community college bond program bonds pursuant to section 260C.71, subsection 6.
   m.  Higher education loan authority bonds pursuant to section 261A.27.
   n.  State board of regents bonds pursuant to sections 262.41, 262.51, 262.60, 262A.8, and 263A.6.
   o.  Interstate bridges bonds pursuant to section 313A.36.
   p.  Aviation authority bonds pursuant to section 330A.16.
   q.  County health center bonds pursuant to section 331.441, subsection 2, paragraph “c”, subparagraph (7).
   r.  Rural water district bonds pursuant to section 357A.15.
   s.  Urban renewal bonds pursuant to section 403.9, subsection 2.
   t.  Municipal housing project bonds pursuant to section 403A.12.
   u.  Comprehensive petroleum underground storage tank fund bonds pursuant to section 455G.6, subsection 14.
   v.  Honey creek premier destination park bonds pursuant to section 463C.12, subsection 8.
    Sec. 83.  Section 422.39, Code 2017, is amended to read as follows:
   422.39  Statutes applicable to corporation tax.
   All the provisions of sections 422.24 to 422.27 422.26 of division II, respecting payment and collection, shall apply in respect to the tax due and payable by a corporation taxable under this division.
    Sec. 84.  Section 422.73, Code 2017, is amended to read as follows:
   422.73  Correction of errors —— refunds, credits, and carrybacks.
   1.  If it appears that an amount of tax, penalty, or interest has been paid which was not due under division II, III or V of this chapter, then that amount shall be credited against any tax due on the books of the department by the person who made the excessive payment, or that amount shall be refunded to the person or with the person’s approval, credited to tax to become due. A claim for refund or credit that has not been filed with the department within three years after the return upon which a refund or credit claimed became due, or within one year after the payment of the tax upon which a refund or credit is claimed was made, whichever time is the later, shall not be allowed by the director. If, as a result of a carryback of a net operating loss or a net capital loss, the amount of tax in a prior period is reduced and an overpayment results, the claim for refund or credit of the overpayment shall be filed with the department within the three years after the return for the taxable year of the net operating loss or net capital loss became due. Notwithstanding the period of limitation specified, the taxpayer shall have six months from the day of final disposition of any income tax matter between the taxpayer and the internal revenue service with respect to the particular tax year to claim an income tax refund or credit.
   2.  Notwithstanding subsection 1, a claim for refund or credit of the individual income tax paid which resulted from a reduction in a person’s federal adjusted gross income due to section 1106 of the FAA Modernization and Reform Act of 2012, Pub. L. No. 112-95, shall be considered timely if the claim is filed with the department on or before June 30, 2013.
   3.  The department shall enter into an agreement with the internal revenue service for the transmission of federal income tax reports on individuals required to file an Iowa income tax return who have been involved in an income tax matter with the internal revenue service. After final disposition of the income tax matter between the taxpayer and the internal revenue service, the department shall determine whether the individual is due a state income tax refund as a result of final disposition of such income tax matter. If the individual is due a state income tax refund, the department shall notify the individual within thirty days and request the individual to file a claim for refund or credit with the department.
    Sec. 85.  Section 422.110, Code 2017, is amended to read as follows:
   422.110  Income tax credit in lieu of refund.
   1.  In lieu of the fuel tax refund provided in section 452A.17, a person or corporation subject to taxation under division II or III of this chapter may elect to receive an income tax credit. The person or corporation which elects to receive an income tax credit shall cancel its refund permit obtained under section 452A.18 within thirty days after the first day of its tax year or the permit becomes invalid at that time. For the purposes of this section, “person” includes a person claiming a tax credit based upon the person’s pro rata share of the earnings from a partnership, limited liability company, or corporation which is not subject to a tax under division II or III of this chapter as a partnership, limited liability company, or corporation “corporation” means the same as defined in section 422.32. If the election to receive an income tax credit has been made, it remains effective for at least one tax year, and for subsequent tax years unless a change is requested and a new refund permit applied for within thirty days after the first day of the person’s or corporation’s tax year. The income tax credit shall be the amount of the Iowa fuel tax paid on fuel purchased by the person or corporation and is subject to the conditions provided in section 452A.17 with the exception that the income tax credit is not available for refunds relating to casualty losses, transport diversions, pumping credits, blending errors, idle time, power takeoffs, reefer units, and exports by distributors.
   2.  The right to a credit under this section is not assignable and the credit may be claimed only by the person or corporation that purchased the fuel.
    Sec. 86.  Section 422D.1, Code 2017, 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 the 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. 87.  Section 425.17, subsection 7, Code 2017, is amended to read as follows:
   7.  “Income” means the sum of Iowa net income as defined in section 422.7, Code 2017, plus all of the following to the extent not already included in Iowa net income:  capital gains, alimony, child support money, cash public assistance and relief, except property tax relief granted under this division, amount of in-kind assistance for housing expenses, the gross amount of any pension or annuity, including but not limited to railroad retirement benefits, payments received under the federal Social Security Act, except child insurance benefits received by a member of the claimant’s household, and all military retirement and veterans’ disability pensions, interest received from the state or federal government or any of its instrumentalities, workers’ compensation and the gross amount of disability income or “loss of time” insurance. “Income” does not include gifts from nongovernmental sources, or surplus foods or other relief in kind supplied by a governmental agency. In determining income, net operating losses and net capital losses shall not be considered.
    Sec. 88.  Section 425.23, subsection 4, paragraph b, Code 2017, 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 2017.
    Sec. 89.  Section 476.20, subsection 2, Code 2017, is amended to read as follows:
   2.  The board shall establish rules requiring a regulated public utility furnishing gas or electricity to include in the utility’s notice of pending disconnection of service a written statement advising the customer that the customer may be eligible to participate in the low income home energy assistance program or weatherization assistance program administered by the division of community action agencies of the department of human rights. The written statement shall list the address and telephone number of the local agency which is administering the customer’s low income home energy assistance program and the weatherization assistance program. The written statement shall also state that the customer is advised to contact the public utility to settle any of the customer’s complaints with the public utility, but if a complaint is not settled to the customer’s satisfaction, the customer may file the complaint with the board. The written statement shall include the address and phone number of the board. If the notice of pending disconnection of service applies to a residence, the written statement shall advise that the disconnection does not apply from November 1 through April 1 for a resident who is a “head of household”, as defined in section 422.4, head of household and who has been certified to the public utility by the local agency which is administering the low income home energy assistance program and weatherization assistance program as being eligible for either the low income home energy assistance program or weatherization assistance program, and that if such a resident resides within the serviced residence, the customer should promptly have the qualifying resident notify the local agency which is administering the low income home energy assistance program and weatherization assistance program. The board shall establish rules requiring that the written notice contain additional information as it deems necessary and appropriate.
    Sec. 90.  Section 476.20, subsection 3, paragraph b, Code 2017, 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 section, “head of household” has the same meaning as provided by the Internal Revenue Code.
    Sec. 91.  Section 476B.2, Code 2017, 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. 92.  Section 476B.6, subsection 5, paragraphs a, b, and c, Code 2017, 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. 93.  Section 476B.7, subsection 2, Code 2017, 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. 94.  Section 476C.4, subsection 4, paragraph a, Code 2017, 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. 95.  Section 476C.4, subsection 4, paragraph b, subparagraph (1), Code 2017, 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. 96.  Section 476C.4, subsection 4, paragraph c, subparagraph (1), Code 2017, 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. 97.  Section 476C.6, subsection 1, paragraph b, Code 2017, 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. 98.  Section 483A.1A, subsection 10, paragraph e, Code 2017, 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. 99.  Section 904.809, subsection 5, paragraph a, subparagraph (2), Code 2017, is amended to read as follows:
   (2)  The inmate’s employer shall provide each employed inmate with the withholding statement required under section 422.16, and any other employment information necessary for the receipt of the remainder of an inmate’s payroll earnings.
    Sec. 100.  REPEAL.  Sections 68A.601, 190B.105, 257.22 through 257.26, 298.14, 422.4 through 422.11F, 422.11H through 422.11J, 422.11M, 422.11Q, 422.11R, 422.11V, 422.11W, 422.11Z, 422.12, 422.12A through 422.12E, 422.12H, 422.12J through 422.12M, 422.13, 422.14, 422.16, 422.17, 422.19, 422.23, 422.27, 422.31, 422D.2 through 422D.4, Code 2017, are repealed.
    Sec. 101.  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. 102.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2018.
    Sec. 103.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2018.
DIVISION II
SALES AND USE TAX

    Sec. 104.  Section 423.2, subsection 1, unnumbered paragraph 1, Code 2017, 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. 105.  Section 423.2, subsections 2 and 3, Code 2017, 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. 106.  Section 423.2, subsection 4, paragraph a, Code 2017, 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.27, 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. 107.  Section 423.2, subsection 5, Code 2017, 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. 108.  Section 423.2, subsection 7, paragraph a, unnumbered paragraph 1, Code 2017, 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. 109.  Section 423.2, subsection 8, paragraph a, Code 2017, 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. 110.  Section 423.2, subsection 9, Code 2017, 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. 111.  Section 423.2, subsection 11, paragraph b, subparagraphs (2) and (3), Code 2017, are amended to read as follows:
   (2)  Transfer from the remaining revenues the amounts required under Article VII, section 10, of the Constitution of the State of Iowa to the natural resources and outdoor recreation trust fund created in section 461.31, if applicable.
   (3)  Transfer one-sixth seventeen and two thousand five hundred forty-eight ten-thousandths percent 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. 112.  Section 423.2, subsection 14, Code 2017, is amended to read as follows:
   14.  The sales tax rate of six eleven percent is reduced to five ten percent on January 1, 2030.
    Sec. 113.  Section 423.5, subsection 1, unnumbered paragraph 1, Code 2017, is amended to read as follows:
   Except as provided in paragraph “c”, an excise tax at the rate of six eleven percent of the purchase price or installed purchase price is imposed on the following:
    Sec. 114.  Section 423.5, subsection 5, Code 2017, is amended to read as follows:
   5.  The use tax rate of six eleven percent is reduced to five ten percent on January 1, 2030.
    Sec. 115.  Section 423.43, subsection 1, paragraph b, Code 2017, 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. 116.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2018.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   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 repeal of the individual income tax will also affect the industrial new jobs training program in Code chapter 260E, the accelerated career education program in Code chapter 260G, and the targeted jobs withholding credit in Code section 403.19A, because those programs rely on income tax amounts withheld from employee wages by employers.
   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 January 1, 2018, 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. By operation of law as provided in Article VII, section 10 of the Iowa Constitution, a portion (0.375 percent) of the state sales tax generated and collected from the rate increase provided in this division will be transferred to the natural resources and outdoor recreation trust fund in Code section 461.31. The division amends the transfer of state sales tax revenues to the secure an advanced vision for education fund (SAVE) in Code section 423F.2 from one-sixth (approximately 16.66 percent) of the revenues to 17.2548 percent of the revenues to ensure that SAVE receives approximately the same proportion of the total sales tax revenue as it did prior to the sales tax rate increase provided in the division.
   The division takes effect January 1, 2018.