Senate File 394 - Introduced SENATE FILE 394 BY BOLKCOM A BILL FOR An Act limiting the amount of research activities tax credit 1 that is refundable and including retroactive applicability 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2320XS (2) 87 mm/sc/rn

S.F. 394 Section 1. Section 15.335, subsection 8, Code 2017, is 1 amended to read as follows: 2 8. Any credit in excess of the tax liability for the taxable 3 year shall be refunded with interest computed under section 4 422.25 . However, the aggregate amount of tax credit that may 5 be refunded pursuant to this section and section 422.10 or 6 section 422.33, subsection 5, shall not exceed one million 7 dollars per taxpayer per taxable year. In lieu of claiming a 8 refund, a taxpayer may elect to have the overpayment shown on 9 its final, completed return credited to the tax liability for 10 the following year. 11 Sec. 2. Section 422.10, subsection 4, Code 2017, is amended 12 to read as follows: 13 4. Any credit in excess of the tax liability imposed by 14 section 422.5 less the amounts of nonrefundable credits allowed 15 under this division for the taxable year shall be refunded 16 with interest computed under section 422.25 . However, the 17 aggregate amount of tax credit that may be refunded pursuant to 18 this section and section 15.335 shall not exceed one million 19 dollars per taxpayer per taxable year. In lieu of claiming 20 a refund, a taxpayer may elect to have the overpayment shown 21 on the taxpayer’s final, completed return credited to the tax 22 liability for the following taxable year. 23 Sec. 3. Section 422.33, subsection 5, paragraph f, Code 24 2017, is amended to read as follows: 25 f. Any credit in excess of the tax liability for the taxable 26 year shall be refunded with interest computed under section 27 422.25 . However, the aggregate amount of tax credit that may 28 be refunded pursuant to this subsection and section 15.335 29 shall not exceed one million dollars per taxpayer per taxable 30 year. In lieu of claiming a refund, a taxpayer may elect 31 to have the overpayment shown on its final, completed return 32 credited to the tax liability for the following taxable year. 33 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 34 retroactively to January 1, 2017, for tax years beginning on 35 -1- LSB 2320XS (2) 87 mm/sc/rn 1/ 2

S.F. 394 or after that date. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 Under current law, the research activities tax credits are 5 refundable, meaning any amount of the tax credits in excess of 6 a taxpayer’s tax liability are issued to the taxpayer in the 7 form of a tax refund. 8 This bill limits the aggregate amount of research activities 9 tax credits that may be refunded to $1 million per taxpayer 10 per taxable year. This limitation includes the individual and 11 corporate research activities credits, and the supplemental 12 research activities tax credit awarded by the economic 13 development authority under Code section 15.335. 14 The bill applies retroactively to January 1, 2017, for tax 15 years beginning on or after that date. 16 -2- LSB 2320XS (2) 87 mm/sc/rn 2/ 2