SSB 1120 (LSB 1799XC (1) 87)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON ANDERSON)

A BILL FOR

An Act creating a geothermal tax credit available against the franchise tax and including effective date and retroactive applicability provisions. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.60, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.  a.  For purposes of this subsection, unless the context otherwise requires:
   (1)  “Qualified geothermal energy system property” means any equipment that uses the ground or groundwater as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure.
   (2)  “Qualified geothermal energy system property expenditures” means an expenditure for qualified geothermal energy system property if depreciation or amortization is allowable to the taxpayer under the Internal Revenue Code with respect to the property, and if the property is installed on or in connection with a structure located in Iowa.
   b.  The taxes imposed under this division shall be reduced by a geothermal tax credit equal to ten percent of the qualified geothermal energy system property expenditures made by the taxpayer during the tax year.
   c.  Qualified geothermal energy system property expenditures shall be deemed to have been made on the date the installation is complete or, in the case of new construction or reconstruction, the date the original use of the structure by the taxpayer begins.
   d.  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.
    Sec. 2.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 3.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2017, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates a geothermal tax credit available against the franchise tax equal to 10 percent of the expenditures made by a taxpayer for qualified geothermal energy system property if depreciation or amortization is allowable to the taxpayer under the Internal Revenue Code with respect to the property, and if the property is installed on or in connection with a structure located in Iowa. “Qualified geothermal energy system property” and other related terms are defined in the bill. For purposes of the tax credit, expenditures are deemed to be made on the date the installation is complete or, in the case of new construction or reconstruction, the date the original use of the structure begins.
   The tax credit is nonrefundable, but any amount in excess of the taxpayer’s tax liability may be carried forward for up to 10 years.
   The bill takes effect upon enactment and applies retroactively to January 1, 2017, for tax years beginning on or after that date.