SSB 1249 (LSB 2746XC (18) 88)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON FEENSTRA)

A BILL FOR

An Act relating to the administration of the tax and related laws by the department of revenue, including the administration and modification of certain tax credits and refunds, the individual and corporate income taxes, franchise taxes, franchise alternative minimum taxes, moneys and credits taxes, sales and use taxes, and automobile rental excise taxes, the assessment of property owned by certain long distance telephone companies, establishing a taxation and exemption of computers task force, and providing for other properly related matters, making penalties applicable, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
INCOME AND FRANCHISE TAX

    Section 1.  Section 422.4, subsection 16, paragraph e, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Add back the following percentage of the qualified business income deduction deductions under section 199A sections 199A(a) and 199A(g) of the Internal Revenue Code taken and allowable in calculating federal taxable income for the applicable tax year:
    Sec. 2.  Section 422.9, subsection 2A, paragraph a, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   The following percentage of the qualified business income deduction deductions under section 199A sections 199A(a) and 199A(g) of the Internal Revenue Code taken and allowable in calculating federal taxable income for the applicable tax year:
    Sec. 3.  Section 422.9, subsection 2A, paragraph b, Code 2019, is amended to read as follows:
   b.  Notwithstanding paragraph “a”, and section 422.4, subsection 16, paragraph “e”, for an entity electing or required to file a composite return under section 422.13, subsection 5, the deduction allowed under this subsection for purposes of the composite return shall be an amount equal to the applicable percentage described in paragraph “a” of the deduction deductions that would be allowable for federal income tax purposes under section 199A sections 199A(a) and 199A(g) of the Internal Revenue Code by an individual taxpayer reporting the same items of income and loss that are included in the composite return.
    Sec. 4.  Section 422.11S, subsection 7, paragraph b, Code 2019, is amended to read as follows:
   b.  The department shall authorize a school tuition organization to issue tax credit certificates for contributions made to the school tuition organization. The aggregate amount of tax credit certificates that the department shall authorize for a school tuition organization for a tax calendar year shall be determined for that organization pursuant to subsection 8. However, a school tuition organization shall not be authorized to issue tax credit certificates unless the organization is controlled by a board of directors consisting of at least seven members. The names and addresses of the members shall be provided to the department and shall be made available by the department to the public, notwithstanding any state confidentiality restrictions.
    Sec. 5.  Section 422.11S, subsection 8, paragraph a, subparagraph (2), Code 2019, 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 calendar years beginning on or after January 1, 2008, but before January 1, 2012, seven million five hundred thousand dollars, for tax calendar years beginning on or after January 1, 2012, but before January 1, 2014, eight million seven hundred fifty thousand dollars, and for tax calendar years beginning on or after January 1, 2014, but before January 1, 2019, twelve million dollars, and for tax calendar years beginning on or after January 1, 2019, thirteen million dollars.
    Sec. 6.  Section 422.11S, subsection 8, paragraph b, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Each year by December 1, the department shall authorize school tuition organizations to issue tax credit certificates for the following tax calendar year. However, for the tax year beginning in the 2006 calendar year only, the department, by September 1, 2006, shall authorize school tuition organizations to issue tax credit certificates for the 2006 calendar tax year. For the tax year beginning in the 2006 calendar year only, each school served by a school tuition organization shall submit a participation form to the department by August 1, 2006, providing the certified enrollment as of the third Friday of September 2005, along with the school tuition organization that represents the school. Tax credit certificates available for issue by each school tuition organization shall be determined in the following manner:
    Sec. 7.  Section 422.11S, subsection 9, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   A school tuition organization that receives a voluntary cash or noncash contribution pursuant to this section shall report to the department, on a form prescribed by the department, by January 12 of each tax calendar year all of the following information:
    Sec. 8.  Section 422.11S, subsection 9, paragraphs b and c, Code 2019, are amended to read as follows:
   b.  The total number and dollar value of contributions received and the total number and dollar value of the tax credits approved during the previous tax calendar year.
   c.  A list of the individual donors for the previous tax calendar year that includes the dollar value of each donation and the dollar value of each approved tax credit.
    Sec. 9.  Section 422.12C, subsection 4, Code 2019, is amended to read as follows:
   4.  Married taxpayers who have filed joint federal returns electing to file separate returns or to file separately on a combined return form must determine the child and dependent care credit under subsection 1 or the early childhood development tax credit under subsection 2 based upon their combined net income and allocate the total credit amount to each spouse in the proportion that each spouse’s respective net income bears to the total combined net income. Nonresidents or part-year residents of Iowa must determine their Iowa child and dependent care credit under subsection 1 or the early childhood development tax credit under subsection 2 in the ratio of their Iowa source net income to their all source net income. Nonresidents or part-year residents who are married and elect to file separate returns or to file separately on a combined return form must allocate the Iowa child and dependent care credit under subsection 1 or the early childhood development tax credit under subsection 2 between the spouses in the ratio of each spouse’s Iowa source net income to the combined Iowa source net income of the taxpayers.
    Sec. 10.  Section 422.60, subsection 2, paragraph b, Code 2019, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (6)  For purposes of this paragraph, “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 and in effect on December 21, 2017. This definition shall not be construed to include any amendment to the Internal Revenue Code enacted after the date specified in the preceding sentence, including any amendment with retroactive applicability or effectiveness.
    Sec. 11.  LIKE-KIND EXCHANGES OF PERSONAL PROPERTY UNDER CORPORATE INCOME TAX AND FRANCHISE TAX FOR TAX YEAR 2019.  Notwithstanding any other provision of law to the contrary, all of the following shall apply when computing net income for purposes of the corporation income tax or franchise tax under section 422.35 for tax years beginning during the 2019 calendar year:
   1.  The rules for nonrecognition of gain or loss from exchanges of real property held for productive use or investment and not held primarily for sale, as provided in section 1031 of the Internal Revenue Code, as amended up to and including March 24, 2018, apply for state income tax purposes with regard to exchanges of real property.
   2.  The rules for nonrecognition of gain or loss from exchanges of property other than real property held for productive use or investment as provided in section 1031 of the Internal Revenue Code, as amended up to and including December 21, 2017, apply for state income tax purposes, notwithstanding any other provision of law to the contrary. If the taxpayer’s federal taxable income includes gain or loss from property, other than real property described in subsection 1, and the taxpayer elects to have this subsection apply, the following adjustments shall be made:
   a.  (1)  Subtract the total amount of gain related to the sale or exchange of the property as properly reported for federal tax purposes under the Internal Revenue Code.
   (2)  Add back any gain related to the sale or exchange of the property to the extent such gain does not qualify for deferral under section 1031 of the Internal Revenue Code, as amended up to and including December 21, 2017, which gain shall be calculated using the taxpayer’s adjusted basis in the property for state tax purposes. 
   b.  (1)  Add the total amount of loss related to the sale or exchange of the property as properly reported for federal tax purposes under the Internal Revenue Code.
   (2)  Subtract any loss related to the sale or exchange of the property to the extent such loss does not qualify for deferral under section 1031 of the Internal Revenue Code, as amended up to and including December 21, 2017, which loss shall be calculated using the taxpayer’s adjusted basis in the property for state tax purposes. 
   c.  Any other adjustments to gains, losses, deductions, or tax basis for the property given up or received in the sale or exchange pursuant to rules adopted by the director. 
    Sec. 12.  REFUNDS —— EARLY CHILDHOOD DEVELOPMENT TAX CREDIT.  Notwithstanding any provision of law to the contrary, for tax years beginning prior to January 1, 2019, refunds of the early childhood development tax credit provided in section 422.12C, subsection 2, requested on or after the effective date of the provision of this division of this Act amending section 422.12C, subsection 4, shall not exceed the amount allowed under section 422.12C, subsection 4, as amended by this division of this Act.
    Sec. 13.  LEGISLATIVE INTENT.  It is the intent of the general assembly that the provisions of this division of this Act amending section 422.11S are conforming amendments consistent with current state law, and that the amendments do not change the application of current law but instead reflect current law both before and after the enactment of this Act. 
    Sec. 14.  EFFECTIVE DATE.  The following, being deemed of immediate importance, take effect upon enactment:
   1.  The section of this division of this Act amending section 422.12C, subsection 4.
   2.  The section of this division of this Act relating to refunds for the early childhood development tax credit. 
   3.  The section of this division of this Act relating to like-kind exchanges of personal property under corporate income tax and franchise tax.
    Sec. 15.  RETROACTIVE APPLICABILITY.  The following apply retroactively to January 1, 2019, for tax years beginning on or after that date:
   1.  The section of this division of this Act amending section 422.4, subsection 16, paragraph “e”, unnumbered paragraph 1.
   2.  The sections of this division of this Act amending section 422.9, subsection 2A.
   3.  The section of this division of this Act amending section 422.12C, subsection 4. 
   4.  The section of this division of this Act amending section 422.60, subsection 2, paragraph “b”.
    Sec. 16.  RETROACTIVE APPLICABILITY —— LIKE-KIND EXCHANGES OF PERSONAL PROPERTY.  The section of this division of this Act relating to like-kind exchanges of personal property under corporate income tax and franchise tax applies retroactively to January 1, 2019, for tax years beginning on or after that date, but before January 1, 2020. 
DIVISION II
ADMINISTRATIVE PROVISIONS

    Sec. 17.  Section 422.20, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  The department may permit, by rule, the disclosure of state tax information to a person a taxpayer has authorized to receive such state tax information, in the manner prescribed by the department.
    Sec. 18.  Section 422.72, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  8.  The department may permit, by rule, the disclosure of state tax information to a person a taxpayer has authorized to receive such state tax information, in the manner prescribed by the department.
DIVISION III
SALES AND USE TAX

    Sec. 19.  Section 423.2, subsection 1, paragraph a, subparagraph (5), subparagraph division (a), Code 2019, is amended to read as follows:
   (a)  If a service or warranty contract does not specify a fee amount for nontaxable services or taxable personal property, the tax imposed pursuant to this section shall be imposed upon an amount equal to one-half of the sales price of the contract.
    Sec. 20.  Section 423.2, subsection 6, paragraph k, Code 2019, is amended to read as follows:
   k.  Carpentry repair and installation.
    Sec. 21.  Section 423.3, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  16A.  a.  The sales price from the sale of a grain bin, including material or replacement parts used to construct or repair a grain bin.
   b.  For purposes of this subsection, “grain bin” means property that is vented and covered with corrugated metal or similar material, and that is primarily used to hold loose grain for drying or storage.
    Sec. 22.  Section 423.3, subsection 47, paragraph c, subparagraph (3), Code 2019, is amended by striking the subparagraph and inserting in lieu thereof the following:
   (3)  The following within the scope of section 427A.1, subsection 1, paragraphs “h” and “i”:
   (a)  Computers.
   (b)  Machinery.
   (c)  Equipment, including pollution control equipment.
   (d)  Replacement parts.
   (e)  Supplies.
   (f)  Materials used to construct or self-construct the following:
   (i)  Computers.
   (ii)  Machinery.
   (iii)  Equipment, including pollution control equipment.
   (iv)  Replacement parts.
   (v)  Supplies.
    Sec. 23.  Section 423.3, subsection 104, paragraph a, Code 2019, is amended to read as follows:
   a.  The sales price of specified digital products and of prewritten computer software sold, and of enumerated services described in section 423.2, subsection 1, paragraph “a”, subparagraph (5), or section 423.2, subsection 6, paragraphs “bq”, “br”, “bs”, and “bu” furnished, to a commercial enterprise for use exclusively by the commercial enterprise. The use of prewritten computer software, a specified digital product, or service fails to qualify as a use exclusively by the commercial enterprise if its use for noncommercial purposes is more than de minimis.
    Sec. 24.  Section 423.14A, subsection 3, paragraph b, Code 2019, is amended by striking the paragraph.
    Sec. 25.  Section 423.14A, subsection 3, paragraph d, subparagraph (1), Code 2019, is amended to read as follows:
   (1)  A marketplace facilitator that makes or facilitates Iowa sales on its own behalf or for one or more marketplace sellers equal to or exceeding one hundred thousand dollars, or in two hundred or more separate transactions, for an immediately preceding calendar year or a current calendar year.
    Sec. 26.  Section 423.14A, subsection 3, paragraph e, subparagraph (1), unnumbered paragraph 1, Code 2019, is amended to read as follows:
   A referrer if, for any immediately preceding calendar year or a current calendar year, one hundred thousand dollars or more in Iowa sales or two hundred or more separate Iowa sales transactions result from referrals from a platform of the referrer. A referrer is not required to collect and remit sales and use tax pursuant to this paragraph if the referrer does all of the following:
    Sec. 27.  Section 423.14A, subsection 3, paragraph e, subparagraph (1), subparagraph division (c), unnumbered paragraph 1, Code 2019, is amended to read as follows:
   The referrer provides the department with monthly annual reports in an electronic format and in the manner prescribed by the department, which monthly annual reports contain all of the following:
    Sec. 28.  Section 423.14A, subsection 3, paragraph e, Code 2019, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (5)  This paragraph is subject to implementation by the department by rule and shall not require a referrer to collect tax or comply with the notice and reporting requirements and other provisions of this paragraph unless and until such administrative rules take effect. 
    Sec. 29.  Section 423.48, subsection 2, paragraph c, Code 2019, is amended by striking the paragraph.
    Sec. 30.  TAXATION AND EXEMPTION OF COMPUTERS TASK FORCE.  A taxation and exemption of computers task force is created. The department of revenue shall initiate and coordinate the task force and provide staff assistance. It is the intent of the general assembly that the task force include representatives of appropriate stakeholders identified by the director of the department of revenue. The director of revenue or the director’s designee shall serve as chairperson of the task force.
   The task force shall be charged with reviewing the definition of “computer” as used throughout the portions of the Iowa Code and the Iowa Administrative Code administered by the department of revenue including the exemption for computers provided in section 423.3, subsection 47, paragraph “a”, subparagraph (4). If the task force recommends modifications to the current definition of “computer” including the exemption for computers provided in section 423.3, subsection 47, paragraph “a”, subparagraph (4), the department of revenue shall provide any recommendations to the general assembly by January 1, 2020.
    Sec. 31.  REFUNDS.  Refunds of taxes, interest, or penalties that arise from claims resulting from the enactment of section 423.3, subsection 16A, for sales occurring between January 1, 2015, and the effective date of the enactment of section 423.3, subsection 16A, shall be limited to twenty-five thousand dollars in the aggregate and shall not be allowed unless refund claims are filed prior to October 1, 2019, notwithstanding any other law to the contrary. If the amount of claims totals more than twenty-five thousand dollars in the aggregate, the department of revenue shall prorate the twenty-five thousand dollars among all claimants in relation to the amounts of the claimants’ valid claims.
    Sec. 32.  EFFECTIVE DATE.  The following, being deemed of immediate importance, take effect upon enactment:
   1.  The section of this division of this Act enacting section 423.3, subsection 16A.
   2.  The section of this division of this Act amending section 423.3, subsection 47, paragraph “c”, subparagraph (3).
   3.  The section of this division of this Act relating to refunds that arise from claims resulting from the enactment of section 423.3, subsection 16A.
    Sec. 33.  RETROACTIVE APPLICABILITY.  The following applies retroactively to January 1, 2016, for tax years beginning on or after that date:
   The section of this division of this Act amending section 423.3, subsection 47, paragraph “c”, subparagraph (3).
    Sec. 34.  RETROACTIVE APPLICABILITY.  The following applies retroactively to tax years beginning on or after January 1, 2015:
   The section of this division of this Act enacting section 423.3, subsection 16A.
DIVISION IV
AUTOMOBILE RENTAL EXCISE TAX

    Sec. 35.  Section 423.14A, subsection 1, paragraph b, subparagraph (3), Code 2019, is amended to read as follows:
   (3)  A “rental platform”, as defined in section 423C.2, that meets the requirements described in person who is not required to collect and remit automobile rental excise tax pursuant to section 423C.3, subsection 3, paragraph “c”, subparagraph (2), shall not be considered a “marketplace facilitator” with respect to any sale of a transportation service under section 423.2, subsection 6, paragraph “bf”, or section 423.5, subsection 1, paragraph “e”, consisting of the rental of vehicles subject to registration which are registered for a gross weight of thirteen tons or less for a period of sixty days or less.
    Sec. 36.  Section 423C.2, subsection 3, paragraphs a and b, Code 2019, are amended to read as follows:
   a.  A person or any affiliate of a person that owns or controls an automobile and makes the automobile available for rent through the person or any affiliate, or through a rental platform or rental facilitator any other person required to collect sales or use tax under chapter 423.
   b.  A person or any affiliate of a person who possesses or acquires a right or interest in any automobile with an intent to rent the automobile to another person, or through the person or any affiliate, or through a rental platform or a rental facilitator any other person required to collect sales or use tax under chapter 423.
    Sec. 37.  Section 423C.2, subsection 6, Code 2019, is amended to read as follows:
   6.  “Facilitation fee” means any consideration, by whatever name called, that a rental facilitator or a rental platform person charges to a user for facilitating the user’s rental of an automobile. “Facilitation fee” does not include any commission an automobile provider pays to a rental facilitator or a rental platform person for facilitating the rental of an automobile.
    Sec. 38.  Section 423C.2, subsections 9 and 10, Code 2019, are amended by striking the subsections.
    Sec. 39.  Section 423C.2, subsection 11, Code 2019, is amended to read as follows:
   11.  “Rental price” means all consideration charged for the renting and facilitation of renting of an automobile before taxes, including but not limited to facilitation fees, reservation fees, services fees, nonrefundable deposits, and any other direct or indirect charge made or consideration provided in connection with the renting or facilitation of renting of an automobile the same as “sales price” as defined in section 423.1, which term includes but is not limited to facilitation fees, reservation fees, services fees, nonrefundable deposits, and any other direct or indirect charge made or consideration provided in connection with the renting or facilitation of renting an automobile.
    Sec. 40.  Section 423C.3, Code 2019, is amended to read as follows:
   423C.3  Tax on rental of automobiles —— collection and remittance of tax.
   1.  For purposes of this section:
   a.  “Discount rental charge” means the amount an automobile provider charges to a rental facilitator for the rental of an automobile, excluding any applicable tax.
   b.  “Travel package” means an automobile rental bundled with one or more separate components such as lodging, air transportation, or similar items and charged for a single retail price.
   2.  1.  A tax of five percent is imposed upon the rental price of an automobile if the rental transaction is subject to the sales and services tax under chapter 423, subchapter II, or the use tax under chapter 423, subchapter III. The tax shall not be imposed on any rental transaction not taxable under the state sales and services tax, as provided in section 423.3, or the state use tax, as provided in section 423.6, on automobile rental receipts.
   3.  2.  This subsection shall govern the collection and remittance of the tax imposed under subsection 2 The tax imposed under subsection 1 shall be collected and remitted to the department by all persons required to collect state sales and use tax on the rental transaction under chapter 423.
   a.  Unless otherwise provided in this subsection, the automobile provider shall collect the tax by adding the tax to the rental price of the automobile and the tax, when collected, shall be stated as a distinct item separate and apart from the rental price of the automobile and the sales and services tax imposed under chapter 423, subchapter II, or the use tax imposed under chapter 423, subchapter III.
   b.  If a transaction for the rental of an automobile involves a rental facilitator, all of the following shall occur in the order prescribed:
   (1)  The rental facilitator shall collect the tax on any rental price that the user pays to the rental facilitator in the same manner as an automobile provider under paragraph “a”.
   (2)  (a)  Unless otherwise required by rule or order of the department, the rental facilitator shall remit to the automobile provider that portion of the tax collected on the rental price that represents the discount rental charge.
   (b)  No assessment shall be made against a rental facilitator for tax due on a discount rental charge if the rental facilitator collected the tax and remitted it to an automobile provider that has a valid tax permit required under this chapter or under chapter 423. This subparagraph division shall not apply if the rental facilitator and automobile provider are affiliates, or if the department requires the rental facilitator to remit taxes collected on that portion of the sales price that represents the discount rental charge directly to the department.
   (3)  The rental facilitator shall remit any remaining tax it collected to the department.
   (4)  (a)  The automobile provider shall collect and remit to the department any taxes the rental facilitator remitted to the automobile provider, and shall collect and remit to the department any taxes due on any amount of rental price the user paid to the automobile provider.
   (b)  No assessment shall be made against an automobile provider for any tax due on a discount rental charge that was not remitted to the automobile provider by a rental facilitator. This subparagraph division shall not apply if the automobile provider and the rental facilitator are affiliates.
   (5)  Notwithstanding any other provision of this paragraph to the contrary, if a rental facilitator and its affiliates facilitate total rentals under this chapter and chapter 423A that are equal to or less than an aggregate amount of rental price and sales price of ten thousand dollars for an immediately preceding calendar year or a current calendar year, or in ten or fewer separate transactions for an immediately preceding calendar year or a current calendar year, the rental facilitator shall not be required to collect tax on the amount of sales price that represents the rental facilitator’s facilitation fee.
   c.  (1)  If a transaction for the rental of an automobile involves a rental platform, other than a rental platform described in subparagraph (2), the rental platform shall collect and remit the tax imposed under this chapter in the same manner as an automobile provider under paragraph “a”.
   (2)  3.  A rental platform person is not required to collect and remit the tax imposed under this chapter in the same manner as an automobile provider under paragraph “a” if the rental platform person meets all of the following requirements:
   a.  The person or any affiliate of the person is not an automobile provider.
   b.  The person or any affiliate of the person facilitates the renting of an automobile by doing all of the following:
   (1)  The person owns, operates, or controls an automobile rental marketplace that allows an automobile provider who is not an affiliate of the person to offer or list an automobile for rent on the marketplace. For purposes of this paragraph, it is immaterial whether or not the automobile provider has a tax permit under this chapter or chapter 423 or whether the automobile is owned by a natural person or by a business entity.
   (2)  The person or affiliate of the person collects or processes the rental price charged to the user.
   (a)  c.  The only sales the rental platform person and its affiliates of the person facilitate that are subject to tax under chapter 423 are sales of a transportation service under section 423.2, subsection 6, paragraph “bf”, or section 423.5, subsection 1, paragraph “e”, consisting of the rental of vehicles subject to registration which are registered for a gross weight of thirteen tons or less for a period of sixty days or less.
   (b)  d.  The rental platform person operates a peer-to-peer automobile sharing marketplace.
   (3)  4.  For any rental transaction for which the rental platform a person is required to or elects to collect and remit the tax under this chapter, the rental platform person shall also be liable for the collection and remittance of any sales or use tax due on that transaction under section 423.2, subsection 6, paragraph “bf”, or section 423.5, subsection 1, paragraph “e”, notwithstanding any other provision to the contrary in chapter 423.
   (4)  5.  For any rental transaction for which the rental platform person is not required to collect and remit the tax under this chapter as provided under subparagraph (2) subsection 3, the automobile provider shall be solely liable for any amount of uncollected or unremitted tax under this chapter and chapter 423.
DIVISION V
TELEPHONE COMPANY PROPERTY

    Sec. 41.  Section 476.1D, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  10.  a.  The board, at the request of a long distance telephone company, shall classify such company as a competitive long distance telephone company if more than half of the company’s revenues from its Iowa intrastate telecommunications services and facilities are received from services and facilities that the board has determined to be subject to effective competition, or if more than half of the company’s revenues from its Iowa intrastate telecommunications services and facilities are received from intralata interexchange services and facilities. For purposes of this subsection, “intralata interexchange services” means those interexchange services that originate and terminate within the same local access transport area.
   b.  The board shall promptly notify the director of revenue that a long distance telephone company has been classified as a competitive long distance telephone company. Upon such notification by the board, the director of revenue shall assess the property of such competitive long distance telephone company, which property is first assessed for taxation in this state on or after January 1, 1996, in the same manner as all other property assessed as commercial property by the local assessor under chapters 427, 427A, 427B, 428, and 441. As used in this section, “long distance telephone company” means an entity that provides telephone service and facilities between local exchanges, but does not include a cellular service provider or a local exchange utility holding a certificate issued under section 476.29, subsection 12.
    Sec. 42.  Section 476.1D, subsection 10, as enacted in this division of this Act, is amended by striking the subsection.
    Sec. 43.  EFFECTIVE DATE.  The following, being deemed of immediate importance, takes effect upon enactment:
   The section of this division of this Act enacting section 476.1D, subsection 10.
    Sec. 44.  RETROACTIVE APPLICABILITY.  The following applies retroactively to July 1, 2018, for assessment years beginning on or after that date:
   The section of this division of this Act enacting section 476.1D, subsection 10.
    Sec. 45.  EFFECTIVE DATE.  The following takes effect July 1, 2021:
   The section of this division of this Act striking section 476.1D, subsection 10.
    Sec. 46.  APPLICABILITY.  The following applies to assessment years beginning on or after January 1, 2022:
   The section of this division of this Act striking section 476.1D, subsection 10.
DIVISION VI
CHILD AND DEPENDENT CARE CREDIT AND EARLY CHILDHOOD DEVELOPMENT CREDIT

    Sec. 47.  Section 422.12C, subsection 1, Code 2019, is amended to read as follows:
   1.  The taxes imposed under this division, less the amounts of nonrefundable credits allowed under this division, shall be reduced by a child and dependent care credit equal to the following percentages of the federal child and dependent care credit provided in section 21 of the Internal Revenue Code, without regard to whether or not the federal credit was limited by the taxpayer’s federal tax liability:
   a.  For a taxpayer with net income of less than ten twelve thousand seven hundred fifty dollars, seventy-five percent.
   b.  For a taxpayer with net income of ten twelve thousand seven hundred fifty dollars or more but less than twenty twenty-five thousand four hundred ninety dollars, sixty-five percent.
   c.  For a taxpayer with net income of twenty twenty-five thousand four hundred ninety dollars or more but less than twenty-five thirty-one thousand eight hundred sixty dollars, fifty-five percent.
   d.  For a taxpayer with net income of twenty-five thirty-one thousand eight hundred sixty dollars or more but less than thirty-five forty-four thousand six hundred ten dollars, fifty percent.
   e.  For a taxpayer with net income of thirty-five forty-four thousand six hundred ten dollars or more but less than forty fifty thousand nine hundred eighty dollars, forty percent.
   f.  For a taxpayer with net income of forty fifty thousand nine hundred eighty dollars or more but less than forty-five fifty-seven thousand three hundred sixty dollars, thirty percent.
   g.  For a taxpayer with net income of forty-five fifty-seven thousand three hundred sixty dollars or more, zero percent.
    Sec. 48.  Section 422.12C, subsection 2, paragraph a, Code 2019, is amended to read as follows:
   a.  The taxes imposed under this division, less the amounts of nonrefundable credits allowed under this division, may be reduced by an early childhood development tax credit equal to twenty-five percent of the first one thousand dollars which the taxpayer has paid to others for each dependent, as defined in the Internal Revenue Code, ages three through five for early childhood development expenses. In determining the amount of early childhood development expenses for the tax year beginning in the 2006 calendar year only, such expenses paid during November and December of the previous tax year shall be considered paid in the tax year for which the tax credit is claimed. This credit is available to a taxpayer whose net income is less than forty-five fifty-seven thousand three hundred sixty dollars. If the early childhood development tax credit is claimed for a tax year, the taxpayer and the taxpayer’s spouse shall not claim the child and dependent care credit under subsection 1.
    Sec. 49.  Section 422.12C, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  a.  Upon determination of the latest cumulative inflation factor, the director shall multiply each net income level set forth in subsection 1 or 2 by this cumulative inflation factor, shall round off the resulting product to the nearest one dollar, and shall incorporate the result into the net income levels in subsection 1 or 2 for each tax year beginning on or after January 1, 2019.
   b.  For purposes of this subsection, “cumulative inflation factor” means the product of the annual inflation factor for the 2019 calendar year and all annual inflation factors for subsequent calendar years as determined by section 422.4, subsection 1, paragraph “a”. The cumulative inflation factor applies to all tax years beginning on or after January 1 of the calendar year for which the latest annual inflation factor has been determined. Notwithstanding any other provision, the annual inflation factor for the 2019 calendar year is one hundred percent.
    Sec. 50.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 51.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to tax years beginning on or after January 1, 2019.
DIVISION VII
APPORTIONMENT OF CERTAIN BUSINESS INCOME OF AN AIRLINE

    Sec. 52.  Section 422.33, subsection 2, paragraph a, subparagraph (2), Code 2019, is amended by adding the following new subparagraph divisions:
   NEW SUBPARAGRAPH DIVISION.  (0f)  Notwithstanding subparagraph division (c), where income is derived by an airline from transportation operations, the part attributable to business within the state shall be in the proportion that the miles of the airline traveled in this state bears to the total miles of such airline traveled everywhere.
   NEW SUBPARAGRAPH DIVISION.  (00f)  (i)  Notwithstanding subparagraph division (c), where income is derived by a qualified air freight forwarder from transportation operations through an affiliated airline, such income shall be apportioned as follows:
   (A)  For tax years beginning during the 2020 calendar year, ninety percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining ten percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (B)  For tax years beginning during the 2021 calendar year, eighty percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining twenty percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (C)  For tax years beginning during the 2022 calendar year, seventy percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining thirty percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (D)  For tax years beginning during the 2023 calendar year, sixty percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining forty percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (E)  For tax years beginning during the 2024 calendar year, fifty percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining fifty percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (F)  For tax years beginning during the 2025 calendar year, forty percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining sixty percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere. 
   (G)  For tax years beginning during the 2026 calendar year, thirty percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining seventy percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (H)  For tax years beginning during the 2027 calendar year, twenty percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining eighty percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (I)  For tax years beginning during the 2028 calendar year, ten percent of such income shall be equitably apportioned as provided in subparagraph division (c), and of the remaining ninety percent of such income, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (J)  For tax years beginning on or after January 1, 2029, the part attributable to business within the state shall be in the proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere.
   (ii)  For purposes of this subparagraph division (00f), “qualified air freight forwarder” means a taxpayer who meets all of the following requirements:
   (A)  The taxpayer is primarily engaged in the facilitation of the transportation of property by air.
   (B)  The taxpayer does not itself operate aircraft.
   (C)  The taxpayer is in the same affiliated group as an airline.
    Sec. 53.  Section 422.33, subsection 2, paragraph a, subparagraph (2), subparagraph division (g), Code 2019, is amended to read as follows:
   (g)  Where income consists of more than one class of income as provided in subparagraph divisions (a) through (e) (00f) of this subparagraph, it shall be reasonably apportioned by the business activity ratio provided in rules adopted by the director.
    Sec. 54.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2020.
DIVISION VIII
BURIAL TRUSTS

    Sec. 55.  Section 422.7, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  6.  Subtract, to the extent included, income from interest and earnings received from a burial trust fund as defined in section 523A.102.
DIVISION IX
ADOPTION TAX CREDIT

    Sec. 56.  Section 422.12A, subsection 2, Code 2019, is amended to read as follows:
   2.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by an adoption tax credit equal to the amount of qualified adoption expenses paid or incurred by the taxpayer during the tax year in connection with the adoption of a child by the taxpayer, not to exceed five thousand dollars per adoption.
    Sec. 57.  Section 422.12A, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  3A.  The credit under this section with respect to any qualified adoption expense shall be allowed during a tax year as follows:
   a.  For any qualified adoption expense paid or incurred prior to or during the tax year in which the adoption becomes final, the tax year in which the adoption becomes final. 
   b.  For any qualified adoption expense paid or incurred after the tax year in which the adoption becomes final, the tax year in which an adoption expense is paid or incurred. 
    Sec. 58.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2019, for tax years beginning on or after that date.
DIVISION X
TARGETED JOBS WITHHOLDING CREDIT

    Sec. 59.  Section 403.19A, subsection 1, Code 2019, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0b.  “Created job” means a new and permanent full-time equivalent position added to the payroll of a business in excess of the base employment level at the time of application for withholding credits under this section. 
    Sec. 60.  Section 403.19A, subsection 1, paragraph c, Code 2019, is amended to read as follows:
   c.  “Employer” means a business creating or retaining targeted jobs in a pilot project city pursuant to a withholding agreement.
    Sec. 61.  Section 403.19A, subsection 1, paragraph f, Code 2019, is amended by striking the paragraph.
    Sec. 62.  Section 403.19A, subsection 1, paragraph g, Code 2019, is amended to read as follows:
   g.  “Targeted job” means a job in a business which is or will be located in a pilot project city that pays a wage at least equal to the countywide average wage. “Targeted job” includes new or retained created jobs from Iowa business expansions or retentions within the city limits of the pilot project city and those jobs resulting from established out-of-state businesses, as defined by the economic development authority, moving to or expanding in Iowa.
    Sec. 63.  Section 403.19A, subsection 3, paragraph c, subparagraphs (1) and (2), Code 2019, are amended to read as follows:
   (1)  The pilot project city and the economic development authority shall enter into a withholding agreement with each employer concerning the targeted jobs withholding credit. The withholding agreement shall provide for the total amount of withholding credits awarded, as negotiated by the economic development authority, the pilot project city, and the employer. An agreement shall not provide for an amount of withholding credits that exceeds the amount of the qualifying investment made in the project. An agreement shall not be entered into with a business currently located in this state unless the business either creates or retains ten jobs or makes a qualifying investment of at least five hundred thousand dollars within the pilot project city. The withholding agreement may have a term of years negotiated by the economic development authority, the pilot project city, and the employer, of up to ten years. A withholding agreement specifying a term of years or a total amount of withholding credits shall terminate upon the expiration of the term of years specified in the agreement or upon the award of the total amount of withholding credits specified in the agreement, whichever occurs first. An employer shall not be obligated to enter into a withholding agreement. An agreement shall not be entered into with an employer not already located in a pilot project city when another Iowa community is competing for the same project and both the pilot project city and the other Iowa community are seeking assistance from the authority.
   (2)  The pilot project city and the economic development authority shall not enter into a withholding agreement after June 30, 2019 2023.
    Sec. 64.  Section 403.19A, subsection 3, paragraphs f and g, Code 2019, are amended to read as follows:
   f.  Pursuant to rules adopted by the economic development authority, the pilot project city shall provide on an annual basis to the economic development authority information documenting the compliance of each employer with each requirement of the withholding agreement, including but not limited to the number of jobs created or retained and the amount of investment made by the employer. The economic development authority shall, in response to receiving such information from the pilot project city, assess the level of compliance by each employer and provide to the pilot project city recommendations for either maintaining employer compliance with the withholding agreement or terminating the agreement for noncompliance under paragraph “g”. The economic development authority shall also provide each such assessment and recommendation report to the department of revenue.
   g.  If the economic development authority, following an eighteen-month performance period beginning on the date the withholding agreement is approved by the authority board, determines that the employer ceases to meet the requirements of the withholding agreement relating to retaining jobs, if applicable, the agreement shall be terminated by the economic development authority and the pilot project city and any withholding credits for the benefit of the employer shall cease. If the economic development authority, following a three-year performance period beginning on the date the withholding agreement is approved by the authority board, determines that the employer has not or is incapable of meeting the requirements of the withholding agreement relating to creating jobs, if applicable, or the requirement of the withholding agreement relating to the qualifying investment prior to the end of the withholding agreement, the economic development authority may reduce the future benefits to the employer under the agreement or negotiate with the other parties to terminate the agreement early. Notice shall be provided promptly by the pilot project city to the department of revenue following termination of a withholding agreement.
    Sec. 65.  Section 403.19A, subsection 3, paragraph l, subparagraph (1), Code 2019, is amended to read as follows:
   (1)  The total number of targeted jobs and a breakdown as to those that are Iowa business expansions or retentions within the city limits of the pilot project city and those that are jobs resulting from established out-of-state businesses moving to or expanding in Iowa.
    Sec. 66.  APPLICABILITY.  The amendments to section 403.19A in this division of this Act do not apply to a withholding agreement entered into prior to the effective date of this division of this Act.
DIVISION XI
SCHOOL TUITION ORGANIZATION TAX CREDITS

    Sec. 67.  Section 422.11S, subsection 8, paragraph a, subparagraph (2), Code 2019, 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, but before January 1, 2019, twelve million dollars, and for tax years beginning on or after January 1, 2019, but before January 1, 2020, thirteen million dollars, and for tax years beginning on or after January 1, 2020, seventeen million dollars.
    Sec. 68.  CONTINGENT CODE EDITOR DIRECTIVE.  The Code editor is directed to harmonize the section of this division of this Act amending section 422.11S with the other division of this Act amending section 422.11S, if enacted, by changing tax year to calendar year where appropriate and to make other related changes, if necessary, to effectuate such changes. 
DIVISION XII
DEDUCTING RESIDUAL FERTILIZER

    Sec. 69.  Section 422.7, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  60.  a.  For purposes of this subsection, “residual fertilizer supply” means an asset or an improvement to land that meets all of the following requirements:
   (1)  The asset or improvement consists of residual fertilizer or excess available nutrients that are incorporated into and inseparable from land. 
   (2)  The asset or improvement is sold or exchanged in conjunction with the sale or exchange of land upon which the asset or improvement is located.
   (3)  Following the sale or exchange, an expense deduction, amortization deduction, or depreciation deduction is allowable for federal tax purposes under the Internal Revenue Code with respect to the asset or improvement in the hands of a taxpayer other than the seller.
   b.  For any sale or exchange of a residual fertilizer supply executed on or after July 1, 2019, an expense deduction, depreciation deduction, or amortization deduction with respect to the residual fertilizer supply shall not be allowed under this division unless all of the following requirements are satisfied: 
   (1)  The expense deduction, depreciation deduction, or amortization deduction is allowable to the taxpayer under the Internal Revenue Code. 
   (2)  The residual fertilizer supply is part of a signed, written agreement between the seller and buyer that identifies the residual fertilizer supply and the consideration paid by the buyer for the residual fertilizer supply.
   c.  If a taxpayer has taken a deduction in computing federal adjusted gross income that is disallowed under paragraph “b”, the taxpayer shall make the following adjustments:
   (1)  Add back the total amount of the deduction in computing net income for state tax purposes.
   (2)  Reallocate the amount of the deduction to the taxpayer’s basis, if any, in the land upon which the residual fertilizer supply is located. 
   (3)  Any other adjustments to gains, losses, deductions, or tax basis of assets pursuant to rules adopted by the director.
    Sec. 70.  Section 422.35, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  26.  a.  For purposes of this subsection, “residual fertilizer supply” means an asset or an improvement to land that meets all of the following requirements:
   (1)  The asset or improvement consists of residual fertilizer or excess available nutrients that are incorporated into and inseparable from land. 
   (2)  The asset or improvement is sold or exchanged in conjunction with the sale or exchange of land upon which the asset or improvement is located.
   (3)  Following the sale or exchange, an expense deduction, amortization deduction, or depreciation deduction is allowable for federal tax purposes under the Internal Revenue Code with respect to the asset or improvement in the hands of a taxpayer other than the seller. 
   b.  For any sale or exchange of a residual fertilizer supply executed on or after July 1, 2019, an expense deduction, depreciation deduction, or amortization deduction with respect to the residual fertilizer supply shall not be allowed under this division unless all of the following requirements are satisfied: 
   (1)  The expense deduction, depreciation deduction, or amortization deduction is allowable to the taxpayer under the Internal Revenue Code. 
   (2)  The residual fertilizer supply is part of a signed, written agreement between the seller and buyer that identifies the residual fertilizer supply and the consideration paid by the buyer for the residual fertilizer supply. 
   c.  If a taxpayer has taken a deduction in computing federal taxable income that is disallowed under paragraph “b”, the taxpayer shall make the following adjustments:
   (1)  Add back the total amount of the deduction in computing net income for state tax purposes.
   (2)  Reallocate the amount of the deduction to the taxpayer’s basis, if any, in the land upon which the residual fertilizer supply is located. 
   (3)  Any other adjustments to gains, losses, deductions, or tax basis of assets pursuant to rules adopted by the director.
DIVISION XIII
FRANCHISE TAX —— ALTERNATIVE MINIMUM TAX (AMT) REPEAL

    Sec. 71.  Section 422.60, subsection 2, Code 2019, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  This subsection is repealed January 1, 2021, for tax years beginning on or after that date.
    Sec. 72.  Section 422.60, subsection 3, Code 2019, is amended to read as follows:
   3.  a.  (1)  There For tax years beginning before January 1, 2022, there is allowed as a credit against the tax determined in section 422.63 for a tax year an amount equal to the minimum tax credit for that tax year.
   (2)  The minimum tax credit for a tax year is the excess, if any, of the net minimum tax imposed for all prior tax years beginning on or after January 1, 1987, but before January 1, 2021, over the amount allowable as a credit under this subsection for those prior tax years.
   b.  (1)  The allowable credit under paragraph “a” for a tax year beginning before January 1, 2021, shall not exceed the excess, if any, of the tax determined in section 422.63 over the state alternative minimum tax as determined in subsection 2.  The allowable credit under paragraph “a” for a tax year beginning in the 2021 calendar year shall not exceed the tax determined in section 422.63.
   (2)  The net minimum tax for a tax year is the excess, if any, of the tax determined in subsection 2 for the tax year over the tax determined in section 422.63 for the tax year.
   c.  This subsection is repealed January 1, 2022, for tax years beginning on or after that date.
DIVISION XIV
GROSS GLOBAL INCOME LOW-TAXED INCOME

    Sec. 73.  Section 422.35, subsection 21, Code 2019, is amended to read as follows:
   21.  Subtract the amount of net foreign dividend income, including based upon the percentage of ownership as set forth in section 243 of the Internal Revenue Code. Net foreign dividend income includes subpart F income as defined in section 952 of the Internal Revenue Code, based upon the percentage of ownership as set forth in section 243 of the Internal Revenue Code and includes global intangible low-taxed income as defined in section 951A of the Internal Revenue Code after applying the deduction allowed for global intangible low-taxed income allowed under section 250(a)(1)(B) of the Internal Revenue Code.
    Sec. 74.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2019, for tax years beginning on or after that date.
DIVISION XV
FEDERAL RESEARCH CREDIT —— INTERNAL REVENUE CODE

    Sec. 75.  Section 15.335, subsection 4, paragraph a, Code 2019, is amended to read as follows:
   a.  In lieu of the credit amount computed in subsection 2, an eligible business may elect to compute the credit amount for qualified research expenses incurred in this state in a manner consistent with the alternative simplified credit described in section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The taxpayer may make this election regardless of the method used for the taxpayer’s federal income tax. The election made under this paragraph is for the tax year and the taxpayer may use another or the same method for any subsequent year.
    Sec. 76.  Section 15.335, subsection 4, paragraph b, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   For purposes of the alternate credit computation method in paragraph “a”, the credit percentages applicable to qualified research expenses described in section 41(c)(5)(A) 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the Internal Revenue Code are as follows:
    Sec. 77.  Section 422.10, subsection 1, paragraphs c and d, Code 2019, are amended to read as follows:
   c.  In lieu of the credit amount computed in paragraph “b”, subparagraph (1), subparagraph division (a), a taxpayer may elect to compute the credit amount for qualified research expenses incurred in this state in a manner consistent with the alternative simplified credit described in section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The taxpayer may make this election regardless of the method used for the taxpayer’s federal income tax. The election made under this paragraph is for the tax year and the taxpayer may use another or the same method for any subsequent year.
   d.  For purposes of the alternate credit computation method in paragraph “c”, the credit percentages applicable to qualified research expenses described in section 41(c)(5)(A) 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the Internal Revenue Code are four and fifty-five hundredths percent and one and ninety-five hundredths percent, respectively.
    Sec. 78.  Section 422.33, subsection 5, paragraphs c and d, Code 2019, are amended to read as follows:
   c.  In lieu of the credit amount computed in paragraph “a”, subparagraph (1), a corporation may elect to compute the credit amount for qualified research expenses incurred in this state in a manner consistent with the alternative simplified credit described in section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The taxpayer may make this election regardless of the method used for the taxpayer’s federal income tax. The election made under this paragraph is for the tax year and the taxpayer may use another or the same method for any subsequent year.
   d.  For purposes of the alternate credit computation method in paragraph “c”, the credit percentages applicable to qualified research expenses described in section 41(c)(5)(A) 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the Internal Revenue Code are four and fifty-five hundredths percent and one and ninety-five hundredths percent, respectively.
    Sec. 79.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2019, for tax years beginning on or after that date.
DIVISION XVI
RESEARCH ACTIVITIES TAX CREDIT

    Sec. 80.  Section 422.10, subsection 1, paragraph a, subparagraph (1), subparagraph division (a), Code 2019, is amended to read as follows:
   (a)  The business is engaged in the manufacturing, life sciences, agriscience, agricultural animal production, software engineering, or aviation and aerospace industry.
    Sec. 81.  Section 422.10, subsection 1, paragraph a, subparagraph (1), subparagraph division (b), unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Persons that shall not be considered to be engaged in the manufacturing, life sciences, agriscience, agricultural animal production, software engineering, or aviation and aerospace industry, and thus are not eligible for the credit, include but are not limited to all of the following:
    Sec. 82.  Section 422.10, subsection 3, Code 2019, is amended by adding the following new paragraphs:
   NEW PARAGRAPH.  c.  For purposes of this section, “agricultural animal” means an animal belonging to the bovine, caprine, equine, ovine, or porcine species; ostriches, rheas, or emus; farm deer as defined in section 170.1; or poultry.
   NEW PARAGRAPH.  d.  For purposes of this section, “agricultural animal production” means activities related to producing or maintaining an agricultural animal.
    Sec. 83.  Section 422.33, subsection 5, paragraph e, subparagraph (1), subparagraph division (a), Code 2019, is amended to read as follows:
   (a)  The business is engaged in the manufacturing, life sciences, agriscience, agricultural animal production, software engineering, or aviation and aerospace industry.
    Sec. 84.  Section 422.33, subsection 5, paragraph e, subparagraph (1), subparagraph division (b), unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Persons that shall not be considered to be engaged in the manufacturing, life sciences, agriscience, agricultural animal production, software engineering, or aviation and aerospace industry, and thus are not eligible for the credit, include but are not limited to all of the following:
    Sec. 85.  Section 422.33, subsection 5, Code 2019, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0g.  As used in this subsection: 
   (1)  “Agricultural animal” means an animal belonging to the bovine, caprine, equine, ovine, or porcine species; ostriches, rheas, or emus; farm deer as defined in section 170.1; or poultry.
   (2)  “Agricultural animal production” means activities related to producing or maintaining an agricultural animal.
    Sec. 86.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 87.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2017, for tax years beginning on or after that date.
DIVISION XVII
NEW JOBS CREDIT —— FRANCHISE TAXES —— MONEYS AND CREDITS TAXES

    Sec. 88.  Section 422.60, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.  The taxes imposed under this division shall be reduced by a new jobs tax credit. An industry which has entered into an agreement under chapter 260E and which has increased its base employment level by at least ten percent within the time set in the agreement or, in the case of an industry without a base employment level, adds new jobs within the time set in the agreement is entitled to this new jobs tax credit for the tax year selected by the industry. In determining if the industry has increased its base employment level by ten percent or added new jobs, only those new jobs directly resulting from the project covered by the agreement and those directly related to those new jobs shall be counted. The amount of this credit is equal to the product of six percent of the taxable wages upon which an employer is required to contribute to the state unemployment compensation fund, as defined in section 96.19, subsection 37, times the number of new jobs existing in the tax year that directly result from the project covered by the agreement or new jobs that directly result from those new jobs. The tax year chosen by the industry shall either begin or end during the period beginning with the date of the agreement and ending with the date by which the project is to be completed under the agreement. Any credit in excess of the tax liability for the tax year may be credited to the tax liability for the following ten tax years or until depleted in less than the ten years. For purposes of this subsection, “agreement”, “industry”, “new job”, and “project” mean the same as defined in section 260E.2 and “base employment level” means the number of full-time jobs an industry employs at the site which is covered by an agreement under chapter 260E on the date of that agreement.
    Sec. 89.  Section 533.329, subsection 2, Code 2019, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  l.  The moneys and credits tax imposed under this section shall be reduced by a new jobs tax credit. An industry which has entered into an agreement under chapter 260E and which has increased its base employment level by at least ten percent within the time set in the agreement or, in the case of an industry without a base employment level, adds new jobs within the time set in the agreement is entitled to this new jobs tax credit for the tax year selected by the industry. In determining if the industry has increased its base employment level by ten percent or added new jobs, only those new jobs directly resulting from the project covered by the agreement and those directly related to those new jobs shall be counted. The amount of this credit is equal to the product of six percent of the taxable wages upon which an employer is required to contribute to the state unemployment compensation fund, as defined in section 96.19, subsection 37, times the number of new jobs existing in the tax year that directly result from the project covered by the agreement or new jobs that directly result from those new jobs. The tax year chosen by the industry shall either begin or end during the period beginning with the date of the agreement and ending with the date by which the project is to be completed under the agreement. Any credit in excess of the tax liability for the tax year may be credited to the moneys and credits tax liability for the following ten tax years or until depleted in less than the ten years. For purposes of this paragraph, “agreement”, “industry”, “new job”, and “project” mean the same as defined in section 260E.2 and “base employment level” means the number of full-time jobs an industry employs at the site which is covered by an agreement under chapter 260E on the date of that agreement.
DIVISION XVIII
UTILITY REPLACEMENT TASK FORCE

    Sec. 90.  Section 437A.15, subsection 7, paragraph b, Code 2019, is amended to read as follows:
   b.  The task force shall study the effects of the replacement taxes under this chapter and chapter 437B on local taxing authorities, local taxing districts, consumers, and taxpayers through January 1, 2019 2029. If the task force recommends modifications to the replacement tax that will further the purposes of tax neutrality for local taxing authorities, local taxing districts, taxpayers, and consumers, consistent with the stated purposes of this chapter, the department of management shall transmit those recommendations to the general assembly.
DIVISION XIX
MONEYS AND CREDITS TAX ON STATE CREDIT UNIONS

    Sec. 91.  Section 533.329, subsection 2, paragraph a, Code 2019, is amended to read as follows:
   a.  The moneys and credits tax on state credit unions is imposed at a rate of one-half cent on each dollar of the legal and special reserves that are required to be maintained by the state credit union under section 533.303, and shall be levied by the board of supervisors and placed upon the tax list and collected by the county treasurer. However, an exemption shall be given to each state credit union in the amount of forty thousand dollars.
DIVISION XX
SALES AND USE TAX EXEMPTIONS RELATED TO MANUFACTURERS

    Sec. 92.  Section 423.3, subsection 47, paragraph d, subparagraph (4), subparagraph division (c), unnumbered paragraph 1, Code 2019, is amended to read as follows:
   “Manufacturer” does not include persons who are not commonly understood as manufacturers, including but not limited to persons primarily engaged in any of the following activities:
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 the administration of the tax and related laws by the department of revenue, including the administration and modification of certain taxes, tax credits, and refunds.
   DIVISION I —— INCOME AND FRANCHISE TAX. The amendments to Code sections 422.4(16) and 422.9 modify Internal Revenue Code references relating to the qualified business income deduction. The amendments to Code sections 422.4(16) and 422.9 apply retroactively for tax years beginning on or after January 1, 2019. 
   The amendments to Code section 422.11S specify that school tuition organization tax credits shall be authorized by the department of revenue on a calendar year basis rather than a tax year basis. The amendments to Code section 422.11S also specify that a school tuition organization shall be controlled by a board of directors consisting of at least seven members. Under current law, the board of directors shall be seven members. The bill provides that it is the intent of the general assembly that the amendments to Code section 422.11S are conforming amendments consistent with current law, and that the amendments do not change the application of current law. 
   The amendment to Code section 422.12C specifies that a nonresident or part-year resident shall determine their early childhood development tax credit in the ratio of the taxpayer’s Iowa source net income to their all source net income. The amendment to Code section 422.12C takes effect upon enactment and applies retroactively for tax years beginning on or after January 1, 2019. The bill specifies that for tax years beginning prior to January 1, 2019, refunds of the early childhood development tax credit requested on or after July 1, 2019, shall not exceed the amount allowed under Code section 422.12C(4), as amended by the bill. 
   The amendment to Code section 422.60 aligns the definition of “Internal Revenue Code” for franchise alternative minimum tax purposes with the definition of “Internal Revenue Code” for corporate alternative minimum tax purposes. The amendment to Code section 422.60 applies retroactively for tax years beginning on or after January 1, 2019. 
   The bill provides for a deferral of a gain or loss resulting from exchanging of property (1031 exchange) that meet certain conditions. The federal Tax Cuts and Jobs Act of 2017 repealed 1031 exchanges with respect to exchanges of personal property. The Iowa tax bill enacted last year (2018 Iowa Acts, chapter 1161) decouples, for Iowa individual tax purposes, from the federal repeal of 1031 exchanges relating to personal property, and permits individuals to defer gain or loss on qualifying personal property for tax year 2019 to the extent such deferral would have been permitted under federal law prior to its amendment by the federal Tax Cuts and Jobs Act of 2017. The bill permits a corporation or financial institution, for Iowa corporate income tax or franchise income tax purposes, the same deferral of gain or loss as individuals on qualifying personal property for tax year 2019 to the extent such deferral would have been permitted under federal law prior to its amendment by the federal Tax Cuts and Jobs Act of 2017. The 1031 exchange provision takes effect upon enactment, and applies retroactively for tax years beginning January 1, 2019, but before January 1, 2020. 
   DIVISION II —— ADMINISTRATIVE PROVISIONS. The amendments to Code sections 422.20 and 422.72 permit the department of revenue, by rule, to disclose state tax information to a person a taxpayer has identified to receive such information in the manner prescribed by the department of revenue.
   DIVISION III —— SALES AND USE TAX. The amendment to Code section 423.2(1) provides that if a service or warranty contract does not specify a fee amount for nontaxable services or taxable personal property, the sales tax shall be imposed upon an amount equal to the sales price of the contract. Currently, the sales tax is imposed upon an amount equal to one-half of the sales price of such a contract. 
   The amendment to Code section 432.2(6) specifies that the sales price from the furnishing of carpentry repair and installation services are subject to the sales tax. Currently, carpentry services are subject to sales tax. 
   The bill enacts new Code section 423.3(16A), exempting from the state sales and use tax the purchase price of a grain bin, including material or replacement parts used to construct or repair a grain bin. “Grain bin” is defined to mean property that is vented and covered with corrugated metal or similar material, and that is primarily used to hold loose grain for drying or storage. This provision takes effect upon enactment and applies retroactively to January 1, 2015, and applies to tax years beginning on or after that date. The bill also provides for refunds of taxes, interest, or penalties that arise from claims resulting from the enactment of Code section 423.3(16A) for sales occurring between January 1, 2015, and the effective date of the enactment of Code section 423.3(16A).  The bill limits the refunds to $25,000 in the aggregate.
   The amendment to Code section 423.3(47) changes the exclusions from the sales tax exemptions in that subsection by aligning the exclusions with the changes made to the exemptions enacted in 2016 Iowa Acts, chapter 1007. This provision takes effect upon enactment and applies retroactively to tax years beginning January 1, 2016, for tax years beginning on or after that date. 
   The amendment to Code section 423.3(104) exempts from the sales tax the sales of optional service or warranty contracts for computer software maintenance or support services furnished to a commercial enterprise used exclusively by the commercial enterprise. “Commercial enterprise” is defined in Code section 423.3(104).
   Currently, a retailer making Iowa sales, as defined in Code section 423.14A(1)(a), shall collect and remit sales, use, and local option taxes, if the retailer has gross revenue from Iowa sales equal to or exceeding $100,000 for an immediately preceding calendar year or a current calendar year, or has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. The bill amends Code section 423.14A(3)(b) by striking the requirement that retailers making Iowa sales collect such taxes if the retailer has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. 
   The bill amends Code section 423.14A(3)(d) by striking the requirement that a marketplace facilitator, as defined in Code section 423.14A(1)(b), making Iowa sales, as defined in Code section 423.14A(1)(a), collect sales, use, and local option taxes if the marketplace facilitator has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. The bill does not strike the requirement that a marketplace facilitator collect such taxes if the marketplace facilitator makes or facilitates Iowa sales on its own behalf or for one or more marketplace sellers equal to or exceeding $100,000. 
   The bill amends Code section 423.14A(3)(e) by striking the requirement that a referrer, as defined in Code section 423.14A(3)(e)(3), making Iowa sales, as defined in Code section 423.14A(1)(a), collect sales, use, and local option taxes if the referrer has 200 or more separate transactions for an immediately preceding calendar year or a current calendar year. The bill does not strike the requirement that a referrer collect such taxes if the referrer has Iowa sales equal to or exceeding $100,000.
   Currently, a referrer is required to provide the department of revenue, on a monthly basis, a list of marketplace sellers who collect and remit Iowa sales and use tax on the platform of the referrer. Otherwise, the referrer is required to collect and remit Iowa sales and use tax. The amendment to Code section 423A.14A(3)(e)(1)(c) provides that a referrer may provide the department of revenue such a report on an annual basis, and avoid collecting the sales and use tax if other conditions in Code section 423.14(3)(e)(1) are met.
   The bill enacts new Code section 423.14A(3)(e)(5) specifying that the paragraph relating to “referrers” is subject to implementation by the department of revenue by rule, and shall not require a referrer to collect tax or comply with the notice and reporting requirements unless such administrative rules take effect. 
   The bill amends Code section 423.48(2)(c) by striking the paragraph specifying that registering under the streamlined sales and use tax agreement in another member state shall be considered to be registered in this state for purposes of the streamlined sales and use tax agreement. 
   The bill establishes a taxation and exemption computers task force to be initiated, coordinated, and staffed by the department of revenue. The task force shall review the definition of “computer” as used throughout the portions of the Iowa Code and the Iowa Administrative Code administered by the department of revenue including the exemption for computers provided in Code section 423.3(47)(a)(4). If the task force recommends modifications to the current definition of “computer” including the exemption for computers provided in Code section 423.3(47)(a)(4), the department of revenue shall provide any recommendations to the general assembly by January 1, 2020. 
   DIVISION IV —— AUTOMOBILE RENTAL EXCISE TAX. The amendment to Code section 423.14A provides that a person who is not required to collect and remit automobile rental excise tax shall not be considered a “marketplace facilitator” with respect to the sale of certain transportation services. 
   The amendment to Code section 423C.2 substitutes a person required to collect sales or use tax under Code chapter 423 for “rental facilitator” and “rental platform” and strikes the definitions of “rental facilitator” and “rental platform” from Code section 423C.2. 
   The amendment to Code section 423C.2(11) modifies the definition of “rental price” to mean the same as “sales price” defined in Code section 423.1, which includes facilitation fees, reservation fees, service fees, nonrefundable deposits, and any other direct or indirect charge made or consideration provided in connection with the renting or facilitation of renting automobiles. 
   The amendment to Code section 423C.3 strikes the definitions of “discount rental charge” and “travel package”. 
   The amendment to Code section 423C.3 specifies that the automobile rental excise tax shall be imposed upon the rental price of an automobile if the rental is subject to the state sales or use tax. 
   The bill strikes numerous provisions in Code section 423C.3 relating to the collection of the automobile rental excise tax by a “rental facilitator” and “rental platform” due to these definitions being stricken by another part of this division of the bill. 
   The amendment to Code section 423C.3 requires that any person required to collect state sales and use tax on the rental transaction under Code chapter 423 shall collect the automobile rental excise tax as applicable. The amendment to Code section 423C.3 provides that a person is not required to collect and remit the automobile rental excise tax if the person meets certain circumstances. For any rental transaction for which the person is not required to collect and remit the automobile rental excise tax, the amendment to Code section 423C.3 requires an automobile provider to be solely liable for any amount of uncollected or unremitted automobile rental excise tax and sales and use tax under Code chapter 423. 
   DIVISION V —— TELEPHONE COMPANY PROPERTY. Division V of the bill authorizes the Iowa utilities board to classify a long distance telephone company as a competitive long distance telephone company if certain revenue source criteria are met. In the event of such a classification, the board is required to promptly notify the director of revenue. Upon such notification by the board, the director of revenue is required to assess the property of such competitive long distance telephone company, which property is first assessed for taxation in this state on or after January 1, 1996, in the same manner as all other property assessed as commercial property by the local assessor. The provisions established in the bill are the same as provisions repealed on July 1, 2018, by 2018 Iowa Acts, chapter 1160. 
   The section of Division V of the bill enacting Code section 476.1D, subsection 10, takes effect upon enactment and applies retroactively to July 1, 2018, for assessment years beginning on or after that date.
   Division V also strikes Code section 476.1D, subsection 10, as enacted in the bill, effective July 1, 2021. The future strike of Code section 476.1D, subsection 10, applies to assessment years beginning on or after January 1, 2022. 
   DIVISION VI —— CHILDHOOD AND DEPENDENT CARE CREDIT AND EARLY CHILDHOOD DEVELOPMENT CREDIT. The amendment to Code section 422.12C(4) increases the Iowa net income threshold levels for purposes of calculating the Iowa child and dependent child care tax credit and the early childhood development tax credit available against the individual income tax. The Iowa child and dependent care tax credit is a refundable credit calculated as a percentage of the nonrefundable federal child and dependent care tax credit, depending on the Iowa net income of the taxpayer. The early childhood development tax credit is a refundable credit equaling 25 percent of the first $1,000 which the taxpayer has paid to others for each dependent ages three through five for early childhood development expenses.
   IOWA CHILD AND DEPENDENT CHILD CARE TAX CREDIT. Currently, there are seven graduated Iowa net income thresholds used to calculate the credit. The bill increases these graduated thresholds, but does not change the percentage of the nonrefundable federal child and dependent care tax credit used to calculate the Iowa child and dependent child care tax credit.
   Currently, the credit percentages in these seven Iowa net income thresholds range from a high of 75 percent of the federal credit for taxpayers with net income of less than $10,000, to a low of 30 percent of the federal credit for taxpayers with net income of $40,000 or more but less than $45,000. Under the bill, the credit percentages in the thresholds range from a high of 75 percent of the federal credit for taxpayers with a net income of less than $12,750, to a low of 30 percent of the federal credit for taxpayers with net income of $50,980 or more but less than $57,360.
   The bill also adjusts the future amount of each of the Iowa net income amounts in the seven graduated Iowa net income thresholds by indexing the thresholds to inflation.
   EARLY CHILDHOOD DEVELOPMENT TAX CREDIT. The bill increases the income threshold determining the eligibility of a taxpayer for the early childhood development tax credit. The bill increases the eligibility threshold from a taxpayer earning $45,000 per year to $57,360 per year. By increasing the eligibility threshold, taxpayers earning less than $57,360 are now eligible to take the early childhood development tax credit equaling 25 percent of the first $1,000 which the taxpayer has paid to others for early childhood development expenses for each dependent ages three through five. The bill also adjusts the future amount of the net income threshold by indexing the threshold to inflation.
   EFFECTIVE DATE AND APPLICABILITY. The division takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2019.
   DIVISION VII —— APPORTIONMENT OF CERTAIN BUSINESS INCOME OF AN AIRLINE. The amendment to Code section 422.33(2)(a)(2) relates to the apportionment of income of an airline and of a qualified air freight forwarder for purposes of the Iowa corporate income tax.
   A corporation doing business both within and without Iowa is required to apportion its business income among Iowa and the other states in which it does business. The amount of business income apportioned to Iowa is generally in the same percentage as the business’s gross sales made within Iowa if the business involves the manufacture or sale of goods and products, or in the same percentage as the business’s gross receipts earned within Iowa if the business involves something other than the manufacture or sale of goods and products. However, airlines and other specified industries have special rules provided by administrative rule for apportioning the income of those industries.
   Under current law pursuant to 701 Iowa administrative code, rule 54.7(2), an airline deriving income from transportation operations is required to apportion its business income to Iowa in the same proportion that its mileage traveled in Iowa bears to its total mileage traveled everywhere. The bill specifies that an airline shall apportion this business income in the same manner described above as required under 701 Iowa administrative code, rule 54.7(2).
   The bill also provides rules for apportioning income derived by a qualified air freight forwarder from transportation operations through an affiliated airline. The bill defines “qualified air freight forwarder” to be a taxpayer that is primarily engaged in the facilitation of the transportation of property by air, and that does not itself operate aircraft but that is in the same affiliated group as an airline. 
   The bill states that the qualified air freight forwarder income derived from transportation operations shall be apportioned to Iowa either under the current rules of the director of revenue (current statutory rules), or in the same proportion that the miles of the qualified air freight forwarder’s affiliated airline traveled in this state bears to the total miles of the affiliated airline traveled everywhere (affiliated airline mileage rules), based on increasing percentages as enumerated in the bill over a number of tax years.
   The division applies to tax years beginning on or after January 1, 2020. 
   DIVISION VIII —— BURIAL TRUSTS. The bill enacts new Code section 422.7(6) by exempting from the individual income tax interest and earnings received from a burial trust fund.
   DIVISION IX —— ADOPTION TAX CREDIT. The amendment to Code section 422.12A relates to claiming the adoption tax credit for qualified adoption expenses paid or incurred by an individual taxpayer during a tax year.
   Currently, in order to claim the adoption tax credit the taxpayer must pay or incur “qualified adoption expenses” during the tax year, which are unreimbursed, and connected with the adoption. The bill strikes the requirement that the “qualified adoption expenses” be paid or incurred by the taxpayer during the tax year. 
   The bill specifies that if a qualified adoption expense is incurred prior to or during the tax year in which the adoption becomes final, the qualified adoption expense shall be allowed during the tax year in which the adoption becomes final. For qualified adoption expenses incurred after the tax year in which the adoption becomes final, the qualified adoption expense shall be allowed during the tax year such adoption expense was paid or incurred. 
   The division applies retroactively to tax years beginning on or after January 1, 2019.
   DIVISION X —— TARGETED JOBS WITHHOLDING CREDIT. The amendment to Code section 403.19A strikes a provision defining “retained job” and establishes a definition for “created job”. The bill defines “created job” to mean a new and permanent full-time equivalent position, added to the payroll of a business in excess of the base employment level at the time of application for withholding credits under the Code section. The amendment to Code section 403.19A also extends by four years the deadline for entering into withholding agreements under the targeted jobs withholding credit pilot project from June 30, 2019, to June 30, 2023.
   A “withholding agreement” means an agreement between a pilot project city, the economic development authority, and an employer concerning the targeted jobs withholding credit.
   The amendments to Code section 403.19A do not apply to a withholding agreement entered into prior to the effective date of this division.
   DIVISION XI —— SCHOOL TUITION ORGANIZATION TAX CREDITS. The amendment to Code section 422.11S increases the total amount of school tuition organization tax credits that may be issued per tax year to $17 million from $13 million for tax years beginning on or after January 1, 2020.
   The Code editor is directed to harmonize the amendment to Code section 422.11S in this division with the amendments to Code section 422.11S in another division of the bill. 
   DIVISION XII —— DEDUCTING RESIDUAL FERTILIZER. The bill enacts new Code section 422.7(60), which relates to deducting residual fertilizer supply in the soil for purposes of individual and corporate income taxes. 
   The bill defines “residual fertilizer supply” to mean an asset or an improvement to land that meets all of the following requirements: the asset or improvement consists of residual fertilizer or excess available nutrients that are in the soil; the land upon which the asset or improvement is located is sold or exchanged; and following the sale or exchange of the land containing the residual fertilizer supply, an expense deduction, amortization deduction, or depreciation deduction is allowable for federal tax purposes with respect to the residual fertilizer in the hands of a taxpayer other than the seller of the land. 
   The bill provides that for any sale or exchange of a land containing residual fertilizer supply executed on or after July 1, 2019, an expense deduction, depreciation deduction, or amortization deduction with respect to the residual fertilizer supply shall not be allowed for individual or corporate income tax purposes unless all of the following requirements are satisfied: the expense deduction, depreciation deduction, or amortization deduction is allowable to the taxpayer under the Internal Revenue Code; and the residual fertilizer supply is part of a written agreement between the seller and buyer that identifies the residual fertilizer supply and the consideration paid for the residual fertilizer supply. 
   If a taxpayer has taken a deduction relating to residual fertilizer supply in computing federal adjusted gross income that is disallowed under the bill, the taxpayer shall make the following adjustments: add back the total amount of the deduction in computing net income for state tax purposes; reallocate the amount of the deduction to the taxpayer’s basis, if any, in the land upon which the residual fertilizer supply is located; and make any other adjustments to gains, losses, deductions, or tax basis of assets pursuant to rules adopted by the director of revenue. 
   DIVISION XIII —— FRANCHISE TAX —— ALTERNATIVE MINIMUM TAX (AMT) REPEAL. Current law imposes an AMT on a financial institution to the extent the AMT exceeds the financial institution’s regular tax liability. The AMT is generally calculated by adding certain “preference” items (deductions, exemptions, and other adjustments) back to taxable income, applying an exemption amount, and then multiplying the resulting income amount by an AMT rate. The amendments to Code section 422.60 repeal the AMT for the franchise tax beginning in tax year 2021. 
   Current law also provides an alternative minimum tax credit, which allows AMT paid by a financial institution in prior tax years to be claimed against regular tax liability in future tax years if the financial institution is not subject to the AMT in that year. With the repeal of the franchise AMT in 2021, the bill allows a taxpayer to claim any remaining alternative minimum tax credit against the financial institution’s regular tax liability for the 2021 tax year, and the bill then repeals the alternative minimum tax credit beginning in tax year 2022.
   DIVISION XIV —— GROSS GLOBAL INCOME LOW-TAXED INCOME.  Federal law includes in a taxpayer’s gross income global intangible low-taxed income (GILTI) as defined in section 951A of the Internal Revenue Code, subject to a deduction equal to 50 percent of the corporation’s GILTI under section 250(a)(1)(B) of the Internal Revenue Code. The amendment to Code section 422.35(21) directs corporate taxpayers to treat the taxpayer’s net GILTI amount as a foreign dividend for Iowa income tax purposes, meaning the taxpayer qualifies for the same dividends received deduction that applies to subpart F income and other foreign dividends. 
   The division applies retroactively to January 1, 2019, for tax years beginning on or after that date.
   DIVISION XV —— FEDERAL RESEARCH CREDIT —— INTERNAL REVENUE CODE. The Consolidated Appropriations Act of 2018 (Pub. L. No. 115-141), which Iowa is conformed to for tax year 2019 and beyond, struck and renumbered a provision of the federal research credit, which resulted in a renumbering of the simplified credit in the Internal Revenue Code. The amendments in the division change the Internal Revenue references in the Iowa Code to reflect the changes to the references in the Internal Revenue Code. 
   The division applies retroactively to January 1, 2019, and applies to tax years beginning on or after that date. 
   DIVISION XVI —— RESEARCH ACTIVITIES TAX CREDIT. The amendments to Code section 422.10(1)(a) specify that the research and activities tax credit is available against the individual income tax if an individual is engaged in agriscience or agricultural animal production, and if certain conditions are met. The amendments to Code section 422.33(5)(e)(1) specify that a corporation engaged in agriscience or agricultural animal production shall be eligible for the research activities tax credit if certain conditions are met. 
   The bill defines “agricultural animal production” to mean activities related to producing or maintaining an agricultural animal.
   The division takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2017.
   DIVISION XVII —— NEW JOBS CREDIT —— FRANCHISE TAXES —— MONEYS AND CREDITS TAXES. The amendments to Code sections 422.60 and 533.329 make the new jobs tax credit under Code chapter 260E available against franchise taxes and moneys and credits taxes imposed on financial institutions and state credit unions, respectively.
   DIVISION XVIII —— UTILITY REPLACEMENT TASK FORCE. The amendment to Code section 437A.15 extends the utility replacement tax task force from January 1, 2019, to January 1, 2029. The task force is charged with studying the effects of the replacement taxes under Code chapter 437A (taxes on electricity and natural gas providers) and Code chapter 437B (taxes on rate-regulated water utilities) on local taxing authorities, local taxing districts, consumers, and taxpayers.
   DIVISION XIX —— MONEYS AND CREDITS TAX ON STATE CREDIT UNIONS. The amendment to Code section 533.329 strikes a provision requiring the board of supervisors to impose the moneys and credits tax on state credit unions and the county treasurer to collect such tax, and aligns the imposition and the collection of the tax with Code section 533.329(2)(b) and Code section 533.329(3). 
   DIVISION XX —— SALES AND USE TAX EXEMPTIONS RELATED TO MANUFACTURERS. The amendment to Code section 423.3(47)(d)(4)(c) modifies the definition of “manufacturer” relating to the sales and use tax exemption for machinery, equipment, and other items used directly and primarily in processing by a manufacturer. The bill expands the definition of “manufacturer” by adding the word “primarily” to the exclusions of the definition of “manufacturer”, thereby allowing persons who do not primarily engage in certain activities to qualify as a “manufacturer”.