Senate File 27 - Introduced SENATE FILE 27 BY BOLKCOM A BILL FOR An Act limiting the amount of research activities tax credit 1 that is refundable and including retroactive applicability 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1265XS (2) 89 jm/jh

S.F. 27 Section 1. Section 15.335, subsection 8, Code 2021, is 1 amended to read as follows: 2 8. Any credit in excess of the tax liability for the taxable 3 year shall be refunded with interest in accordance with section 4 421.60, subsection 2 , paragraph “e” . However, the aggregate 5 amount of the tax credit that may be refunded pursuant to this 6 section and section 422.10 or section 422.33, subsection 5, 7 shall not exceed one million dollars per taxpayer per tax year. 8 In lieu of claiming a refund, a taxpayer may elect to have the 9 overpayment shown on its final, completed return credited to 10 the tax liability for the following year. 11 Sec. 2. Section 422.10, subsection 4, Code 2021, is amended 12 to read as follows: 13 4. Any credit in excess of the tax liability imposed by 14 section 422.5 less the amounts of nonrefundable credits allowed 15 under this subchapter for the taxable year shall be refunded 16 with interest in accordance with section 421.60, subsection 2 , 17 paragraph “e” . However, the aggregate amount of the tax credit 18 that may be refunded pursuant to this section and section 19 15.335 shall not exceed one million dollars per taxpayer per 20 tax year. In lieu of claiming a refund, a taxpayer may elect to 21 have the overpayment shown on the taxpayer’s final, completed 22 return credited to the tax liability for the following taxable 23 year. 24 Sec. 3. Section 422.33, subsection 5, paragraph g, Code 25 2021, is amended to read as follows: 26 g. Any credit in excess of the tax liability for the taxable 27 year shall be refunded with interest in accordance with section 28 421.60, subsection 2 , paragraph “e” . However, the aggregate 29 amount of the tax credit that may be refunded pursuant to this 30 subsection and section 15.335 shall not exceed one million 31 dollars per taxpayer per tax year. In lieu of claiming a 32 refund, a taxpayer may elect to have the overpayment shown on 33 its final, completed return credited to the tax liability for 34 the following taxable year. 35 -1- LSB 1265XS (2) 89 jm/jh 1/ 2

S.F. 27 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 1 retroactively to January 1, 2021, for tax years beginning on 2 or after that date. 3 EXPLANATION 4 The inclusion of this explanation does not constitute agreement with 5 the explanation’s substance by the members of the general assembly. 6 Under current law, research activities tax credits are 7 refundable, meaning any amount of the tax credits in excess of 8 a taxpayer’s tax liability are issued to the taxpayer in the 9 form of a tax refund. 10 This bill limits the aggregate amount of research activities 11 tax credits that may be refunded to $1 million per taxpayer 12 per taxable year. This limitation includes the individual and 13 corporate research activities credits, and the supplemental 14 research activities tax credit awarded by the economic 15 development authority under Code section 15.335. 16 The bill applies retroactively to January 1, 2021, for tax 17 years beginning on or after that date. 18 -2- LSB 1265XS (2) 89 jm/jh 2/ 2