HF 2624 (LSB 6108YH (2) 90)

HOUSE FILE 2624

BY  JONES

A BILL FOR

An Act creating the railroad reconstruction or replacement tax credit available against the individual and corporate income taxes, the franchise tax, the insurance premiums tax, and the moneys and credits tax, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  327I.1  Railroad reconstruction or replacement tax credit.
   1.  As used in this section:
   a.  “Department” means the department of revenue.
   b.  “Qualified expenditures” means gross expenditures in the taxable year for maintenance, reconstruction, or replacement of railroad infrastructure, including track, roadbed, bridges, industrial leads and sidings, and track-related structures owned or leased by a class II or class III railroad in this state as of January 1, 2021. “Qualified expenditures” also includes new construction of industrial leads, switches, spurs, and sidings and extensions of existing sidings in this state by a class II or class III railroad.
   c.  “Taxpayer” means any railroad that is classified by the surface transportation board as a class II or class III railroad.
   2.  A railroad reconstruction or replacement tax credit shall be allowed against the taxes imposed in chapter 422, subchapters II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, for qualified expenditures.
   3.  A taxpayer who is an individual may claim a tax credit under this subsection of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
   4.  Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following five years or until depleted, whichever is earlier.
   5.  For tax years beginning on or after January 1, 2024, but before January 1, 2032, a tax credit may be claimed that shall equal fifty percent of qualified expenditures made by the taxpayer, not to exceed three thousand dollars per mile, multiplied by the number of miles of railroad track owned or leased within the state by the taxpayer for which the taxpayer made qualified expenditures upon during the applicable tax year.
   6.  a.  To claim a tax credit, a taxpayer shall include one or more tax credit certificates with the taxpayer’s return.
   b.  The tax credit certificate shall contain the taxpayer’s name, address, tax identification number, the amount of the credit, any other information required by the department, and a place for the name and tax identification number of a transferee and the amount of the tax credit being transferred.
   7.  a.  Tax credit certificates issued under this section may be transferred to any person. Within ninety days of transfer, the transferee shall submit the transferred tax credit certificate to the department of revenue along with a statement containing the transferee’s name, tax identification number, address, the denomination that each replacement tax credit certificate is to carry, and any other information required by the department of revenue. However, tax credit certificate amounts of less than the minimum amount established by rule by the department of revenue shall not be transferable.
   b.  Within thirty days of receiving the transferred tax credit certificate and the transferee’s statement, the department of revenue shall issue one or more replacement tax credit certificates to the transferee. Each replacement tax credit certificate must contain the information required for the original tax credit certificate and must have the same expiration date that appeared on the transferred tax credit certificate.
   c.  A tax credit shall not be claimed by a transferee under this section until a replacement tax credit certificate identifying the transferee as the proper holder has been issued. The transferee may use the amount of the tax credit transferred against the taxes imposed in chapter 422, subchapters II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329 for any tax year the original transferor could have claimed the tax credit. Any consideration received for the transfer of the tax credit shall not be included as income under chapter 422, subchapters II, III, and V. Any consideration paid for the transfer of the tax credit shall not be deducted from income under chapter 422, subchapters II, III, and V.
   8.  This section is repealed January 1, 2037.
    Sec. 2.  NEW SECTION.  422.10C  Railroad reconstruction or replacement tax credit.
   1.  The taxes imposed under this subchapter, less the credits allowed under section 422.12, shall be reduced by a railroad reconstruction or replacement tax credit allowed pursuant to section 327I.1.
   2.  This section is repealed January 1, 2037.
    Sec. 3.  Section 422.33, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  11.  a.  The taxes imposed under this subchapter shall be reduced by a railroad reconstruction or replacement tax credit allowed pursuant to section 327I.1.
   b.  This subsection is repealed January 1, 2037.
    Sec. 4.  Section 422.60, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  16.  a.  The taxes imposed under this subchapter shall be reduced by a railroad reconstruction or replacement tax credit allowed pursuant to section 327I.1.
   b.  This subsection is repealed January 1, 2037.
    Sec. 5.  NEW SECTION.  432.12P  Railroad reconstruction or replacement tax credit.
   1.  The taxes imposed under this chapter shall be reduced by a railroad reconstruction or replacement tax credit allowed pursuant to section 327I.1.
   2.  This section is repealed January 1, 2037.
    Sec. 6.  Section 533.329, subsection 2, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  n.  (1)  The moneys and credits tax imposed under this section shall be reduced by a railroad reconstruction or replacement tax credit allowed pursuant to section 327I.1.
   (2)  This paragraph is repealed January 1, 2037.
    Sec. 7.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 8.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2024, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates the railroad reconstruction or replacement tax credit available against the individual and corporate income taxes, the franchise tax, the insurance premiums tax, and the moneys and credits tax.
   Under the bill, for tax years beginning on or after January 1, 2024, but before January 1, 2032, a tax credit may be claimed equaling 50 percent of qualified expenditures made by a railroad classified as class I or class II, not to exceed $3,000 per mile, multiplied by the number of miles of railroad track owned or leased within the state by the taxpayer for which the taxpayer made qualified expenditures upon during the applicable tax year.
   The bill defines “qualified expenditures” to mean the maintenance, reconstruction, or replacement of railroad infrastructure, including track, roadbed, bridges, and industrial leads and sidings, owned or leased by a class II or class III railroad in this state as of January 1, 2021. “Qualified expenditures” also includes new construction of industrial leads, switches, spurs, and sidings and extensions of existing sidings.
   Any credit in excess of the tax liability is not refundable under the bill, but the excess may be credited to the tax liability for up to the next five tax years.
   The bill repeals the tax credit from the Code on January 1, 2037, to account for a taxpayer crediting excess tax liability for up to five additional tax years or until depleted, whichever is earlier.
   The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2024.