House File 2679 - Introduced HOUSE FILE 2679 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 2504) A BILL FOR An Act providing a deduction from the individual and corporate 1 income taxes for the amount of certain income derived 2 from indigent representation by an eligible law firm, and 3 including retroactive applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5550HV (3) 90 jm/jh

H.F. 2679 Section 1. Section 422.7, Code 2024, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 44. a. As used in this subsection: 3 (1) “Eligible attorney” means an attorney who is appointed 4 to an eligible case and who, at the time of such appointment, 5 has been licensed to practice law for fewer than five years. 6 (2) “Eligible case” means an appointment on or after July 1, 7 2024, by an Iowa court of an eligible attorney to represent a 8 person in a case pursuant to section 814.11 or 815.10. 9 (3) “Eligible law firm” means a law firm in this state that 10 has two or more attorneys that practice law in the law firm for 11 at least half of each tax year during which the law firm is 12 engaged in an eligible case. 13 b. (1) An eligible law firm may subtract, to the extent 14 included, the aggregated amount equal to the difference between 15 the total hours billed by the eligible attorney in the eligible 16 case multiplied by one hundred fifty dollars or the actual 17 hourly rate charged by the eligible law firm for that eligible 18 attorney for such a case, whichever is less, and the total 19 hours billed by the eligible attorney in the eligible case 20 multiplied by the hourly rate in effect for the eligible case 21 in section 815.7. 22 (2) The amount of the deduction allowed pursuant to this 23 subsection for an individual taxpayer of an eligible law 24 firm shall be calculated using the same percentage as the 25 taxpayer’s pro rata percentage share of the profits or losses 26 from the partnership, limited liability company, or subchapter 27 S corporation. 28 Sec. 2. Section 422.35, Code 2024, is amended by adding the 29 following new subsection: 30 NEW SUBSECTION . 14. a. As used in this subsection: 31 (1) “Eligible attorney” means an attorney who is appointed 32 to an eligible case and who, at the time of such appointment, 33 has been licensed to practice law for fewer than five years. 34 (2) “Eligible case” means an appointment on or after July 1, 35 -1- LSB 5550HV (3) 90 jm/jh 1/ 3

H.F. 2679 2024, by an Iowa court of an eligible attorney to represent a 1 person in a case pursuant to section 814.11 or 815.10. 2 (3) “Eligible law firm” means a law firm in this state that 3 has two or more attorneys that practice law in the law firm for 4 at least half of each tax year during which the law firm is 5 engaged in an eligible case. 6 b. An eligible law firm may subtract, to the extent 7 included, the aggregated amount equal to the difference between 8 the total hours billed by the eligible attorney in the eligible 9 case multiplied by one hundred fifty dollars or the actual 10 hourly rate charged by the eligible law firm for that eligible 11 attorney for such a case, whichever is less, and the total 12 hours billed by the eligible attorney in the eligible case 13 multiplied by the hourly rate in effect for the eligible case 14 in section 815.7. 15 Sec. 3. RETROACTIVE APPLICABILITY. This Act applies 16 retroactively to January 1, 2024, for tax years beginning on 17 or after that date. 18 EXPLANATION 19 The inclusion of this explanation does not constitute agreement with 20 the explanation’s substance by the members of the general assembly. 21 This bill provides a deduction from the individual income or 22 corporate income tax for the amount of certain income derived 23 from indigent representation by an eligible law firm. 24 The bill defines “eligible law firm” to mean a law firm in 25 this state that has two or more attorneys that practice law in 26 the law firm for at least half of each tax year during which the 27 law firm is engaged in an eligible case. 28 The bill defines “eligible case” to mean an appointment on or 29 after July 1, 2024, by an Iowa court of an eligible attorney to 30 represent a person in a case pursuant to Code section 814.11 31 (indigent’s right to counsel) or 815.10 (appointment of counsel 32 by court). 33 The bill defines “eligible attorney” to mean an attorney who 34 is appointed to an eligible case and who, at the time of such 35 -2- LSB 5550HV (3) 90 jm/jh 2/ 3

H.F. 2679 appointment, has been licensed to practice law for fewer than 1 five years. 2 The amount of the deduction shall equal the aggregated 3 amount equal to the difference between the total hours billed 4 by the eligible attorney in the eligible case multiplied by 5 $150 or the actual hourly rate charged by the eligible law firm 6 for that eligible attorney for such a case, whichever is less, 7 and the total hours billed by the eligible attorney in the 8 eligible case multiplied by the hourly rate in effect for the 9 eligible case in Code section 815.7. 10 The current hourly rate is $83 per hour for a class “A” 11 felony, $78 per hour for a class “B” felony, and $73 per hour 12 for all other cases. 13 For individual income tax purposes, a taxpayer who is a 14 partner of a partnership, a shareholder of a subchapter S 15 corporation, or a member of a limited liability corporation may 16 deduct the portion of the amount of the deduction calculated 17 under the bill based on the taxpayer’s pro rata share of 18 the profits or losses from the partnership or subchapter S 19 corporation. 20 The bill applies retroactively to tax years beginning on or 21 after January 1, 2024. 22 -3- LSB 5550HV (3) 90 jm/jh 3/ 3