HF 70 (LSB 1109HH (1) 90)

HOUSE FILE 70

BY  ISENHART

A BILL FOR

An Act establishing a solar electricity generation replacement tax corporate tax credit for electricity generated on certain property and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.33, Code 2023, is amended by adding the following new subsection:
   NEW SUBSECTION.  33.  a.  As used in this subsection, unless the context otherwise requires:
   (1)  “Conservation buffer strip” means a riparian buffer, filter strip, contour buffer strip, field border, or any vegetative barrier that meets the criteria established by the United States department of agriculture natural resources conservation service.
   (2)  “Farming operation” means one or more of the following:
   (a)  Cultivation of land for the production of food for human consumption.
   (b)  Raising of poultry.
   (c)  Production of fruit or other horticultural crops.
   (d)  Grazing of livestock.
   (e)  Creation of an actively maintained habitat for pollinating insects.
   (3)  “Solar energy conversion facility” or “facility” means the same as defined in section 476C.1.
   b.  Each taxpayer that is subject to the tax imposed on electric generation under section 437A.6 shall be eligible for a credit against the amount of taxes imposed under this subchapter in an amount equal to the tax imposed under section 437A.6 on each solar energy conversion facility owned or operated by the taxpayer during the applicable tax year if the tax year begins within ten years following the date the facility was initially placed into service and if all of the following conditions are met on the facility, subject to the limitation of paragraph “c”, subparagraph (1):
   (1)  A portion of the land upon which the solar energy conversion facility is located is used by a person who is actively engaged in a farming operation on the land.
   (2)  The solar energy conversion facility is situated on the land in a manner that facilitates the establishment or continuation of a farming operation on the land.
   (3)  A conservation buffer strip at least fifty feet in width is maintained between all streams on the land, if any, and any source of nitrogen, manure, or any other regulated contaminant that is applied on the land in conjunction with a farming operation.
   (4)  If the farming operation on the land includes actively maintaining a habitat for pollinating insects, the total area of the habitat for such purpose does not exceed fifty percent of the total area of the land.
   c.  (1)  The maximum amount of taxes imposed on each solar energy conversion facility under section 437A.6 that may be used for the calculation of the credit allowed under this subsection shall be the total amount of taxes imposed on the facility under section 437A.6, but not to exceed the lesser of the following:
   (a)  The amount of taxes due under section 437A.6 on the first five megawatts of electricity generated by the solar energy conversion facility.
   (b)  The amount of taxes due under section 437A.6 on the electricity generated on a portion of the solar energy conversion facility, not to exceed twenty acres.
   (2)  Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following ten tax years or until depleted, whichever is the earlier.
   (3)  To receive the credit under this subsection, the taxpayer subject to the tax under section 437A.6 shall annually file an application with the local assessor to, in cooperation with the soil and water conservation district in which the land is located, inspect and certify that all of the conditions of paragraph “b” have been met. Applications must be filed annually not later than June 30. Once an application is filed by the credit applicant, the certification, if approved, shall be sent to the applicant and to the department. The local assessor shall file approved certifications with the department not later than November 1.
   d.  The department shall adopt rules pursuant to chapter 17A to administer this subsection, including prescribing forms for applications filed with the local assessor and the form of certifications issued by the local assessor.
    Sec. 2.  APPLICABILITY.  This Act applies to tax years beginning on or after January 1, 2024.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill establishes a tax credit against the corporate income tax under Code chapter 422, subchapter III. Each taxpayer that is subject to the tax imposed on electric generation under Code section 437A.6 shall be eligible for a credit against the corporate income tax in an amount equal to the tax imposed under Code section 437A.6 on each solar energy conversion facility owned or operated by the taxpayer during the applicable tax year if the tax year begins within 10 years following the date the facility was initially placed into service and if all of the following conditions are met: (1) a portion of the land upon which the facility is located is used by a person who is actively engaged in a farming operation on the land; (2) the facility is situated on the land in a manner that facilitates the establishment or continuation of a farming operation; (3) a conservation buffer strip at least 50 feet in width is maintained between all streams on the land, if any, and any source of nitrogen, manure, or any other regulated contaminant that is applied on the land in conjunction with a farming operation; and (4) if the farming operation on the land includes actively maintaining a habitat for pollinating insects, the total area of the habitat for that purpose does not exceed 50 percent of the total area of the land.
   The bill establishes a maximum amount of taxes imposed on each solar energy conversion facility that may be used for the calculation of the credit allowed under the bill. 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 10 tax years or until depleted, whichever is the earlier.
   To receive the credit under the bill, the person subject to the tax imposed on electric generation shall annually file an application with the local assessor to, in cooperation with the soil and water conservation district in which the land is located, inspect and certify that all of the conditions of the bill have been met.
   The bill requires the department of revenue to adopt rules to administer the credit, including prescribing forms for applications filed with the local assessor and the form of certifications issued by the local assessor.
   The bill applies to tax years beginning on or after January 1, 2024.