House File 860 - Reprinted



                                      HOUSE FILE       
                                      BY  COMMITTEE ON WAYS AND MEANS


                                      (SUCCESSOR TO HSB 286)


    Passed House, Date               Passed Senate, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act establishing a tax credit certificate transfer program.
  2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  3 TLSB 1741HV 81
  4 tm/gg/14

PAG LIN



  1  1    Section 1.  NEW SECTION.  421.58  SALE OR TRANSFER OF NET
  1  2 OPERATING LOSS CARRYOVER.
  1  3    1.  As used in this section, unless the context otherwise
  1  4 requires:
  1  5    a.  "Biotechnology enterprise" means the same as defined in
  1  6 section 15E.202.
  1  7    b.  "Department" means the department of revenue.
  1  8    c.  "Net operating loss" means the same as defined in
  1  9 section 172 of the Internal Revenue Code.  "Net operating
  1 10 loss" may include up to a maximum salary allocation of one
  1 11 hundred thirty percent of the average annual county wage.
  1 12    d.  "Targeted industry business" means the same as defined
  1 13 in section 15E.223.
  1 14    2.  The department shall establish and administer a tax
  1 15 credit certificate transfer program for purposes of allowing a
  1 16 biotechnology enterprise or a targeted industry business with
  1 17 twenty or fewer employees to transfer a tax credit certificate
  1 18 to another taxpayer in return for private financial assistance
  1 19 for a net operating loss carryover.
  1 20    3.  A biotechnology enterprise or a targeted industry
  1 21 business with twenty or fewer employees that has a net
  1 22 operating loss carryover in a single tax year may apply to the
  1 23 department for the issuance of a tax credit certificate in the
  1 24 amount of the loss carryover for sale under this section to a
  1 25 qualifying, nonaffiliated business.  Upon the department's
  1 26 approval of an application, a tax credit certificate shall be
  1 27 issued containing the taxpayer's name, address, tax
  1 28 identification number, the amount of the tax credit, and other
  1 29 information required by the department.  The proceeds from the
  1 30 sale of a tax credit shall be used by the biotechnology
  1 31 enterprise or targeted industry business for expenses
  1 32 including, but not limited to, the expenses of fixed assets
  1 33 such as the acquisition, development, and construction of real
  1 34 property, materials, salaries, and research and development
  1 35 expenditures.
  2  1    4.  A taxpayer willing to enter into an agreement to
  2  2 receive a tax credit certificate from a biotechnology
  2  3 enterprise or a targeted industry business in exchange for
  2  4 providing private financial assistance shall submit an
  2  5 application to the department.  The application to receive a
  2  6 tax credit certificate shall identify the amount of private
  2  7 financial assistance that the applicant is willing to provide
  2  8 in exchange for a tax credit certificate.
  2  9    5.  A taxpayer willing to exchange private financial
  2 10 assistance to a biotechnology enterprise or targeted industry
  2 11 business may use the amount of the tax credit transferred
  2 12 against the taxes imposed under chapter 422, division II, III,
  2 13 or V, or chapter 432 for any tax year the original transferor
  2 14 could have claimed the net operating loss carryover.  Any
  2 15 consideration received for the transfer of the tax credit
  2 16 shall not be included as income under chapter 422, division
  2 17 II, III, or V.  Any consideration paid for the transfer of a
  2 18 tax credit under this section shall not be deducted from
  2 19 income under chapter 422, division II, III, or V.  Any tax
  2 20 credit in excess of the tax liability for the tax year may be
  2 21 credited to the tax liability for the following seven years or
  2 22 until depleted, whichever occurs first.
  2 23    6.  The department shall adopt rules pursuant to chapter
  2 24 17A to establish the procedures for the application, review,
  2 25 selection, issuance, and transfer of tax credit certificates
  2 26 and to provide for the method to be used to determine for
  2 27 which fiscal year the tax credits are available.
  2 28    7.  The department or a designee shall match applications
  2 29 submitted under this section in a manner that can best
  2 30 stimulate and encourage the extension of private financial
  2 31 assistance to biotechnology enterprises or targeted industry
  2 32 businesses in the state.  As part of approving an application,
  2 33 the department shall require all of the following from
  2 34 applicants:
  2 35    a.  A written agreement concerning the terms and conditions
  3  1 of providing private financial assistance in exchange for a
  3  2 tax credit certificate issued pursuant to this section.
  3  3    b.  Private financial assistance supplied by a taxpayer
  3  4 must be equal to at least seventy=five percent of the value of
  3  5 the tax credit certificate issued pursuant to this section.
  3  6    c.  Private financial assistance received under this
  3  7 section shall be used for the operation or expansion of a
  3  8 biotechnology enterprise or a targeted industry business.
  3  9    8.  The total amount of tax credits that may be approved
  3 10 for a fiscal year under this section shall not exceed one
  3 11 million five hundred thousand dollars.  A biotechnology
  3 12 enterprise or a targeted industry business shall not receive
  3 13 more than one hundred fifty thousand dollars in any fiscal
  3 14 year of private financial assistance under the program.  Tax
  3 15 credits issued under this section shall not be prorated.
  3 16    9.  A biotechnology enterprise or a targeted industry
  3 17 business receiving private financial assistance under the
  3 18 program shall not receive a wage=benefits tax credit under
  3 19 section 15H.2, if enacted.
  3 20 HF 860
  3 21 tm:rj/es/25