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