Senate File 392 - Reprinted SENATE FILE BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1191) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to entities eligible to claim certain property= 2 related tax credits. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1892SV 81 5 tm/gg/14 PAG LIN 1 1 Section 1. Section 15E.193B, subsection 5, Code 2005, is 1 2 amended by adding the following new paragraph: 1 3 NEW PARAGRAPH. f. If the eligible housing business is a 1 4 partnership, S corporation, or limited liability company using 1 5 low=income housing tax credits authorized under section 42 of 1 6 the Internal Revenue Code to assist in the financing of the 1 7 housing development, the name of any partner if the business 1 8 is a partnership, a shareholder if the business is an S 1 9 corporation, or a member if the business is a limited 1 10 liability company and the amount designated as allowed under 1 11 subsection 8. 1 12 Sec. 2. Section 15E.193B, subsection 6, paragraph a, Code 1 13 2005, is amended to read as follows: 1 14 a. An eligible housing business may claim a tax credit up 1 15 to a maximum of ten percent of the new investment which is 1 16 directly related to the building or rehabilitating of a 1 17 minimum of four single=family homes located in that part of a 1 18 city or county in which there is a designated enterprise zone 1 19 or one multiple dwelling unit building containing three or 1 20 more individual dwelling units located in that part of a city 1 21 or county in which there is a designated enterprise zone. The 1 22 new investment that may be used to compute the tax credit 1 23 shall not exceed the new investment used for the first one 1 24 hundred forty thousand dollars of value for each single=family 1 25 home or for each unit of a multiple dwelling unit building 1 26 containing three or more units. The tax credit may be used to 1 27 reduce the tax liability imposed under chapter 422, division 1 28 II, III, or V, or chapter 432. Any credit in excess of the 1 29 tax liability for the tax year may be credited to the tax 1 30 liability for the following seven years or until depleted, 1 31 whichever occurs earlier. If the business is a partnership, S 1 32 corporation, limited liability company, or estate or trust 1 33 electing to have the income taxed directly to the individual, 1 34 an individual may claim the tax credit allowed. The amount 1 35 claimed by the individual shall be based upon the pro rata 2 1 share of the individual's earnings of the partnership, S 2 2 corporation, limited liability company, or estate or trust 2 3 except as allowed for under subsection 8 when low=income 2 4 housing tax credits authorized under section 42 of the 2 5 Internal Revenue Code are used to assist in the financing of 2 6 the housing development. 2 7 Sec. 3. Section 15E.193B, subsection 8, unnumbered 2 8 paragraph 1, Code 2005, is amended to read as follows: 2 9 The amount of the tax credits determined pursuant to 2 10 subsection 6, paragraph "a", for each project shall be 2 11 approved by the department of economic development. The 2 12 department shall utilize the financial information required to 2 13 be provided under subsection 5, paragraph "e", to determine 2 14 the tax credits allowed for each project. In determining the 2 15 amount of tax credits to be allowed for a project, the 2 16 department shall not include the portion of the project cost 2 17 financed through federal, state, and local government tax 2 18 credits, grants, and forgivable loans. Upon approving the 2 19 amount of the tax credit, the department of economic 2 20 development shall issue a tax credit certificate to the 2 21 eligible housing business except when low=income housing tax 2 22 credits authorized under section 42 of the Internal Revenue 2 23 Code are used to assist in the financing of the housing 2 24 development in which case the tax credit certificate may be 2 25 issued to a partner if the business is a partnership, a 2 26 shareholder if the business is an S corporation, or a member 2 27 if the business is a limited liability company in the amounts 2 28 designated by the eligible partnership, S corporation, or 2 29 limited liability company. An eligible housing business or 2 30 the designated partner if the business is a partnership, 2 31 designated shareholder if the business is an S corporation, or 2 32 designated member if the business is a limited liability 2 33 company, or transferee shall not claim the tax credit unless a 2 34 tax credit certificate issued by the department of economic 2 35 development is attached to the taxpayer's return for the tax 3 1 year for which the tax credit is claimed. The tax credit 3 2 certificate shall contain the taxpayer's name, address, tax 3 3 identification number, the amount of the tax credit, and other 3 4 information required by the department of revenue. The tax 3 5 credit certificate shall be transferable if low=income housing 3 6 tax credits authorized under section 42 of the Internal 3 7 Revenue Code are used to assist in the financing of the 3 8 housing development. Tax credit certificates issued under 3 9 this chapter may be transferred to any person or entity. 3 10 Within ninety days of transfer, the transferee must submit the 3 11 transferred tax credit certificate to the department of 3 12 economic development along with a statement containing the 3 13 transferee's name, tax identification number, and address, and 3 14 the denomination that each replacement tax credit certificate 3 15 is to carry and any other information required by the 3 16 department of revenue. Within thirty days of receiving the 3 17 transferred tax credit certificate and the transferee's 3 18 statement, the department of economic development shall issue 3 19 one or more replacement tax credit certificates to the 3 20 transferee. Each replacement certificate must contain the 3 21 information required to receive the original certificate and 3 22 must have the same expiration date that appeared in the 3 23 transferred tax credit certificate. Tax credit certificate 3 24 amounts of less than the minimum amount established by rule of 3 25 the department of economic development shall not be 3 26 transferable. A tax credit shall not be claimed by a 3 27 transferee under subsection 6, paragraph "a", until a 3 28 replacement tax credit certificate identifying the transferee 3 29 as the proper holder has been issued. 3 30 Sec. 4. Section 422.11D, subsection 2, Code 2005, is 3 31 amended to read as follows: 3 32 2. An individual may claim a property rehabilitation tax 3 33 credit allowed a partnership, limited liability company, S 3 34 corporation, estate, or trust electing to have the income 3 35 taxed directly to the individual. The amount claimed by the 4 1 individual shall be based upon the pro rata share of the 4 2 individual's earnings of a partnership, limited liability 4 3 company, S corporation, estate, or trust except when low= 4 4 income housing tax credits authorized under section 42 of the 4 5 Internal Revenue Code are used to assist in the financing of 4 6 the housing development in which case the amount claimed by a 4 7 partner if the business is a partnership, a shareholder if the 4 8 business is an S corporation, or a member if the business is a 4 9 limited liability company shall be based on the amounts 4 10 designated by the eligible partnership, S corporation, or 4 11 limited liability company. 4 12 SF 392 4 13 tm:rj/cc/26