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House Study Bill 196 - IntroducedA Bill ForAn Act 1establishing a shortline railroad restoration tax
2credit, and including effective date and retroactive
3applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 15K.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
41. “Department” means the department of revenue.
52. “Qualifying shortline railroad restoration project”
6means an expenditure for maintenance, reconstruction, or
7replacement of railroad infrastructure. A “qualifying shortline
8railroad restoration project” also includes an expenditure for
9maintenance, reconstruction, or replacement expenses that may
10include new construction of industrial leads, switches, spurs,
11sidings, and extensions of existing sidings.
123. “Railroad infrastructure” includes track, roadbed,
13bridges, industrial leads, and track-related structures owned
14or leased as of January 1, 2019.
154. “Tax credit” means the shortline railroad restoration tax
16credit.
17 Sec. 2. NEW SECTION. 15K.2 Shortline railroad restoration
18tax credit — limitations.
19To qualify for the tax credit, all of the following must
20apply:
211. The taxpayer must be classified as a class II or class
22III railroad by the federal surface transportation board
23pursuant to 49 C.F.R.§1106.2.
242. The taxpayer must have a qualifying shortline railroad
25restoration project expenditure during the tax year.
263. A qualifying shortline railroad restoration project
27expenditure is deemed to have occurred on the date the
28expenditure is incurred.
294. a. For a class III railroad, the amount of the tax
30credit shall not exceed the product of seven thousand dollars
31multiplied by the number of miles of railroad track owned or
32leased within the state by the taxpayer at the close of the tax
33year when the qualifying shortline railroad project expenditure
34occurred.
35b. For a class II railroad, the amount of the tax credit
-1-1shall not exceed the product of two thousand dollars multiplied
2by the number of miles of railroad track owned or leased within
3the state by the taxpayer at the close of the tax year when the
4qualifying shortline railroad project expenditure occurred.
55. The amount of the tax credit shall equal fifty percent
6of the total expense of the qualifying shortline railroad
7restoration project expenditure paid for by the taxpayer,
8subject to the limitation in subsection 4.
9 Sec. 3. NEW SECTION. 15K.3 Shortline railroad restoration
10tax credit — certificate — transferability.
111. a. A tax credit is allowed against the taxes imposed in
12chapter 422, divisions II, III, and V, and in chapter 432, and
13against the moneys and credits tax imposed in section 533.329.
14b. An individual may claim a tax credit under this
15subsection of a partnership, limited liability company,
16S corporation, estate, or trust electing to have income
17taxed directly to the individual. The amount claimed by the
18individual shall be based upon the pro rata share of the
19individual’s earnings from the partnership, limited liability
20company, S corporation, estate, or trust.
21c. Any tax credit in excess of the taxpayer’s liability
22for the tax year is not refundable but may be credited to the
23tax liability for the following five years or until depleted,
24whichever is earlier.
25d. A tax credit shall not be carried back to a tax year
26prior to the tax year in which the taxpayer first receives the
27tax credit.
282. a. To claim a tax credit under subsection 1, a taxpayer
29must include one or more tax credit certificates with the
30taxpayer’s tax return. A tax credit certificate shall not be
31included with a return filed for a taxable year beginning prior
32to the tax year listed on the certificate.
33b. The tax credit certificate shall contain the taxpayer’s
34name, address, tax identification number, the amount of the
35credit, any other information required by the department,
-2-1and a place for the name and tax identification number of a
2transferee and the amount of the tax credit being transferred.
3c. The tax credit certificate, unless rescinded by the
4department, shall be accepted by the department as payment for
5taxes imposed pursuant to chapter 422, divisions II, III, and
6V, and in chapter 432, and against the moneys and credits tax
7imposed in section 533.329.
8d. Tax credit certificates issued under this section may be
9transferred to any individual or entity. Within ninety days
10of transfer, the transferee shall submit the transferred tax
11credit certificate to the department along with a statement
12containing the transferee’s name, tax identification number,
13and address, the denomination that each replacement tax credit
14certificate is to carry, and any other information required by
15the department.
16e. Within thirty days of receiving the transferred tax
17credit certificate and the transferee’s statement, the
18department shall issue one or more replacement tax credit
19certificates to the transferee. Each replacement tax credit
20certificate must contain the information required for the
21original tax credit certificate and must have the same
22expiration date that appeared in the transferred tax credit
23certificate. Tax credit certificate amounts of less than the
24minimum amount established by rule of the department shall not
25be transferable.
26f. A tax credit shall not be claimed by a transferee
27under this section until a replacement tax credit certificate
28identifying the transferee as the proper holder has been
29issued. The transferee may use the amount of the tax credit
30transferred against the taxes imposed in chapter 422, divisions
31II, III, and V, and chapter 432, and against the moneys and
32credits tax imposed in section 533.329, for any tax year the
33original transferor could have claimed the tax credit. Any
34consideration received for the transfer of the tax credit shall
35not be included as income under chapter 422, divisions II, III,
-3-1and V. Any consideration paid for the transfer of the tax
2credit shall not be deducted from income under chapter 422,
3divisions II, III, and V.
43. The amount of the tax credit shall be determined by the
5department as provided in section 15K.4.
6 Sec. 4. NEW SECTION. 15K.4 Tax credit — application —
7award.
81. The department shall develop a system for the
9application, review, and authorization of tax credits awarded
10pursuant to this chapter and shall control the issuance of all
11tax credit certificates.
122. Upon review of the information required to be submitted
13by a taxpayer, which shall include documentation of qualifying
14shortline railroad restoration projects eligible expenditures,
15the number of track miles in this state, and status as a class
16II or class III railroad, the department shall issue the tax
17credit certificate stating the amount of the tax credit that
18may be claimed.
193. Qualifying shortline railroad restoration project
20expenditures funded by grants from an agency of the federal
21government, from another state agency, or from a political
22subdivision of the state shall not be eligible to generate a
23tax credit award pursuant to this chapter.
244. The department shall adopt rules pursuant to chapter 17A
25to administer this chapter.
26 Sec. 5. NEW SECTION. 422.12N Shortline railroad restoration
27tax credit.
28The taxes imposed under this division, less the credits
29allowed under section 422.12, shall be reduced by a shortline
30railroad restoration tax credit as allowed under section 15K.3.
31 Sec. 6. Section 422.33, Code 2019, is amended by adding the
32following new subsection:
33 NEW SUBSECTION. 31. The taxes imposed under this division
34shall be reduced by a shortline railroad restoration tax credit
35as allowed under section 15K.3.
-4-1 Sec. 7. Section 422.60, Code 2019, is amended by adding the
2following new subsection:
3 NEW SUBSECTION. 14. The taxes imposed under this division
4shall be reduced by a shortline railroad restoration tax credit
5as allowed under section 15K.3.
6 Sec. 8. NEW SECTION. 432.12N Shortline railroad restoration
7tax credit.
8The taxes imposed under this chapter shall be reduced by
9a shortline railroad restoration tax credit as allowed under
10section 15K.3.
11 Sec. 9. Section 533.329, subsection 2, Code 2019, is amended
12by adding the following new paragraph:
13 NEW PARAGRAPH. l. The moneys and credits tax imposed
14under this section shall be reduced by a shortline railroad
15restoration tax credit allowed under section 15K.3.
16 Sec. 10. EFFECTIVE DATE. This Act, being deemed of
17immediate importance, takes effect upon enactment.
18 Sec. 11. RETROACTIVE APPLICABILITY. This Act applies
19retroactively to January 1, 2019, for tax years beginning on
20or after that date.
21EXPLANATION
22The inclusion of this explanation does not constitute agreement with
23the explanation’s substance by the members of the general assembly.
24This bill establishes a shortline railroad restoration tax
25credit to be administered by the department of revenue for
26qualifying shortline railroad restoration projects.
27The bill defines “qualifying shortline railroad restoration
28project” to mean expenditures for maintenance, reconstruction,
29or replacement of shortline railroad infrastructure.
30The bill defines “railroad infrastructure” to include
31track, roadbed, bridges, industrial leads, and track-related
32structures owned or leased as of January 1, 2019.
33The bill allows a tax credit against the taxes imposed
34in Code chapter 422, divisions II (personal income tax), III
35(corporations), and V (franchise), and in Code chapter 432
-5-1(insurance companies tax), and against the moneys and credits
2tax imposed in Code section 533.329 (credit union taxation).
3To qualify for the tax credit under the bill, the taxpayer
4must be classified as a class II or class III railroad by the
5federal surface transportation board, and have a qualifying
6shortline railroad restoration project expenditure during the
7tax year.
8For a class III railroad, the amount of the tax credit shall
9not exceed the product of $7,000 multiplied by the number of
10miles of railroad track owned or leased within this state by
11the taxpayer at the close of the tax year when the qualifying
12shortline railroad restoration project expenditure occurred.
13For a class II railroad, the amount of the tax credit shall
14not exceed the product of $2,000 multiplied by the number of
15miles of railroad track owned or leased within the state by
16the taxpayer at the close of the tax year when the qualifying
17railroad project expenditure occurred. The amount of the tax
18credit shall equal 50 percent of the total expense of the
19qualifying shortline railroad restoration project. The bill
20specifies that a qualifying shortline railroad restoration
21project expenditure is deemed to have occurred on the date the
22expenditure is incurred.
23The tax credit is not refundable, but any credit not used
24by the taxpayer may be carried forward for up to five years.
25However, a tax credit shall not be carried back to a tax year
26prior to the tax year in which the taxpayer first receives the
27tax credit.
28The bill allows the tax credit to be transferred to any
29individual or entity.
30The department of revenue is required to develop a system
31for the application, review, and authorization of tax credits
32awarded pursuant to the bill and shall control the issuance of
33all tax credit certificates.
34The bill takes effect upon enactment and applies
35retroactively to January 1, 2019, to tax years beginning on or
-6-1after that date.
-7-jm/jh
2credit, and including effective date and retroactive
3applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 15K.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
41. “Department” means the department of revenue.
52. “Qualifying shortline railroad restoration project”
6means an expenditure for maintenance, reconstruction, or
7replacement of railroad infrastructure. A “qualifying shortline
8railroad restoration project” also includes an expenditure for
9maintenance, reconstruction, or replacement expenses that may
10include new construction of industrial leads, switches, spurs,
11sidings, and extensions of existing sidings.
123. “Railroad infrastructure” includes track, roadbed,
13bridges, industrial leads, and track-related structures owned
14or leased as of January 1, 2019.
154. “Tax credit” means the shortline railroad restoration tax
16credit.
17 Sec. 2. NEW SECTION. 15K.2 Shortline railroad restoration
18tax credit — limitations.
19To qualify for the tax credit, all of the following must
20apply:
211. The taxpayer must be classified as a class II or class
22III railroad by the federal surface transportation board
23pursuant to 49 C.F.R.§1106.2.
242. The taxpayer must have a qualifying shortline railroad
25restoration project expenditure during the tax year.
263. A qualifying shortline railroad restoration project
27expenditure is deemed to have occurred on the date the
28expenditure is incurred.
294. a. For a class III railroad, the amount of the tax
30credit shall not exceed the product of seven thousand dollars
31multiplied by the number of miles of railroad track owned or
32leased within the state by the taxpayer at the close of the tax
33year when the qualifying shortline railroad project expenditure
34occurred.
35b. For a class II railroad, the amount of the tax credit
-1-1shall not exceed the product of two thousand dollars multiplied
2by the number of miles of railroad track owned or leased within
3the state by the taxpayer at the close of the tax year when the
4qualifying shortline railroad project expenditure occurred.
55. The amount of the tax credit shall equal fifty percent
6of the total expense of the qualifying shortline railroad
7restoration project expenditure paid for by the taxpayer,
8subject to the limitation in subsection 4.
9 Sec. 3. NEW SECTION. 15K.3 Shortline railroad restoration
10tax credit — certificate — transferability.
111. a. A tax credit is allowed against the taxes imposed in
12chapter 422, divisions II, III, and V, and in chapter 432, and
13against the moneys and credits tax imposed in section 533.329.
14b. An individual may claim a tax credit under this
15subsection of a partnership, limited liability company,
16S corporation, estate, or trust electing to have income
17taxed directly to the individual. The amount claimed by the
18individual shall be based upon the pro rata share of the
19individual’s earnings from the partnership, limited liability
20company, S corporation, estate, or trust.
21c. Any tax credit in excess of the taxpayer’s liability
22for the tax year is not refundable but may be credited to the
23tax liability for the following five years or until depleted,
24whichever is earlier.
25d. A tax credit shall not be carried back to a tax year
26prior to the tax year in which the taxpayer first receives the
27tax credit.
282. a. To claim a tax credit under subsection 1, a taxpayer
29must include one or more tax credit certificates with the
30taxpayer’s tax return. A tax credit certificate shall not be
31included with a return filed for a taxable year beginning prior
32to the tax year listed on the certificate.
33b. The tax credit certificate shall contain the taxpayer’s
34name, address, tax identification number, the amount of the
35credit, any other information required by the department,
-2-1and a place for the name and tax identification number of a
2transferee and the amount of the tax credit being transferred.
3c. The tax credit certificate, unless rescinded by the
4department, shall be accepted by the department as payment for
5taxes imposed pursuant to chapter 422, divisions II, III, and
6V, and in chapter 432, and against the moneys and credits tax
7imposed in section 533.329.
8d. Tax credit certificates issued under this section may be
9transferred to any individual or entity. Within ninety days
10of transfer, the transferee shall submit the transferred tax
11credit certificate to the department along with a statement
12containing the transferee’s name, tax identification number,
13and address, the denomination that each replacement tax credit
14certificate is to carry, and any other information required by
15the department.
16e. Within thirty days of receiving the transferred tax
17credit certificate and the transferee’s statement, the
18department shall issue one or more replacement tax credit
19certificates to the transferee. Each replacement tax credit
20certificate must contain the information required for the
21original tax credit certificate and must have the same
22expiration date that appeared in the transferred tax credit
23certificate. Tax credit certificate amounts of less than the
24minimum amount established by rule of the department shall not
25be transferable.
26f. A tax credit shall not be claimed by a transferee
27under this section until a replacement tax credit certificate
28identifying the transferee as the proper holder has been
29issued. The transferee may use the amount of the tax credit
30transferred against the taxes imposed in chapter 422, divisions
31II, III, and V, and chapter 432, and against the moneys and
32credits tax imposed in section 533.329, for any tax year the
33original transferor could have claimed the tax credit. Any
34consideration received for the transfer of the tax credit shall
35not be included as income under chapter 422, divisions II, III,
-3-1and V. Any consideration paid for the transfer of the tax
2credit shall not be deducted from income under chapter 422,
3divisions II, III, and V.
43. The amount of the tax credit shall be determined by the
5department as provided in section 15K.4.
6 Sec. 4. NEW SECTION. 15K.4 Tax credit — application —
7award.
81. The department shall develop a system for the
9application, review, and authorization of tax credits awarded
10pursuant to this chapter and shall control the issuance of all
11tax credit certificates.
122. Upon review of the information required to be submitted
13by a taxpayer, which shall include documentation of qualifying
14shortline railroad restoration projects eligible expenditures,
15the number of track miles in this state, and status as a class
16II or class III railroad, the department shall issue the tax
17credit certificate stating the amount of the tax credit that
18may be claimed.
193. Qualifying shortline railroad restoration project
20expenditures funded by grants from an agency of the federal
21government, from another state agency, or from a political
22subdivision of the state shall not be eligible to generate a
23tax credit award pursuant to this chapter.
244. The department shall adopt rules pursuant to chapter 17A
25to administer this chapter.
26 Sec. 5. NEW SECTION. 422.12N Shortline railroad restoration
27tax credit.
28The taxes imposed under this division, less the credits
29allowed under section 422.12, shall be reduced by a shortline
30railroad restoration tax credit as allowed under section 15K.3.
31 Sec. 6. Section 422.33, Code 2019, is amended by adding the
32following new subsection:
33 NEW SUBSECTION. 31. The taxes imposed under this division
34shall be reduced by a shortline railroad restoration tax credit
35as allowed under section 15K.3.
-4-1 Sec. 7. Section 422.60, Code 2019, is amended by adding the
2following new subsection:
3 NEW SUBSECTION. 14. The taxes imposed under this division
4shall be reduced by a shortline railroad restoration tax credit
5as allowed under section 15K.3.
6 Sec. 8. NEW SECTION. 432.12N Shortline railroad restoration
7tax credit.
8The taxes imposed under this chapter shall be reduced by
9a shortline railroad restoration tax credit as allowed under
10section 15K.3.
11 Sec. 9. Section 533.329, subsection 2, Code 2019, is amended
12by adding the following new paragraph:
13 NEW PARAGRAPH. l. The moneys and credits tax imposed
14under this section shall be reduced by a shortline railroad
15restoration tax credit allowed under section 15K.3.
16 Sec. 10. EFFECTIVE DATE. This Act, being deemed of
17immediate importance, takes effect upon enactment.
18 Sec. 11. RETROACTIVE APPLICABILITY. This Act applies
19retroactively to January 1, 2019, for tax years beginning on
20or after that date.
21EXPLANATION
22The inclusion of this explanation does not constitute agreement with
23the explanation’s substance by the members of the general assembly.
24This bill establishes a shortline railroad restoration tax
25credit to be administered by the department of revenue for
26qualifying shortline railroad restoration projects.
27The bill defines “qualifying shortline railroad restoration
28project” to mean expenditures for maintenance, reconstruction,
29or replacement of shortline railroad infrastructure.
30The bill defines “railroad infrastructure” to include
31track, roadbed, bridges, industrial leads, and track-related
32structures owned or leased as of January 1, 2019.
33The bill allows a tax credit against the taxes imposed
34in Code chapter 422, divisions II (personal income tax), III
35(corporations), and V (franchise), and in Code chapter 432
-5-1(insurance companies tax), and against the moneys and credits
2tax imposed in Code section 533.329 (credit union taxation).
3To qualify for the tax credit under the bill, the taxpayer
4must be classified as a class II or class III railroad by the
5federal surface transportation board, and have a qualifying
6shortline railroad restoration project expenditure during the
7tax year.
8For a class III railroad, the amount of the tax credit shall
9not exceed the product of $7,000 multiplied by the number of
10miles of railroad track owned or leased within this state by
11the taxpayer at the close of the tax year when the qualifying
12shortline railroad restoration project expenditure occurred.
13For a class II railroad, the amount of the tax credit shall
14not exceed the product of $2,000 multiplied by the number of
15miles of railroad track owned or leased within the state by
16the taxpayer at the close of the tax year when the qualifying
17railroad project expenditure occurred. The amount of the tax
18credit shall equal 50 percent of the total expense of the
19qualifying shortline railroad restoration project. The bill
20specifies that a qualifying shortline railroad restoration
21project expenditure is deemed to have occurred on the date the
22expenditure is incurred.
23The tax credit is not refundable, but any credit not used
24by the taxpayer may be carried forward for up to five years.
25However, a tax credit shall not be carried back to a tax year
26prior to the tax year in which the taxpayer first receives the
27tax credit.
28The bill allows the tax credit to be transferred to any
29individual or entity.
30The department of revenue is required to develop a system
31for the application, review, and authorization of tax credits
32awarded pursuant to the bill and shall control the issuance of
33all tax credit certificates.
34The bill takes effect upon enactment and applies
35retroactively to January 1, 2019, to tax years beginning on or
-6-1after that date.
-7-jm/jh