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Senate File 228 - IntroducedA Bill ForAn Act 1relating to economic development by providing an
2adjustment to net income for certified suppliers of anchor
3manufacturers for purposes of state taxation and including
4retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 2.48, subsection 3, Code 2017, is amended
2by adding the following new paragraph:
3 NEW PARAGRAPH. 0h. In 2019, the economic development
4program for certified suppliers of anchor manufacturers
5available under sections 15.226 through 15.229 and the related
6adjustments to net income provided in section 422.7, subsection
759, and section 422.35, subsection 26.
8 Sec. 2. NEW SECTION. 15.226 Definitions.
9For purposes of this part:
101. “Anchor manufacturer” means a business that meets all of
11the following:
12a. Manufactures tangible personal property at a facility in
13Iowa.
14b. Exports at least fifty percent of the tangible personal
15property manufactured at the facility to markets outside of the
16state.
172. “Certified supplier” means a business certified pursuant
18to section 15.227.
193. “Facility” means a building or buildings located in the
20state at which tangible personal property is manufactured for
21sale within or without the state of Iowa.
224. “Manufactured” or “Manufactures” means adding value to
23personal property through a process of manufacturing, refining,
24purifying, combining of different materials, the packaging of
25meats, extracting and recovering natural resources, and all
26processes of fabricating and curing, with a view to selling the
27property for gain or profit.
285. “Tangible personal property” means the same as defined in
29section 422.33, subsection 2, paragraph “b”, subparagraph (3).
30 Sec. 3. NEW SECTION. 15.227 Certification of suppliers.
311. A business meeting the requirements of subsection 2 may
32apply to the authority, no later than ninety days after the
33end of a tax year of the business, for certification under
34this section. If a business applying to the authority meets
35the requirements of subsection 2, the authority shall issue
-1-1a certificate to the business stating that the business is a
2certified supplier.
32. To receive certification as a certified supplier, a
4business must meet all of the following for the tax year
5immediately preceding the tax year for which the requested
6certificate will be valid:
7a. The business manufactures tangible personal property at a
8facility in Iowa.
9b. The business derives more than ten percent of its gross
10sales of tangible personal property manufactured at a facility
11in Iowa from sales to anchor manufacturers. For purposes of
12the requirement in this paragraph, a business may aggregate
13gross sales to more than one anchor manufacturer.
14c. All sales by the business to anchor manufacturers are
15arm’s length transactions.
16d. The business provides all of the following:
17(1) A statement or statements from one or more
18anchor manufacturers, signed by an officer or authorized
19representative of the anchor manufacturer, attesting that the
20anchor manufacturer meets the definition of anchor manufacturer
21under section 15.226. The business shall provide statements
22from as many anchor manufacturers to which the business makes
23sales as collectively represents more than ten percent of
24the business’s gross sales of tangible personal property
25manufactured at a facility in Iowa.
26(2) Supporting documentation in a form prescribed by the
27authority.
28e. The business meets one of the following criteria:
29(1) At least ten percent of the total payroll of the
30business is located in the state.
31(2) The business employs at least fifty employees at a
32facility in the state.
33f. The business agrees to annually provide to the authority
34information and data on jobs created and capital investments
35made in the state by the business. The information and data
-2-1shall be in a form prescribed by the authority.
2g. The business is not an anchor manufacturer.
33. A certificate is valid for one tax year and shall include
4an expiration date. Reapplication may be made each year for
5certification under this part. The department of revenue shall
6accept a validly issued, unexpired certificate issued under
7this section.
84. The authority shall not issue certificates pursuant to
9this section for tax years beginning on or after January 1,
102020.
11 Sec. 4. NEW SECTION. 15.228 Eligibility for adjustment to
12net income of certified suppliers.
131. A certified supplier shall be eligible to make the
14adjustment to net income in section 422.35, subsection 26, for
15a tax year if all the following apply:
16a. The certified supplier’s net business income for the tax
17year, allocated and apportioned to this state under section
18422.33, subsection 2, paragraph “a”, subparagraph (2), computed
19without regard to section 422.35, subsection 26, increased
20by more than five percent over the certified supplier’s net
21business income in the prior year, allocated and apportioned to
22this state under section 422.33, subsection 2, paragraph “a”,
23subparagraph (2).
24b. The certified supplier includes a copy of a valid,
25unexpired certificate issued under section 15.227 with the
26certified supplier’s tax return required under chapter 422.
272. A taxpayer who is a shareholder in a subchapter S
28corporation that is a certified supplier shall be eligible to
29make the adjustment to net income in section 422.7, subsection
3059, for a tax year if all the following apply:
31a. The certified supplier’s net business income for the tax
32year, allocated and apportioned to this state under section
33422.33, subsection 2, paragraph “a”, subparagraph (2), computed
34without regard to section 422.35, subsection 26, increased
35by more than five percent over the certified supplier’s net
-3-1business income in the prior year, allocated and apportioned
2to this state under section 422.33, subsection 2, paragraph
3“a”, subparagraph (2), which prior year’s allocation and
4apportionment shall be computed with regard to section 422.35,
5subsection 26, if the subchapter S corporation was a certified
6supplier in the previous tax year and met the eligibility
7requirements in this paragraph “a”.
8b. The shareholder includes a copy of a valid, unexpired
9certificate issued under section 15.227 with the shareholder’s
10tax return required under chapter 422.
113. For purposes of establishing eligibility under this
12section, “net business income” shall not include any income of
13a certified supplier that is attributable to an existing trade
14or business or income-producing contract that was acquired by
15the certified supplier through merger or acquisition during or
16after the first year for which the certified supplier becomes
17eligible pursuant to this section for the adjustments to net
18income in section 422.7, subsection 59, or section 422.35,
19subsection 26.
20 Sec. 5. NEW SECTION. 15.229 Rules.
21The authority and the department of revenue may adopt rules
22pursuant to chapter 17A to administer this part.
23 Sec. 6. Section 257.21, subsection 2, Code 2017, is amended
24to read as follows:
252. The instructional support income surtax shall be imposed
26on the state individual income tax for the calendar year during
27which the school’s budget year begins, or for a taxpayer’s
28fiscal year ending during the second half of that calendar year
29and after the date the board adopts a resolution to participate
30in the program or the first half of the succeeding calendar
31year, and shall be imposed on all individuals residing in the
32school district on the last day of the applicable tax year.
33As used in this section, “state individual income tax” means
34the taxes computed under section 422.5, without regard to the
35adjustment to net income in section 422.7, subsection 59, less
-4-1the amounts of nonrefundable credits allowed under chapter
2422, division II, except for the Iowa taxpayers trust fund tax
3credit allowed under section 422.11E.
4 Sec. 7. Section 422.7, Code 2017, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 59. a. If the adjusted gross income
7includes income from a subchapter S corporation for which the
8taxpayer is a shareholder, which subchapter S corporation is
9a certified supplier that meets the requirements in section
1015.228, subsection 2, paragraph “a”, the taxpayer may subtract
11an amount based on the taxpayer’s pro rata share of the
12profits or losses from the subchapter S corporation equal to
13the difference between the subchapter S corporation’s net
14business income for the tax year, allocated and apportioned to
15this state under section 422.33, subsection 2, paragraph “a”,
16subparagraph (2), computed without regard to section 422.35,
17subsection 26, and one hundred five percent of the subchapter
18S corporation’s net business income for the prior tax year,
19allocated and apportioned under section 422.33, subsection 2,
20paragraph “a”, subparagraph (2), which prior year’s allocation
21and apportionment shall be computed with regard to section
22422.35, subsection 26, if the subchapter S corporation was
23a certified supplier in the previous tax year and met the
24requirements in section 15.228, subsection 2, paragraph “a”.
25A taxpayer who is a resident shall not make the subtraction
26provided in this subsection unless the taxpayer also makes an
27election pursuant to section 422.5, subsection 1, paragraph
28“j”, subparagraph (2).
29b. For purposes of the adjustment provided in this
30subsection, “net business income” shall not include any
31income of a certified supplier that is attributable to an
32existing trade or business or income-producing contract that
33was acquired by the certified supplier through merger or
34acquisition during or after the first year for which the
35certified supplier becomes eligible for the adjustment in this
-5-1subsection.
2 Sec. 8. Section 422.35, Code 2017, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 26. a. If the taxpayer is a certified
5supplier that meets the requirements in section 15.228,
6subsection 1, subtract an amount equal to the difference
7between the taxpayer’s net business income for the tax year,
8allocated and apportioned under section 422.33, subsection 2,
9paragraph “a”, subparagraph (2), computed without regard to
10this subsection, and one hundred five percent of the taxpayer’s
11net business income for the prior tax year, allocated and
12apportioned under section 422.33, subsection 2, paragraph “a”,
13subparagraph (2).
14b. For purposes of the adjustment provided in this
15subsection, “net business income” shall not include any
16income of a certified supplier that is attributable to an
17existing trade or business or income-producing contract
18which was acquired by the certified supplier through merger
19or acquisition during or after the first year for which the
20certified supplier becomes eligible for the adjustment in this
21subsection.
22 Sec. 9. Section 422D.2, Code 2017, is amended to read as
23follows:
24422D.2 Local income surtax.
25A county may impose by ordinance a local income surtax as
26provided in section 422D.1 at the rate set by the board of
27supervisors, of up to one percent, on the state individual
28income tax of each individual residing in the county at the
29end of the individual’s applicable tax year. However, the
30cumulative total of the percents of income surtax imposed on
31any taxpayer in the county shall not exceed twenty percent.
32The reason for imposing the surtax and the amount needed
33shall be set out in the ordinance. The surtax rate shall be
34set to raise only the amount needed. For purposes of this
35section, “state individual income tax” means the tax computed
-6-1under section 422.5, without regard to the adjustment to net
2income in section 422.7, subsection 59, less the amounts of
3nonrefundable credits allowed under chapter 422, division II,
4except for the Iowa taxpayers trust fund tax credit allowed
5under section 422.11E.
6 Sec. 10. RETROACTIVE APPLICABILITY. This Act applies
7retroactively to January 1, 2017, for tax years beginning on
8or after that date.
9EXPLANATION
10The inclusion of this explanation does not constitute agreement with
11the explanation’s substance by the members of the general assembly.
12This bill creates an economic development program that
13allows a certified supplier to make an adjustment to net income
14for state individual and corporate income tax purposes. The
15adjustment is available for corporations and shareholders of
16subchapter S corporations.
17To qualify as a certified supplier under the bill, a business
18must meet several requirements. The business must manufacture
19tangible personal property in Iowa but cannot be an anchor
20manufacturer. The business must derive more than 10 percent
21of its gross sales from sales to anchor manufacturers, and all
22such sales must be arm’s length transactions. The business
23must supply the authority with signed statements from a certain
24number of anchor manufacturers attesting to certain information
25as prescribed in the bill and must agree to annually provide
26to the authority information and data on jobs and capital
27investments made in the state by the business. Finally, the
28business must maintain at least 10 percent of its payroll in
29Iowa or employ at least 50 employees in Iowa.
30“Anchor manufacturer” is defined as a business that
31manufactures tangible personal property in Iowa and exports at
32least 50 percent of the tangible personal property manufactured
33in Iowa outside of the state.
34A business that meets all of the qualifications of a
35certified supplier may annually apply to the authority to
-7-1receive a certificate labeling the business as a certified
2supplier. A business must apply for a certificate no later
3than 90 days after the end of its tax year. The certificate is
4valid for one year and shall include an expiration date.
5The certified supplier will be entitled to make an
6adjustment to its net income if it includes the valid,
7unexpired certificate with its tax return, and if its net
8business income allocated and apportioned to this state,
9computed without regard to the adjustment to net income
10provided in the bill, increased by more than 5 percent over
11its prior year net business income allocated and apportioned
12to this state.
13If both requirements are met, the certified supplier is
14entitled to subtract from its net income an amount equal to
15the difference between its current year net business income
16allocated and apportioned to this state, computed without
17regard to the adjustment to net income provided in the bill,
18and 105 percent of its prior year net business income allocated
19and apportioned to this state. This net income adjustment
20does not take into account any income attributable to an
21existing trade or business or income-producing contract
22which was acquired by the certified supplier through merger
23or acquisition during or after the first year for which
24the certified supplier became eligible for the net income
25adjustment. Finally, the bill excludes this net income
26adjustment from the calculation of the school district income
27surtaxes in Code sections 257.21 (instructional support
28program), 257.29 (educational improvement program), and 298.2
29(physical plant and equipment levy), and the emergency medical
30services income surtax in Code chapter 422D, so that revenues
31from those taxes will not be reduced as a result of the net
32income adjustment.
33The economic development authority shall not issue
34certificates for tax years beginning on or after January 1,
352020. The bill includes the certification program and its
-8-1related income tax adjustments on the list of tax expenditures
2that the legislative tax expenditure committee is required to
3review during 2019.
4The bill provides the authority and department of revenue
5with rulemaking authority.
6The bill applies retroactively to January 1, 2017, for tax
7years beginning on or after that date.
-9-mm/sc
2adjustment to net income for certified suppliers of anchor
3manufacturers for purposes of state taxation and including
4retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 2.48, subsection 3, Code 2017, is amended
2by adding the following new paragraph:
3 NEW PARAGRAPH. 0h. In 2019, the economic development
4program for certified suppliers of anchor manufacturers
5available under sections 15.226 through 15.229 and the related
6adjustments to net income provided in section 422.7, subsection
759, and section 422.35, subsection 26.
8 Sec. 2. NEW SECTION. 15.226 Definitions.
9For purposes of this part:
101. “Anchor manufacturer” means a business that meets all of
11the following:
12a. Manufactures tangible personal property at a facility in
13Iowa.
14b. Exports at least fifty percent of the tangible personal
15property manufactured at the facility to markets outside of the
16state.
172. “Certified supplier” means a business certified pursuant
18to section 15.227.
193. “Facility” means a building or buildings located in the
20state at which tangible personal property is manufactured for
21sale within or without the state of Iowa.
224. “Manufactured” or “Manufactures” means adding value to
23personal property through a process of manufacturing, refining,
24purifying, combining of different materials, the packaging of
25meats, extracting and recovering natural resources, and all
26processes of fabricating and curing, with a view to selling the
27property for gain or profit.
285. “Tangible personal property” means the same as defined in
29section 422.33, subsection 2, paragraph “b”, subparagraph (3).
30 Sec. 3. NEW SECTION. 15.227 Certification of suppliers.
311. A business meeting the requirements of subsection 2 may
32apply to the authority, no later than ninety days after the
33end of a tax year of the business, for certification under
34this section. If a business applying to the authority meets
35the requirements of subsection 2, the authority shall issue
-1-1a certificate to the business stating that the business is a
2certified supplier.
32. To receive certification as a certified supplier, a
4business must meet all of the following for the tax year
5immediately preceding the tax year for which the requested
6certificate will be valid:
7a. The business manufactures tangible personal property at a
8facility in Iowa.
9b. The business derives more than ten percent of its gross
10sales of tangible personal property manufactured at a facility
11in Iowa from sales to anchor manufacturers. For purposes of
12the requirement in this paragraph, a business may aggregate
13gross sales to more than one anchor manufacturer.
14c. All sales by the business to anchor manufacturers are
15arm’s length transactions.
16d. The business provides all of the following:
17(1) A statement or statements from one or more
18anchor manufacturers, signed by an officer or authorized
19representative of the anchor manufacturer, attesting that the
20anchor manufacturer meets the definition of anchor manufacturer
21under section 15.226. The business shall provide statements
22from as many anchor manufacturers to which the business makes
23sales as collectively represents more than ten percent of
24the business’s gross sales of tangible personal property
25manufactured at a facility in Iowa.
26(2) Supporting documentation in a form prescribed by the
27authority.
28e. The business meets one of the following criteria:
29(1) At least ten percent of the total payroll of the
30business is located in the state.
31(2) The business employs at least fifty employees at a
32facility in the state.
33f. The business agrees to annually provide to the authority
34information and data on jobs created and capital investments
35made in the state by the business. The information and data
-2-1shall be in a form prescribed by the authority.
2g. The business is not an anchor manufacturer.
33. A certificate is valid for one tax year and shall include
4an expiration date. Reapplication may be made each year for
5certification under this part. The department of revenue shall
6accept a validly issued, unexpired certificate issued under
7this section.
84. The authority shall not issue certificates pursuant to
9this section for tax years beginning on or after January 1,
102020.
11 Sec. 4. NEW SECTION. 15.228 Eligibility for adjustment to
12net income of certified suppliers.
131. A certified supplier shall be eligible to make the
14adjustment to net income in section 422.35, subsection 26, for
15a tax year if all the following apply:
16a. The certified supplier’s net business income for the tax
17year, allocated and apportioned to this state under section
18422.33, subsection 2, paragraph “a”, subparagraph (2), computed
19without regard to section 422.35, subsection 26, increased
20by more than five percent over the certified supplier’s net
21business income in the prior year, allocated and apportioned to
22this state under section 422.33, subsection 2, paragraph “a”,
23subparagraph (2).
24b. The certified supplier includes a copy of a valid,
25unexpired certificate issued under section 15.227 with the
26certified supplier’s tax return required under chapter 422.
272. A taxpayer who is a shareholder in a subchapter S
28corporation that is a certified supplier shall be eligible to
29make the adjustment to net income in section 422.7, subsection
3059, for a tax year if all the following apply:
31a. The certified supplier’s net business income for the tax
32year, allocated and apportioned to this state under section
33422.33, subsection 2, paragraph “a”, subparagraph (2), computed
34without regard to section 422.35, subsection 26, increased
35by more than five percent over the certified supplier’s net
-3-1business income in the prior year, allocated and apportioned
2to this state under section 422.33, subsection 2, paragraph
3“a”, subparagraph (2), which prior year’s allocation and
4apportionment shall be computed with regard to section 422.35,
5subsection 26, if the subchapter S corporation was a certified
6supplier in the previous tax year and met the eligibility
7requirements in this paragraph “a”.
8b. The shareholder includes a copy of a valid, unexpired
9certificate issued under section 15.227 with the shareholder’s
10tax return required under chapter 422.
113. For purposes of establishing eligibility under this
12section, “net business income” shall not include any income of
13a certified supplier that is attributable to an existing trade
14or business or income-producing contract that was acquired by
15the certified supplier through merger or acquisition during or
16after the first year for which the certified supplier becomes
17eligible pursuant to this section for the adjustments to net
18income in section 422.7, subsection 59, or section 422.35,
19subsection 26.
20 Sec. 5. NEW SECTION. 15.229 Rules.
21The authority and the department of revenue may adopt rules
22pursuant to chapter 17A to administer this part.
23 Sec. 6. Section 257.21, subsection 2, Code 2017, is amended
24to read as follows:
252. The instructional support income surtax shall be imposed
26on the state individual income tax for the calendar year during
27which the school’s budget year begins, or for a taxpayer’s
28fiscal year ending during the second half of that calendar year
29and after the date the board adopts a resolution to participate
30in the program or the first half of the succeeding calendar
31year, and shall be imposed on all individuals residing in the
32school district on the last day of the applicable tax year.
33As used in this section, “state individual income tax” means
34the taxes computed under section 422.5, without regard to the
35adjustment to net income in section 422.7, subsection 59, less
-4-1the amounts of nonrefundable credits allowed under chapter
2422, division II, except for the Iowa taxpayers trust fund tax
3credit allowed under section 422.11E.
4 Sec. 7. Section 422.7, Code 2017, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 59. a. If the adjusted gross income
7includes income from a subchapter S corporation for which the
8taxpayer is a shareholder, which subchapter S corporation is
9a certified supplier that meets the requirements in section
1015.228, subsection 2, paragraph “a”, the taxpayer may subtract
11an amount based on the taxpayer’s pro rata share of the
12profits or losses from the subchapter S corporation equal to
13the difference between the subchapter S corporation’s net
14business income for the tax year, allocated and apportioned to
15this state under section 422.33, subsection 2, paragraph “a”,
16subparagraph (2), computed without regard to section 422.35,
17subsection 26, and one hundred five percent of the subchapter
18S corporation’s net business income for the prior tax year,
19allocated and apportioned under section 422.33, subsection 2,
20paragraph “a”, subparagraph (2), which prior year’s allocation
21and apportionment shall be computed with regard to section
22422.35, subsection 26, if the subchapter S corporation was
23a certified supplier in the previous tax year and met the
24requirements in section 15.228, subsection 2, paragraph “a”.
25A taxpayer who is a resident shall not make the subtraction
26provided in this subsection unless the taxpayer also makes an
27election pursuant to section 422.5, subsection 1, paragraph
28“j”, subparagraph (2).
29b. For purposes of the adjustment provided in this
30subsection, “net business income” shall not include any
31income of a certified supplier that is attributable to an
32existing trade or business or income-producing contract that
33was acquired by the certified supplier through merger or
34acquisition during or after the first year for which the
35certified supplier becomes eligible for the adjustment in this
-5-1subsection.
2 Sec. 8. Section 422.35, Code 2017, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 26. a. If the taxpayer is a certified
5supplier that meets the requirements in section 15.228,
6subsection 1, subtract an amount equal to the difference
7between the taxpayer’s net business income for the tax year,
8allocated and apportioned under section 422.33, subsection 2,
9paragraph “a”, subparagraph (2), computed without regard to
10this subsection, and one hundred five percent of the taxpayer’s
11net business income for the prior tax year, allocated and
12apportioned under section 422.33, subsection 2, paragraph “a”,
13subparagraph (2).
14b. For purposes of the adjustment provided in this
15subsection, “net business income” shall not include any
16income of a certified supplier that is attributable to an
17existing trade or business or income-producing contract
18which was acquired by the certified supplier through merger
19or acquisition during or after the first year for which the
20certified supplier becomes eligible for the adjustment in this
21subsection.
22 Sec. 9. Section 422D.2, Code 2017, is amended to read as
23follows:
24422D.2 Local income surtax.
25A county may impose by ordinance a local income surtax as
26provided in section 422D.1 at the rate set by the board of
27supervisors, of up to one percent, on the state individual
28income tax of each individual residing in the county at the
29end of the individual’s applicable tax year. However, the
30cumulative total of the percents of income surtax imposed on
31any taxpayer in the county shall not exceed twenty percent.
32The reason for imposing the surtax and the amount needed
33shall be set out in the ordinance. The surtax rate shall be
34set to raise only the amount needed. For purposes of this
35section, “state individual income tax” means the tax computed
-6-1under section 422.5, without regard to the adjustment to net
2income in section 422.7, subsection 59, less the amounts of
3nonrefundable credits allowed under chapter 422, division II,
4except for the Iowa taxpayers trust fund tax credit allowed
5under section 422.11E.
6 Sec. 10. RETROACTIVE APPLICABILITY. This Act applies
7retroactively to January 1, 2017, for tax years beginning on
8or after that date.
9EXPLANATION
10The inclusion of this explanation does not constitute agreement with
11the explanation’s substance by the members of the general assembly.
12This bill creates an economic development program that
13allows a certified supplier to make an adjustment to net income
14for state individual and corporate income tax purposes. The
15adjustment is available for corporations and shareholders of
16subchapter S corporations.
17To qualify as a certified supplier under the bill, a business
18must meet several requirements. The business must manufacture
19tangible personal property in Iowa but cannot be an anchor
20manufacturer. The business must derive more than 10 percent
21of its gross sales from sales to anchor manufacturers, and all
22such sales must be arm’s length transactions. The business
23must supply the authority with signed statements from a certain
24number of anchor manufacturers attesting to certain information
25as prescribed in the bill and must agree to annually provide
26to the authority information and data on jobs and capital
27investments made in the state by the business. Finally, the
28business must maintain at least 10 percent of its payroll in
29Iowa or employ at least 50 employees in Iowa.
30“Anchor manufacturer” is defined as a business that
31manufactures tangible personal property in Iowa and exports at
32least 50 percent of the tangible personal property manufactured
33in Iowa outside of the state.
34A business that meets all of the qualifications of a
35certified supplier may annually apply to the authority to
-7-1receive a certificate labeling the business as a certified
2supplier. A business must apply for a certificate no later
3than 90 days after the end of its tax year. The certificate is
4valid for one year and shall include an expiration date.
5The certified supplier will be entitled to make an
6adjustment to its net income if it includes the valid,
7unexpired certificate with its tax return, and if its net
8business income allocated and apportioned to this state,
9computed without regard to the adjustment to net income
10provided in the bill, increased by more than 5 percent over
11its prior year net business income allocated and apportioned
12to this state.
13If both requirements are met, the certified supplier is
14entitled to subtract from its net income an amount equal to
15the difference between its current year net business income
16allocated and apportioned to this state, computed without
17regard to the adjustment to net income provided in the bill,
18and 105 percent of its prior year net business income allocated
19and apportioned to this state. This net income adjustment
20does not take into account any income attributable to an
21existing trade or business or income-producing contract
22which was acquired by the certified supplier through merger
23or acquisition during or after the first year for which
24the certified supplier became eligible for the net income
25adjustment. Finally, the bill excludes this net income
26adjustment from the calculation of the school district income
27surtaxes in Code sections 257.21 (instructional support
28program), 257.29 (educational improvement program), and 298.2
29(physical plant and equipment levy), and the emergency medical
30services income surtax in Code chapter 422D, so that revenues
31from those taxes will not be reduced as a result of the net
32income adjustment.
33The economic development authority shall not issue
34certificates for tax years beginning on or after January 1,
352020. The bill includes the certification program and its
-8-1related income tax adjustments on the list of tax expenditures
2that the legislative tax expenditure committee is required to
3review during 2019.
4The bill provides the authority and department of revenue
5with rulemaking authority.
6The bill applies retroactively to January 1, 2017, for tax
7years beginning on or after that date.
-9-mm/sc