SF 431 – Solar energy system tax credit update
SF 432 – Department of Revenue agency efficiency bill
SF 433 – Targeted Jobs/Border Cities
SF 434 – Electric and Natural Gas vehicle fueling infrastructure tax credit
SF 436 – Historic Tax credits
SF 437 – Charitable Food Donations
HF 575 – Department of Revenue technical update bill
FLOOR AND COMMITTEE ACTION:
SF 433 concerns the Targeted Jobs Withholding Tax Credit Program. This program was enacted in 2006 and allows the diversion of withholding funds paid by an employer to be matched by a designated border city to create economic incentives that can be directed toward the growth and expansion of targeted businesses. These changes are made to the program:
• Extends the sunset date for new contracts under this program until 2018.
• Removes the requirement that a project be located in an urban renewal area, which decreases a city’s administrative procedures.
• Defines “retained job” as “at risk of elimination or being relocated out of state.”
• Changes the contract term and approval process within the Iowa Economic Development Authority (IEDA) and makes IEDA party to the agreements.
• Allows IEDA the ability to terminate agreements for noncompliance.
• Provides clear compliance requirements to go along with more compliance authority for IEDA.
• Limits the value of a lease to the term of a project agreement. [Floor 4/3: 47-3 (Chelgren, Guth, Zaun “no”); Committee 4/1: short form]
COMMITTEE ACTION:
SF 431updates the solar energy system tax credit passed last session. The bill would allow a single taxpayer to claim multiple credits for multiple installations. Currently, a taxpayer is limited to one credit. This change would allow a business with multiple locations the ability to install a solar energy system at more than one location and receive a credit for each installation. The bill would also allow the unused allotment of tax credits for a fiscal year to carry forward and be used in the following year in the event that there is not sufficient projects eligible in that year. [4/1: short form]
SF 432 is the Department of Revenue’s (DOR) proposed efficiency bill. The bill eliminates unnecessary notice provisions in the Code, and allows DOR to require counties to share geographic information systems (GIS) data with the department. This data will help DOR more efficiently review and administer property assessment and equalization processes. Currently, 94 of the 99 counties have this GIS technology, which includes detailed physical and demographic information of land and parcels. [4/1: short form]
SF 434establishes a tax credit for the costs of purchasing and installing electric or natural gas vehicle fueling infrastructure. The allowed equipment would include pumps and other equipment associated with the dispensing of compressed natural gas and charging equipment for electricity. The amount of tax credit equals 30 percent of the cost to purchase the equipment and 30 percent to complete the installation. For tax credits taken for agricultural or commercial installations, the tax credit must be spread equally over the course of three years, while a residential installation would be allowed to take the full tax credit amount in one tax year. Tax credits for residential installations can only be for an electronic facility. The tax credit is applicable to qualified installations put in service beginning January 1, 2013, but before January 1, 2016. [4/1: short form]
HF 575 makes a number of technical changes to existing tax laws. These changes include:
• Arranges Iowa Code to list the securities issued by the state or other political subdivisions that are currently exempt from individual and corporate income taxes.
• Deletes an obsolete reference to the treatment of a federal rate reduction tax credit. The federal tax credit was in effect for 2001 and 2002 only.
• Clarifies the state Auditor’s ability to access certain confidential tax information to complete an audit.
• Amends Code language that was enacted last year to exempt consumable supplies purchased by auto body shops for use in repairs from sales tax. The language enacted last session did not accomplish the intent of the legislation, so the language is being change to meet that intent.
• Deletes a reference to an obsolete sales tax exemption for wine shipped into Iowa.
• Clarifies audit and enforcement abilities regarding the E911 surcharge on prepaid wireless services.
• Changes the existing currency exchange license from a biennial license to an annual license. [4/1: short form]
SF 436increases the cap for the annual amount of historic tax credits. Currently the cap is set at $45 million, and the bill increases that cap to $60 million for FY14 to FY16 before returning to $50 million beginning in FY17. The bill also changes the “substantial rehabilitation” threshold for a commercial property to qualify for the credits. Currently a project must have costs equaling at least 50 percent of the assessed value of the property to qualify as a substantial rehabilitation. The bill changes the threshold to $50,000 or 50 percent of the assessed value, so that a property can undergo at least $50,000 in renovations and still qualify even if that amount is less than 50 percent of the assessed value of the property. Additionally, the bill raises the threshold for the size of projects that are eligible to qualify for the portion of the tax credits reserved for smaller projects. Currently, project costs must be $500,000 or less to qualify as a small project. The bill would raise the small project size to $750,000 or less. Finally, the bill allows projects that have incurred at least 50 percent of their project costs within 60 months of receiving the credits an additional year to maintain the credits. Currently, a project must be completed within 60 months of when it is awarded credits. The bill extends the timeframe to 72 months for a project that has incurred at least half of the project costs but not finished by the end of 60 months. [4/1: short form]
SF 437establishes and funds a State Emergency Food Program. Highlights include:
• Allocating $2 million to purchase and distribute food, as well as educate recipients on how to use the food to form and maintain a nutritional diet. This comprises $1.7 million to purchase nutritional products to be allocated to the eight Feeding America food banks affiliated with the Iowa Food Bank Association based on the federal commodities distribution formula (with emphasis on products that originate from Iowa or will be of economic benefit to the state); $100,000 in grant funds to be distributed to emergency feeding organizations to implement innovative nutrition education programs; and $200,000 for transportation and storage costs.
• Creating a 15 percent tax credit for farmers that donate products that are immediately consumable by individuals. The tax credit is capped at $5,000 per individual. The value of the commodities (for a tax credit) is determined in the same manner as the IRS. In addition, a person may choose a tax credit or a tax deduction, not both. The tax credit is estimated to cost the state General Fund $40,000 or less annually. [4/1: 10-5 (party-line, with except for Bertrand voting “aye”)]