House File 2471 - Reprinted
HOUSE FILE
BY COMMITTEE ON WAYS AND
MEANS
(SUCCESSOR TO HF 2359)
(SUCCESSOR TO HSB 604)
(As Amended and Passed by the House April 23, 2012)
A BILL FOR
1 An Act relating to economic development by providing an
2 adjustment to net income for certified suppliers of anchor
3 manufacturers for purposes of state taxation and including
4 retroactive applicability provisions.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
HF 2471 (5) 84
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PAG LIN
1 1 Section 1. NEW SECTION. 15.226 Definitions.
1 2 For purposes of this part:
1 3 1. "Anchor manufacturer" means a business that meets all of
1 4 the following:
1 5 a. Manufactures tangible personal property at a facility in
1 6 Iowa.
1 7 b. Exports at least fifty percent of the tangible personal
1 8 property produced at the facility to markets outside of the
1 9 state.
1 10 2. "Certified supplier" means a business certified pursuant
1 11 to section 15.227.
1 12 3. "Facility" means a building or buildings located in the
1 13 state at which tangible personal property is manufactured for
1 14 sale within or without the state of Iowa.
1 15 4. "Manufactured" or "Manufactures" means adding value to
1 16 personal property through a process of manufacturing, refining,
1 17 purifying, combining of different materials, the packaging of
1 18 meats, extracting and recovering natural resources, and all
1 19 processes of fabricating and curing, with a view to selling the
1 20 property for gain or profit.
1 21 5. "Tangible personal property" means the same as defined in
1 22 section 422.33, subsection 2, unnumbered paragraph 2.
1 23 Sec. 2. NEW SECTION. 15.227 Certification of suppliers.
1 24 1. A business meeting the requirements of subsection 2 may
1 25 apply to the authority, no later than ninety days after the
1 26 end of a tax year of the business, for certification under
1 27 this section. If a business applying to the authority meets
1 28 the requirements of subsection 2, the authority shall issue
1 29 a certificate to the business stating that the business is a
1 30 certified supplier.
1 31 2. To receive certification as a certified supplier, a
1 32 business must meet all of the following for the tax year
1 33 immediately preceding the tax year for which the requested
1 34 certificate will be valid:
1 35 a. The business manufactures tangible personal property at a
2 1 facility in Iowa.
2 2 b. The business derives more than ten percent of its gross
2 3 sales of tangible personal property manufactured at a facility
2 4 in Iowa from sales to anchor manufacturers. For purposes of
2 5 the requirement in this paragraph, a business may aggregate
2 6 gross sales to more than one anchor manufacturer.
2 7 c. All sales by the business to anchor manufacturers are
2 8 arm's length transactions.
2 9 d. The business provides a statement from an anchor
2 10 manufacturer, signed by an officer or authorized representative
2 11 of the anchor manufacturer, attesting that the anchor
2 12 manufacturer meets the definition of anchor manufacturer under
2 13 section 15.226, and provides supporting documentation in a form
2 14 prescribed by the authority.
2 15 e. The business meets one of the following criteria:
2 16 (1) At least ten percent of the total payroll of the
2 17 business is located in the state.
2 18 (2) The business employs at least fifty employees at a
2 19 facility in the state.
2 20 f. The business agrees to annually provide to the authority
2 21 information and data on jobs created and capital investments
2 22 made in the state by the business. The information and data
2 23 shall be in a form prescribed by the authority.
2 24 g. The business is not an anchor manufacturer.
2 25 3. A certificate is valid for one tax year and shall include
2 26 an expiration date. Reapplication may be made each year for
2 27 certification under this part. The department of revenue shall
2 28 accept a validly issued, unexpired certificate issued under
2 29 this section.
2 30 4. The authority shall not issue certificates pursuant
2 31 to this section for tax years beginning on or after January
2 32 1, 2015. On or after January 1, 2015, the authority and the
2 33 department of revenue shall coordinate with the chairpersons
2 34 of the senate and house standing committees on economic
2 35 growth and rebuild Iowa to evaluate the effectiveness of this
3 1 certification process and the related adjustments to net income
3 2 provided in chapter 422, and the feasibility of continuing both
3 3 into the future.
3 4 Sec. 3. NEW SECTION. 15.228 Eligibility for adjustment to
3 5 net income of certified suppliers.
3 6 1. A certified supplier shall be eligible to make the
3 7 adjustment to net income in section 422.35, subsection 26, for
3 8 a tax year if all the following apply:
3 9 a. The certified supplier's net business income for the tax
3 10 year, allocated and apportioned to this state under section
3 11 422.33, subsection 2, paragraph "b", computed without regard
3 12 to section 422.35, subsection 26, increased by more than five
3 13 percent over the certified supplier's net business income in
3 14 the prior year, allocated and apportioned to this state under
3 15 section 422.33, subsection 2, paragraph "b".
3 16 b. The certified supplier attaches a copy of a valid,
3 17 unexpired certificate issued under section 15.227 to the
3 18 certified supplier's tax return required under chapter 422.
3 19 2. A taxpayer who is a shareholder in a subchapter S
3 20 corporation that is a certified supplier shall be eligible to
3 21 make the adjustment to net income in section 422.7, subsection
3 22 57, for a tax year if all the following apply:
3 23 a. The certified supplier's net business income for the tax
3 24 year, allocated and apportioned to this state under section
3 25 422.33, subsection 2, paragraph "b", computed without regard
3 26 to section 422.35, subsection 26, increased by more than five
3 27 percent over the certified supplier's net business income in
3 28 the prior year, allocated and apportioned to this state under
3 29 section 422.33, subsection 2, paragraph "b", computed with
3 30 regard to section 422.35, subsection 26, if the subchapter S
3 31 corporation was a certified supplier in the previous tax year
3 32 and met the eligibility requirements in this paragraph "a".
3 33 b. The shareholder attaches a copy of a valid, unexpired
3 34 certificate issued under section 15.227 to the shareholder's
3 35 tax return required under chapter 422.
4 1 3. For purposes of establishing eligibility under this
4 2 section, "net business income" shall not include any income of
4 3 a certified supplier that is attributable to an existing trade
4 4 or business or income=producing contract that was acquired by
4 5 the certified supplier through merger or acquisition during or
4 6 after the first year for which the certified supplier becomes
4 7 eligible pursuant to this section for the adjustments to net
4 8 income in section 422.7, subsection 57, or section 422.35,
4 9 subsection 26.
4 10 Sec. 4. NEW SECTION. 15.229 Rules.
4 11 The authority and the department of revenue may adopt rules
4 12 for the implementation of this part.
4 13 Sec. 5. Section 257.21, Code 2011, is amended to read as
4 14 follows:
4 15 257.21 Computation of instructional support amount.
4 16 1. The department of management shall establish the amount
4 17 of instructional support property tax to be levied and the
4 18 amount of instructional support income surtax to be imposed
4 19 by a district in accordance with the decision of the board
4 20 under section 257.19 for each school year for which the
4 21 instructional support program is authorized. The department
4 22 of management shall determine these amounts based upon the
4 23 most recent figures available for the district's valuation of
4 24 taxable property, individual state income tax paid, and budget
4 25 enrollment in the district, and shall certify to the district's
4 26 county auditor the amount of instructional support property
4 27 tax, and to the director of revenue the amount of instructional
4 28 support income surtax to be imposed if an instructional support
4 29 income surtax is to be imposed.
4 30 2. The instructional support income surtax shall be imposed
4 31 on the state individual income tax for the calendar year during
4 32 which the school's budget year begins, or for a taxpayer's
4 33 fiscal year ending during the second half of that calendar year
4 34 and after the date the board adopts a resolution to participate
4 35 in the program or the first half of the succeeding calendar
5 1 year, and shall be imposed on all individuals residing in the
5 2 school district on the last day of the applicable tax year.
5 3 As used in this section, "state individual income tax" means
5 4 the taxes computed under section 422.5, without regard to the
5 5 adjustment to net income in section 422.7, subsection 57, less
5 6 the amounts of nonrefundable credits allowed under chapter 422,
5 7 division II.
5 8 Sec. 6. Section 422.7, Code Supplement 2011, is amended by
5 9 adding the following new subsection:
5 10 NEW SUBSECTION. 57. a. If the adjusted gross income
5 11 includes income from a subchapter S corporation for which the
5 12 taxpayer is a shareholder, which subchapter S corporation is
5 13 a certified supplier that meets the requirements in section
5 14 15.228, subsection 2, paragraph "a", the taxpayer may subtract
5 15 an amount based on the taxpayer's pro rata share of the
5 16 profits or losses from the subchapter S corporation equal to
5 17 the difference between the subchapter S corporation's net
5 18 business income for the tax year, allocated and apportioned
5 19 to this state under section 422.33, subsection 2, paragraph
5 20 "b", computed without regard to section 422.35, subsection 26,
5 21 and one hundred five percent of the subchapter S corporation's
5 22 net business income for the prior tax year, allocated and
5 23 apportioned under section 422.33, subsection 2, paragraph "b",
5 24 computed with regard to section 422.35, subsection 26, if
5 25 the subchapter S corporation was a certified supplier in the
5 26 previous tax year and met the requirements in section 15.228,
5 27 subsection 2, paragraph "a". A taxpayer who is a resident shall
5 28 not make the subtraction provided in this subsection unless
5 29 the taxpayer also makes an election pursuant to section 422.5,
5 30 subsection 1, paragraph "j", subparagraph (2).
5 31 b. For purposes of the adjustment provided in this
5 32 subsection, "net business income" shall not include any
5 33 income of a certified supplier that is attributable to an
5 34 existing trade or business or income=producing contract that
5 35 was acquired by the certified supplier through merger or
6 1 acquisition during or after the first year for which the
6 2 certified supplier becomes eligible for the adjustment in this
6 3 subsection.
6 4 Sec. 7. Section 422.35, Code Supplement 2011, is amended by
6 5 adding the following new subsection:
6 6 NEW SUBSECTION. 26. a. If the taxpayer is a certified
6 7 supplier that meets the requirements in section 15.228,
6 8 subsection 1, subtract an amount equal to the difference
6 9 between the taxpayer's net business income for the tax year,
6 10 allocated and apportioned under section 422.33, subsection 2,
6 11 paragraph "b", computed without regard to this subsection, and
6 12 one hundred five percent of the taxpayer's net business income
6 13 for the prior tax year, allocated and apportioned under section
6 14 422.33, subsection 2, paragraph "b".
6 15 b. For purposes of the adjustment provided in this
6 16 subsection, "net business income" shall not include any
6 17 income of a certified supplier that is attributable to an
6 18 existing trade or business or income=producing contract
6 19 which was acquired by the certified supplier through merger
6 20 or acquisition during or after the first year for which the
6 21 certified supplier becomes eligible for the adjustment in this
6 22 subsection.
6 23 Sec. 8. Section 422D.2, Code 2011, is amended to read as
6 24 follows:
6 25 422D.2 Local income surtax.
6 26 A county may impose by ordinance a local income surtax as
6 27 provided in section 422D.1 at the rate set by the board of
6 28 supervisors, of up to one percent, on the state individual
6 29 income tax of each individual residing in the county at the
6 30 end of the individual's applicable tax year. However, the
6 31 cumulative total of the percents of income surtax imposed on
6 32 any taxpayer in the county shall not exceed twenty percent.
6 33 The reason for imposing the surtax and the amount needed
6 34 shall be set out in the ordinance. The surtax rate shall be
6 35 set to raise only the amount needed. For purposes of this
7 1 section, "state individual income tax" means the tax computed
7 2 under section 422.5, without regard to the adjustment to net
7 3 income in section 422.7, subsection 57, less the amounts of
7 4 nonrefundable credits allowed under chapter 422, division II.
7 5 Sec. 9. RETROACTIVE APPLICABILITY. This Act applies
7 6 retroactively to January 1, 2012, for tax years beginning on
7 7 or after that date.
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