HOUSE REPUBLICAN STAFF ANALYSIS Bill: Committee: Floor Manager: Date: Staff:
HF 2454 (Formerly HF 2401) Ways and Means Rep. Deyoe May 2, 2014 Lew Olson (1-3096) Kristi L. Kielhorn (2-5290)
House Ag. Committee: House Ways & Means House Floor: Senate Floor: Governor:
PASSED February 19 (23-0) PASSED March 20 (24-0) PASSED April 1 (95-0) PASSED April 28 (47-1)
Beginning Farmer Tax Credits Carryover Extensions House File 2454 proposes to extend the timeframe in which several different types of Beginning Farmer Tax credits (past, present and future-- Ag Asset Transfer Tax Credits, and Custom Farm Tax Credits earned between 2013 and 2017) from 5-years beyond the year the credit is earned to 10 years. The bill is unusually complex and seemingly redundant because of legislation passed and enacted last year that increased the rate of ag asset transfer tax credits for a five year period between 2013 and 2017, and then reverting to pre-2013 rates and also created a new 5-year custom farm tax credit in effect between 2013 and the end of 2017. This legislation is being sought because a few taxpayers have earned more tax credits than they have been able to use. The legislation that passed last year (HF 599) also increased for five years period (2013 thru 2017) the cumulative amount of these tax credits that may be claimed by all qualifying taxpayers to no
more than $12-million , prior limit and the limit after 2017 is $6-million. Fiscal Note – A March 20, 2014, a fiscal note for HF2401 was estimated with an impact of -$100,000 in FY2016, -$400,000 in FY- 2017, -$600,000 in FY-2018, -$800,000 in FY 2019; and then rising more rapidly to a peak of -$6.7-million in FY-2024, but then subsiding to $3.2-million in FY-2026 and ultimately $1.4-million in FY 2029.
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Section by Section Analysis Division I Past Version of Ag Asset Transfer Tax Credits Sections 1 – Applicability of 10-Year Carryover Provisions for Ag Asset Transfer Tax Credits Earned Between 1/1/2009 and 12/31/2012 and After 1/1/2018 that were found in Code Section 175.37 Section 2--Division I/(Section 1) is Effective Upon Enactment Section 3--Division I/(Section 1) Applies Retroactively to Tax Credits Earner Between 1/1/2008 Division II Current Version of Ag Asset Transfer Tax Credits 1
Section 4 – Applicability of 10-Year Carryover Provisions for Ag Asset Transfer Tax Credits Earned Between 1/1/2013 and 12/31/2017 as found in Iowa Code2014 Section 175.37 Section 5-Applicability of 10-Year Carryover Applies Until Credits Exhausted, or 10-Years have Passed on Ag Asset Tax Credits Earned between 1/1/2013 an 12/31/2017 This section is conditional in its application since if SF 2328 is signed (and it has been) the provisions in SF 2328 that extend the carry forward from these tax credits to ten years supersedes this section. Section 6--Division II/(Sections 4 & 5) is Effective Upon Enactment Section 7--Division II/(Sections 4 ,& 5) Applies Retroactively to Tax Credits Earner Between 1/1/2013 and 12/31/2017 Division III Conditional Future Ag Asset Transfer Tax Credits Sections 8 – Section 60 of SF 2328 is Amended from 5 to 10 Years Concerning the Carry Forward of Ag Asset Transfer Tax Credits Section 9--Applicability of 10-Year Carryover Provisions Applies to Ag Asset Transfer Tax Credits Earned After 1/1/2015 and Apply to Restored Tax Credit Rates that were in Effect Prior to 1/1/2013 in Code Section 175.37 After January 1, 2018 Section 10--Division III/(Sections 8 &9 ) is Effective 1/1/2015 If SF 2328 Is Enacted Division IV First Conditional Future Version of Ag Asset Transfer Tax Credit (Only effective if SF 2328 is not Enacted/ Moot because SF 2328 has been enacted) Section 11-- Applicability of 10-Year Carryover Provisions Applies to Ag Asset Transfer Tax Credits Earned After 1/1/2018 Under Restored Tax Credit Rates that were in Effect Prior to 1/1/2013 in Code Section 175.37 Section 12-- Division IV/(Section 11) is Effective 1/1/2015 Only If SF 2328 Is not Enacted Section 13--Division IV/(Sections 11 & 12) Applies to Tax Years Beginning on or After 1/1/2018 Division V Second Conditional Future Version of Ag Asset Transfer Tax Credit (Effective since SF 2328 was enacted on April 10, 2014) Section 14--Amends Enacted Code Section 16.80.7 ( 60 of SF 2328) is Amended from 5 to 10 Years Concerning the Carry Forward of Ag Asset Transfer Tax Credits Section 15-- Division V/(Section 14) is Effective 1/1/2015 with Enactment of SF 2328 Section 16--Division V/(Sections 14 & 15) Applies to Tax Years Beginning on or After 1/1/2018 Division VI Current Version of Custom Farm Contract Tax Credits Section 17-- Carryover Provisions for Custom Farm Contract Tax Credits that are Earned Between 1/1/2013 and 12/31/2017 as Found in Iowa Code2014 Section 175.38 are Extended from 5-Years to 10-Years Section 18--Applicability of 10-Year Carryover Provisions for Custom Farm Contract Tax Credits Applies to those Earned Between 1/1/2013 and 12/31/2017 and Continue Until Credits are Exhausted or 10-Years have Passed Section 19--Division VI/(Sections 17 & 18) is Effective Upon Enactment Section 20--Division VI /(Section 17, & 18) Applies Retroactively to 1/1/2013 2
Division VII Conditional Future Version of Custom Farm Contract Tax Credits Section 21-- Section 61 of SF 2328 is Amended from 5 to 10 Years Concerning the Carry Forward of Custom Farm Contract Tax Credits (New Code Section 16.81.9) Section 22---- Applicability of 10-Year Carryover Provisions Applies to Custom Farm Contract Tax Credits Earned After 1/1/2015 and Apply to Restored Tax Credit Rates that were in Effect Prior to 1/1/2013 in Code Section 175.37 After January 1, 2018 Section 23-- Division VII/(Sections 21 & 22) is Conditional Effective on January 1, 2015 if SF 2328 is Enacted Section 24--Applicability of Division VII/(Sections 22-24) is on or After January 1, 2014
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Amendment Analysis of House Action H-8189, by Drake, proposes to amend the bill to reflect to accommodate the potential enactment of SF 2328 which has ramification upon HF 2454 as introduced that are different if SF 2328 is not enacted and will require some further Code conforming verbiage from the bill drafter. H 8189 as amended ADOPTED on Voice vote. H-8201, by Deyoe, proposes to amend H 8189 to go into the bill and make a number of Code conforming changes depending upon whether SF 2328 is enacted or not that impact the Beginning Farmer Tax Credit Carry-over legislation HF 2454. The amendment is at the behest of the bill drafter and has been cleared with both IFA (Iowa Finance Authority), and the Department of Revenue. The amendment does the following-
Takes into account SF 2328 (the IFA bill) which repeals and reenacts the two tax credits in a new Code chapter. SF 2328 passed both chambers but is not enacted. If the governor signs the bill, the 10 year carry-forward period will also apply to the new versions of the two tax credits.
It goes back in time one more tax year, to capture taxpayers who filed in the 2008 tax year and whose carry-forward will otherwise run out in the 2013 tax year.
It eliminates references to a specific tax filing year based on the calendar year January 1 December 31 in order to recognize taxpayers whose tax years do not coincide with the calendar year.
H 8201 ADOPTED on a voice vote.
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