HOUSE REPUBLICAN STAFF ANALYSIS Bill: Committee: Floor Manager: Date: Staff:
House File 2468 Ways and Means Rep. Windschitl Final Kristi L. Kious (2-5290)
House Ways & Means: House Floor: Senate Floor: Governor:
PASSED on April 27 (24-0) PASSED on April 27 (98-0) PASSED on April 28 (45-0)
Technical Omnibus Bill • This bill provides for various tax administration corrections. • Fiscal Note – unknown
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Section by Section Analysis Section 1 – Background Checks This section includes language giving the Department of Revenue the authority to run background checks on job applicants due to a new IRS requirement. Section 2 – Geothermal Tax Credit This section creates a geothermal tax credit equal to 10 percent of the cost of the installation of a qualified geothermal heat pump. The credit is only available to residential installations in Iowa that are used by the taxpayer. The tax credit is nonrefundable but can be carried forward for up to ten years. The credit is available for installations occurring on or after 1/1/17. This section also provides that the credit will not be available in any year where the federal credit is available. The federal credit is set to expire at the end of this year. That credit provides a tax credit equal to 20 percent of the federal credit. Section 3 – Solar Energy Tax Credits This section provides the Department of Revenue the authority to create a wait list for solar tax credit applications. Section 4 – Solar Energy Tax Credits This section extends the solar energy tax credits through 2021. Section 5 – Adoption Tax Credit This section increases the current adoption tax credit from $2,500 to $5,000 starting in tax year 2017 (for returns filed in April of 2018). Currently, there is an individual income tax credit for qualified adoption expenses paid or incurred in connection with the adoption of a child (an individual under the age of 18). The adoption qualifies for the tax credit if the adoption is completed by the Department of Human Services, a 1
licensed agency, or a person petitioning for an independent placement. Qualifying expenses are expenses that are incurred by the taxpayer during the tax year, are not otherwise reimbursed, and are connected with the adoption. These expenses can include medical and hospital expenses of the biological mother which are incidental to the birth of the adopted child, adoption agency and legal fees, and all other fees and costs relating to the adoption. These expenses cannot include expenses paid or incurred in violation of state or federal law. Any credit in excess of the taxpayer’s liability is refundable or may be carried forward one tax year. Under Iowa law, a taxpayer may claim an itemized deduction for the amount of certain adoption expenses that exceed 3 percent of net income. Taxpayers who claim the itemized deduction are required to reduce that deduction by the amount of expenses used to calculate the adoption tax credit. Section 6 – Sales Tax Exemptions This section amends the definition of “designated exempt entity” to include an instrumentality of a county or city government for purposes of a reinvestment district. This was a change to ease administration of reinvestment districts code provisions. Sections 7 – Taxpayer Appeals This section allows the department to present evidence in a contested case with a taxpayer on centrally assessed property. This was something that was inadvertently left out of legislation passed last year. Sections 8 & 9 – Utility Replacement Tax Task Force These sections extend the utility replacement task force until 2019. The task force expired January 1, 2016 and was created to study the effects of the replacement taxes on electricity and natural gas providers and rateregulated water utilities. Sections 10 through 14 – Solar Energy Tax Credits These sections remove the requirement for small solar facilities owned by utilities that the utility must own at least 51 percent of the facility and instead provides that the specified utility must own the facility in whole or in part, directly or indirectly. These sections also remove the restriction for those small solar facilities that an owner own no more than two and that a person that owns at least 51 percent of a facility not own more than 10 percent in another facility. These sections also add language adds a new requirement that a utility or electric cooperative cannot have an ownership interest in more than 4 small solar facilities. These sections also extend the placed in service requirements for the renewable energy tax credit in 476C from 2017 to 2018. Under current law if you file your solar tax credit application after May 1 following the year of the installation, you are denied the credit. These sections provide language so people who file after May 1 can still get the credit, they just can’t be approved until the tax year after they installed. Additionally, it allows people who filed late applications for 2014 installations to be allowed the credit, but they can’t be approved until the 2016 tax year applications are approved. Sections 15 through 27 – Effective Dates and Retroactive Applicability Provisions
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