15.333 - INVESTMENT TAX CREDIT.
15.333 INVESTMENT TAX CREDIT.
1. a. An eligible business may claim a tax credit equal to a
percentage of the new investment directly related to new jobs created
or retained by the location or expansion of an eligible business
under the program. The tax credit shall be amortized equally over
five calendar years. The tax credit shall be allowed against taxes
imposed under chapter 422, division II, III, or V, and against the
moneys and credits tax imposed in section 533.329. If the business
is a partnership, S corporation, limited liability company,
cooperative organized under chapter 501 and filing as a partnership
for federal tax purposes, or estate or trust electing to have the
income taxed directly to the individual, an individual may claim the
tax credit allowed. The amount claimed by the individual shall be
based upon the pro rata share of the individual's earnings of the
partnership, S corporation, limited liability company, cooperative
organized under chapter 501 and filing as a partnership for federal
tax purposes, or estate or trust. The percentage shall be determined
as provided in section 15.335A. Any tax credit in excess of the tax
liability for the tax year may be credited to the tax liability for
the following seven years or until depleted, whichever occurs first.
b. Subject to prior approval by the department of economic
development, in consultation with the department of revenue, an
eligible business whose project primarily involves the production of
value-added agricultural products or uses biotechnology-related
processes may elect to receive a refund of all or a portion of an
unused tax credit. For purposes of this subsection, such an eligible
business includes a cooperative described in section 521 of the
Internal Revenue Code which is not required to file an Iowa corporate
income tax return, and whose project primarily involves the
production of ethanol. The refund may be applied against a tax
liability imposed under chapter 422, division II, III, or V, and
against the moneys and credits tax imposed in section 533.329. If
the business is a partnership, S corporation, limited liability
company, cooperative organized under chapter 501 and filing as a
partnership for federal tax purposes, or estate or trust electing to
have the income taxed directly to the individual, an individual may
claim the tax credit allowed. The amount claimed by the individual
shall be based upon the pro rata share of the individual's earnings
of the partnership, S corporation, limited liability company,
cooperative organized under chapter 501 and filing as a partnership
for federal tax purposes, or estate or trust.
2. For purposes of this subsection, "new investment directly
related to new jobs created by the location or expansion of an
eligible business under the program" means the cost of machinery
and equipment, as defined in section 427A.1, subsection 1, paragraphs
"e" and "j", purchased for use in the operation of the
eligible business, the purchase price of which has been depreciated
in accordance with generally accepted accounting principles, the
purchase price of real property and any buildings and structures
located on the real property, and the cost of improvements made to
real property which is used in the operation of the eligible
business. "New investment directly related to new jobs created by
the location or expansion of an eligible business under the
program" also means the annual base rent paid to a third-party
developer by an eligible business for a period not to exceed ten
years, provided the cumulative cost of the base rent payments for
that period does not exceed the cost of the land and the third-party
developer's costs to build or renovate the building for the eligible
business. The eligible business shall enter into a lease agreement
with the third-party developer for a minimum of five years. If,
however, within five years of purchase, the eligible business sells,
disposes of, razes, or otherwise renders unusable all or a part of
the land, buildings, or other existing structures for which tax
credit was claimed under this section, the tax liability of the
eligible business for the year in which all or part of the property
is sold, disposed of, razed, or otherwise rendered unusable shall be
increased by one of the following amounts:
a. One hundred percent of the tax credit claimed under this
section if the property ceases to be eligible for the tax credit
within one full year after being placed in service.
b. Eighty percent of the tax credit claimed under this
section if the property ceases to be eligible for the tax credit
within two full years after being placed in service.
c. Sixty percent of the tax credit claimed under this section
if the property ceases to be eligible for the tax credit within three
full years after being placed in service.
d. Forty percent of the tax credit claimed under this section
if the property ceases to be eligible for the tax credit within four
full years after being placed in service.
e. Twenty percent of the tax credit claimed under this
section if the property ceases to be eligible for the tax credit
within five full years after being placed in service.
3. a. An eligible business whose project primarily involves
the production of value-added agricultural products or uses
biotechnology-related processes, which elects to receive a refund of
all or a portion of an unused tax credit, shall apply to the
department of economic development for tax credit certificates. Such
an eligible business shall not claim a tax credit refund under this
subsection unless a tax credit certificate issued by the department
of economic development is attached to the taxpayer's tax return for
the tax year for which the tax credit refund is claimed. For
purposes of this subsection, an eligible business includes a
cooperative described in section 521 of the Internal Revenue Code
which is not required to file an Iowa corporate income tax return,
and whose project primarily involves the production of ethanol. For
purposes of this subsection, an eligible business also includes a
cooperative described in section 521 of the Internal Revenue Code
which is required to file an Iowa corporate income tax return and
whose project primarily involves the production of ethanol. Such
cooperative may elect to transfer all or a portion of its tax credit
to its members. The amount of tax credit transferred and claimed by
a member shall be based upon the pro rata share of the member's
earnings of the cooperative.
b. A tax credit certificate issued under this subsection
shall not be valid until the tax year following the date of the
capital investment project completion. A tax credit certificate
shall contain the taxpayer's name, address, tax identification
number, the date of project completion, the amount of the tax credit,
and other information required by the department of revenue. The
department of economic development shall not issue tax credit
certificates under this subsection which total more than four million
dollars during a fiscal year. If the department receives and
approves applications for tax credit certificates under this
subsection in excess of four million dollars, the applicants shall
receive certificates for a prorated amount. The tax credit
certificates shall not be transferred except as provided in this
subsection for a cooperative described in section 521 of the Internal
Revenue Code which is required to file an Iowa corporate income tax
return and whose project primarily involves the production of
ethanol. For a cooperative described in section 521 of the Internal
Revenue Code, the department of economic development shall require
that the cooperative submit a list of its members and the share of
each member's interest in the cooperative. The department shall
issue a tax credit certificate to each member contained on the
submitted list. Section History: Recent Form
94 Acts, ch 1008, §10; 99 Acts, ch 172, §1; 2000 Acts, ch 1213,
§1, 10; 2001 Acts, ch 123, §1; 2001 Acts, ch 141, §1, 8; 2002 Acts,
ch 1119, §5; 2002 Acts, 2nd Ex, ch 1001, §47, 49, 52; 2003 Acts, ch
125, §8; 2003 Acts, ch 145, §286; 2003 Acts, ch 150, §1--3; 2004
Acts, ch 1003, § 4, 12; 2005 Acts, ch 135, §103; 2005 Acts, ch 150,
§48, 68, 69; 2007 Acts, ch 174, §82; 2009 Acts, ch 123, §15
Referred to in § 15.119, 15.335A, 15E.196, 422.11F, 422.33,
422.60, 533.329
For aggregate limitations on amount of tax credits, see §15.119