15A.9 - QUALITY JOBS ENTERPRISE ZONE -- STATE ASSISTANCE.
15A.9 QUALITY JOBS ENTERPRISE ZONE -- STATE
ASSISTANCE.
1. Findings -- zone designation.
a. The general assembly finds and declares that the
designation of a quality jobs enterprise zone or zones and the
provision of economic development assistance within the zone or zones
are necessary to diversify the Iowa economy, enhance opportunities
for Iowans to obtain quality industrial jobs, and provide significant
economic benefits to the state through the expansion of Iowa's
economy. Establishment of the quality jobs enterprise zone or zones
and the economic development assistance provided by the state or a
local community will be for the well-being and benefit of the
residents of the state and will be for a public purpose.
b. In order to assist a community or communities located
within the state to secure new industrial manufacturing jobs, the
state of Iowa makes economic development assistance available within
the zone or zones, and the department of economic development shall
designate a site or sites, which shall not be larger than two
thousand five hundred acres, within thirty days of March 4, 1994, as
a quality jobs enterprise zone or zones for the purpose of attracting
a primary business and supporting businesses to locate facilities
within the state.
The primary business or a supporting business shall not be
prohibited from participating in or receiving other economic
development programs or services or electing to utilize other tax
provisions to the extent authorized elsewhere by law.
2. Definitions. As used in this section:
a. "Contractor or subcontractor" means a person who contracts
with the primary business or a supporting business or subcontracts
with a contractor for the provision of property, materials, or
services for the construction or equipping of a facility, located
within the zone, of the primary business or a supporting business.
b. "Primary business" means a business which pays its
full-time production employees at the facility average cash
compensation, which shall not include the cost of the business's
contribution to retirement or health benefit plans, equating to
fifteen dollars per hour worked by the end of the second full year of
operation following project completion, and which provides the
department of economic development within thirty days of March 4,
1994, with notice of its intent to develop and operate a new
manufacturing facility on a specific location within the state,
including the legal description of the site which shall not contain
more than two thousand five hundred acres, to invest at least two
hundred fifty million dollars in the facility, and to commence
construction of the facility by December 31, 1994, providing all
necessary permits have been issued and zoning changes made in time
for construction to begin by that date. The business shall also
guarantee that it will create at least three hundred full-time jobs
at the facility. The headquarters of the primary business need not
be within the zone.
c. "Project completion" means the first date upon which the
average annualized production of finished product for the preceding
ninety-day period at the manufacturing facility operated by the
primary business within the zone is at least fifty percent of the
initial design capacity of the facility. The primary business shall
inform the department of revenue in writing within two weeks of
project completion.
d. "Supporting business" means a business under contract with
the primary business to provide property, materials, or services
which are a necessary component of the operation of the manufacturing
facility. To qualify as a supporting business, the business shall
have a permanent facility or operations located within the zone and
the revenue from fulfilling the contract with the primary business
shall constitute at least seventy-five percent of the revenue
generated by the business from all activities undertaken from the
facility within the zone.
e. "Zone or zones" means a quality jobs enterprise zone or
zones.
3. New jobs credit.
a. At the request of the primary business or a supporting
business, an agreement authorizing a supplemental new jobs credit
from withholding from jobs within the zone may be entered into
between the department of revenue, a community college, and the
primary business or a supporting business. The agreement shall be
for program services for an additional job training project, as
defined in chapter 260E. The agreement shall provide for the
following:
(1) That the project shall be administered in the same manner as
a project under chapter 260E and that a supplemental new jobs credit
from withholding in an amount equal to one and one-half percent of
the gross wages paid by the primary business or a supporting business
pursuant to section 422.16 is authorized to fund the program services
for the additional project.
(2) That the supplemental new jobs credit from withholding shall
be collected, accounted for, and may be pledged by the community
college in the same manner as described in section 260E.5.
(3) That the community college shall not be allowed any expenses
for administering the additional project except those expenses which
are directly attributable to the additional project and which are in
excess of the expenses allowed for the project under chapter 260E.
b. To provide funds for the payment of the costs of the
additional project, a community college may borrow money, issue and
sell certificates, and secure the payment of the certificates in the
same manner as described in section 260E.6, including, but not
limited to, providing the assessment of an annual levy as described
in section 260E.6, subsection 4. The program and credit authorized
by this subsection is in addition to, and not in lieu of, the program
and credit authorized in chapter 260E.
4. Investment tax credit.
a. The primary business and a supporting business shall be
entitled to a corporate tax credit equal to ten percent of the new
investment made within the zone by the primary business or a
supporting business prior to project completion. A credit in excess
of the tax liability for the tax year may be credited to the tax
liability for the following twenty years or until depleted, whichever
comes first.
b. For purposes of this section, "new investment made
within the zone" means the capitalized cost of all real and
personal property, including buildings and other improvements to real
estate, purchased or otherwise acquired or relocated to the zone for
use in the operation of the primary business or a supporting business
within the zone. New investment in the zone does not include land,
intangible property, or furniture and furnishings. The capitalized
cost of property shall for the purposes of this section be determined
in accordance with generally accepted accounting principles.
5. Property tax exemption.
a. All property, as defined in former section 427A.1,
subsection 1, paragraphs "e" and "j", Code 1993, used by the
primary business or a supporting business and located within the
zone, shall be exempt from property taxation for a period of twenty
years beginning with the year it is first assessed for taxation. In
order to be eligible for this exemption, the property shall be
acquired or leased by the primary business or a supporting business
or relocated by the primary business or a supporting business to the
zone from outside the state prior to project completion.
b. Property which is exempt for property tax purposes under
this subsection is eligible for the sales and use tax exemption under
section 423.3, subsection 47, notwithstanding that subsection or any
other provision of the Code to the contrary.
6. Sales, services, and use tax refund. Taxes paid pursuant
to chapter 423 on the sales price or rental price of property
purchased or rented by the primary business or a supporting business
for use by the primary business or a supporting business within the
zone or on gas, electricity, water, and sewer utility services prior
to project completion shall be refunded to the primary business or
supporting business if the item was purchased or the service was
performed or received prior to project completion. Claims under this
section shall be submitted on forms provided by the department of
revenue not later than six months after project completion. The
refund in this subsection shall not apply to furniture or
furnishings, or intangible property.
7. Sales, services, and use tax refund -- contractor or
subcontractor.
a. The primary business or a supporting business shall be
entitled to a refund of the sales and use taxes paid under chapter
423 for gas, electricity, water, or sewer utility services, goods,
wares, or merchandise, or on services rendered, furnished, or
performed to or for a contractor or subcontractor and used in the
fulfillment of a written contract relating to the construction or
equipping of a facility within the zone of the primary business or a
supporting business. Taxes attributable to intangible property and
furniture and furnishings shall not be refunded.
b. To receive the refund, a claim shall be filed by the
primary business or a supporting business with the department of
revenue as follows:
(1) The contractor or subcontractor shall state under oath, on
forms provided by the department, the amount of the sales of goods,
wares, or merchandise or services rendered, furnished, or performed
including water, sewer, gas, and electric utility services for use in
the zone upon which sales or use tax has been paid prior to the
project completion, and shall file the forms with the primary
business or supporting business before final settlement is made.
(2) The primary business or a supporting business shall, not more
than six months after project completion, make application to the
department for any refund of the amount of the sales and use taxes
paid pursuant to chapter 423 upon any goods, wares, or merchandise,
or services rendered, furnished, or performed, including water,
sewer, gas, and electric utility services. The application shall be
made in the manner and upon forms to be provided by the department,
and the department shall audit the claim and, if approved, issue a
warrant to the primary business or supporting business in the amount
of the sales or use tax which has been paid to the state of Iowa
under a contract. A claim filed by the primary business or a
supporting business in accordance with this subsection shall not be
denied by reason of a limitation provision set forth in chapter 421,
422, or 423.
c. A contractor or subcontractor who willfully makes a false
report of tax paid under the provisions of this subsection is guilty
of a simple misdemeanor and in addition is liable for the payment of
the tax and any applicable penalty and interest.
8. Corporate tax research credit. A corporate tax credit
shall be available to the primary business or a supporting business
for increasing research activities in this state within the zone.
a. (1) The credit equals the sum of the following:
(a) Thirteen percent of the excess of qualified research expenses
during the tax year over the base amount for the tax year based upon
the state's apportioned share of the qualifying expenditures for
increasing research activities.
(b) Thirteen percent of the basic research payments determined
under section 41(e)(1)(A) of the Internal Revenue Code during the tax
year based upon the state's apportioned share of the qualifying
expenditures for increasing research activities.
(2) The state's apportioned share of the qualifying expenditures
for increasing research activities is a percent equal to the ratio of
qualified research expenditures in this state within the zone to
total qualified research expenditures.
b. In lieu of the credit amount computed in paragraph
"a", subparagraph (1), subparagraph division (a), a business may
elect to compute the credit amount for qualified research expenses
incurred in this state within the zone in a manner consistent with
the alternative incremental credit described in section 41(c)(4) of
the Internal Revenue Code. The taxpayer may make this election
regardless of the method used for the taxpayer's federal income tax.
The election made under this paragraph is for the tax year and the
taxpayer may use another or the same method for any subsequent year.
c. For purposes of the alternate credit computation method in
paragraph "b", the credit percentages applicable to qualified
research expenses described in clauses (i), (ii), and (iii) of
section 41(c)(4)(A) of the Internal Revenue Code are three and thirty
hundredths percent, four and forty hundredths percent, and five and
fifty hundredths percent, respectively.
d. Any credit in excess of the tax liability for the tax year
shall be refunded with interest computed under section 422.25. In
lieu of claiming a refund, the primary business or a supporting
business may elect to have the overpayment shown on its final return
credited to its tax liability for the following tax year.
e. (1) For the purposes of this subsection, "base
amount", "basic research payment", and "qualified research
expense" mean the same as defined for the federal credit for
increasing research activities under section 41 of the Internal
Revenue Code, except that for the alternative incremental credit such
amounts are for research conducted within this state within the zone.
(2) For purposes of this subsection, "Internal Revenue Code"
means the Internal Revenue Code in effect on January 1, 2009.
f. The credit authorized in this subsection is in lieu of the
credit authorized in section 422.10 and section 422.33, subsection 5.
9. Exemption from land ownership restrictions for nonresident
aliens.
a. The primary business and a supporting business, to the
extent the primary business or the supporting business is not
actively engaged in farming within the zone, may acquire, own, and
lease land in the zone, notwithstanding the provisions of sections
9H.4, 9H.5, and 9I.3, and shall be exempt from the requirements of
section 9I.4. The primary business and supporting business shall
comply with the remaining provisions of chapters 9H and 9I to the
extent they do not conflict with this subsection.
b. "Actively engaged in farming" means any of the following:
(1) Inspecting agricultural production activities within the zone
periodically and furnishing at least half of the value of the tools
and paying at least half the direct cost of production.
(2) Regularly and frequently making or taking an important part
in making management decisions substantially contributing to or
affecting the success of the farm operations within the zone.
(3) Performing physical work which significantly contributes to
crop or livestock production.
10. Limitation on assistance. Economic development
assistance under subsections 3 through 9 shall only be available to
the primary business or a supporting business. However, if the
department of economic development finds that a primary business or a
supporting business has a record of violations of the law, including
but not limited to environmental and worker safety statutes, rules,
and regulations, over a period of time that tends to show a
consistent pattern, the primary business or supporting business shall
not qualify for economic development assistance under subsections 3
through 9, unless the department of economic development finds that
the violations did not seriously affect public health or safety or
the environment, or if it did that there were mitigating
circumstances. In making the findings and determinations regarding
violations, mitigating circumstances, and whether a primary business
or a supporting business is eligible for economic development
assistance under subsections 3 through 9, the department of economic
development shall be exempt from chapter 17A. Section History: Recent Form
94 Acts, ch 1008, §17; 95 Acts, ch 152, §1, 7; 96 Acts, ch 1166,
§1, 4; 97 Acts, ch 135, §2, 9; 98 Acts, ch 1078, §2, 10, 14; 99 Acts,
ch 95, § 2, 12, 13; 2000 Acts, ch 1146, §2, 9, 11; 2000 Acts, ch
1194, §2, 21; 2001 Acts, ch 127, §2, 9, 10; 2002 Acts, ch 1050, §4;
2002 Acts, ch 1069, §2, 10, 14; 2003 Acts, ch 35, §26, 49; 2003 Acts,
ch 139, §2; 2003 Acts, ch 145, §286; 2003 Acts, 1st Ex, ch 2, §154,
205; 2004 Acts, ch 1073, §2; 2005 Acts, ch 24, §2, 10, 11; 2006 Acts,
ch 1010, §8; 2006 Acts, ch 1140, §2, 10, 11; 2007 Acts, ch 12, §2, 7,
8; 2008 Acts, ch 1011, §2, 9; 2008 Acts, ch 1032, §126, 201; 2009
Acts, ch 41, §263; 2009 Acts, ch 179, §103, 153
Referred to in § 15.119, 422.33
Internal Revenue Code definition is updated regularly; for
applicable definition in a prior tax year, refer to Iowa Acts and
Code for that year
For aggregate limitations on amount of tax credits, see § 15.119