WAYS & MEANS – 2012 All-bill summary
SF 2322—Firefighters and EMS tax credit
SF 2325—Income Tax Form Checkoffs
SF 2328—Department of Revenue Technical Bill
SF 2333—Substance Abuse Providers sales tax exemption
SF 2342—Energy Tax Credits and Sales Tax Exemptions
HF 675—Mechanic’s Lien
HF 2150—Internal Revenue Code Updates
HF 2166—Streamlined Sales Tax Agreement
HF 2460—Tax Increment Financing (TIF)
HF 2470—Farm Machinery and Equipment Sales and Use Taxes
HF 2472—Ethanol Tax Rate
SF 2322 provides volunteer firefighters and emergency medical personnel with an individual income tax credit of $50. The tax credit applies to tax years beginning January 1, 2013. [3/26: 50-0]
SF 2325 relates to the income tax checkoffs for the Child Abuse Prevention Program Fund, the Veterans Trust Fund and Volunteer Fire Fighter Preparedness Fund. Code section 422.12E limits to four the number of income tax checkoffs that can appear on the income tax return. When the same four income tax return checkoffs have been provided on the income tax return for two consecutive years, the two checkoffs for which the least amount has been contributed through March 15 of the second tax year are automatically repealed. The bill reenacts as new the checkoffs for the Child Abuse Prevention Program Fund, the Veterans Trust Fund and Volunteer Fire Fighter Preparedness Fund. [4/3: 48-0 (Bertrand, Horn excused)]
SF 2328 is the Department of Revenue’s technical bill. It provides technical and clean-up changes to the Iowa Code. It has sections dealing with the Enterprise Zone Program, Redevelopment Tax Credit, updates the name of alcohol fuels, corrects filing requirements, makes interest payments consistent, makes filing requirements consistent, deletes obsolete sections, corrects Code references, deletes repealed references, and clarifies the definition of cigarette vending machines to include machines that assemble and dispense cigarettes after payment or the insertion of loose tobacco product. Currently, cigarettes vended from such machines are subject only to the loose tobacco tax rate (50 percent of the wholesale sales price), which is less than the cigarette tax rate ($1.36 per package of 20; $1.70 per package of 25). [4/4: 44-1 (Chelgren “no”; Bertrand, Boettger, Horn, Houser, Seymour excused)]
SF 2333 provides a sales tax exemption for the sale of certain items to substance abuse providers that receive a block grant from the Iowa Department of Public Health. [4/9: 49-0 (Houser excused)]
SF 2342 provides tax credits for the construction and installation of solar energy systems and geothermal heat pumps. It provides a credit for geothermal systems equal to 25 percent of the federal credit. It is not refundable but can be carried forward for 10 years. The solar energy system tax credit is also 50 percent of the federal credit, is not refundable, and can be carried forward for 10 years. The bill also modifies sales and use tax provisions related to property purchased for auto body repair for resale, and creates a sales tax exemption for certain items purchased for use in providing vehicle wash and wax services. [4/26: 45-1 (Beall “no”; Houser, Johnson, Kapucian, Sorenson excused)]
HF 675 makes significant changes to Code Chapter 572, the Mechanic’s Lien chapter. Currently, Chapter 572 is archaic, cumbersome and difficult to interpret, sometimes resulting in subcontractors failing to get paid for work and filing unenforceable liens. In addition, homeowners sometimes pay double for the work done on their homes because they have no notice of liens that were filed, close on their home and pay the general contractor who sometimes fails to pay a subcontractor. Currently, mechanic’s lien filings are done at the county level. This bill creates a State Construction Registry (SCR), which is Internet-based and administered by the Secretary of State. The SCR will serve as a state-wide central repository where pre-lien notices and mechanics’ liens will be filed and housed. The requirements relating to the SCR apply to residential construction, defined in the bill as “construction on single-family or two-family dwellings occupied or used, or intended to be occupied or used, primarily for residential purposes, and includes horizontal condominiums.” Under the bill:
** General contractors and owner-builders who contract with subcontractors to provide labor and furnish materials on a project will post a “notice of Commencement of Work” to the State Construction Registry website within 10 days of commencement of work on the property. The bill outlines the information required to be included in the notice. The Secretary of State then assigns an SCR number to the project.
** If a general contractor fails to post the notice of commencement of work, a subcontractor may post the notice.
** In order to preserve lien rights, subcontractors will post a “preliminary notice” to the SCR website relating to a residential project for which they are providing labor, services, materials, etc.
** To perfect a lien after filing a preliminary notice, a subcontractor must post the lien to the website that homeowners, bankers, abstracters and others will be able to search for postings related to a property. [4/16: 46-2 (Bartz, Kettering “no”; Horn, Ward excused)]
HF 2150 updates the Iowa Code references to the Internal Revenue Code to make federal income tax revisions enacted by Congress in 2011 applicable for Iowa income tax purposes. This year the bill simply updates the date to 2012. There were no federal tax changes in 2011. There is no fiscal impact to this bill. [2/28: 50-0]
HF 2166 includes changes recommended by the Iowa Department of Revenue to maintain Iowa’s compliance with the Streamlined Sales Tax Governing Board Agreement. Iowa’s participation in the Streamlined Project brings in approximately $13 million per year in sales and use tax revenue collected from remote retailers. [3/26: 50-0]
** The amendment requires certain reporting of the counties, cities and rural improvement trustees regarding urban renewal projects, plans and tax increment financing (TIF). Each municipality must file the electronic report with the Department of Management by December 1, 2012.
** Legislative Services Agency is required to do an annual report on the information contained in the reports and this annual report will be sent to the Governor and the Legislature. When a municipality amends or modifies an adopted renewal plan to include an additional urban renewal project, it must hold a public hearing.
** TIF cannot be used for the relocation of a commercial or industrial enterprise not presently located within the municipality unless: (1) The local governing body of the municipality where the business is currently located has a entered into a written agreement with the local governing body of the municipality where the business is proposing to relocate concerning the relocation or has a written agreement concerning the general use of economic incentives to attract commercial or industrial development within those municipalities or (2) The local governing body of the municipality where the commercial or industrial enterprise is proposing to relocate find that the use of TIF is in the public interest (requires written verification). “Relocation” means the closure or substantial reduction of an enterprise’s existing operations in one area of the state and the initiation of substantially the same operation in the same county or contiguous county in the state.
** A city must get the approval of the county board of supervisors when the city adopts a resolution approving the Local Option Sales Tax (LOST) TIF.
** Restricts the municipality from using Instructional Support Levy for tax increment financing unless the school board by resolution approves the use of the levy. This is effective on April 24, 2012. [4/24: 26-22 party-line (Hamerlinck, McKinley excused)]
HF 2470 provides a sales tax exemption on certain farm equipment. [5/8: 43-3 (Bolkcom, Dearden, McCoy “no”; Bacon, Behn, Chelgren, McKinley excused)]
HF 2472 (companion to SF 2340) extends the paired rate system for motor fuel for an additional year, until July 1, 2013. Currently, an excise tax is imposed on each gallon of motor fuel sold in the state. The general tax rate is 20 cents per gallon, but subject to adjustment each 12-month period, based on a formula that produces a paired rate system for ethanol-blended gasoline and other motor fuel. When the paired rate system expires, the tax rate will be uniformly imposed at 20 cents for each gallon. [4/26: 46-0 (Houser, Johnson, Kapucian, Sorenson excused)]Posted Jun. 14th, 2012 at 12:59 pm by Senate Staff