Iowa bill would offer tax credits for major business projects

The authority may authorize one of two investment tax credit options. The first option offers up to 5 percent of qualifying investment for as many as two businesses. The second offers up to 10 percent for one business with a project in a rural county, defined as a county with 50,000 people or fewer. The authority may use either credit option, but not both. The board may not authorize program incentives for more than two businesses, or more than one if the rural credit is issued, or on or after January 1, 2030, whichever occurs first. The authority must find the site suitable. The 5% option requires a controlling interest in the site or a certified site greater than 250 acres. The rural option also permits a documented site evaluation comparable to a certified site. A certificate may issue only after the project or a designated portion is placed in service and at least half the associated agreed jobs are on payroll; those jobs must pay at least 140% of the qualifying wage threshold. The first option is paid in equal amounts over five tax years. The rural option is paid over ten tax years.

A business’s tax liability increases when it sells, disposes of, razes, or makes credited property unusable and the property ceases to qualify within the applicable period. This applies to land, buildings, or other structures for which a program tax credit was claimed. For the first option, the increase is 100 percent of the credit if the property ceases to qualify within one year, decreasing to 20 percent if that happens within five years. For the rural option, the increase is 100% of the credit claimed if the property ceases to qualify within one year, declining to 10% within ten years. The covered property includes property for which any taxpayer claimed the credit. The period starts when the authority issues the credit. The increased tax liability applies for the year the property is sold, disposed of, torn down, or made unusable.

When a certificate was issued through prohibited activity, the Department of Revenue must revoke outstanding credits and seek repayment, subject to the exception for qualifying transferees. These rules cover businesses receiving program credits and people or entities receiving transferred credits. Prohibited activity includes breaking the program agreement, making a false statement, fraud, claiming a credit for an unqualified investment, or violating program rules or other laws. The business and some credit buyers may owe repayment, interest, penalties, and reasonable legal costs. A buyer’s liability cannot exceed the credit amount acquired. A qualifying buyer who paid value, acted in good faith without notice of a violation or competing claim, and is not associated with the business is exempt from the liability, revocation, and repayment rules in this paragraph. A buyer may claim a transferred credit only after the Department of Revenue issues a replacement certificate in the buyer’s name.