Bill Text: IA HF592 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act creating a home ownership development tax credit available for charitable contributions to certain low-income housing developers in this state, and including applicability provisions.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2018-03-28 - Subcommittee Meeting: 04/03/2018 8:30AM House Lounge. [HF592 Detail]
Download: Iowa-2017-HF592-Introduced.html
House File 592 - Introduced HOUSE FILE BY HEARTSILL A BILL FOR 1 An Act creating a homeownership development tax credit 2 available for charitable contributions to certain 3 low=income housing developers in this state, and including 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2174YH (3) 87 mm/jh PAG LIN 1 1 Section 1. NEW SECTION. 15E.152 Short title. 1 2 This division shall be known and may be cited as the 1 3 "Homeownership Development Tax Credit Act". 1 4 Sec. 2. NEW SECTION. 15E.153 Purpose. 1 5 The purpose of this division is to increase the availability 1 6 of affordable housing in this state by encouraging taxpayers 1 7 to make charitable contributions to certain nonprofit housing 1 8 developers that create affordable single=family housing to be 1 9 sold to low=income households in this state. 1 10 Sec. 3. NEW SECTION. 15E.154 Definitions. 1 11 As used in this division, unless the context otherwise 1 12 requires: 1 13 1. "Department" means the department of revenue. 1 14 2. "Eligible housing developer" means an entity meeting the 1 15 requirements of section 15E.155, subsection 2, and certified 1 16 as an eligible housing developer by the authority pursuant to 1 17 that section. 1 18 3. "Eligible rural housing developer" means an entity 1 19 meeting the requirements of section 15E.155, subsection 3, 1 20 and certified as an eligible rural housing developer by the 1 21 authority pursuant to that section. 1 22 4. "Low=income household" means a household with income 1 23 of eighty percent or less of the area median family income by 1 24 county as determined by the United States department of housing 1 25 and urban development. 1 26 Sec. 4. NEW SECTION. 15E.155 Developer certification. 1 27 1. Application. An organization may apply to the authority 1 28 in the manner prescribed by the authority to be certified as 1 29 an eligible housing developer or an eligible rural housing 1 30 developer. 1 31 2. Eligible housing developer. In order to be certified as 1 32 an eligible housing developer, an organization shall meet the 1 33 requirements of paragraph "a" or "b": 1 34 a. (1) The organization is organized under chapter 504 and 1 35 qualifying under section 501(c)(3) of the Internal Revenue Code 2 1 as an organization exempt from federal income tax under section 2 2 501(a) of the Internal Revenue Code. 2 3 (2) The organization has, for a minimum of three years prior 2 4 to the time of the application, been developing single=family 2 5 housing in this state to be sold to low=income households. 2 6 (3) The bylaws, articles, or other document relating to the 2 7 establishment of the organization provide that a purpose of the 2 8 organization is to develop affordable housing in this state to 2 9 be sold to low=income households. 2 10 (4) The organization agrees to provide to the authority 2 11 information reasonably required by the authority in order to 2 12 verify the receipt, donor identity, value, and eligibility for 2 13 the tax credit of contributions received by the organization. 2 14 b. (1) The entity is an organization organized under 2 15 chapter 504 and qualifying under section 501(c)(3) of the 2 16 Internal Revenue Code as an organization exempt from federal 2 17 income tax under section 501(a) of the Internal Revenue Code. 2 18 (2) A purpose of the organization is to serve or support 2 19 an organization certified as an eligible housing developer 2 20 pursuant to paragraph "a" of this subsection. 2 21 (3) The organization accepts contributions on behalf of 2 22 an organization certified as an eligible housing developer 2 23 pursuant to paragraph "a" of this subsection, and redistributes 2 24 any and all such contributions to that organization. 2 25 (4) The organization agrees to provide to the authority 2 26 information reasonably required by the authority in order to 2 27 verify the receipt, donor identity, value, and eligibility for 2 28 the tax credit of contributions received by the organization. 2 29 3. Eligible rural housing developer. In order to be 2 30 certified as an eligible rural housing developer, an 2 31 organization shall meet the requirements of paragraph "a" or 2 32 "b": 2 33 a. The organization meets the requirements of subsection 2 34 2, paragraph "a", and for the three years preceding the 2 35 application, the organization has conducted at least fifty=one 3 1 percent of its housing development activities in Iowa counties 3 2 with a population of fewer than fifty thousand as determined by 3 3 the most recent federal decennial census. 3 4 b. (1) The organization is organized under chapter 504 and 3 5 qualifying under section 501(c)(3) of the Internal Revenue Code 3 6 as an organization exempt from federal income tax under section 3 7 501(a) of the Internal Revenue Code. 3 8 (2) A purpose of the organization is to serve or support an 3 9 organization certified as an eligible rural housing developer 3 10 pursuant to paragraph "a" of this subsection. 3 11 (3) The organization accepts contributions on behalf of an 3 12 organization certified as an eligible rural housing developer 3 13 pursuant to paragraph "a" of this subsection, and redistributes 3 14 any and all such contributions to that organization. 3 15 (4) The organization agrees to provide to the authority 3 16 information reasonably required by the authority in order to 3 17 verify the receipt, donor identity, value, and eligibility for 3 18 the tax credit of contributions received by the organization. 3 19 4. Length of certification and recertification. Unless 3 20 certification is revoked pursuant to subsection 5, a 3 21 certification received pursuant to this section shall be valid 3 22 for a period of three years, at which time the organization 3 23 may apply to the authority in the manner prescribed by the 3 24 authority to become recertified as an eligible housing 3 25 developer or eligible rural housing developer pursuant to this 3 26 section. 3 27 5. Revocation of certification. An organization shall 3 28 notify the authority in a timely manner of any changes that 3 29 affect the organization's ability to qualify as an eligible 3 30 housing developer or eligible rural housing developer. The 3 31 authority shall revoke the certification of an organization 3 32 certified as an eligible housing developer or eligible rural 3 33 housing developer if that organization subsequently fails to 3 34 meet the requirements of subsection 2 or 3, as applicable. 3 35 The revocation of a certification under this subsection shall 4 1 not prohibit an organization from subsequently applying to be 4 2 certified as an eligible housing developer or eligible rural 4 3 housing developer under this section. 4 4 Sec. 5. NEW SECTION. 15E.156 Tax credit application == 4 5 maximum tax credits. 4 6 1. Application. 4 7 a. To receive a tax credit under section 15E.157, a taxpayer 4 8 must submit an application in the manner and form prescribed 4 9 by the authority on or after the date of the charitable 4 10 contribution to the eligible housing developer or eligible 4 11 rural housing developer for which a tax credit is sought. The 4 12 eligible housing developer or eligible rural housing developer 4 13 shall forward the application to the authority. 4 14 b. The authority shall issue tax credits and related tax 4 15 credit certificates on a first=come, first=served basis in 4 16 the order applications are received from eligible housing 4 17 developers and eligible rural housing developers until the 4 18 maximum amount of tax credits authorized pursuant to subsection 4 19 2 is reached. If for a calendar year the maximum amount 4 20 of tax credits applied for exceeds the amount specified in 4 21 subsection 2, the authority shall establish a wait list for 4 22 tax credits. Valid applications received but not approved 4 23 by the authority shall be placed on a wait list in the order 4 24 the applications were received by the authority and those 4 25 applicants shall be given priority for receiving tax credits in 4 26 succeeding calendar years. Placement on a wait list pursuant 4 27 to this paragraph shall not constitute a promise binding the 4 28 state. The availability of a tax credit and approval of a tax 4 29 credit application pursuant to this section in a future year 4 30 is contingent upon the availability of tax credits in that 4 31 particular year. 4 32 2. Maximum tax credit amounts. 4 33 a. The aggregate amount of tax credits issued pursuant to 4 34 this section shall not exceed a total of seven million dollars 4 35 per calendar year. 5 1 b. Twenty percent of the aggregate amount of tax credits 5 2 issued in a calendar year shall be reserved for charitable 5 3 contributions to an eligible rural housing developer. 5 4 c. (1) Except as provided in subparagraph (2), the maximum 5 5 amount of tax credits issued to any one taxpayer for charitable 5 6 contributions in a tax year shall not exceed two hundred fifty 5 7 thousand dollars. 5 8 (2) The maximum amount of tax credits issued to any one 5 9 taxpayer for charitable contributions in a tax year shall 5 10 not exceed three hundred thousand dollars if at least twenty 5 11 percent of the taxpayer's total charitable contributions made 5 12 during the tax year that are eligible for the tax credit in 5 13 section 15E.157 are to one or more eligible rural housing 5 14 developers. 5 15 Sec. 6. NEW SECTION. 15E.157 Homeownership development tax 5 16 credit. 5 17 1. a. A tax credit shall be allowed against the taxes 5 18 imposed in chapter 422, divisions II, III, and V, and in 5 19 chapter 432, and against the moneys and credits tax imposed in 5 20 section 533.329, equal to fifty percent of the amount of the 5 21 voluntary cash or noncash charitable contributions made by a 5 22 taxpayer during the tax year to an eligible housing developer 5 23 or eligible rural housing developer. 5 24 b. The charitable contribution must equal or exceed five 5 25 hundred dollars in order to qualify for the tax credit. 5 26 However, an eligible housing developer or eligible rural 5 27 housing developer may set a higher minimum qualifying amount 5 28 pursuant to rules prescribed by the authority. 5 29 2. The tax credit shall be claimed for the tax year during 5 30 which the taxpayer was issued the tax credit. 5 31 3. An individual may claim a tax credit under this section 5 32 of a partnership, limited liability company, S corporation, 5 33 estate, or trust electing to have income taxed directly to 5 34 the individual. The amount claimed by the individual shall 5 35 be based upon the pro rata share of the individual's earnings 6 1 from the partnership, limited liability company, S corporation, 6 2 estate, or trust. 6 3 4. Any tax credit in excess of the taxpayer's tax liability 6 4 for the tax year may be credited to the tax liability for the 6 5 following five years or until depleted, whichever occurs first. 6 6 A tax credit shall not be carried back to a tax year prior to 6 7 the tax year in which the taxpayer claims the tax credit. 6 8 5. a. To claim a tax credit under this section, a taxpayer 6 9 shall include one or more tax credit certificates with the 6 10 taxpayer's tax return. 6 11 b. The tax credit certificate shall contain the taxpayer's 6 12 name, address, tax identification number, the amount of the 6 13 credit, and any other information required by the department. 6 14 c. The tax credit certificate, unless rescinded by the 6 15 authority, shall be accepted by the department as payment for 6 16 taxes imposed pursuant to chapter 422, divisions II, III, and 6 17 V, and in chapter 432, and against the moneys and credits 6 18 tax imposed in section 533.329, subject to any conditions or 6 19 restrictions placed by the authority upon the face of the tax 6 20 credit certificate and subject to the limitations of this 6 21 chapter. 6 22 d. Tax credit certificates issued pursuant to this division 6 23 shall not be transferred to any other person. 6 24 6. The amount of the charitable contribution for which the 6 25 tax credit is claimed shall not be deductible in determining 6 26 taxable income for state income tax purposes. 6 27 Sec. 7. NEW SECTION. 15E.158 Reports to general assembly. 6 28 The authority shall publish an annual report of the 6 29 activities conducted pursuant to this division and shall submit 6 30 the report to the governor and the general assembly. The 6 31 report shall include a listing of certified eligible housing 6 32 developers and certified eligible rural housing developers, the 6 33 number of tax credit certificates and the amount of tax credits 6 34 issued by the authority, and the number of taxpayers and the 6 35 amount of tax applications on the tax credit wait list, if any. 7 1 Sec. 8. NEW SECTION. 15E.159 Rules. 7 2 The authority and the department shall each adopt rules 7 3 pursuant to chapter 17A as necessary for the implementation of 7 4 this division. 7 5 Sec. 9. APPLICABILITY. This Act applies to tax years 7 6 beginning on or after January 1, 2018. 7 7 Sec. 10. APPLICABILITY. This Act applies to charitable 7 8 contributions to eligible housing developers and eligible rural 7 9 housing developers made on or after January 1, 2018. 7 10 EXPLANATION 7 11 The inclusion of this explanation does not constitute agreement with 7 12 the explanation's substance by the members of the general assembly. 7 13 This bill creates a homeownership development tax credit 7 14 that will be administered by the economic development authority 7 15 (EDA) and that will provide tax credits to taxpayers who make 7 16 charitable contributions to eligible housing developers or 7 17 eligible rural housing developers in this state. 7 18 An "eligible housing developer" is defined in the bill to 7 19 include an Iowa nonprofit, tax=exempt organization that has 7 20 been developing single=family housing for at least three years 7 21 in this state to be sold to low=income households, as defined 7 22 in the bill, that includes the development of such housing in 7 23 this state for low=income households as a purpose in its bylaws 7 24 or other organizational documents, and that agrees to provide 7 25 EDA with certain information in order to properly verify 7 26 charitable contributions. An "eligible housing developer" 7 27 also includes an Iowa nonprofit, tax=exempt organization whose 7 28 purpose is to support an organization described above and who 7 29 redistributes any charitable contributions received on behalf 7 30 of that eligible housing developer to the developer. 7 31 An "eligible rural housing developer" is defined in the 7 32 bill to include an Iowa nonprofit, tax=exempt organization 7 33 that meets the requirements of an eligible housing developer 7 34 described above but that additionally has conducted for the 7 35 last three years at least 51 percent of its housing development 8 1 activities in Iowa counties with a population of fewer than 8 2 50,000 as determined by the most recent federal decennial 8 3 census. 8 4 An organization must apply to EDA to be certified as an 8 5 eligible housing developer or an eligible rural housing 8 6 developer. A certification by EDA will last for a period of 8 7 three years, at which time an eligible housing developer or 8 8 eligible rural housing developer may apply to be recertified. 8 9 Failure to meet the requirements specified above may cause the 8 10 organization to lose its certification as an eligible housing 8 11 developer or eligible rural housing developer, but the loss 8 12 of such certification does not prohibit an organization from 8 13 subsequently reapplying to EDA for certification. 8 14 In order to receive a tax credit for a charitable 8 15 contribution to an eligible housing developer or eligible rural 8 16 housing developer, a taxpayer is required to apply to the 8 17 developer in the manner and form prescribed by EDA on or after 8 18 the date the charitable contribution is made. The developer is 8 19 then required to forward the application to EDA. 8 20 The tax credit equals 50 percent of the amount of the cash or 8 21 noncash charitable contribution made to the eligible housing 8 22 developer or eligible rural housing developer during the tax 8 23 year. The minimum amount of charitable contribution that may 8 24 qualify for the tax credit is $500, but each eligible housing 8 25 developer or eligible rural housing developer is allowed to 8 26 set a higher minimum contribution amount. The bill provides 8 27 that EDA shall not issue more than $7 million in tax credits 8 28 per calendar year. Of that $7 million maximum aggregate 8 29 amount, 20 percent ($1.4 million) of the tax credits shall 8 30 be reserved for charitable contributions to eligible rural 8 31 housing developers. The maximum amount of tax credits that 8 32 may be issued per taxpayer for charitable contributions in a 8 33 tax year is $250,000, or $300,000 if at least 20 percent of 8 34 the taxpayer's total charitable contributions to the eligible 8 35 housing development organizations during the tax year were to 9 1 one or more eligible rural housing developers. 9 2 The tax credit may be claimed against the individual income 9 3 tax, the corporate income tax, the franchise tax, the insurance 9 4 companies tax, and the moneys and credits tax. To claim a tax 9 5 credit, a taxpayer must include a tax credit certificate with 9 6 the taxpayer's tax return. The tax credit is nonrefundable 9 7 and nontransferable, but any excess may be carried forward for 9 8 five tax years. The amount of the charitable contribution for 9 9 which the tax credit is claimed shall not be deductible in 9 10 determining taxable income for state tax purposes. 9 11 EDA is required to issue tax credits on a first=come, 9 12 first=served basis until the maximum amount of $7 million 9 13 per calendar year is reached. If the amount of tax credit 9 14 applications exceeds $7 million in a calendar year, EDA 9 15 is required to establish a wait list and give priority in 9 16 subsequent years to applications on the wait list. 9 17 The bill requires EDA and the department of revenue to 9 18 adopt rules as necessary for the implementation of the bill, 9 19 and requires EDA to publish and submit annual reports to 9 20 the governor and general assembly containing information as 9 21 described in the bill. 9 22 The bill applies to tax years beginning on or after January 9 23 1, 2018, and to charitable contributions to eligible housing 9 24 developers and eligible rural housing developers on or after 9 25 that date. LSB 2174YH (3) 87 mm/jh
