Bill Text: IA HF69 | 2021-2022 | 89th General Assembly | Introduced
Bill Title: A bill for an act relating to the taxation of compensation paid by a publicly held corporation to its chief executive officer under the state corporate income tax, franchise tax, and insurance companies tax, and including applicability provisions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2021-01-14 - Introduced, referred to Ways and Means. H.J. 93. [HF69 Detail]
Download: Iowa-2021-HF69-Introduced.html
House
File
69
-
Introduced
HOUSE
FILE
69
BY
JACOBY
A
BILL
FOR
An
Act
relating
to
the
taxation
of
compensation
paid
by
a
1
publicly
held
corporation
to
its
chief
executive
officer
2
under
the
state
corporate
income
tax,
franchise
tax,
and
3
insurance
companies
tax,
and
including
applicability
4
provisions.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
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Section
1.
Section
422.35,
Code
2021,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
31.
a.
For
purposes
of
this
subsection,
3
“compensation”
means
the
total
amount
allowable
under
section
4
162(a)(1)
of
the
Internal
Revenue
Code
as
salary
or
other
5
compensation
for
personal
services
actually
rendered,
6
determined
without
regard
to
section
162(m)
or
280G
of
the
7
Internal
Revenue
Code.
8
b.
If
the
taxpayer
is
a
publicly
held
corporation
as
defined
9
in
section
162(m)(2)
of
the
Internal
Revenue
Code,
the
taxpayer
10
shall
do
all
of
the
following:
11
(1)
Add,
to
the
extent
allowed
as
a
deduction
in
computing
12
federal
taxable
income,
the
amount
paid
or
accrued
during
the
13
tax
year
as
compensation
of
the
chief
executive
officer
of
the
14
taxpayer,
or
the
individual
acting
in
such
capacity.
15
(2)
Add
the
amount
paid
or
accrued
during
the
tax
year
as
16
compensation
of
the
chief
executive
officer
of
the
taxpayer,
or
17
the
individual
acting
in
such
capacity.
18
Sec.
2.
NEW
SECTION
.
432.11
Tax
on
chief
executive
officer
19
compensation
of
publicly
held
corporations.
20
1.
For
purposes
of
this
section:
21
a.
“Compensation”
means
the
same
as
defined
in
section
22
422.35,
subsection
31.
23
b.
“Federal
income
tax
year”
means,
with
respect
to
an
24
insurance
company
or
association,
the
calendar
year,
or
the
25
fiscal
year
ending
during
such
calendar
year,
upon
the
basis
of
26
which
the
insurance
company’s
or
association’s
federal
income
27
tax
is
computed.
28
2.
Every
insurance
company
or
association
of
whatever
kind
29
or
character
that
is
subject
to
the
tax
on
gross
premiums
30
imposed
in
this
chapter
and
that
is
a
publicly
held
corporation
31
as
defined
in
section
162(m)(2)
of
the
federal
Internal
Revenue
32
Code
shall
pay
to
the
director
of
the
department
of
revenue,
or
33
to
a
depository
designated
by
the
director,
as
a
tax,
an
amount
34
equal
to
one
percent
of
the
amount
paid
or
accrued,
as
the
case
35
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may
be,
during
a
federal
income
tax
year
as
compensation
of
1
the
chief
executive
officer,
or
the
individual
acting
in
such
2
capacity.
3
3.
If
the
taxable
income
of
the
insurance
company
or
4
association
for
federal
income
tax
purposes
is
derived
from
its
5
business
carried
on
entirely
within
this
state,
the
tax
in
this
6
section
shall
be
imposed
on
the
entire
compensation,
but
if
the
7
business
is
carried
on
partly
within
and
partly
without
the
8
state,
the
portion
of
compensation
reasonably
attributable
to
9
the
business
within
the
state
shall
be
specifically
allocated
10
or
equitably
apportioned
within
and
without
the
state
under
11
rules
of
the
director
of
the
department
of
revenue.
12
4.
The
tax
imposed
in
this
section
shall
be
paid
on
or
13
before
the
due
date
under
the
federal
Internal
Revenue
Code
14
for
paying
the
federal
income
tax
of
the
insurance
company
or
15
association
for
the
applicable
federal
income
tax
year
that
is
16
the
subject
of
the
tax
in
this
section,
as
provided
by
rules
17
adopted
by
the
commissioner.
The
commissioner,
in
consultation
18
with
the
director
of
the
department
of
revenue,
shall
create
19
and
make
available
forms
to
be
used
in
paying
the
tax
imposed
20
in
this
section.
21
5.
The
commissioner
may
suspend
or
revoke
the
license
of
a
22
company
or
association
that
fails
to
pay
its
tax
on
or
before
23
the
due
date.
24
Sec.
3.
APPLICABILITY.
This
Act
applies
to
tax
years
25
beginning
on
or
after
January
1,
2022.
26
EXPLANATION
27
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
28
the
explanation’s
substance
by
the
members
of
the
general
assembly.
29
This
bill
relates
to
the
taxation
of
compensation
paid
to
30
chief
executive
officers
of
publicly
traded
corporations
under
31
the
Iowa
corporate
income
tax,
franchise
tax,
and
insurance
32
premiums
tax.
The
bill
defines
“compensation”
to
be
the
total
33
amount
allowable
as
a
business
expense
deduction
under
the
34
Internal
Revenue
Code
(IRC)
for
salary
and
compensation
for
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personal
services
actually
rendered,
determined
without
regard
1
to
the
deduction
limitations
in
the
IRC
for
certain
excessive
2
employee
compensation
or
excess
parachute
payments.
3
For
purposes
of
calculating
net
income
of
a
publicly
held
4
corporation
under
the
Iowa
corporate
income
tax,
and
under
5
the
franchise
tax
imposed
on
financial
institutions,
the
bill
6
disallows
a
deduction
for
amounts
paid
or
accrued
during
a
tax
7
year
as
compensation
of
the
chief
executive
officer,
or
the
8
individual
acting
in
such
capacity.
The
bill
additionally
9
requires
the
publicly
held
corporation
to
add
to
net
income
the
10
amounts
paid
or
accrued
during
the
tax
year
as
compensation
of
11
the
chief
executive
officer,
or
the
individual
acting
in
such
12
capacity.
13
Insurance
companies
and
associations
doing
business
in
14
Iowa
are
not
subject
to
the
Iowa
corporate
income
tax
or
15
the
franchise
tax,
but
are
instead
generally
subject
to
a
1
16
percent
gross
premiums
tax
related
to
business
done
in
Iowa
17
on
a
calendar
year
basis.
The
bill
provides
that
any
such
18
insurance
company
or
association
subject
to
the
Iowa
insurance
19
premiums
tax
that
is
a
publicly
held
corporation
shall
also
20
be
subject
to
a
tax
equal
to
1
percent
of
the
amount
paid
or
21
accrued
during
each
federal
income
tax
year
as
compensation
of
22
the
chief
executive
officer,
or
the
individual
acting
in
such
23
capacity.
“Federal
income
tax
year”
is
defined
in
the
bill
to
24
be
the
calendar
year
or
fiscal
year
upon
which
an
insurance
25
company
or
association
computes
its
federal
income
tax.
If
26
the
entire
federal
taxable
income
of
the
insurance
company
or
27
association
is
derived
in
Iowa,
then
the
tax
is
imposed
on
the
28
entire
amount
of
the
compensation,
but
if
business
is
conducted
29
inside
and
outside
of
Iowa,
only
a
portion
of
the
compensation
30
is
taxable
in
Iowa
pursuant
to
allocation
and
apportionment
31
rules
required
to
be
adopted
by
the
director
of
revenue.
32
The
tax
is
due
on
or
before
the
due
date
under
the
IRC
for
33
paying
the
federal
income
tax
of
the
insurance
company
or
34
association
for
the
applicable
federal
income
tax
year
that
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is
the
subject
of
the
compensation
tax.
The
bill
allows
the
1
commissioner
of
insurance
to
suspend
or
revoke
the
license
of
2
any
insurance
company
or
association
that
fails
to
pay
the
3
compensation
tax
on
or
before
the
due
date.
4
The
bill
applies
to
tax
years
beginning
on
or
after
January
5
1,
2022.
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