Providing a credit refund for taxpayers who own or lease cow-calf operations that maintain a herd of qualified cattle, and providing an appropriation

BACKGROUND —— CALCULATION. The 1996 Iowa Act established a formula to calculate the credit based on a flat rate of cents multiplied by a corn equivalency factor assigned to each species of listed farm animals maintained as part of a herd or flock at a livestock production operation (operation)., farrow to finish and farrow to feeder pig) and types of operation (cow-calf, feedlot, and dairy).102).15). The next step would be to multiply the product of the per turkey credit refund by the total number of turkeys maintained at the operation.5 x 15,000 = $2,250.15 per head.5 x 280 = $3,122. BACKGROUND —— PROCEDURES. The 1996 Iowa Act established a number of procedures. The taxpayer was required to file a claim for the refund within months from the last day of the taxpayer’s tax year (October for a calendar year filer). An extension by the taxpayer was not allowed. A claim for a credit refund had to be made on forms published by the department. The department was required to determine by February of each calendar year whether the total amount of claims for refunds for the prior calendar year exceeded the amount available to fully pay all claims. BACKGROUND —— LIMITATIONS (RESTRICTED TO COW-CALF OPERATIONS). The 1996 Iowa Act provided that for the tax year beginning on and after January 1, 1996, the credit refund applied only to cow-calf operations. The 1997 Iowa Act extended that restriction to all future tax years, while leaving the Code sections establishing the general credit refund applying to all farm animals intact but unfunded. The 1997 Iowa Act specified that a cow-calf operation must include a herd consisting of three types of qualifying cattle: mature beef cows bred or for breeding, bred yearling heifers, and breeding bulls. The 1999 Iowa Act provided that the credit refund was based on a head count of the cattle (inventory) conducted on December of the tax year and required that the same cattle must have been included in the herd inventory on the previous July 1. BACKGROUND —— LIMITATIONS (FINANCIAL CAPS). A number of financial limitations applied to the credit refund. The first and second limitations were established in the 1996 Iowa Act. The first limitation set a maximum allowable amount (maximum credit cap) of $3,000 that could be awarded to any one taxpayer.35). The second limitation set a maximum annual standing limited appropriation of $2 million dedicated to pay all claimed credit refunds allowed by the department in that fiscal year. If on February the appropriated amount was available to cover all approved credit claims, each of the approved claims would be paid up to the maximum allowable credit cap. Otherwise, the appropriated amount would be paid on a percentage basis in two rounds of distributions. During the first round, each taxpayer holding a claim was paid an equal amount up to the claimed credit’s maximum credit cap. During the second round, the remaining appropriation amount was apportioned among all taxpayers holding claims that were not fully paid. Each such taxpayer was assigned the same percentage of the remaining appropriation amount as would have been awarded to that taxpayer if full refund payments were made to all such waiting taxpayers. The third financial limitation set an eligibility requirement for taxpayers. The 1997 Iowa Act replaced a taxpayer net worth cap with a taxpayer annual income cap. The former Act required a taxpayer to have had a net worth of less than $1 million.4). BACKGROUND —— ALLOCATIONS. Interest holders of certain businesses, such as S corporations, were allowed to claim the credit individually as a pass-through. BILL’S PROVISIONS. This bill reestablishes the credit refund based on the framework of the 1996 Iowa Act as amended, but also makes certain changes. The former version of the credit refund applied to livestock production operations but in fact limited its application to only cow-calf operations. The bill applies exclusively to cow-calf operations as defined in the 1997 Iowa Act and eliminates language that refers to those other types of operations. The bill assumes an inflation rate of percent (rounded) since the income cap for taxpayers first applied to 1997 and later tax years and substitutes $99,600 with $191,000 (rounded) as a base rate for the 2024 calendar year with subsequent increases calculated for tax years beginning on and after January 1, 2025, using the same inflation formula.75 percent (rounded) since the credit’s elimination in 2009.50 (rounded). It makes two other inflation adjustments, including (1) the maximum allowable credit amount by substituting $3,000 with $4,000 (rounded), and (2) the appropriation amount by substituting $2 million with $3 million (rounded). It requires the filing of documents with the department in an electronic format.79 providing eligibility criteria for the beginning farmer tax credit program). Finally, it expressly allows the department to calculate allocations of a credit when qualifying cow-calf operation cattle are owned by more than one taxpayer, including married taxpayers.