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House
File
2732
-
Introduced
HOUSE
FILE
2732
BY
TUREK
A
BILL
FOR
An
Act
providing
for
water
quality
practices,
including
an
1
edge-of-field
practice
tax
credit
and
cover
crop
practice
2
tax
credit.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
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Section
1.
NEW
SECTION
.
159.5A
Water
quality
practice.
1
1.
The
department,
acting
through
the
division
of
soil
2
conservation
and
water
quality,
may
enter
onto
land
in
order
to
3
inspect
a
water
quality
practice
and
verify
that
such
practice
4
has
been
established
and
maintained
as
required
in
chapter
467.
5
In
entering
onto
the
land,
the
division
shall
have
the
powers
6
conferred
upon
commissioners
of
soil
and
water
conservation
7
districts
under
chapter
161A
as
if
the
water
quality
practice
8
were
a
soil
and
water
conservation
practice
or
erosion
control
9
practice
established
on
a
voluntary
or
mandatory
basis
using
10
cost-share
moneys.
11
2.
Subsection
1
does
not
require
the
department
to
12
enter
onto
land
to
inspect
and
verify
the
establishment
or
13
maintenance
of
a
water
quality
practice.
14
Sec.
2.
NEW
SECTION
.
161A.11
Water
quality
practice
——
15
cooperation
with
the
division.
16
The
commissioners
of
a
district
where
a
water
quality
17
practice
is
to
be
or
has
been
established
under
chapter
467
are
18
deemed
to
be
the
agents
of
the
division
and
shall
act
under
19
the
direction
and
supervision
of
the
division
in
entering
20
onto
land
located
in
the
district
in
order
to
inspect
a
water
21
quality
practice
and
verify
that
it
has
been
established
and
22
maintained
as
required
in
chapter
467.
In
entering
onto
the
23
land,
the
commissioners
have
all
the
powers
conferred
upon
them
24
under
this
chapter
as
if
the
water
quality
practice
were
a
soil
25
and
water
conservation
practice
or
erosion
control
practice
26
established
on
a
voluntary
or
mandatory
basis
using
cost-share
27
moneys.
28
Sec.
3.
NEW
SECTION
.
161A.77
Limitations
on
financial
29
assistance
——
water
quality
practice
tax
credits.
30
A
person
is
not
eligible
to
receive
an
award
of
financial
31
assistance
that
is
not
required
to
be
repaid
by
the
recipient,
32
including
but
not
limited
to
cost-share
moneys
under
this
33
chapter,
for
that
portion
of
the
amount
awarded
under
the
water
34
quality
practice
program
as
either
an
edge-of-field
practice
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tax
credit
or
cover
crop
practice
tax
credit
under
chapter
467.
1
Sec.
4.
NEW
SECTION
.
422.11K
Water
quality
practice
program
2
——
tax
credits.
3
1.
The
taxes
imposed
under
this
subchapter,
less
the
4
credits
allowed
under
section
422.12,
shall
be
reduced
by
an
5
edge-of-field
practice
tax
credit
allowed
under
chapter
467.
6
2.
The
taxes
imposed
under
this
subchapter,
less
the
credits
7
allowed
under
section
422.12,
shall
be
reduced
by
a
cover
crop
8
practice
tax
credit
allowed
under
chapter
467.
9
Sec.
5.
Section
422.33,
Code
2026,
is
amended
by
adding
the
10
following
new
subsection:
11
NEW
SUBSECTION
.
24.
a.
The
taxes
imposed
under
this
12
subchapter,
less
the
credits
allowed
under
section
422.12,
13
shall
be
reduced
by
an
edge-of-field
practice
tax
credit
14
allowed
under
chapter
467.
15
b.
The
taxes
imposed
under
this
subchapter,
less
the
credits
16
allowed
under
section
422.12,
shall
be
reduced
by
a
cover
crop
17
practice
tax
credit
allowed
under
chapter
467.
18
Sec.
6.
NEW
SECTION
.
467.1
Definitions.
19
As
used
in
this
chapter,
unless
the
context
otherwise
20
requires:
21
1.
a.
“Cover
crop”
means
a
water
quality
practice
that
is
22
planted
for
seasonal
vegetative
cover
and
that
is
all
of
the
23
following:
24
(1)
Part
of
a
crop
rotation
cycle.
25
(2)
Not
intended
for
harvest.
26
(3)
Established
in
a
manner
that
promotes
soil
health.
27
b.
“Cover
crop”
includes
grasses,
legumes,
forbs,
and
other
28
vegetation
specified
by
the
department.
29
2.
“Cropland”
means
any
land
suitable
for
use
to
produce
30
grains,
seed
crops,
and
forages.
31
3.
“Department”
means
the
department
of
agriculture
and
land
32
stewardship.
33
4.
a.
“Edge-of-field
practice”
means
a
water
quality
34
practice
designed
to
slow,
filter,
and
process
surface
and
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subsurface
water
draining
from
cropland.
1
b.
“Edge-of-field
practice”
includes
all
of
the
following:
2
(1)
A
bioreactor
installed
as
part
of
or
connected
to
a
3
field
drainage
system.
4
(2)
A
wetland
established
as
part
of
or
connected
to
a
crop
5
field.
6
(3)
A
saturated
buffer.
7
(4)
Cropland
integrated
with
a
prairie
grass
strip.
8
(5)
A
riparian
buffer
strip.
9
(6)
A
grassed
waterway.
10
(7)
An
area
maintained
in
permanent
vegetation
cover,
11
including
perennial
vegetation
cover
consisting
of
grasses
or
12
legumes,
including
but
not
limited
to
grasslands
or
forages.
13
(8)
A
wetland
area
if
the
area
is
mostly
underwater
or
14
waterlogged
during
the
growing
season
and
is
characterized
by
15
vegetation
of
hydric
soils.
16
(9)
Any
other
measure
recognized
by
the
department
that
17
manages
nutrients
and
reduces
contributing
contaminant
loads
to
18
receiving
surface
waters,
including
by
detaining
sediment-laden
19
water,
reducing
the
volume
or
velocity
of
precipitation-induced
20
surface
water,
filtering
sediment-laden
water,
or
reducing
21
nutrient
loss
through
tile
drainage
systems.
22
5.
“Eligible
taxpayer”
means
a
person
that
meets
all
of
the
23
following
requirements:
24
a.
Is
eligible
to
claim
the
family
farm
tax
credit
under
25
chapter
425A.
26
b.
Has
a
net
worth
not
exceeding
two
million
dollars
27
according
to
generally
accepted
accounting
principles.
28
6.
“Farming
practice”
includes
but
is
not
limited
to
a
29
decision
regarding
crop
production,
including
crop
types
and
30
varieties
to
plant,
cultivation
and
harvesting
methods,
and
31
the
application
of
materials
including
manure
and
commercial
32
fertilizers,
tillage,
and
crop
rotation
systems.
33
7.
“Soil
and
water
conservation
practice”
means
the
same
as
34
defined
in
section
161A.42.
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8.
“Soil
health”
means
the
continued
capacity
of
soil
to
1
permanently
sustain
plant
and
animal
life.
2
9.
“State
fiscal
year”
means
the
fiscal
year
described
in
3
section
3.12.
4
10.
“Tax
credit”
means
any
of
the
following:
5
a.
An
edge-of-field
practice
tax
credit.
6
b.
A
cover
crop
practice
tax
credit.
7
11.
“Water
quality
practice”
means
any
of
the
following:
8
a.
An
edge-of-field
practice.
9
b.
A
cover
crop
practice.
10
Sec.
7.
NEW
SECTION
.
467.2
Water
quality
practice
program
11
——
administration.
12
1.
This
chapter
shall
be
administered
by
the
department
of
13
agriculture
and
land
stewardship.
The
department
of
revenue
14
shall
cooperate
with
the
department
of
agriculture
and
land
15
stewardship
in
administering
this
chapter.
16
2.
The
department
of
agriculture
and
land
stewardship
and
17
the
department
or
revenue
shall
adopt
rules
pursuant
to
chapter
18
17A
necessary
or
desirable
to
administer
this
chapter.
19
Sec.
8.
NEW
SECTION
.
467.3
Water
quality
practice
program
20
——
purpose.
21
1.
A
water
quality
practice
program
is
established
in
the
22
department
of
agriculture
and
land
stewardship.
23
2.
The
purpose
of
the
program
is
to
establish
new
water
24
quality
practices
as
part
of
existing
farming
practices,
25
including
by
providing
for
the
establishment
of
measures
that
26
limit
sediment
or
nutrients
from
being
conveyed
by
subsurface
27
drainage
or
surface
water
runoff
or
leaching
and
that
may
be
28
part
of
a
soil
and
water
conservation
practice
and
that
may
29
promote
soil
health.
30
Sec.
9.
NEW
SECTION
.
467.11
Edge-of-field
practice
tax
31
credit.
32
As
part
of
the
water
quality
practice
program
as
provided
in
33
section
467.3,
an
edge-of-field
practice
tax
credit
is
allowed
34
against
the
taxes
imposed
in
chapter
422,
subchapter
II,
as
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provided
in
section
422.11K,
and
in
chapter
422,
subchapter
1
III,
as
provided
in
section
422.33,
subsection
24.
2
Sec.
10.
NEW
SECTION
.
467.12
Cover
crop
practice
tax
3
credit.
4
As
part
of
the
water
quality
practice
program
as
provided
5
in
section
467.3,
a
cover
crop
practice
tax
credit
is
allowed
6
against
the
taxes
imposed
in
chapter
422,
subchapter
II,
as
7
provided
in
section
422.11K,
and
in
chapter
422,
subchapter
8
III,
as
provided
in
section
422.33,
subsection
24.
9
Sec.
11.
NEW
SECTION
.
467.13
Tax
credit
application
——
10
approval
process.
11
1.
The
department
of
agriculture
and
land
stewardship,
in
12
cooperation
with
the
department
of
revenue,
shall
establish
13
criteria
and
procedures
for
the
review
and
approval
or
14
disapproval
of
applications
submitted
by
persons
seeking
to
15
participate
in
the
water
quality
practice
program
by
being
16
awarded
any
of
the
following:
17
a.
An
edge-of-field
practice
tax
credit.
The
amount
of
18
the
tax
credit
shall
not
exceed
fifty
percent
of
the
estimated
19
or
actual
cost
of
establishing
the
edge-of-field
practice,
20
whichever
is
less.
21
b.
A
cover
crop
practice
tax
credit.
The
amount
of
the
22
tax
credit
shall
not
exceed
fifty
percent
of
the
estimated
or
23
actual
cost
of
establishing
the
cover
crop
practice,
whichever
24
is
less.
25
2.
The
department
shall
not
approve
an
application
under
26
subsection
1
unless
all
of
the
following
apply:
27
a.
The
person
is
an
eligible
taxpayer.
28
b.
The
person
agrees
to
establish
and
maintain
a
water
29
quality
practice
associated
with
an
edge-of-field
practice
tax
30
credit
or
a
cover
crop
practice
tax
credit
for
not
less
than
31
ten
years.
32
3.
An
eligible
taxpayer
may
apply
for
and
be
approved
33
for
the
establishment
of
both
an
edge-of-field
practice
tax
34
credit
and
a
cover
crop
practice
tax
credit,
as
described
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in
subsection
1,
so
long
as
each
application
applies
to
1
the
establishment
of
a
separate
and
distinct
water
quality
2
practice.
3
Sec.
12.
NEW
SECTION
.
467.14
Tax
credit
application
——
4
approval.
5
1.
Subject
to
subsection
2,
the
department
shall
approve
6
applications
to
participate
in
the
water
quality
practice
7
program
by
awarding
a
tax
credit
pursuant
to
section
467.13
on
8
a
first-come,
first-served
basis.
9
2.
The
department
shall
not
approve
an
application
if
the
10
aggregate
amount
awarded
for
all
tax
credit
awards
exceeds
ten
11
million
dollars
in
any
state
fiscal
year.
12
3.
Applications
that
were
approved
by
the
department
but
for
13
which
a
tax
credit
was
not
awarded
shall
be
placed
on
a
wait
14
list
in
the
order
that
the
applications
were
received
by
the
15
department
and
shall
be
given
priority
for
being
awarded
a
tax
16
credit
in
the
succeeding
state
fiscal
year.
17
Sec.
13.
NEW
SECTION
.
467.15
Tax
credit
award.
18
1.
After
the
department
of
agriculture
and
land
stewardship
19
has
approved
all
applications
by
eligible
taxpayers
20
participating
in
the
water
quality
practice
program
under
21
section
467.14,
and
after
the
department
has
approved
all
22
eligible
taxpayers’
corresponding
tax
credit
awards,
the
23
department
shall
do
one
of
the
following:
24
a.
Issue
a
tax
credit
certificate
to
each
eligible
taxpayer
25
that
has
been
awarded
an
edge-of-field
practice
tax
credit.
26
b.
Issue
a
tax
credit
certificate
to
each
eligible
taxpayer
27
that
has
been
awarded
a
cover
crop
practice
tax
credit.
28
2.
The
tax
credit
certificate
shall
be
issued
and
contain
29
the
information
required
by
the
department
of
revenue.
30
3.
Under
either
tax
credit,
an
individual
may
claim
the
31
tax
credit
as
a
partnership,
limited
liability
company,
32
S
corporation,
estate,
or
trust
electing
to
have
income
33
taxed
directly
to
the
individual.
The
amount
claimed
by
the
34
individual
shall
be
based
upon
the
pro
rata
share
of
the
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individual’s
earnings
from
the
partnership,
limited
liability
1
company,
S
corporation,
estate,
or
trust.
2
4.
To
claim
the
relevant
tax
credit,
an
eligible
taxpayer
3
shall
include
a
tax
credit
certificate
for
that
tax
credit
with
4
the
eligible
taxpayer’s
tax
return
pursuant
to
rules
adopted
5
by
the
department
of
revenue.
6
5.
A
tax
credit
certificate,
unless
rescinded
by
the
7
department
of
agriculture
and
land
stewardship,
shall
be
8
accepted
by
the
department
of
revenue
as
payment
for
taxes
9
pursuant
to
chapter
422,
subchapters
II
and
III,
subject
to
10
any
conditions
or
restrictions
placed
by
the
department
of
11
agriculture
and
land
stewardship
upon
the
face
of
the
tax
12
credit
certificate
and
subject
to
the
limitations
of
the
water
13
quality
practice
program,
including
the
application
approved
14
by
the
department.
15
Sec.
14.
NEW
SECTION
.
467.16
Tax
credit
award
——
16
limitations.
17
1.
A
tax
credit
awarded
under
section
467.15
to
an
eligible
18
taxpayer
shall
not
be
transferable
to
any
other
person
other
19
than
the
eligible
taxpayer’s
estate
or
trust
upon
the
eligible
20
taxpayer’s
death
pursuant
to
rules
adopted
by
the
department
of
21
agriculture
and
land
stewardship.
22
2.
A
tax
credit
in
excess
of
the
eligible
taxpayer’s
23
tax
liability
for
the
tax
year
is
not
refundable
but
may
be
24
credited
to
the
tax
liability
for
the
following
ten
tax
years
25
or
until
depleted,
whichever
is
earlier.
A
tax
credit
shall
26
not
be
carried
back
to
a
tax
year
prior
to
the
tax
year
in
which
27
the
eligible
taxpayer
redeems
the
tax
credit.
28
3.
If
the
eligible
taxpayer
fails
to
comply
with
any
29
requirement
of
the
water
quality
practice
program
or
the
terms
30
of
the
approved
application,
as
determined
by
the
department
of
31
agriculture
and
land
stewardship,
that
department
may
revoke
32
the
tax
credit
award
and
may
rescind
any
tax
credit
certificate
33
that
has
been
issued.
The
department
of
agriculture
and
land
34
stewardship
shall
notify
the
department
of
revenue
of
any
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required
repayment
of
an
awarded
tax
credit.
Such
repayment
1
shall
be
considered
a
tax
payment
due
and
payable
to
the
2
department
of
revenue
by
any
taxpayer
that
claimed
the
tax
3
credit,
and
the
taxpayer’s
failure
to
make
the
repayment
may
4
be
treated
by
the
department
of
revenue
in
the
same
manner
as
a
5
failure
to
pay
the
tax
shown
due,
or
required
to
be
shown
due,
6
with
the
filing
of
a
return
or
deposit
form.
7
EXPLANATION
8
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
9
the
explanation’s
substance
by
the
members
of
the
general
assembly.
10
GENERAL
PROVISIONS.
This
bill
provides
for
a
water
quality
11
practice
program
(program)
administered
by
the
department
of
12
agriculture
and
land
stewardship
(DALS)
in
cooperation
with
the
13
department
of
revenue
(DOR).
The
purpose
of
the
program
is
14
to
establish
new
water
quality
practices
as
part
of
existing
15
farming
practices,
including
by
providing
for
the
establishment
16
of
measures
that
limit
sediment
or
nutrients
from
being
17
conveyed
by
subsurface
drainage
or
surface
water
runoff
or
18
leaching
and
that
may
be
part
of
a
soil
and
water
conservation
19
practice
and
that
may
promote
soil
health.
20
TAX
CREDIT
PROVISIONS.
The
program
provides
for
two
21
separate
tax
credits:
(1)
an
edge-of-field
practice
tax
credit
22
and
(2)
a
cover
crop
practice
tax
credit.
The
bill
provides
23
for
the
consideration
and
approval
of
applications
submitted
24
to
DALS
by
eligible
taxpayers
seeking
to
participate
in
the
25
program.
A
person
is
eligible
to
participate
in
the
program
26
if
the
person
is
eligible
to
claim
the
family
farm
tax
credit
27
(Code
chapter
425A)
and
has
a
net
worth
not
exceeding
28
$2
million.
The
person
must
also
agree
to
establish
and
29
maintain
a
water
quality
practice
associated
with
a
tax
30
credit
for
at
least
10
years.
The
amount
of
the
tax
credit
31
cannot
exceed
50
percent
of
the
estimated
or
actual
cost
of
32
establishing
the
water
quality
practice,
whichever
is
less.
33
DALS
cannot
approve
an
application,
if
the
aggregate
amount
34
awarded
for
all
tax
credit
awards
exceeds
$10
million
in
any
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state
fiscal
year
(July
1
through
June
30).
Upon
approval
of
1
a
tax
credit
award,
DALS
must
issue
the
eligible
taxpayer
a
2
tax
credit
certificate
to
be
included
as
part
of
the
eligible
3
taxpayer’s
tax
return
according
to
DOR
requirements.
The
bill
4
provides
limitations
upon
the
transferability
of
a
tax
credit
5
and
the
use
of
the
tax
credit
to
offset
income.
6
ENFORCEMENT.
DALS
or
a
commissioner
of
a
soil
and
water
7
conservation
district
is
authorized
to
enter
onto
land
where
8
a
water
quality
practice
is
established
in
the
same
manner
as
9
a
commissioner
may
enter
on
the
land
where
a
soil
and
water
10
conservation
practice
financed
with
state
cost-share
moneys
11
is
established
(Code
chapter
161A).
If
the
eligible
taxpayer
12
fails
to
comply
with
any
requirement
of
the
program
or
the
13
terms
of
the
approved
application,
DALS
may
revoke
the
tax
14
credit
award
and
may
rescind
any
tax
credit
certificate
that
15
has
been
issued.
In
that
case,
DOR
must
seek
repayment
of
the
16
tax
credit
award
by
considering
the
repayment
amount
as
a
past
17
due
tax
amount.
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