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Iowa Venture Capital Tax Credit Not Extended to Next Fiscal Year
An initiative in Iowa to disperse tax credits worth 20 percent of equity investments into pre-qualified businesses or seed capital funds has reached its $10 million cap and will not be continued in the next fiscal year. The Iowa Venture Capital Credit – Qualified Business or Seed Capital Fund was started in 2002 with a cap of $10 million, and as monitored by the Iowa Department of Revenue, all credits have been issued.
Efforts in the most recent Iowa legislative session to increase the monetary cap of the program under House Bill 2484 by an additional $3 million did not succeed. The discontinuance of the initiative comes as the practice of utilizing tax credits in Iowa for various activities has grown dramatically over the last several years. However, the scrutiny of the tax credit programs has grown, as well.
SSTI reported on an Iowa Department of Revenue study tracking the growth of the state’s R&D Tax Credit Program (see the April 30, 2008 issue of the Digest), and in a report released in April on tax credit liabilities, the department claims the amount of tax credits awarded in FY 2001 was just over $100 million, but expanded to more than $500 million in FY 2007.
The April 2008 version of the Iowa Tax Credits Contingent Liability Brief can be found at:
http://www.iowa.gov/tax/taxlaw/0408RECReport.pdf