HF 2679 — A bill for an act providing a deduction from the individual and corporate income taxes for the amount of certain income derived from indigent representation by an eligible law firm, and including retroactive applicability provisions.

House File 2679 - IntroducedReprinted HOUSE FILE 2679 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 2504) (As Amended and Passed by the House April 4, 2024) A BILL FOR An Act providing a deduction from the individual and corporate income taxes for the amount of certain income derived from indigent representation by an eligible law firm, and including retroactive applicability provisions.

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(1) “Eligible attorney” means an attorney who is appointed to an eligible case and who, at the time of such appointment, has been licensed to practice law for fewer than fiveten years.

(1) “Eligible attorney” means an attorney who is appointed to an eligible case and who, at the time of such appointment, has been licensed to practice law for fewer than fiveten years.

(2) “Eligible case” means an appointment on or after July 1, LSBHF 5550HV2679 (3)(4) 90 -1- jm/jhjm/jh/md 1/31/2 H.F.

EXPLANATIONHF The2679 inclusion(4) of90 this-2- explanationjm/jh/md does2/2 not constitute agreement with the explanation’s substance by the members of the general assembly.

This bill provides a deduction from the individual income or corporate income tax for the amount of certain income derived from indigent representation by an eligible law firm.

The bill defines “eligible law firm” to mean a law firm in this state that has two or more attorneys that practice law in the law firm for at least half of each tax year during which the law firm is engaged in an eligible case.

The bill defines “eligible case” to mean an appointment on or after July 1, 2024, by an Iowa court of an eligible attorney to represent a person in a case pursuant to Code section 814.11 (indigent’s right to counsel) or 815.10 (appointment of counsel by court).

The bill defines “eligible attorney” to mean an attorney who is appointed to an eligible case and who, at the time of such LSB 5550HV (3) 90 -2- jm/jh 2/3 H.F.

2679 appointment, has been licensed to practice law for fewer than five years.

The amount of the deduction shall equal the aggregated amount equal to the difference between the total hours billed by the eligible attorney in the eligible case multiplied by $150 or the actual hourly rate charged by the eligible law firm for that eligible attorney for such a case, whichever is less, and the total hours billed by the eligible attorney in the eligible case multiplied by the hourly rate in effect for the eligible case in Code section 815.7.

The current hourly rate is $83 per hour for a class “A” felony, $78 per hour for a class “B” felony, and $73 per hour for all other cases.

For individual income tax purposes, a taxpayer who is a partner of a partnership, a shareholder of a subchapter S corporation, or a member of a limited liability corporation may deduct the portion of the amount of the deduction calculated under the bill based on the taxpayer’s pro rata share of the profits or losses from the partnership or subchapter S corporation.

The bill applies retroactively to tax years beginning on or after January 1, 2024.

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