Bill Text: IA SSB3202 | 2019-2020 | 88th General Assembly | Introduced

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Bill Title: A bill for an act relating to state and local taxation and regulation, the Iowa reinvestment Act, innovation fund, hunting and fees, and providing for properly related matters, and including effective date and retroactive applicability provisions.(See SF 2419.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2020-06-12 - Committee report approving bill, renumbered as SF 2419. [SSB3202 Detail]

Download: Iowa-2019-SSB3202-Introduced.html

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Senate Study Bill 3202 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON CHAPMAN)
A BILL FOR
An Act relating to state and local taxation and regulation, the
Iowa reinvestment Act, innovation fund, hunting and fees,
and providing for properly related matters, and including
effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
DEPARTMENT OF REVENUE ADMINISTRATION AND PENALTY PROVISIONS
Section 1. Section 421.6, Code 2020, is amended to read as
follows:
421.6 Definition of return.
For purposes of this title , unless the context otherwise
requires, “return” means any tax or information return, amended
return, declaration of estimated tax, or claim for refund
that is required by, provided for, or permitted under, the
provisions of this title or section 533.329, and which is filed
with the department by, on behalf of, or with respect to any
person. “Return” includes any amendment or supplement to these
items, including supporting schedules, attachments, or lists
which are supplemental to or part of the filed return.
Sec. 2. Section 421.17, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 36. To enter into an agreement pursuant
to chapter 28E with the state fair organized under chapter 173
or with a fair defined in section 174.1, to collect and remit
taxes and fees from sellers making sales at retail on property
owned, controlled, or operated by a fair or through events
conducted by a fair.
Sec. 3. Section 421.27, subsections 1, 4, and 6, Code 2020,
are amended to read as follows:
1. Failure to timely file a return or deposit form. a. If
a person fails to file with the department on or before the due
date a return or deposit form there shall be added to the tax
shown due or required to be shown due a penalty of ten percent
of the tax shown due or required to be shown due.
b. In the case of a specified business with no tax shown
due or required to be shown due that fails to timely file an
income return, the specified business shall pay the greater of
the following penalty amounts:
(1) Two hundred dollars.
(2) An amount equal to ten percent of the imputed Iowa
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liability of the specified business, not to exceed twenty-five
thousand dollars.
c. The penalty, if assessed pursuant to paragraph “a” or
“b” , shall be waived by the department upon a showing of any of
the following conditions:
a. (1) At An amount of tax greater than zero is required to
be shown due and at least ninety percent of the tax required to
be shown due has been paid by the due date of the tax.
b. (2) Those taxpayers who are required to file quarterly
returns, or monthly or semimonthly deposit forms may have one
late return or deposit form within a three-year period. The
use of any other penalty exception will not count as a late
return or deposit form for purposes of this exception.
c. (3) The death of a taxpayer, death of a member of
the immediate family of the taxpayer, or death of the person
directly responsible for filing the return and paying the tax,
when the death interferes with timely filing.
d. (4) The onset of serious, long-term illness or
hospitalization of the taxpayer, of a member of the immediate
family of the taxpayer, or of the person directly responsible
for filing the return and paying the tax.
e. (5) Destruction of records by fire, flood, or other act
of God.
f. (6) The taxpayer presents proof that the taxpayer
relied upon applicable, documented, written advice specifically
made to the taxpayer, to the taxpayer’s preparer, or to an
association representative of the taxpayer from the department,
state department of transportation, county treasurer, or
federal internal revenue service, whichever is appropriate,
that has not been superseded by a court decision, ruling by a
quasi-judicial body, or the adoption, amendment, or repeal of
a rule or law.
g. (7) Reliance upon results in a previous audit was a
direct cause for the failure to file where the previous audit
expressly and clearly addressed the issue and the previous
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audit results have not been superseded by a court decision, or
the adoption, amendment, or repeal of a rule or law.
h. (8) Under rules prescribed by the director, the taxpayer
presents documented proof of substantial authority to rely
upon a particular position or upon proof that all facts and
circumstances are disclosed on a return or deposit form.
i. (9) The return, deposit form, or payment is timely,
but erroneously, mailed with adequate postage to the internal
revenue service, another state agency, or a local government
agency and the taxpayer provides proof of timely mailing with
adequate postage.
j. (10) The tax has been paid by the wrong licensee and the
payments were timely remitted to the department for one or more
tax periods prior to notification by the department.
k. (11) The failure to file was discovered through a
sanctioned self-audit program conducted by the department.
l. (12) If the availability of funds in payment of tax
required to be made through electronic funds transfer is
delayed and the delay of availability is due to reasons beyond
the control of the taxpayer. “Electronic funds transfer” means
any transfer of funds, other than a transaction originated
by check, draft, or similar paper instrument, that is
initiated through an electronic terminal telephone, computer,
magnetic tape, or similar device for the purpose of ordering,
instructing, or authorizing a financial institution to debit or
credit an account.
m. (13) The failure to file a timely inheritance tax return
resulting solely from a disclaimer that required the personal
representative to file an inheritance tax return. The penalty
shall be waived if such return is filed and any tax due is paid
within the later of nine months from the date of death or sixty
days from the delivery or filing of the disclaimer pursuant to
section 633E.12 .
n. (14) That an Iowa inheritance tax return is filed for
an estate within the later of nine months from the date of
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death or sixty days from the filing of a disclaimer by the
beneficiary of the estate refusing to take the property or
right or interest in the property.
4. Willful failure to file or deposit.
a. (1) In case of willful failure to file a return
or deposit form with the intent to evade tax or a filing
requirement , or in case of willfully filing a false return
or deposit form with the intent to evade tax, in lieu of the
penalties otherwise provided in this section , a penalty of
seventy-five percent shall be added to the amount shown due or
required to be shown as tax on the return or deposit form.
(2) In case of a willful failure by a specified business to
file an income return with no tax shown due or required to be
shown due with intent to evade a filing requirement, or in case
of willfully filing a false income return with no tax shown due
or required to be shown due with the intent to evade reporting
of Iowa-source income, the penalty imposed shall be the greater
of the following amounts:
(a) One thousand five hundred dollars.
(b) An amount equal to seventy-five percent of the imputed
Iowa liability of the specified business.
(3) If penalties are applicable for failure to file a
return or deposit form and failure to pay the tax shown due or
required to be shown due on the return or deposit form, the
penalty provision for failure to file shall be in lieu of the
penalty provisions for failure to pay the tax shown due or
required to be shown due on the return or deposit form, except
in the case of willful failure to file a return or deposit form
or willfully filing a false return or deposit form with intent
to evade tax.
b. The penalties imposed under this subsection are not
subject to waiver.
6. Improper receipt of payments Liability —— fraudulent
practice . A person who makes an erroneous application for
refund, credit, reimbursement, rebate, or other payment shall
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be liable for any overpayment received or tax liability reduced
plus interest at the rate in effect under section 421.7 .
a. In addition, a person who willfully commits a fraudulent
practice and is liable for a penalty equal to seventy-five
percent of the refund, credit, exemption, reimbursement,
rebate, or other payment or benefit being claimed if the person
does any of the following:
(1) Willfully makes a false or frivolous application for
refund, credit, reimbursement, rebate, or other payment or
benefit with intent to evade tax or with intent to receive
a refund, credit, reimbursement, rebate, or other payment or
benefit, to which the person is not entitled is guilty of
a fraudulent practice and is liable for a penalty equal to
seventy-five percent of the refund, credit, reimbursement,
rebate, or other payment being claimed .
(2) Willfully submits any false information, document,
or document containing false information in support of an
application for refund, credit, exemption, reimbursement,
rebate, or other payment or benefit with the intent to evade
tax.
(3) Willfully submits with any false information, document,
or document containing false information in support of an
application for refund with the intent to receive a refund,
credit, exemption, reimbursement, rebate, or other payment
benefit, to which the person is not entitled.
b. Payments, penalties, and interest due under this
subsection may be collected and enforced in the same manner as
the tax imposed.
Sec. 4. Section 421.27, Code 2020, is amended by adding the
following new subsections:
NEW SUBSECTION . 8. Definitions. As used in this section:
a. “Imputed Iowa liability” means any of the following:
(1) In the case of corporations other than corporations
described in section 422.34 or section 422.36, subsection 5,
the corporation’s Iowa net income after the application of the
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Iowa business activity ratio, if applicable, multiplied by the
top income tax rate imposed under section 422.33 for the tax
year.
(2) In the case of financial institutions as defined in
section 422.61, the financial institution’s Iowa net income
after the application of the Iowa business activity ratio, if
applicable, multiplied by the franchise tax rate imposed under
section 422.63 for the tax year.
(3) In the case of all other entities, including
corporations described in section 422.36, subsection 5, and all
other entities required to file an information return under
section 422.15, subsection 2, the entity’s Iowa net income
after the application of the Iowa business activity ratio, if
applicable, multiplied by the top income tax rate imposed under
section 422.5A for the tax year.
b. “Income return” means an income tax return or information
return required under section 422.15, subsection 2, or section
422.36, 422.37, or 422.62.
c. “Specified business” means a partnership or other entity
required to file an information return under section 422.15,
subsection 2, a corporation required to file a return under
section 422.36 or 422.37, or a financial institution required
to file a return under section 422.62.
NEW SUBSECTION . 9. Additional penalty. In addition to the
penalties imposed by this section, if a taxpayer fails to file
a return within ninety days of written notice by the department
that the taxpayer is required to do so, there shall be added to
the amount shown due or required to be shown due a penalty in
the amount of one thousand dollars.
Sec. 5. NEW SECTION . 421.27A Perjury.
1. For purposes of this title, a form, application, or any
other documentation required or requested by the department
shall be required to be certified under penalty of perjury that
the information contained in the form, application, or other
documentation is true and correct.
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2. A person commits a class “D” felony under any of the
following circumstances:
a. The person makes a form, application, or other document
containing false information in support of an application for
refund, credit, exemption, reimbursement, rebate, or other
payment or benefit with intent to evade tax.
b. The person makes a form, application, or other document
containing false information with intent to unlawfully receive
a refund, credit, exemption, reimbursement, rebate, or other
payment or benefit, to which the person is not entitled.
c. The person knowingly makes any false affidavit.
d. The person knowingly swears or affirms falsely to any
matter or thing required by the terms of this title to be sworn
to or affirmed.
Sec. 6. NEW SECTION . 421.59 Power of attorney —— authority
to act on behalf of taxpayer.
1. a. A taxpayer may authorize an individual to act on
behalf of the taxpayer by filing a power of attorney with the
department, on a form prescribed by the department.
b. A taxpayer may at any time revoke a power of attorney
filed with the department pursuant to subsection 1. Upon
processing of the taxpayer’s revocation of a power of attorney,
the department shall cease honoring the power of attorney.
2. The department may authorize the following persons to act
and receive information on behalf of and exercise all of the
rights of a taxpayer, regardless of whether a power of attorney
has been filed pursuant to subsection 1:
a. A guardian, conservator, or custodian appointed by a
court, if a taxpayer has been deemed legally incompetent by a
court. The authority of the appointee to act on behalf of the
taxpayer shall be limited to the extent specifically stated in
the order of appointment.
(1) Upon request, a guardian, conservator, or custodian of
a taxpayer shall submit to the department a copy of the court
order appointing the guardian, conservator, or custodian.
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(2) The department may petition the court that appointed the
guardian, conservator, or custodian to verify the appointment
or to determine the scope of the appointment.
b. A receiver appointed pursuant to chapter 680. An
appointed receiver shall be limited to act on behalf of the
taxpayer by the authority stated in the order of appointment.
(1) Upon the request of the department, a receiver shall
submit to the department a copy of the court order appointing
the receiver.
(2) The department may petition the court that appointed the
receiver to verify the appointment or to determine the scope
of the appointment.
c. An individual who has been named as an authorized
representative on a fiduciary return of income filed under
section 422.14 or a tax return filed under chapter 450.
d. (1) An individual holding the following title or
position within a corporation, association, partnership, or
other business entity:
(a) A president or chief executive officer, or any other
officer of the corporation or association if the president or
chief executive officer certifies that the officer has the
authority to legally bind the corporation or association.
(b) A designated partner duly authorized to act on behalf
of the partnership.
(c) A person authorized to act on behalf of a limited
liability company in tax matters pursuant to a valid statement
of authority.
(2) An individual seeking to act on behalf of a taxpayer
pursuant to this paragraph shall file an affidavit with the
department attesting to the identity and qualifications of the
individual and any necessary certifications required under this
paragraph. The department may require any documents or other
evidence to demonstrate the individual has authority to act on
behalf of the taxpayer before the department.
e. A licensed attorney who has appeared on behalf of the
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taxpayer or the taxpayer’s estate in a court proceeding.
Authorization under this paragraph is limited to those matters
within the scope of the representation.
f. A parent or guardian of a taxpayer who has not reached
the age of majority where the parent or guardian has signed the
taxpayer’s return on behalf of the taxpayer. Authorization
under this paragraph is limited to those matters relating to
the return signed by the parent or guardian. Authorization
under this paragraph automatically terminates when the taxpayer
reaches the age of majority pursuant to section 599.1.
3. a. In lieu of executing a power of attorney pursuant
to subsection 1, the department may enter into a memorandum of
understanding with the taxpayer for each employee, officer,
or member of a third-party entity engaged with or otherwise
hired by a taxpayer to manage the tax matters of the taxpayer,
to permit the disclosure of confidential tax information to
the third-party entity and the authority to act on behalf of
the taxpayer. The memorandum of understanding shall adhere to
requirements as established by the director.
b. The memorandum of understanding shall be signed by
the director, the taxpayer, and the third-party entity or an
authorized representative of the third-party entity.
c. At any time, a taxpayer may unilaterally revoke
a memorandum of understanding entered into pursuant to
this subsection by filing a notice of revocation with the
department. Upon the filing of such a revocation by the
taxpayer, the department shall cease honoring the memorandum
of understanding.
4. The department shall adopt rules pursuant to chapter 17A
to administer this section.
Sec. 7. Section 421.60, subsection 2, paragraph a,
subparagraph (2), Code 2020, is amended to read as follows:
(2) The statement prepared in accordance with this
paragraph shall be available on the department’s internet site.
The internet site for this information shall be distributed by
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the department to all taxpayers at the first contact by the
department with respect to the determination or collection of
any tax, except in the case of simply providing tax forms.
Sec. 8. Section 421.60, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 11. Electronic communication.
Notwithstanding any provision of the law to the contrary, for
purposes of this title and sections 321.105A and 533.329, a
taxpayer may elect to receive any notices, correspondence,
or other communication electronically that the department is
required to send by regular mail. The director may establish
procedures and limitations for obtaining this election from the
taxpayer.
Sec. 9. Section 421.62, subsection 1, Code 2020, is amended
by adding the following new paragraph:
NEW PARAGRAPH . 0b. “Income tax return or claim for refund”
means any tax return or claim for refund under chapter 422,
excluding withholding returns under section 422.16.
Sec. 10. Section 421.62, subsection 1, paragraph c,
subparagraph (1), Code 2020, is amended to read as follows:
(1) “Tax return preparer” means any individual who, for
a fee or other consideration, prepares ten or more income
tax returns or claims for refund under chapter 422 during
a calendar year, or who assumes final responsibility for
completed work on such income tax returns or claims for refund
under chapter 422 on which preliminary work has been done by
another individual.
Sec. 11. Section 421.62, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. On or after January 1, 2020, a tax return preparer
is required to include the tax return preparer’s PTIN on
any income tax return or claim for refund prepared by the
tax return preparer and filed under chapter 422 with the
department .
Sec. 12. Section 421.64, subsection 1, Code 2020, is amended
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to read as follows:
1. For purposes of this section , “tax return preparer” means
the same as defined in section 421.61 421.62 .
Sec. 13. Section 422.20, subsections 1 and 2, Code 2020, are
amended to read as follows:
1. It shall be unlawful for any present or former officer
or employee of the state to willfully or recklessly divulge or
to make known in any manner whatever not provided by law to
any person the amount or source of income, profits, losses,
expenditures, or any particular thereof, set forth or disclosed
in any income return, or to permit any income return or copy
thereof or any book containing any abstract or particulars
thereof to be seen or examined by any person except as provided
by law; and it shall be unlawful for any person to willfully or
recklessly print or publish in any manner whatever not provided
by law any income return, or any part thereof or source of
income, profits, losses, or expenditures appearing in any
income return; and any person committing an offense against the
foregoing provision shall be guilty of a serious misdemeanor.
If the offender is an officer or employee of the state, such
person shall also be dismissed from office or discharged from
employment. Nothing herein shall prohibit turning over to duly
authorized officers of the United States or tax officials of
other states state information and income returns pursuant
to agreement between the director and the secretary of the
treasury of the United States or the secretary’s delegate or
pursuant to a reciprocal agreement with another state.
2. It is unlawful for an officer, employee, or agent, or
former officer, employee, or agent of the state to willfully
or recklessly disclose to any person, except as authorized
in subsection 1 of this section , any federal tax return
or return information as defined in section 6103(b) of the
Internal Revenue Code. It is unlawful for a person to whom
any federal tax return or return information, as defined in
section 6103(b) of the Internal Revenue Code, is disclosed
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in a manner unauthorized by subsection 1 of this section
to thereafter willfully or recklessly print or publish in
any manner not provided by law any such return or return
information. A person violating this provision is guilty of
a serious misdemeanor.
Sec. 14. Section 422.20, subsection 3, paragraph a, Code
2020, is amended to read as follows:
a. Unless otherwise expressly permitted by section 8A.504 ,
section 8G.4 , section 11.41 , section 96.11, subsection 6 ,
section 421.17, subsections 22, 23, and 26 , section 421.17,
subsection 27 , paragraph “k” , section 421.17, subsection 31 ,
section 252B.9 , section 321.40, subsection 6 , sections 321.120 ,
421.19 , 421.28 , 421.59, 422.72 , and 452A.63 , this section , or
another provision of law, a tax return, return information, or
investigative or audit information shall not be divulged to any
person or entity, other than the taxpayer, the department, or
internal revenue service for use in a matter unrelated to tax
administration.
Sec. 15. Section 422.20, Code 2020, is amended by adding the
following new subsections:
NEW SUBSECTION . 3A. The director may disclose the tax
return of a partnership, limited liability company, or S
corporation, any such return information, or any investigative
information related to the return, to any person who was a
partner, shareholder, or member of such an entity during any
part of the period covered by the return.
NEW SUBSECTION . 3B. a. Prior to being made available for
public inspection, the department shall redact from the record
in an appeal or contested case the following information from
any pleading, exhibit, attachment, motion, written evidence,
final order, decision, or opinion:
(1) A financial account number.
(2) An account number generated by the department to
identify an audit or examination.
(3) A social security number.
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(4) A federal employer identification number.
(5) The name of a minor.
(6) A medical record or other medical information.
b. Upon a motion filed by the taxpayer, the department
may redact from the record in an appeal or contested case any
other information from a pleading, exhibit, attachment, motion,
or written evidence, if the taxpayer proves by clear and
convincing evidence that the release of such information would
disclose a trade secret or be a clear, unwarranted invasion of
personal privacy.
c. Notwithstanding paragraph “a” , when making final orders,
decisions, or opinions available for public inspection, the
department may disclose the items in paragraph “a” if the
department determines such information is necessary to the
resolution or decision of the appeal or case.
d. Except as described in paragraphs “a” and “b” , all
information contained in a pleading, exhibit, attachment,
motion, written evidence, final order, decision, opinion,
and the record in an appeal or contested case is subject to
examination to the extent provided by chapter 22.
Sec. 16. Section 422.25, subsection 1, Code 2020, is amended
by adding the following new paragraph:
NEW PARAGRAPH . c. The period of examination and
determination is unlimited under this title in the case of
any action by the department to recover or rescind any tax
expenditure as defined by section 2.48, subsection 1, or any
other incentive or assistance, due to a failure to meet or
maintain the requirements of a program administered by the
economic development authority.
Sec. 17. Section 422.69, subsection 1, Code 2020, is amended
to read as follows:
1. All fees, taxes, interest, and penalties imposed under
this chapter shall be paid to the department in the form of
remittances payable to the state treasurer department and the
department shall transmit each payment daily to the state
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treasurer.
Sec. 18. Section 422.72, subsection 1, paragraph a,
subparagraph (1), Code 2020, is amended to read as follows:
(1) It is unlawful for the director, or any person having
an administrative duty under this chapter , or any present or
former officer or other employee of the state authorized by the
director to examine returns, to willfully or recklessly divulge
in any manner whatever, the business affairs, operations, or
information obtained by an investigation under this chapter of
records and equipment of any person visited or examined in the
discharge of official duty, or the amount or source of income,
profits, losses, expenditures or any particular thereof, set
forth or disclosed in any return, or to willfully or recklessly
permit any return or copy of a return or any book containing
any abstract or particulars thereof to be seen or examined by
any person except as provided by law.
Sec. 19. Section 422.72, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 7A. a. Prior to being made available for
public inspection, the department shall redact from the record
in an appeal or contested case the following information from
any pleading, exhibit, attachment, motion, written evidence,
final order, decision, or opinion:
(1) A financial account number.
(2) An account number generated by the department to
identify an audit or examination.
(3) A social security number.
(4) A federal employer identification number.
(5) The name of a minor.
(6) A medical record or other medical information.
b. Upon a motion filed by the taxpayer, the department
may redact from the record in an appeal or contested case any
other information from a pleading, exhibit, attachment, motion,
or written evidence, if the taxpayer proves by clear and
convincing evidence that the release of such information would
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disclose a trade secret or be a clear, unwarranted invasion of
personal privacy.
c. Notwithstanding paragraph “a” , when making final orders,
decisions, or opinions available for public inspection, the
department may disclose the items in paragraph “a” if the
department determines such information is necessary to the
resolution or decision of the appeal or case.
d. Except as described in paragraphs “a” and “b” , all
information contained in a pleading, exhibit, attachment,
motion, written evidence, final order, decision, opinion,
and the record in an appeal or contested case is subject to
examination to the extent provided by chapter 22.
Sec. 20. Section 423.37, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 4. The period of limitation on examination
and determination is unlimited under this title in the case
of any action by the department to recover or rescind any tax
expenditure as defined by section 2.48, subsection 1, or any
other incentive or assistance, due to a failure to meet or
maintain the requirements of a program administered by the
economic development authority.
Sec. 21. Section 428A.1, subsection 3, Code 2020, is amended
to read as follows:
3. The declaration of value shall state the full
consideration paid for the real property transferred. If
agricultural land, as defined in section 9H.1 , is purchased by
a corporation, limited partnership, trust, alien or nonresident
alien, the declaration of value shall include the name and
address of the buyer, the name and address of the seller, a
legal description of the agricultural land, and identify the
buyer as a corporation, limited partnership, trust, alien, or
nonresident alien. The county recorder shall not record the
declaration of value, but shall enter on the declaration of
value information the director of revenue requires for the
production of the sales/assessment ratio study and transmit
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all declarations of value to the city or county assessor in
whose jurisdiction the property is located. The city or county
assessor shall enter on the declaration of value provide the
information the director of revenue requires for the production
of the sales/assessment ratio study and transmit one copy of
each declaration of value to the director of revenue, at times
as directed by the director of revenue. The assessor shall
retain one copy of each declaration of value for three years
from December 31 of the year in which the transfer of realty
for which the declaration was filed took place. The director
of revenue shall, upon receipt of the information required to
be filed under this chapter by the city or county assessor,
send to the office of the secretary of state that part of the
declaration of value which identifies a corporation, limited
partnership, trust, alien, or nonresident alien as a purchaser
of agricultural land as defined in section 9H.1 .
Sec. 22. Section 441.48, Code 2020, is amended to read as
follows:
441.48 Notice of adjustment.
1. Before the department of revenue shall adjust the
valuation of any class of property any such percentage, the
department shall first serve ten days’ notice by mail, on the
county auditor of the county whose valuation is proposed to be
adjusted. The department shall hold an adjourned meeting after
such
2. If the county or assessing jurisdiction intends to
protest the proposed adjustment, the board of supervisors or
city council, as applicable, shall provide the department with
notice of intent to protest prior to expiration of the ten
days’ notice.
3. After expiration of the ten days’ notice, at which time
the county or assessing jurisdiction may appear by its city
council or board of supervisors, city or county attorney, and
other assessing jurisdiction, or city or county officials, and
make written or oral protest against such proposed adjustment.
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4. The protest shall consist simply of a statement of the
error, or errors, complained of with such facts as may lead to
their correction. At the adjourned meeting
5. After written protest is received, or an oral protest
is heard, the final action may be taken in reference to the
proposed adjustment.
Sec. 23. Section 489.706, subsection 2, Code 2020, is
amended to read as follows:
2. The secretary of state shall refer the federal tax
identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
and workforce development shall report to the secretary of
state the tax status of the limited liability company. If
either the department reports to the secretary of state that
a filing delinquency or liability exists against the limited
liability company, the secretary of state shall not cancel the
declaration of dissolution until the filing delinquency or
liability is satisfied.
Sec. 24. Section 490.1422, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. The secretary of state shall refer the federal tax
identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
and workforce development shall report to the secretary
of state the tax status of the corporation. If either the
department reports to the secretary of state that a filing
delinquency or liability exists against the corporation,
the secretary of state shall not cancel the certificate of
dissolution until the filing delinquency or liability is
satisfied.
Sec. 25. Section 501.813, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. The secretary of state shall refer the federal tax
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identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
and workforce development shall report to the secretary
of state the tax status of the cooperative. If either the
department reports to the secretary of state that a filing
delinquency or liability exists against the cooperative,
the secretary of state shall not cancel the certificate of
dissolution until the filing delinquency or liability is
satisfied.
Sec. 26. Section 504.1423, subsection 2, paragraph a, Code
2020, is amended to read as follows:
a. The secretary of state shall refer the federal tax
identification number contained in the application for
reinstatement to the departments department of revenue and
workforce development. The departments department of revenue
and workforce development shall report to the secretary
of state the tax status of the corporation. If either the
department reports to the secretary of state that a filing
delinquency or liability exists against the corporation,
the secretary of state shall not cancel the certificate of
dissolution until the filing delinquency or liability is
satisfied.
Sec. 27. Section 533.329, Code 2020, is amended by adding
the following new subsection:
NEW SUBSECTION . 03. Returns shall be in the form the
director of revenue prescribes, and shall be filed with the
department of revenue on or before the last day of the fourth
month after the expiration of the tax year. The moneys and
credits tax is due and payable on the last day of the fourth
month after the expiration of the tax year.
Sec. 28. Section 533.329, subsection 3, Code 2020, is
amended to read as follows:
3. The department of revenue shall administer and enforce
the provisions of this section , and except as explicitly
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provided in this section or another provision of law, shall
apply all applicable penalty, interest, and administrative
provisions of chapters 421 and 422 as nearly as possible in
administering and enforcing the moneys and credits tax imposed
by this section .
Sec. 29. LEGISLATIVE INTENT. It is the intent of the
general assembly that the sections of this division amending
Code sections 422.25 and 423.37 are conforming amendments
consistent with current state law, and that the amendments
do not change the application of current law but instead
reflect current law both before and after the enactment of this
division of this Act.
Sec. 30. EFFECTIVE DATE. The following, being deemed of
immediate importance, take effect upon enactment:
1. The section of this division of this Act amending section
422.25.
2. The section of this division of this Act amending section
423.37.
Sec. 31. APPLICABILITY. The following applies to any
return for which a written notice that the taxpayer is required
to file such return is issued by the department on or after
January 1, 2022:
The portion of the section of this division of this Act
enacting section 421.27, subsection 9.
Sec. 32. APPLICABILITY. The following apply to tax years
beginning on or after January 1, 2022:
1. The section of this division of this Act amending section
421.27, subsection 1.
2. The portion of the section of this division of this Act
amending section 421.27, subsection 4.
3. The portion of the section of this division of this Act
enacting section 421.27, subsection 8.
DIVISION II
SALES AND USE TAX
Sec. 33. Section 321G.4, subsection 2, Code 2020, is amended
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to read as follows:
2. a. The owner of the snowmobile shall file an application
for registration with the department through the county
recorder of the county of residence in the manner established
by the commission. The application shall be completed by the
owner and shall be accompanied by a fee of fifteen dollars and
a writing fee as provided in section 321G.27 . A snowmobile
shall not be registered by the county recorder until the
county recorder is presented with receipts, bills of sale,
or other satisfactory evidence that the sales or use tax has
been paid for the purchase of the snowmobile or that the
owner is exempt from paying the tax. A snowmobile that has
an expired registration certificate from another state may be
registered in this state upon proper application, payment of
all applicable registration and writing fees, and payment of a
penalty of five dollars.
b. If the owner of the snowmobile is unable to present
satisfactory evidence that the sales or use tax has been paid,
the county recorder shall collect the tax. On or before the
tenth day of each month, the county recorder shall remit to
the department of revenue the amount of the taxes collected
during the preceding month, together with an itemized statement
on forms furnished by the department of revenue showing the
name of each taxpayer, the make and purchase price of each
snowmobile, the amount of tax paid, and such other information
as the department of revenue requires.
Sec. 34. Section 321I.4, subsection 2, Code 2020, is amended
to read as follows:
2. a. The owner of the all-terrain vehicle shall file an
application for registration with the department through the
county recorder of the county of residence, or in the case
of a nonresident owner, in the county of primary use, in the
manner established by the commission. The application shall
be completed by the owner and shall be accompanied by a fee
of fifteen dollars and a writing fee as provided in section
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321I.29 . An all-terrain vehicle shall not be registered by the
county recorder until the county recorder is presented with
receipts, bills of sale, or other satisfactory evidence that
the sales or use tax has been paid for the purchase of the
all-terrain vehicle or that the owner is exempt from paying the
tax. An all-terrain vehicle that has an expired registration
certificate from another state may be registered in this state
upon proper application, payment of all applicable registration
and writing fees, and payment of a penalty of five dollars.
b. If the owner of the all-terrain vehicle is unable to
present satisfactory evidence that the sales or use tax has
been paid, the county recorder shall collect the tax. On or
before the tenth day of each month, the county recorder shall
remit to the department of revenue the amount of the taxes
collected during the preceding month, together with an itemized
statement on forms furnished by the department of revenue
showing the name of each taxpayer, the make and purchase price
of each all-terrain vehicle, the amount of tax paid, and such
other information as the department of revenue requires.
Sec. 35. Section 423.2, subsection 6, paragraph bs, Code
2020, is amended to read as follows:
bs. Services arising from or related to installing,
maintaining, servicing, repairing, operating, upgrading, or
enhancing either specified digital products or software sold
as tangible personal property .
Sec. 36. Section 423.2, subsection 8, paragraph d,
subparagraph (1), Code 2020, is amended to read as follows:
(1) The retail sale of tangible personal property or
specified digital product and a service , where the tangible
personal property or specified digital product is essential
to the use of the service, and is provided exclusively in
connection with the service, and the true object of the
transaction is the service.
Sec. 37. Section 423.3, subsection 3A, Code 2020, is amended
to read as follows:
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3A. The sales price from the sale of a commercial recreation
service offering the opportunity to hunt a preserve whitetail
as defined in section 484C.1 if the sale occurred between July
1, 2005, and December 31, 2015.
Sec. 38. Section 423.3, subsection 31, unnumbered paragraph
1, Code 2020, is amended to read as follows:
The sales price of tangible personal property or specified
digital products sold to and of services furnished to a tribal
government as defined in 216A.161, or the sales price of
tangible personal property or specified digital products sold
to and of services furnished , and used for public purposes
sold to a tax-certifying or tax-levying body of the state or a
governmental subdivision of the state, including the following:
regional transit systems, as defined in section 324A.1 , ;
the state board of regents , ; department of human services , ;
state department of transportation , ; any municipally owned
solid waste facility which sells all or part of its processed
waste as fuel to a municipally owned public utility , ; and all
divisions, boards, commissions, agencies, or instrumentalities
of state, federal, county, or municipal government , or tribal
government which have no earnings going to the benefit of an
equity investor or stockholder, except any of the following:
Sec. 39. Section 423.3, subsection 80, paragraphs b and c,
Code 2020, are amended to read as follows:
b. Subject to the limitations in paragraph “c” , if a
contractor, subcontractor, or builder is to use building
materials, supplies, and equipment , or services in the
performance of a written construction contract with a
designated exempt entity, the person shall purchase such
items of tangible personal property or services without
liability for the tax if such property or services will be
used in the performance of the written construction contract
and a purchasing agent authorization letter and an exemption
certificate, issued by the designated exempt entity, are
presented to the retailer.
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c. (1) With regard to a written construction contract
with a designated exempt entity described in paragraph “a” ,
subparagraph (1), the sales price of building materials,
supplies, or equipment , or services is exempt from tax by this
subsection only to the extent the building materials, supplies,
or equipment , or services are completely consumed in the
performance of the construction contract with the designated
exempt entity , and only if the property that is the subject
of the construction project becomes public property or the
property of the designated exempt entity .
(2) With regard to a written construction contract with
a designated exempt entity described in paragraph “a” ,
subparagraph (2), the sales price of building materials,
supplies, or equipment , or services is exempt from tax by this
subsection only to the extent the building materials, supplies,
or equipment , or services are completely consumed in the
performance of a construction contract to construct a project,
as defined in section 15J.2, subsection 10 , which project has
been approved by the economic development authority board in
accordance with chapter 15J .
Sec. 40. Section 423.4, subsection 1, Code 2020, is amended
to read as follows:
1. a. For purposes of this subsection, a “designated exempt
entity” means any of the following:
(1) A private nonprofit educational institution in this
state , .
(2) A nonprofit Iowa affiliate of a nonprofit international
organization whose primary activity is the promotion of the
construction, remodeling, or rehabilitation of one-family or
two-family dwellings for low-income families , .
(3) A nonprofit private museum in this state , .
(4) A tax-certifying or tax-levying body or governmental
subdivision of the state, including the state board of regents,
state department of human services, state department of
transportation , a .
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(5) A municipally owned solid waste facility which sells all
or part of its processed waste as fuel to a municipally owned
public utility , and all .
(6) The state of Iowa.
(7) Any political subdivision of the state.
(8) All divisions, boards, commissions, agencies, or
instrumentalities of state, federal, county, or municipal
government which do not have earnings going to the benefit of
an equity investor or stockholder , .
(9) A tribal government as defined in section 216A.161,
and any instrumentalities of the tribal government which do
not have earnings going to the benefit of an equity investor
or stockholder.
b. A designated exempt entity may make application apply
to the department for the refund of the sales or use tax upon
the sales price of all sales of goods, wares, or merchandise
building materials, supplies, equipment , or from services
furnished to a contractor, used in the fulfillment performance
of a written contract with the state of Iowa, any political
subdivision of the state, or a division, board, commission,
agency, or instrumentality of the state or a political
subdivision, a private nonprofit educational institution in
this state, a nonprofit Iowa affiliate described in this
subsection , or a nonprofit private museum in this state if the
property becomes an integral part of the project under contract
and at the completion of the project becomes public property,
is devoted to educational uses, becomes part of a low-income
one-family or two-family dwelling in the state, or becomes a
nonprofit private museum; except goods, wares, or merchandise,
designated exempt entity if all of the following apply:
(1) The building materials, supplies, equipment, or
services are completely consumed in the performance of a
construction project with the designated entity.
(2) The property that is subject of the construction project
becomes public property or the property of an exempt entity.
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(3) The building materials, supplies, equipment, or
services furnished which are not used in the performance of
any contract in connection with the operation of any municipal
utility engaged in selling gas, electricity, or heat to
the general public or in connection with the operation of a
municipal pay television system; and except goods, wares, and
merchandise are not used in the performance of a contract for a
“project” under chapter 419 as defined in that chapter other
than goods, wares, or merchandise used in the performance of
a contract for a “project” under chapter 419 for which a bond
issue was approved by a municipality prior to July 1, 1968, or
for which the goods, wares, or merchandise becomes an integral
part of the project under contract and at the completion of the
project becomes public property or is devoted to educational
uses.
a. c. Such A contractor shall state under oath, on forms
provided by the department, the amount of such sales of goods,
wares, or merchandise, or services furnished and used in the
performance of such contract, and upon which sales or use tax
has been paid, and shall file such forms with the governmental
unit, private nonprofit educational institution, nonprofit Iowa
affiliate, or nonprofit private museum designated exempt entity
which has made any written contract for performance by the
contractor. The forms shall be filed by the contractor with
the governmental unit, educational institution, nonprofit Iowa
affiliate, or nonprofit private museum designated exempt entity
before final settlement is made.
b. d. Such governmental unit, educational institution,
nonprofit Iowa affiliate, or nonprofit private museum A
designated exempt entity shall, not more than one year after
the final settlement has been made, make application apply
to the department for any refund of the amount of the sales
or use tax which shall have been paid upon any goods, wares,
or merchandise building materials, supplies, equipment ,
or services furnished, the application to be made in the
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manner and upon forms to be provided by the department,
and the department shall forthwith audit the claim and, if
approved, issue a warrant to the governmental unit, educational
institution, nonprofit Iowa affiliate, or nonprofit private
museum designated exempt entity in the amount of the sales or
use tax which has been paid to the state of Iowa under the
contract.
c. e. Refunds authorized under this subsection shall accrue
interest in accordance with section 421.60, subsection 2 ,
paragraph “e” .
d. f. Any contractor who willfully makes a false report of
tax paid under the provisions of this subsection is guilty of
a simple misdemeanor and in addition shall be liable for the
payment of the tax and any applicable penalty and interest.
Sec. 41. Section 423.4, subsection 2, paragraphs a and b,
Code 2020, are amended to read as follows:
a. A contractor awarded a contract for a transportation
construction project is considered the consumer of all building
materials, building supplies, and equipment , and services and
shall pay sales tax to the supplier or remit consumer use tax
directly to the department.
b. The contractor is not required to file information with
the state department of transportation stating the amount of
goods, wares, or merchandise, or services rendered, furnished,
or performed and building materials, supplies, equipment, or
services used in the performance of the contract or the amount
of sales or use tax paid.
Sec. 42. Section 423.4, subsection 6, paragraph a,
subparagraph (1), Code 2020, is amended to read as follows:
(1) The owner of a collaborative educational facility
in this state may make application to the department for the
refund of the sales or use tax upon the sales price of all sales
of goods, wares, or merchandise building materials, supplies,
equipment , or from services furnished to a contractor, used
in the fulfillment of a written construction contract with
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the owner of the collaborative educational facility for the
original construction, or additions or modifications to, a
building or structure to be used as part of the collaborative
educational facility.
Sec. 43. Section 423.4, subsection 6, paragraphs b and c,
Code 2020, are amended to read as follows:
b. Such A contractor shall state under oath, on forms
provided by the department, the amount of such sales of goods,
wares, or merchandise building materials, supplies, equipment ,
or services furnished and used in the performance of such
contract, and upon which sales or use tax has been paid, and
shall file such forms with the owner of the collaborative
educational facility which has made any written contract for
performance by the contractor.
c. (1) The owner of the collaborative educational facility
shall, not more than one year after the final settlement has
been made, make application to the department for any refund
of the amount of the sales or use tax which shall have been
paid upon any goods, wares, or merchandise building materials,
supplies, equipment , or services furnished, the application
to be made in the manner and upon forms to be provided by
the department, and the department shall forthwith audit the
claim and, if approved, issue a warrant to the owner of the
collaborative educational facility in the amount of the sales
or use tax which has been paid to the state of Iowa under the
contract.
(2) Refunds authorized under this subsection shall accrue
interest in accordance with section 421.60, subsection 2 ,
paragraph “e” .
Sec. 44. Section 423.5, subsection 1, paragraph b, Code
2020, is amended by striking the paragraph.
Sec. 45. Section 423.29, subsection 1, Code 2020, is amended
to read as follows:
1. Every seller who is a retailer and who is making taxable
sales of tangible personal property or specified digital
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products in Iowa or who is a retailer maintaining a place
of business in this state making taxable sales of tangible
personal property or specified digital products shall, at
the time of making the sale, collect the sales tax. Every
seller who is a retailer that is not otherwise required to
collect sales tax under the provisions of this chapter and who
is selling tangible personal property or specified digital
products for use in Iowa shall, at the time of making the sale,
whether within or without the state, collect the use tax.
Sellers required to collect sales or use tax shall give to any
purchaser a receipt for the tax collected in the manner and
form prescribed by the director.
Sec. 46. Section 423.33, subsection 1, Code 2020, is amended
to read as follows:
1. Liability of purchaser for sales tax and retailer .
a. If a purchaser fails to pay sales tax to the retailer
required to collect the tax, then in addition to all of the
rights, obligations, and remedies provided, the a use tax
is payable by the purchaser directly to the department, and
sections 423.31 , 423.32 , 423.37 , 423.38 , 423.39 , 423.40 ,
423.41 , and 423.42 apply to the purchaser.
b. For failure to pay the sales or use tax as described
in paragraph “a” , the retailer and purchaser are jointly
liable, unless the circumstances described in section 29C.24,
subsection 3, paragraph “a” , subparagraph (2), section 421.60,
subsection 2 , paragraph “m” , section 423.34A , or section
423.45, subsection 4 , paragraph “b” or “e” , or subsection 5 ,
paragraph “c” or “e” , are applicable.
c. If the retailer fails to collect sales tax at the time
of the transaction, the retailer shall thereafter remit the
applicable sales tax, or the purchaser thereafter shall remit
the applicable use tax. If the purchaser remits all applicable
use tax, the retailer remains liable for any local sales and
services tax under chapter 423B that the retailer failed to
collect.
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Sec. 47. REFUNDS RELATED TO PRESERVE WHITETAIL DEER
HUNTING. Refunds of taxes, interest, or penalties that arise
from claims resulting from the amendment of section 423.3,
subsection 3A, for sales occurring between July 1, 2005,
and the effective date of the amendment to section 423.3,
subsection 3A, shall not be allowed, notwithstanding any other
law to the contrary.
Sec. 48. LEGISLATIVE INTENT.
1. It is the intent of the general assembly that the section
of this division of this Act amending section 423.29 is a
conforming amendment consistent with current state law, and
that the amendment does not change the application of current
law but instead reflects current law both before and after the
enactment of this division of this Act.
2. It is the intent of the general assembly that the
addition of “jointly” in the section of this division of
this Act amending section 423.33 is a conforming amendment
consistent with current state law, and that the amendment
does not change the application of current law but instead
reflects current law both before and after the enactment of
this division of this Act.
Sec. 49. EFFECTIVE DATE. The following, being deemed of
immediate importance, take effect upon enactment:
1. The section of this division of this Act amending section
423.3A.
2. The section of this division of this Act relating
to refunds for commercial recreation services offering an
opportunity to hunt preserve whitetail deer.
Sec. 50. RETROACTIVE APPLICABILITY. The following applies
retroactively to July 1, 2005:
The section of this division of this Act amending section
423.3A.
DIVISION III
INCOME TAX
Sec. 51. Section 422.9, subsection 3, paragraph c, Code
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2020, is amended by striking the paragraph and inserting in
lieu thereof the following:
c. A taxpayer may elect to waive the entire carryback period
with respect to an Iowa net operating loss for any taxable year
beginning on or after January 1, 2020. The election shall be
made in the manner and form prescribed by the department, and
shall be made by the due date for filing the taxpayer’s Iowa
return, including extensions of time. After the election is
made for any taxable year, the election shall be irrevocable
for such taxable year. When an election has been properly
made, the Iowa net operating loss shall be carried forward
twenty taxable years.
Sec. 52. Section 422.9, subsection 3, paragraph d, Code
2020, is amended to read as follows:
d. Notwithstanding paragraph “a” , for a taxpayer who is
engaged in the trade or business of farming , which means the
same as a “farming business” as defined in section 263A(e)(4) of
the Internal Revenue Code , and has a farming loss from farming
as defined in section 172(b)(1)(B) of the Internal Revenue Code
including modifications prescribed by rule by the director,
the Iowa farming loss from the trade or business of farming is
a net operating loss which may , at the time of the election of
the taxpayer, be carried back five taxable years prior to the
taxable year of the loss. The election shall be made in the
manner and form prescribed by the department, and shall be made
by the due date for filing the taxpayer’s return, including
extensions of time. After the election is made for any taxable
year, the election shall be irrevocable for such taxable year.
Sec. 53. APPLICABILITY. This division of this Act applies
to tax years beginning on or after January 1, 2020.
DIVISION IV
RESEARCH ACTIVITIES CREDIT
Sec. 54. Section 15.335, subsection 4, paragraph a, Code
2020, is amended to read as follows:
a. In lieu of the credit amount computed in subsection 2 , an
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eligible business may elect to compute the credit amount for
qualified research expenses incurred in this state in a manner
consistent with the alternative simplified credit described in
section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The
taxpayer may make this election regardless of the method used
for the taxpayer’s federal income tax. The election made under
this paragraph is for the tax year and the taxpayer may use
another or the same method for any subsequent year.
Sec. 55. Section 15.335, subsection 4, paragraph b,
unnumbered paragraph 1, Code 2020, is amended to read as
follows:
For purposes of the alternate credit computation method in
paragraph “a” , the credit percentages applicable to qualified
research expenses described in section 41(c)(5)(A) 41(c)(4)(A)
and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the
Internal Revenue Code are as follows:
Sec. 56. Section 422.10, subsection 1, paragraphs c and d,
Code 2020, are amended to read as follows:
c. In lieu of the credit amount computed in paragraph “b” ,
subparagraph (1), subparagraph division (a), a taxpayer may
elect to compute the credit amount for qualified research
expenses incurred in this state in a manner consistent with the
alternative simplified credit described in section 41(c)(5)
41(c)(4) of the Internal Revenue Code. The taxpayer may make
this election regardless of the method used for the taxpayer’s
federal income tax. The election made under this paragraph is
for the tax year and the taxpayer may use another or the same
method for any subsequent year.
d. For purposes of the alternate credit computation
method in paragraph “c” , the credit percentages applicable to
qualified research expenses described in section 41(c)(5)(A)
41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
of the Internal Revenue Code are four and fifty-five
hundredths percent and one and ninety-five hundredths percent,
respectively.
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Sec. 57. Section 422.33, subsection 5, paragraphs c and d,
Code 2020, are amended to read as follows:
c. In lieu of the credit amount computed in paragraph
“a” , subparagraph (1), a corporation may elect to compute the
credit amount for qualified research expenses incurred in this
state in a manner consistent with the alternative simplified
credit described in section 41(c)(5) 41(c)(4) of the Internal
Revenue Code. The taxpayer may make this election regardless
of the method used for the taxpayer’s federal income tax. The
election made under this paragraph is for the tax year and the
taxpayer may use another or the same method for any subsequent
year.
d. For purposes of the alternate credit computation
method in paragraph “c” , the credit percentages applicable to
qualified research expenses described in section 41(c)(5)(A)
41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
of the Internal Revenue Code are four and fifty-five
hundredths percent and one and ninety-five hundredths percent,
respectively.
Sec. 58. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 59. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2019, for tax years
beginning on or after that date.
DIVISION V
PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF
FEDERAL ADJUSTMENTS
Sec. 60. Section 421.27, subsection 2, paragraph c, Code
2020, is amended to read as follows:
c. (1) The taxpayer provides written notification to the
department of a federal audit while it is in progress and
voluntarily files an amended return which includes a copy of
the federal document showing the final disposition or final
federal adjustments and pays any additional Iowa tax due
within sixty one hundred eighty days of the final disposition
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determination date of the federal government’s audit. For
purposes of this subparagraph, “final determination date” means
the same as defined in section 422.25.
(2) (a) In the case of a final federal partnership
adjustment arising from a partnership level audit, with respect
to the audited partnership or a direct partner or indirect
partner of the audited partnership, the audited partnership,
direct partner, or indirect partner voluntarily and timely
complies with its reporting and payment requirements under
section 422.25A, subsection 4 or 5.
(b) As used in this subparagraph, all words and phrases
defined in section 422.25A shall have the same meaning given
them by that section.
Sec. 61. Section 422.7, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 59. Any income subtracted from federal
taxable income for an adjustment year pursuant to section 6225
of the Internal Revenue Code and the regulations thereunder
shall be added back in computing net income for state tax
purposes for the adjustment year.
Sec. 62. Section 422.25, subsections 1 and 2, Code 2020,
are amended by striking the subsections and inserting in lieu
thereof the following:
1. a. For purposes of this subsection:
(1) “Federal adjustment” means a change to an item or amount
required to be determined under the Internal Revenue Code and
the regulations thereunder that is used by the taxpayer to
compute state tax owed whether such change results from action
by the internal revenue service, or the filing of a timely
amended federal return or timely federal refund claim. A
federal adjustment is positive to the extent that it increases
Iowa taxable income as determined under this title and is
negative to the extent that it decreases Iowa taxable income
as determined under this title.
(2) “Federal adjustments report” means the method or form
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required by the department by rule to report final federal
adjustments or final federal partnership adjustments as defined
in section 422.25A, and in the case of any entity taxed as a
partnership or S corporation for federal income tax purposes,
identifies all owners that hold an interest directly in such
entity and provides the effect of the final federal adjustments
on such owner’s Iowa income.
(3) “Final determination date” means the following:
(a) Except as provided in subparagraph divisions (b) and
(c), for federal adjustments arising from an internal revenue
service audit or other action by the internal revenue service,
the final determination date is the first day on which no
federal adjustments arising from that audit or other action
remain to be finally determined, whether by internal revenue
service decision with respect to which all rights of appeal
have been waived or exhausted, by agreement, or, if appealed
or contested, by a final decision with respect to which all
rights of appeal have been waived or exhausted. For agreements
required to be signed by the internal revenue service and the
taxpayer, the final determination date is the date on which the
last party signed the agreement.
(b) For federal adjustments arising from an internal
revenue service audit or other action by the internal revenue
service, if the taxpayer filed as a member of a consolidated
return under section 422.37, the final determination date
is the first day on which no related federal adjustments
arising from that audit or other action remain to be finally
determined, as described in subparagraph division (a), for the
entire group.
(c) For federal adjustments arising from a timely filed
amended federal return or a timely filed federal refund
claim, or if it is a federal adjustment reported on a timely
amended federal return or other similar report filed pursuant
to section 6225(c) of the Internal Revenue Code, the final
determination date is the day on which the amended return,
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refund claim, or other similar report was filed.
(4) “Final federal adjustment” means a federal adjustment
after the final determination date for that federal adjustment
has passed.
b. Within three years after the return is filed or within
three years after the return became due, including any
extensions of time for filing, whichever time is the later,
the department shall examine the return and determine the tax.
However, if the taxpayer omits from income an amount which
will, under the Internal Revenue Code, extend the statute of
limitations for assessment of federal tax to six years under
the federal law, the period for examination and determination
is six years.
c. The period for examination and determination of the
correct amount of tax is unlimited in the case of a false or
fraudulent return made with the intent to evade tax or in the
case of a failure to file a return.
d. In lieu of the period of limitation for any prior year
for which an overpayment of tax or an elimination or reduction
of an underpayment of tax due for that prior year results from
the carryback to that prior year of a net operating loss or
net capital loss, the period is the period of limitation for
the taxable year of the net operating loss or net capital loss
which results in the carryback.
e. (1) In addition to the applicable period of limitation
for examination and determination in paragraph “b” , “c” , or “d” ,
the department may make an examination and determination at any
time within one year from the date of receipt by the department
of a federal adjustments report with respect to a final
federal adjustment or final federal partnership adjustment
as defined in section 422.25A for a particular tax year. In
order to begin the running of the one-year period, the federal
adjustments report related to the final federal adjustment or
final federal partnership adjustment shall be transmitted to
the department by the taxpayer in the form and manner specified
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by the department by rule.
(2) The department in its discretion may adopt rules to
establish a de minimis amount for which subparagraph (1) shall
not apply and the taxpayer shall not be required to file a
federal adjustments report.
(3) The department may in its discretion and when
administratively feasible adopt a process through rule by
which a taxpayer may make estimated payments of tax expected
to result from a pending internal revenue service audit
prior to the filing of a federal adjustments report with the
department. The process shall provide that the estimated
tax payments shall be credited against any tax liability
ultimately found to be due to the state from the internal
revenue service audit and will limit the accrual of further
statutory interest on that liability. The process shall also
provide that if the estimated tax payments exceed the final
tax liability and statutory interest ultimately determined to
be due, the taxpayer is entitled to a refund or credit for
the excess, without interest, provided the taxpayer files a
federal adjustments report, or a claim for refund or credit of
tax under section 422.73, no later than one year following the
final determination date.
2. a. If the tax found due under subsection 1 is greater
than the amount paid, the department shall compute the amount
due, together with interest and penalties as provided in
paragraph “b” , and shall mail a notice of assessment to the
taxpayer and, if applicable, to the taxpayer’s authorized
representative of the total, which shall be computed as a sum
certain, with interest computed to the last day of the month
in which the notice is dated.
b. In addition to the tax or additional tax determined
by the department under subsection 1, the taxpayer shall pay
interest on the tax or additional tax at the rate in effect
under section 421.7 for each month counting each fraction of
a month as an entire month, computed from the date the return
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was required to be filed. In addition to the tax or additional
tax, the taxpayer shall pay a penalty as provided in section
421.27.
Sec. 63. NEW SECTION . 422.25A Reporting and treatment of
certain partnership adjustments.
1. Definitions. As used in this section and sections
422.25B and 422.25C, unless the context otherwise requires:
a. “Administrative adjustment request” means the same as
provided in section 6227 of the Internal Revenue Code.
b. “Audited partnership” means a partnership subject
to a final federal partnership adjustment resulting from a
partnership level audit.
c. “C corporation” means an entity that elects or is
required to be taxed as a corporation under title 26, chapter
1, subchapter A, part 2, of the Internal Revenue Code.
d. “Corporate partner” means a C corporation partner that is
subject to tax pursuant to section 422.33.
e. “Direct partner” means a person that holds an interest
directly in a partnership or pass-through entity.
f. “Exempt partner” means a partner that is exempt from
taxation pursuant to section 422.34.
g. “Federal adjustments report” means the same as defined
in section 422.25.
h. “Federal partnership adjustment” means a change to an
item or amount required to be determined under the Internal
Revenue Code and the regulations thereunder that is used by a
partnership and its direct and indirect partners to compute
state tax owed for the reviewed year where such change results
from a partnership level audit or an administrative adjustment
request. A federal partnership adjustment is positive to the
extent that it increases Iowa taxable income as determined
under this title and is negative to the extent that it
decreases Iowa taxable income as determined under this title.
A federal adjustment reported on an amended federal return
or other similar report filed pursuant to section 6225(c) of
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the Internal Revenue Code shall not be considered a federal
partnership adjustment for purposes of this section.
i. “Federal partnership representative” means the person
the partnership designates for the taxable year as the
partnership’s representative, or the person the internal
revenue service has appointed to act as the federal partnership
representative, pursuant to section 6223(a) of the Internal
Revenue Code and the regulations thereunder.
j. “Fiduciary partner” means a partner that is a fiduciary
that is subject to tax pursuant to sections 422.5 and 422.6.
k. “Final determination date” means any one of the following
dates:
(1) In the case of a federal partnership adjustment that
arises from a partnership level audit, the first day on which
no federal adjustments arising from that audit remain to be
finally determined, whether by agreement, or, if appealed
or contested, by a final decision with respect to which all
rights of appeal have been waived or exhausted. For agreements
required to be signed by the internal revenue service and the
audited partnership, the final determination date is the date
on which the last party signed the agreement.
(2) In the case of a federal partnership adjustment that
results from a timely filed administrative adjustment request,
the day on which the administrative adjustment request was
filed with the internal revenue service.
l. “Final federal partnership adjustment” means a federal
partnership adjustment after the final determination date for
that federal partnership adjustment has passed.
m. “Indirect partner” means a partner in a partnership or
pass-through entity where such partnership or pass-through
entity itself holds an interest directly, or through another
indirect partner, in a partnership or pass-through entity.
n. “Individual partner” means a partner who is a natural
person that is subject to tax pursuant to section 422.5.
o. “Nonresident partner” means a partner that is not a
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resident partner as defined in this subsection.
p. “Partner” means a person that holds an interest, directly
or indirectly, in a partnership or pass-through entity.
q. “Partnership” means an entity subject to taxation
under subchapter K of the Internal Revenue Code and the
regulations thereunder and includes but is not limited to a
syndicate, group, pool, joint venture, or other unincorporated
organization through or by means of which any business,
financial operation, or venture is carried on and which is
not, within the meaning of this chapter, a trust, estate, or
corporation.
r. “Partnership level audit” means an examination by the
internal revenue service at the partnership level pursuant to
subchapter C, title 26, subtitle F, chapter 63, of the Internal
Revenue Code, as enacted by the Bipartisan Budget Act of 2015,
Pub. L. No. 114-74, and as amended, which results in final
federal partnership adjustments initiated and made by the
internal revenue service.
s. “Pass-through entity” means an entity, other than
a partnership, that is not subject to tax under section
422.33 for C corporations but excluding an exempt partner.
“Pass-through entity” includes but is not limited to S
corporations, estates, and trusts other than grantor trusts.
t. “Reallocation adjustment” means a final federal
partnership adjustment that changes the shares of items of
partnership income, gain, loss, expense, or credit allocated
to a partner that holds an interest directly in a partnership
or pass-through entity. A positive reallocation adjustment
means the portion of a reallocation adjustment that would
increase Iowa taxable income for such partners, and a negative
reallocation adjustment means the portion of a reallocation
adjustment that would decrease Iowa taxable income for such
partners.
u. “Resident partner” means any of the following:
(1) For an individual partner, a “resident” as defined in
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section 422.4.
(2) For a fiduciary partner, one with situs in Iowa.
(3) For all other partners, a partner whose headquarters or
principal place of business is located in Iowa.
v. “Reviewed year” means the taxable year of a partnership
that is subject to a partnership level audit from which final
federal partnership adjustments arise, or otherwise means the
taxable year of the partnership or pass-through entity that is
the subject of a state partnership audit.
w. “State partnership audit” means an examination by the
director at the partnership or pass-through entity level which
results in adjustments to partnership or pass-through entity
related items or reallocations of income, gains, losses,
expenses, credits, and other attributes among such partners for
the reviewed year.
x. “Tiered partner” means any partner that is a partnership
or pass-through entity.
y. “Unrelated business income” means the income which is
defined in section 512 of the Internal Revenue Code and the
regulations thereunder.
2. Application. Partnerships and their direct partners
and indirect partners shall report final federal partnership
adjustments as provided in this section.
3. State partnership representative. Notwithstanding any
other law to the contrary, the state partnership representative
for the reviewed year shall have the sole authority to act on
behalf of the partnership or pass-through entity with respect
to an action required or permitted to be taken by a partnership
or pass-through entity under this section or section 422.28 or
422.29 with respect to final federal partnership adjustments
arising from a partnership level audit or an administrative
adjustment request, and its direct partners and indirect
partners shall be bound by those actions.
4. Reporting and payment requirements for audited
partnerships and their partners subject to final federal
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partnership adjustments.
a. Unless an audited partnership makes the election in
subsection 5, the audited partnership shall do all of the
following for all final federal partnership adjustments no
later than ninety days after the final determination date of
the audited partnership:
(1) File a completed federal adjustments report.
(2) Notify each direct partner of such partner’s
distributive share of the adjustments in the manner and form
prescribed by the department by rule.
(3) File an amended composite return under section 422.13
if one was originally filed, and if applicable for withholding
from partners, file an amended withholding report under
section 422.16, and pay the additional amount under this title
that would have been due had the final federal partnership
adjustments been reported properly as required, including any
applicable interest and penalties.
b. Unless an audited partnership paid an amount on behalf
of the direct partners of the audited partnership pursuant to
subsection 5, all direct partners of the audited partnership
shall do all of the following no later than one hundred
eighty days after the final determination date of the audited
partnership:
(1) File a completed federal adjustments report reporting
the direct partner’s distributive share of the adjustments
required to be reported to such partners under paragraph “a” .
(2) If the direct partner is a tiered partner, notify all
partners that hold an interest directly in the tiered partner
of such partner’s distributive share of the adjustments in the
manner and form prescribed by the department by rule.
(3) If the direct partner is a tiered partner and subject to
section 422.13, file an amended composite return under section
422.13 if such return was originally filed, and if applicable
for withholding from partners file an amended withholding
report under section 422.16 if one was originally required to
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be filed.
(4) Pay any additional amount under this title that would
have been due had the final federal partnership adjustments
been reported properly as required, including any applicable
penalty and interest.
c. Unless a partnership or tiered partner paid an amount on
behalf of the partners pursuant to subsection 5, each indirect
partner shall do all of the following:
(1) Within ninety days after the time for filing and
furnishing statements to tiered partners and their partners
as established by section 6226 of the Internal Revenue Code
and the regulations thereunder, file a completed federal
adjustments report.
(2) If the indirect partner is a tiered partner, within
ninety days after the time for filing and furnishing statements
to tiered partners and their partners as established by
section 6226 of the Internal Revenue Code and the regulations
thereunder but within sufficient time for all indirect partners
to also complete the requirements of this subsection, notify
all of the partners that hold an interest directly in the
tiered partner of such partner’s distributive share of the
adjustments in the manner and form prescribed by the department
by rule.
(3) Within ninety days after the time for filing and
furnishing statements to tiered partners and their partners
as established by section 6226 of the Internal Revenue Code
and the regulations thereunder, if the indirect partner
is a tiered partner and subject to section 422.13, file an
amended composite return under section 422.13 if such return
was originally filed, and if applicable for withholding from
partners, file an amended withholding report under section
422.16 if one was originally required to be filed.
(4) Within ninety days after the time for filing and
furnishing statements to tiered partners and the partners of
the tiered partners as established by section 6226 of the
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Internal Revenue Code and the regulations thereunder, pay any
additional amount due under this title, including any penalty
and interest that would have been due had the final federal
partnership adjustments been reported properly as required.
5. Election for partnership or tiered partners to pay.
a. An audited partnership, or a tiered partner that receives
a notification of a final federal partnership adjustment under
subsection 4, may make an election to pay as provided under
this subsection.
b. An audited partnership or tiered partner makes an
election to pay under this subsection by filing a completed
federal adjustments report, notifying the department in the
manner and form prescribed by the department that it is making
the election under this subsection, notifying each of the
direct partners of such partner’s distributive share of the
adjustments, and paying on behalf of its partners an amount
calculated in paragraph “c” , including any applicable penalty
and interest. These requirements shall all be fulfilled within
one of the following time periods:
(1) For the audited partnership, no later than ninety days
after the final determination date of the audited partnership.
(2) For a direct tiered partner, no later than one hundred
eighty days after the final determination date of the audited
partnership.
(3) For an indirect tiered partner, within ninety days
after the time for filing and furnishing statements to a
tiered partner and the partner of the tiered partner, as
established by section 6226 of the Internal Revenue Code and
the regulations thereunder.
c. The amount due under this subsection from an audited
partnership or tiered partner shall be calculated as follows:
(1) Exclude from final federal partnership adjustments and
any positive reallocation adjustments the distributive share
of such adjustments reported to an exempt partner that holds
an interest directly in the audited partnership if the audited
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partnership is making the election or that holds an interest
directly in the tiered partner if the tiered partner is making
the election, but only to the extent the distributive share is
not unrelated business income.
(2) Determine the total distributive share of all final
federal partnership adjustments and positive reallocation
adjustments as modified by this title that are reported to
corporate partners, and to exempt partners to the extent the
distributive share is unrelated business income, and allocate
and apportion such adjustments as provided in section 422.33
at the partnership or tiered partner level, and multiply the
resulting amount by the maximum state corporate income tax rate
pursuant to section 422.33 for the reviewed year.
(3) Determine the total distributive share of all final
federal partnership adjustments and positive reallocation
adjustments as modified by this title that are reported to
nonresident individual partners and nonresident fiduciary
partners and allocate and apportion such adjustments as
provided in section 422.33 at the partnership or tiered
partner level, and multiply the resulting amount by the maximum
individual income tax rate pursuant to section 422.5A for the
reviewed year.
(4) For the total distributive share of all final federal
partnership adjustments and positive reallocation adjustments
as modified by this title that are reported to tiered partners:
(a) Determine the amount of such adjustments which are of a
type that would be subject to sourcing to Iowa under section
422.8, subsection 2, paragraph “a” , as a nonresident, and then
determine the portion of this amount that would be sourced to
Iowa under those provisions as if the tiered partner were a
nonresident.
(b) Determine the amount of such adjustments which are of
a type that would not be subject to sourcing to Iowa under
section 422.8, subsection 2, paragraph “a” , as a nonresident.
(c) Determine the portion of the amount in subparagraph
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division (b) that can be established, as prescribed by the
department by rule, to be properly allocable to indirect
partners that are nonresident partners or other partners not
subject to tax on the adjustments.
(d) Multiply the total of the amounts determined in
subparagraph divisions (a) and (b), reduced by any amount
determined in subparagraph division (c), by the highest
individual income tax rate pursuant to section 422.5A for the
reviewed year.
(5) For the total distributive share of all final federal
partnership adjustments and positive reallocation adjustments
as modified by this title that are reported to resident
individual partners and resident fiduciary partners, multiply
that amount by the highest individual income tax rate pursuant
to section 422.5A for the reviewed year.
(6) Total the amounts computed pursuant to subparagraphs
(2) through (5) and calculate any interest and penalty as
provided under this title. Notwithstanding any provision of
law to the contrary, interest and penalties on the amount due
by the audited partnership or tiered partner shall be computed
from the day after the due date of the reviewed year return
without extension, and shall be imposed as if the audited
partnership or tiered partner was required to pay tax or show
tax due on the original return for the reviewed year.
d. Adjustments subject to the election in this subsection
do not include any adjustments arising from an administrative
adjustment request.
e. An audited partnership or tiered partner not otherwise
subject to any reporting or payment obligation to Iowa that
makes an election under this subsection consents to be subject
to the Iowa laws related to reporting, assessment, collection,
and payment of Iowa tax, interest, and penalties calculated
under the election.
6. Modified reporting and payment method. The department may
adopt procedures for an audited partnership or tiered partner
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to enter into an agreement with the department to use an
alternative reporting and payment method, including applicable
time requirements or any other provision of this section. The
audited partnership or tiered partner must demonstrate that
the requested method will reasonably provide for the reporting
and payment of taxes, penalties, and interest due under the
provisions of this section. Application for approval of an
alternative reporting and payment method must be made by the
audited partnership or tiered partner within the time for
making an election to pay under subsection 5 and in the manner
prescribed by the department. Approval of such an alternative
reporting and payment method shall be at the discretion of the
department.
7. Effect of election by partnership or tiered partner and
payment of amount due.
a. The election made under subsection 5 is irrevocable,
unless in the discretion of the director, the director
determines otherwise.
b. The amount determined in subsection 5, when properly
reported and paid by the audited partnership or tiered partner,
shall be treated as paid on behalf of the partners of such
audited partnership or tiered partner on the same final federal
partnership adjustments, provided, however, that no partner may
take any deduction or credit for the amount, claim a refund of
the amount, or include the amount on such partner’s Iowa return
in any manner.
c. In the event another state offers to an audited
partnership or tiered partner a similar election to pay state
tax resulting from final federal partnership adjustments,
nothing in this subsection shall prohibit a resident who holds
an interest directly in that audited partnership or tiered
partner, as the case may be, from claiming a credit for taxes
paid by the resident to another state under section 422.8,
subsection 1, for any amounts paid by the audited partnership
or tiered partner on such resident partner’s behalf to another
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state, provided such payment otherwise meets the requirements
of section 422.8, subsection 1.
d. Nothing in this section shall prohibit the department
from assessing direct partners and indirect partners for taxes
they owe in the event that an audited partnership or tiered
partner fails to timely make any report or payment required by
this section for any reason.
8. Assessments of additional Iowa income tax, interest, and
penalties, and claims for refund, arising from final federal
partnership adjustments.
a. The department shall assess additional Iowa income
tax, interest, and penalties arising from final federal
partnership adjustments in the same manner as provided in
this title unless a different treatment is provided by this
subsection. Since final federal partnership adjustments are
determined at the audited partnership level, any assessment
issued to partners shall not be appealable by the partner.
The department may assess any taxes, including on-behalf-of
amounts, interest, and penalties arising from the final federal
partnership adjustments if it issues a notice of assessment to
the audited partnership, tiered partner, or other direct or
indirect partner on or before the expiration of the applicable
limitations period specified in section 422.25.
b. In addition to the period for claiming a refund or credit
provided in section 422.73, subsection 1, paragraph “a” , and
notwithstanding section 422.73, subsection 1, paragraph “b” ,
a partnership, tiered partner, or other direct or indirect
partner, as the case may be, may file a claim for refund of
Iowa income tax arising directly or indirectly from a final
federal partnership adjustment arising from a partnership level
audit on or before the date which is one year from the date the
federal adjustments report for that final federal partnership
adjustment was required to be filed by such person under this
section.
9. Rules. The department may adopt any rules pursuant to
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chapter 17A to implement this section.
Sec. 64. NEW SECTION . 422.25B State partnership
representative.
1. As used in this section, all words and phrases defined
in section 422.25A shall have the same meaning given them by
that section.
2. The state partnership representative for the reviewed
year for a partnership shall be the partnership’s federal
partnership representative with respect to an action required
or permitted to be taken by a state partnership representative
under this chapter for a reviewed year, unless the partnership
designates in writing another person as the state partnership
representative as provided in subsection 3. The state
partnership representative for the reviewed year for a
pass-through entity is the person designated in subsection 3.
3. The department may establish reasonable qualifications
for a person to be a state partnership representative. If
a partnership desires to designate a person other than the
federal partnership representative, the partnership shall
designate such person in the manner and form prescribed by the
department. A pass-through entity shall designate a person as
the state partnership representative in the manner and form
prescribed by the department. A partnership or pass-through
entity shall be allowed to change such designation by notifying
the department at the time the change occurs in the manner and
form prescribed by the department.
4. The department may adopt any rules pursuant to chapter
17A to implement this section.
Sec. 65. NEW SECTION . 422.25C Partnership and pass-through
entity audits and examinations —— consistent treatment of
entity-level items —— binding actions —— amended returns.
1. As used in this section, all words and phrases defined
in section 422.25A shall have the same meaning given them by
that section.
2. For tax years beginning on or after January 1, 2020, any
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adjustments to a partnership’s or pass-through entity’s items
of income, gain, loss, expense, or credit, or an adjustment
to such items allocated to a partner that holds an interest
in a partnership or pass-through entity for the reviewed year
by the department as a result of a state partnership audit,
shall be determined at the partnership level or pass-through
entity level in the same manner as provided by section 6221(a)
of the Internal Revenue Code and the regulations thereunder
unless a different treatment is specifically provided in this
title. The provisions of sections 6222, 6223, and 6227 of the
Internal Revenue Code and the regulations thereunder shall also
apply to a partnership or pass-through entity and its direct
or indirect partners in the same manner as provided in such
sections unless a different treatment is specifically provided
in this title. For purposes of applying such sections, due
account shall be made for differences in federal and Iowa
terminology. The adjustment provided by section 6221(a) of
the Internal Revenue Code shall be determined as provided in
such section but shall be based on Iowa taxable income or
other tax attributes of the partnership as determined pursuant
to this chapter for the reviewed year. The department shall
issue a notice of adjustment to the partnership or pass-through
entity. Such notice shall be treated as an assessment for
the purposes of section 422.25, and the notice shall be
appealable by the partnership or pass-through entity pursuant
to sections 422.28 and 422.29 and shall be issued within the
time period provided by section 422.25. Once the adjustments
to partnership-related or pass-through entity-related items or
reallocations of income, gains, losses, expenses, credits, and
other attributes among such partners for the reviewed year are
finally determined, the partnership or pass-through entity and
any direct partners or indirect partners shall then be subject
to the provisions of section 422.25, subsection 1, paragraph
“e” , and section 422.25A in the same manner as if the state
partnership audit were a federal partnership level audit, and
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as if the final state partnership audit adjustment were a final
federal partnership adjustment. The penalty exceptions in
section 421.27, subsection 2, paragraphs “b” and “c” , shall not
apply to a state partnership audit.
3. The state partnership representative for the reviewed
year as determined under section 422.25B shall have the sole
authority to act on behalf of the partnership or pass-through
entity with respect to an action required or permitted to
be taken by a partnership or pass-through entity under this
section, including proceedings under section 422.28 or 422.29,
and the partnership’s or pass-through entity’s direct partners
and indirect partners shall be bound by those actions.
4. If the department, the partnership or pass-through
entity, and the partnership or pass-through entity owners
agree, the provisions of this section may be applied to tax
years beginning before January 1, 2020.
5. The department may adopt rules pursuant to chapter 17A to
implement this section.
Sec. 66. Section 422.35, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 26. Any income subtracted from federal
taxable income for an adjustment year pursuant to section 6225
of the Internal Revenue Code and the regulations thereunder
shall be added back in computing net income for state tax
purposes for the adjustment year.
Sec. 67. Section 422.39, Code 2020, is amended by striking
the section and inserting in lieu thereof the following:
422.39 Statutes applicable to corporations and corporation
tax.
All the provisions of sections 422.24 through 422.27
of division II, respecting payment, collection, reporting,
examination, and assessment, shall apply in respect to a
corporation subject to the provisions of this division and to
the tax due and payable by a corporation taxable under this
division. This includes but is not limited to a corporation
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that is a pass-through entity as defined in section 422.25A.
Sec. 68. Section 422.73, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 01. For purposes of this section, “federal
adjustment” , “final determination date” , and “final federal
adjustment” all mean the same as defined in section 422.25.
Sec. 69. Section 422.73, subsections 1 and 3, Code 2020, are
amended to read as follows:
1. a. If it appears that an amount of tax, penalty, or
interest has been paid which was not due under division II ,
III or V of this chapter , then that amount shall be credited
against any tax due on the books of the department by the
person who made the excessive payment, or that amount shall be
refunded to the person or with the person’s approval, credited
to tax to become due. A claim for refund or credit that has
not been filed with the department within three years after
the return upon which a refund or credit claimed became due,
or within one year after the payment of the tax upon which a
refund or credit is claimed was made, whichever time is the
later, shall not be allowed by the director. If, as a result of
a carryback of a net operating loss or a net capital loss, the
amount of tax in a prior period is reduced and an overpayment
results, the claim for refund or credit of the overpayment
shall be filed with the department within the three years after
the return for the taxable year of the net operating loss or
net capital loss became due.
b. Notwithstanding the period of limitation specified in
paragraph “a” , the taxpayer shall have six months one year from
the day of final disposition final determination date of any
income tax matter between the taxpayer and the internal revenue
service final federal adjustment arising from an internal
revenue service audit or other similar action by the internal
revenue service with respect to the particular tax year to
claim an income tax refund or credit arising from that final
federal adjustment .
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3. The department shall enter into an agreement with the
internal revenue service for the transmission of federal income
tax reports on individuals required to file an Iowa income tax
return who have been involved in an income tax matter with the
internal revenue service. After final disposition the final
determination date of the income tax matter that involves a
final federal adjustment between the taxpayer and the internal
revenue service, the department shall determine whether the
individual is due a state income tax refund as a result of that
final disposition of federal adjustment from such income tax
matter. If the individual is due a state income tax refund,
the department shall notify the individual within thirty days
and request the individual to file a claim for refund or credit
with the department.
Sec. 70. APPLICABILITY. This division of this Act applies
to federal adjustments and federal partnership adjustments that
have a final determination date after the effective date of
this division of this Act.
DIVISION VI
SETOFF PROCEDURES —— RULEMAKING —— EFFECTIVE DATE
Sec. 71. RULES. The following applies to 2020 Iowa Acts,
Senate File 2328 or House File 2565, if enacted:
The department of revenue shall adopt rules governing
setoffs that occur during the transition from the department of
administrative services to the department of revenue.
Sec. 72. 2020 Iowa Acts, Senate File 2328, if enacted, is
amended by adding the following new section:
NEW SECTION . Sec. ___. EFFECTIVE DATE. This Act takes
effect on the later of January 1, 2021, or the effective date
of the rules adopted by the department of revenue pursuant
to chapter 17A implementing this Act other than transitional
rules.
Sec. 73. 2020 Iowa Acts, House File 2565, section 28, if
enacted, is amended to read as follows:
SEC. 28. EFFECTIVE DATE. This Act takes effect on the
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later of January 1, 2021 , or the effective date of the rules
adopted by the department of revenue pursuant to chapter 17A
implementing this Act other than transitional rules .
Sec. 74. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 75. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to the effective date of 2020 Iowa
Acts, Senate File 2328 or House File 2565, if enacted.
DIVISION VII
PRO RATA SHARE OF ENTITY-LEVEL INCOME TAX PAID BY SHAREHOLDERS
OR BENEFICIARIES
Sec. 76. Section 422.8, subsection 1, Code 2020, is amended
to read as follows:
1. a. The amount of income tax paid to another state or
foreign country by a resident taxpayer of this state on income
derived from sources outside of Iowa shall be allowed as a
credit against the tax computed under this chapter , except that
the credit shall not exceed what the amount of the Iowa tax
would have been on the same income which was taxed by the other
state or foreign country. The limitation on this credit shall
be computed according to the following formula: Income earned
outside of Iowa and taxed by another state or foreign country
shall be divided by the total income of the resident taxpayer
of Iowa. This quotient multiplied times by the net Iowa tax as
determined on the total income of the taxpayer as if entirely
earned in Iowa shall be the maximum tax credit against the Iowa
net tax.
b. (1) For purposes of paragraph “a” , a resident partner
of an entity taxed as a partnership for federal tax purposes,
a resident shareholder of an S corporation, or a resident
beneficiary of an estate or trust shall be deemed to have paid
the resident partner’s, resident shareholder’s, or resident
beneficiary’s pro rata share of entity-level income tax paid
by the partnership, S corporation, estate, or trust to another
state or foreign country on income that is also subject to
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tax under this division, but only if the entity provides the
resident partner, resident shareholder, or resident beneficiary
a statement that documents the resident partner’s, resident
shareholder’s, or resident beneficiary’s share of the income
derived in the other state or foreign country, the income tax
liability of the entity in that state or foreign country, and
the income tax paid by the entity to that state or foreign
country.
(2) For purposes of paragraph “a” , a resident shareholder of
a regulated investment company shall be deemed to have paid the
shareholder’s pro rata share of entity-level income tax paid by
the regulated investment company to another state or foreign
country and treated as paid by its shareholders pursuant to
section 853 of the Internal Revenue Code, but only if the
regulated investment company provides the resident shareholder
a statement that documents the resident shareholder’s share of
the income derived in the other state or foreign country, the
income tax liability of the regulated investment company in
that state or foreign country, and the income tax paid by the
regulated investment company to that state or foreign country.
Sec. 77. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 78. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2020, for tax years
beginning on or after that date.
DIVISION VIII
BONUS DEPRECIATION
Sec. 79. Section 422.7, subsections 51 and 52, Code 2020,
are amended by striking the subsections.
Sec. 80. Section 422.9, subsection 2, paragraph h, Code
2020, is amended to read as follows:
h. For purposes of calculating the deductions in this
subsection that are authorized under the Internal Revenue Code,
and to the extent that any of such deductions is determined by
an individual’s federal adjusted gross income, the individual’s
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federal adjusted gross income is computed in accordance with
section 422.7, subsections 39, 39A, 39B, 51, 52, and 53 .
Sec. 81. Section 422.35, subsections 14 and 15, Code 2020,
are amended by striking the subsections.
Sec. 82. PRESERVATION OF EXISTING RIGHTS. The sections of
this division striking section 422.7, subsections 51 and 52,
and section 422.35, subsections 14 and 15, respectively, shall
not limit, modify, or otherwise adversely affect a taxpayer’s
right to deduct for a tax year beginning on or after January 1,
2020, any amount determined under section 422.7, subsection 52,
paragraph “b”, subparagraph (3), Code 2020, or under section
422.35, subsection 15, paragraph “b”, subparagraph (3), Code
2020, for a tax year beginning prior to January 1, 2020.
Sec. 83. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2020, for tax years
beginning on or after that date.
DIVISION IX
MARRIED TAXPAYERS —— JOINT LIABILITY
Sec. 84. Section 422.21, subsection 7, Code 2020, is amended
to read as follows:
7. If married taxpayers file a joint return or file
separately on a combined return in accordance with rules
prescribed by the director, both spouses are jointly and
severally liable for the total tax due on the return, except
when one spouse is considered to be an innocent spouse eligible
for relief under criteria established pursuant to section 6015
of the Internal Revenue Code. The department may notify the
nonrequesting spouse or former spouse and permit, by rule, the
intervention of a nonrequesting spouse or former spouse when
relief from joint and several liability is requested.
Sec. 85. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
DIVISION X
SALES TAX PAID BY THIRD-PARTY DEVELOPERS
Sec. 86. Section 15.331C, subsection 2, Code 2020, is
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amended to read as follows:
2. A third-party developer shall state under oath, on
forms provided by the department of revenue, the amount of
taxes paid as described in subsection 1 and shall submit such
forms to the department of revenue. The taxes paid shall be
itemized to allow identification of the taxes attributable
to racks, shelving, and conveyor equipment to be used in a
warehouse or distribution center. After receiving the form
from the third-party developer, the department of revenue shall
issue a tax credit certificate to the eligible business equal
to the sales and use taxes paid by a third-party developer
under chapter 423 for gas, electricity, water, or sewer
utility services, goods, wares, or merchandise, or on services
rendered, furnished, or performed to or for a contractor or
subcontractor and used in the fulfillment of a written contract
relating to the construction or equipping of a facility.
The department of revenue shall also issue a tax credit
certificate to the eligible business equal to the taxes paid
and attributable to racks, shelving, and conveyor equipment to
be used in a warehouse or distribution center. The aggregate
combined total amount of tax refunds under section 15.331A for
taxes attributable to racks, shelving, and conveyor equipment
to be used in a warehouse or distribution center and of tax
credit certificates issued by the department of revenue for the
taxes paid and attributable to racks, shelving, and conveyor
equipment to be used in a warehouse or distribution center
shall not exceed five hundred thousand dollars in a fiscal
year. If an applicant for a tax credit certificate does not
receive a certificate for the taxes paid and attributable
to racks, shelving, and conveyor equipment to be used in a
warehouse or distribution center, the application shall be
considered in succeeding fiscal years. The eligible business
shall not claim a tax credit under this section unless a tax
credit certificate issued by the department of revenue is
included with the taxpayer’s tax return for the tax year for
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which the tax credit is claimed. A tax credit certificate
shall contain the eligible business’s name, address, tax
identification number, the amount of the tax credit, and other
information deemed necessary by the department of revenue.
An individual under this section may claim a tax credit of
a partnership, limited liability company, S corporation,
estate, or trust electing to have income taxed directly to
the individual. The amount claimed by the individual shall
be based upon the pro rata share of the individual’s earnings
from the partnership, limited liability company, S corporation,
estate, or trust.
Sec. 87. NEW SECTION . 422.12O Corporate tax credit for
certain sales taxes paid by third-party developer.
The taxes imposed under this division, less the credits
allowed under section 422.12, shall be reduced by a corporate
tax credit authorized pursuant to section 15.331C for certain
sales taxes paid by a third-party developer.
Sec. 88. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 89. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2020, for tax years
beginning on or after that date.
DIVISION XI
IOWA EDUCATIONAL SAVINGS PLAN TRUST (529 PLANS)
Sec. 90. Section 12D.1, subsection 2, paragraph k, Code
2020, is amended to read as follows:
k. “Qualified education expenses” means the same as
“qualified higher education expenses” as defined in section
529(e)(3) of the Internal Revenue Code, as amended by Pub. L.
No. 115-97, and shall include elementary and secondary school
expenses for tuition described in section 529(c)(7) of the
Internal Revenue Code, subject to the limitations imposed by
section 529(e)(3)(A) of the Internal Revenue Code. “Qualified
education expenses” includes expenses for the participation
in an apprenticeship program registered and certified with
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the United States secretary of labor under section 1 of the
National Apprenticeship Act, 29 U.S.C. §50, and amounts paid as
principal or interest on any qualified education loan on behalf
of a beneficiary or a sibling of the beneficiary, subject to
the limitations imposed by section 529(c)(9)(B) and (C) of the
Internal Revenue Code.
Sec. 91. Section 12D.1, subsection 2, Code 2020, is amended
by adding the following new paragraphs:
NEW PARAGRAPH . 0l. “Qualified education loan” means the
same as “qualified education loan” as defined in section 221(d)
of the Internal Revenue Code.
NEW PARAGRAPH . 0m. “Sibling” means a brother, sister,
stepbrother, or stepsister of the beneficiary.
Sec. 92. Section 422.7, subsection 32, paragraph c,
subparagraph (1), Code 2020, is amended by adding the following
new subparagraph divisions:
NEW SUBPARAGRAPH DIVISION . (d) The payment of expenses
for fees, books, supplies, and equipment required for the
participation of a beneficiary in an apprenticeship program.
NEW SUBPARAGRAPH DIVISION . (e) The payment of qualified
education loan repayments.
Sec. 93. Section 422.7, subsection 32, paragraph c,
subparagraph (2), Code 2020, is amended by adding the following
new subparagraph divisions:
NEW SUBPARAGRAPH DIVISION . (0a) “Apprenticeship program”
means a program registered and certified with the United
States secretary of labor under section 1 of the National
Apprenticeship Act, 29 U.S.C. §50.
NEW SUBPARAGRAPH DIVISION . (0c) “Qualified education loan”
means the same as defined in section 12D.1, subsection 2.
NEW SUBPARAGRAPH DIVISION . (00c) “Qualified education loan
repayments” means amounts paid as principal or interest on any
qualified education loan of the beneficiary or a sibling of
the beneficiary. The repayment amounts shall not exceed ten
thousand dollars in the aggregate for the beneficiary or the
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sibling, respectively.
NEW SUBPARAGRAPH DIVISION . (d) “Sibling” means the same as
defined in section 12D.1, subsection 2.
Sec. 94. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 95. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2019, for tax years
beginning on or after that date.
DIVISION XII
IOWA EDUCATIONAL SAVINGS ACCOUNT AND FIRST-TIME HOMEBUYER
ACCOUNT —— EXTENSIONS
Sec. 96. EXTENSION OF IOWA EDUCATIONAL SAVINGS ACCOUNT
CONTRIBUTION DEDUCTION FOR TAX YEAR 2019. Notwithstanding any
provision of law to the contrary, in determining the deduction
provided under section 422.7, subsection 32, paragraph “a”,
for tax years beginning during the 2019 calendar year, a
participant who makes a contribution to the Iowa educational
savings plan trust pursuant to section 12D.3, subsection 1, on
or after January 1, 2020, but on or before July 31, 2020, may
elect to be deemed to have made the contribution on the last
day of calendar year 2019.
Sec. 97. EXTENSION OF IOWA FIRST-TIME HOMEBUYER ACCOUNT AND
BENEFICIARY DESIGNATION FOR ACCOUNTS OPENED IN 2019.
1. Notwithstanding section 541B.3, subsection 1, paragraph
“a”, or any other provision of law to the contrary, an
individual who opened a first-time homebuyer account during
calendar year 2019 and who wishes to participate in the Iowa
first-time homebuyer savings account program shall designate
the account as a first-time homebuyer account on or before July
31, 2020, on forms provided by the department of revenue.
2. Notwithstanding section 541B.3, subsection 2, paragraph
“a”, or any other provision of law to the contrary, an
individual who opened a first-time homebuyer account during
calendar year 2019 and who wishes to participate in the Iowa
first-time homebuyer savings account program shall designate an
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individual as beneficiary of the first-time homebuyer savings
account on or before July 31, 2020, on forms provided by the
department of revenue.
Sec. 98. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
DIVISION XIII
QUALIFYING PERSONAL PROTECTION EQUIPMENT —— DONATION
Sec. 99. Section 423.6, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 18. Qualifying personal protective
equipment and materials which are assembled to become
qualifying personal protective equipment. For purposes of this
subsection, “qualifying personal protective equipment” means
personal protective equipment that is assembled and donated by
a person during the period beginning with a state of disaster
emergency proclamation by the governor under section 29C.6 and
ending one hundred eighty days after the expiration of such
proclamation.
Sec. 100. REFUNDS. Refunds of taxes, interest, or penalties
that arise from claims resulting from the enactment of this
division of this Act, for donations occurring prior to the
effective date of this division of this Act, shall not be
allowed unless claims are filed prior to October 1, 2020,
notwithstanding any other provision of the law to the contrary.
Sec. 101. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 102. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2020, for qualifying
personal protective equipment and materials assembled and
donated on or after that date.
DIVISION XIV
SHORT-TERM RENTAL PROPERTIES
Sec. 103. Section 331.301, Code 2020, is amended by adding
the following new subsection:
NEW SUBSECTION . 18. a. For purposes of this subsection,
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“short-term rental property” means any individually or
collectively owned single-family house or dwelling unit;
any unit or group of units in a condominium, cooperative,
or timeshare; or an owner-occupied residential home that is
offered for a fee for thirty days or less. “Short-term rental
property” does not include a unit that is used for any retail,
restaurant, banquet space, event center, or other similar use.
b. A county shall not adopt or enforce any ordinance
prohibiting short-term rental properties within the county. A
short-term rental property shall be classified as a residential
land use for zoning purposes.
c. Notwithstanding paragraph “b” , a county may enact or
enforce an ordinance that regulates, prohibits, or otherwise
limits short-term rental properties for the following primary
purposes if enforcement is performed in the same manner as
enforcement applicable to similar properties that are not
short-term rental properties:
(1) Protection of public health and safety related to fire
and building safety, sanitation, or traffic control.
(2) Residential use and zoning purposes related to noise,
property maintenance, or nuisance issues.
(3) Limitation or prohibition of use of property to house
sex offenders; to manufacture, exhibit, distribute, or sell
illegal drugs, liquor, pornography, or obscenity; or to operate
an adult-oriented entertainment establishment as described in
section 239B.5, subsection 4, paragraph “a” .
(4) To provide the county with an emergency contact for a
short-term rental property.
Sec. 104. Section 414.1, subsection 1, Code 2020, is amended
by adding the following new paragraphs:
NEW PARAGRAPH . e. A city shall not adopt or enforce any
regulation, restriction, or other ordinance related to distance
separation requirements for single-family homes or duplexes.
NEW PARAGRAPH . f. (1) For purposes of this paragraph,
“short-term rental property” means any individually or
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collectively owned single-family house or dwelling unit;
any unit or group of units in a condominium, cooperative,
or timeshare; or an owner-occupied residential home that is
offered for a fee for thirty days or less. “Short-term rental
property” does not include a unit that is used for any retail,
restaurant, banquet space, event center, or other similar use.
(2) A city shall not adopt or enforce any ordinance
prohibiting short-term rental properties within the city. A
short-term rental property shall be classified as a residential
land use for zoning purposes.
(3) Notwithstanding subparagraph (2), a city may enact or
enforce an ordinance that regulates, prohibits, or otherwise
limits short-term rental properties for the following primary
purposes if enforcement is performed in the same manner as
enforcement applicable to similar properties that are not
short-term rental properties:
(a) Protection of public health and safety related to fire
and building safety, sanitation, or traffic control.
(b) Residential use and zoning purposes related to noise,
property maintenance, or nuisance issues.
(c) Limitation or prohibition of use of property to house
sex offenders; to manufacture, exhibit, distribute, or sell
illegal drugs, liquor, pornography, or obscenity; or to operate
an adult-oriented entertainment establishment as described in
section 239B.5, subsection 4, paragraph “a” .
(d) To provide the city with an emergency contact for a
short-term rental property.
DIVISION XV
FUTURE TAX CHANGES
Sec. 105. 2018 Iowa Acts, chapter 1161, section 133, is
amended by striking the section and inserting in lieu thereof
the following:
SEC. 133. This division of this Act takes effect January 1,
2023.
DIVISION XVI
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BUSINESS INTEREST EXPENSE DEDUCTION AND GLOBAL INTANGIBLE
LOW-TAXED INCOME
Sec. 106. Section 422.7, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 59. a. Section 163(j) of the Internal
Revenue Code does not apply in computing net income for state
tax purposes. If the taxpayer’s federal adjusted gross income
for the tax year was increased or decreased by reason of the
application of section 163(j) of the Internal Revenue Code,
the taxpayer shall recompute net income for state tax purposes
under rules prescribed by the director.
b. Paragraph “a” shall not apply during any tax year
in which the additional first-year depreciation allowance
authorized in section 168(k) of the Internal Revenue Code
applies in computing net income for state tax purposes.
c. For any tax year in which paragraph “a” does not apply,
a taxpayer shall not be permitted to deduct any amount of
interest expense paid or accrued in a previous taxable year
that is allowed as a deduction in the current taxable year by
reason of the carryforward of disallowed business interest
provisions of section 163(j)(2) of the Internal Revenue Code,
if either of the following apply:
(1) The interest expense was originally paid or accrued
during a tax year in which paragraph “a” applied.
(2) The interest expense was originally paid or accrued
during a tax year in which the taxpayer was not required to
file an Iowa return.
Sec. 107. Section 422.35, Code 2020, is amended by adding
the following new subsections:
NEW SUBSECTION . 26. a. Section 163(j) of the Internal
Revenue Code does not apply in computing net income for state
tax purposes. If the taxpayer’s federal taxable income for
the tax year was increased or decreased by reason of the
application of section 163(j) of the Internal Revenue Code,
the taxpayer shall recompute net income for state tax purposes
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under rules prescribed by the director.
b. Paragraph “a” shall not apply during any tax year
in which the additional first-year depreciation allowance
authorized in section 168(k) of the Internal Revenue Code
applies in computing net income for state tax purposes.
c. For any tax year in which paragraph “a” does not apply,
a taxpayer shall not be permitted to deduct any amount of
interest expense paid or accrued in a previous taxable year
that is allowed as a deduction in the current taxable year by
reason of the carryforward of disallowed business interest
provisions of section 163(j)(2) of the Internal Revenue Code,
if either of the following apply:
(1) The interest expense was originally paid or accrued
during a tax year in which paragraph “a” applied.
(2) The interest expense was originally paid or accrued
during a tax year in which the taxpayer was not required to
file an Iowa return.
NEW SUBSECTION . 27. Subtract, to the extent included,
global intangible low-taxed income under section 951A of the
Internal Revenue Code.
Sec. 108. RESCISSION OF ADMINISTRATIVE RULES.
1. Contingent upon the enactment of the section of this
Act amending section 422.35, subsection 27, the following Iowa
administrative rules are rescinded:
a. 701 Iowa administrative code, rule 54.2, subrule 3,
paragraph “i”.
b. 701 Iowa administrative code, rule 59.28, subrule 2,
paragraph “p”.
2. As soon as practicable, the Iowa administrative code
editor shall remove the language of the Iowa administrative
rules referenced in subsection 1 of this section from the Iowa
administrative code.
Sec. 109. EFFECTIVE DATE. This Act, being deemed of
immediate importance, takes effect upon enactment.
Sec. 110. RETROACTIVE APPLICABILITY. The following applies
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retroactively to January 1, 2019, for tax years beginning on
or after that date:
The portion of the section of this division of this Act
enacting section 422.35, subsection 27.
Sec. 111. RETROACTIVE APPLICABILITY. The following apply
retroactively to January 1, 2020 for tax years beginning on or
after that date:
1. The section of this division of this Act enacting section
422.7, subsection 59.
2. The portion of the section of this division of this Act
enacting section 422.35, subsection 26.
DIVISION XVII
REINVESTMENT ACT
Sec. 112. Section 15J.2, subsections 4, 7, 8, and 9, Code
2020, are amended to read as follows:
4. “District” means the area within a municipality that is
designated a reinvestment district pursuant to section 15J.4 .
7. “Municipality” means a county or an incorporated city.
any of the following:
a. A county.
b. An incorporated city.
c. A joint board or other legal entity established or
designated in an agreement between two or more contiguous
municipalities identified in paragraph “a” or “b” pursuant to
chapter 28E.
8. a. “New lessor” means a lessor, as defined in section
423A.2 , operating a business in the district that was not in
operation in the area of the district before the effective
date of the ordinance or resolution establishing the district,
regardless of ownership.
b. “New lessor” also includes any lessor, defined in section
423A.2 , operating a business in the district if the place of
business for that business is the subject of a project that was
approved by the board.
9. a. “New retail establishment” means a business operated
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in the district by a retailer, as defined in section 423.1 ,
that was not in operation in the area of the district before
the effective date of the ordinance or resolution establishing
the district, regardless of ownership.
b. “New retail establishment” also includes any business
operated in the district by a retailer, as defined in section
423.1 , if the place of business for that retail establishment
is the subject of a project that was approved by the board.
Sec. 113. Section 15J.4, subsection 1, unnumbered paragraph
1, Code 2020, is amended to read as follows:
A municipality that has an area suitable for development
within the boundaries of the municipality or within the
combined boundaries of a municipality under section 15J.2,
subsection 7, paragraph “c” , is eligible to seek approval from
the board to establish a reinvestment district under this
section consisting of the area suitable for development. To
be designated a reinvestment district, an area shall meet the
following requirements:
Sec. 114. Section 15J.4, subsection 1, paragraphs c and d,
Code 2020, are amended to read as follows:
c. The For districts approved before July 1, 2018, the area
consists of contiguous parcels and does not exceed twenty-five
acres in total. For districts approved on or after July 1,
2020, the area consists of contiguous parcels and does not
exceed seventy-five acres in total.
d. For a municipality that is a city or for a city that
is party to an agreement under section 15J.2, subsection 7,
paragraph “c” , the area does not include the entire incorporated
area of the city.
Sec. 115. Section 15J.4, subsection 3, paragraph a, Code
2020, is amended to read as follows:
a. The municipality shall submit a copy of the resolution,
the proposed district plan, and all accompanying materials
adopted pursuant to this section to the board for evaluation.
The board shall not approve a proposed district plan on or
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after July 1, 2018 2025 .
Sec. 116. Section 15J.4, subsection 3, paragraph b,
subparagraph (6), Code 2020, is amended to read as follows:
(6) The amount of proposed capital investment within the
proposed district related to retail businesses in the proposed
district does not exceed fifty percent of the total capital
investment for all proposed projects in the proposed district
plan. For the purposes of this subparagraph, “retail business”
means any business engaged in the business of selling tangible
personal property or taxable services at retail in this state
that is obligated to collect state sales or use tax under
chapter 423 . However, for the purposes of this subparagraph,
“retail business” does not include a new lessor or a business
engaged in an activity subject to tax under section 423.2,
subsection 3 .
Sec. 117. Section 15J.4, subsection 3, paragraph f, Code
2020, is amended to read as follows:
f. (1) The total aggregate amount of state sales tax
revenues and state hotel and motel tax revenues that may be
approved by the board for remittance to all municipalities and
that may be transferred to the state reinvestment district
fund under section 423.2A or 423A.6 , and remitted to all
municipalities having a reinvestment district under this
chapter for districts approved by the board before July 1,
2018, shall not exceed one hundred million dollars.
(2) The total aggregate amount of state sales tax revenues
and state hotel and motel tax revenues that may be approved by
the board for remittance to all municipalities and that may
be transferred to the state reinvestment district fund under
section 423.2A or 423A.6, and remitted to all municipalities
having a reinvestment district under this chapter for districts
approved on or after July 1, 2020, but before July 1, 2025,
shall not exceed one hundred million dollars.
Sec. 118. Section 15J.4, subsections 4 and 5, Code 2020, are
amended to read as follows:
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4. a. Upon receiving the approval of the board, the
municipality may shall adopt an ordinance , or in the case of
a municipality under section 15J.2, subsection 7, paragraph
“c” , a resolution, establishing the district and shall notify
the director of revenue of the district’s commencement date
established by the board and the information required under
paragraph “b” no later than thirty days after adoption of the
ordinance or resolution .
b. For each district approved by the board on or after July
1, 2020, the municipality shall include in the notification
under paragraph “a” and in the statement required under
paragraph “c” all of the following:
(1) For each new retail establishment under section 15J.2,
subsection 9, paragraph “b” , that was in operation before
the establishment of the district, the monthly amount of
sales subject to the state sales tax from the most recently
available twelve-month period preceding the establishment of
the district.
(2) For each new lessor under section 15J.2, subsection 8,
paragraph “b” , that was in operation before the establishment
of the district, the monthly amount of sales subject to the
state hotel and motel tax from the most recently available
twelve-month period preceding the establishment of the
district.
c. The ordinance or resolution adopted by the municipality
shall include the district’s commencement date and a detailed
statement of the manner in which the approved projects to be
undertaken in the district will be financed, including but not
limited to the financial information included in the project
plan under subsection 2 , paragraph “d” .
d. Following establishment of the district, a municipality
may use the moneys deposited in the municipality’s reinvestment
project fund created pursuant to section 15J.7 to fund the
development of those projects included within the district
plan.
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5. A municipality may amend the district plan to add
or modify projects. However, a proposed modification to a
project and each project proposed to be added shall first be
approved by the board in the same manner as provided for the
original plan. In no case, however, shall an amendment to the
district plan result in the extension of the commencement date
established by the board. If a district plan is amended to
add or modify a project, the municipality shall , if necessary,
amend the ordinance or resolution, as applicable , if necessary,
to reflect any changes to the financial information required to
be included under subsection 4 .
Sec. 119. Section 15J.5, subsection 1, paragraph b, Code
2020, is amended to read as follows:
b. (1) The For districts established before July 1,
2020, the amount of new state sales tax revenue for purposes
of paragraph “a” shall be the product of the amount of sales
subject to the state sales tax in the district during the
quarter from new retail establishments times four percent.
(2) For districts established on or after July 1, 2020, the
amount of new state sales tax revenue for purposes of paragraph
“a” shall be the product of four percent times the remainder of
amount of sales subject to the state sales tax in the district
during the quarter from new retail establishments minus the sum
of the sales from the corresponding quarter of the twelve-month
period determined under section 15J.4, subsection 4, paragraph
“b” , subparagraph (1), for new retail establishments identified
under section 15J.4, subsection 4, paragraph “b” , subparagraph
(1), that were in operation at the end of the quarter.
Sec. 120. Section 15J.5, subsection 2, paragraph b, Code
2020, is amended to read as follows:
b. (1) The For districts established before July 1,
2020, the amount of new state hotel and motel tax revenue for
purposes of paragraph “a” shall be the product of the amount of
sales subject to the state hotel and motel tax in the district
during the quarter from new lessors times the state hotel and
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motel tax rate imposed under section 423A.3 .
(2) For districts established on or after July 1, 2020, the
amount of new state hotel and motel tax revenue for purposes of
paragraph “a” shall be the product of the state hotel and motel
tax rate imposed under section 423A.3 times the remainder of
amount of sales subject to the state hotel and motel tax in the
district during the quarter from new lessors minus the sum of
the sales from the corresponding quarter of the twelve month
period determined under section 15J.4, subsection 4, paragraph
“b” , subparagraph (2), for new lessors identified under section
15J.4, subsection 4, paragraph “b” , subparagraph (2), that were
in operation at the end of the quarter.
Sec. 121. Section 15J.7, subsection 4, paragraph b, Code
2020, is amended to read as follows:
b. For the purposes of this subsection , “relocation”
means the closure or substantial reduction of an enterprise’s
existing operations in one area of the state and the initiation
of substantially the same operation in the same county or a
contiguous county in the state. However, if the initiation
of operations includes an expanded scope or nature of the
enterprise’s existing operations, the new operation shall
not be considered to be substantially the same operation.
“Relocation” does not include an enterprise expanding its
operations in another area of the state provided that existing
operations of a similar nature are not closed or substantially
reduced.
Sec. 122. Section 15J.7, subsection 6, Code 2020, is amended
to read as follows:
6. Upon dissolution of a district pursuant to section 15J.8 ,
moneys remaining in the reinvestment project fund that were
deposited pursuant to subsection 2 and all interest remaining
in the fund that was earned on such amounts shall be deposited
in the general fund of the municipality or, for a municipality
under section 15J.2, subsection 7, paragraph “c” , the governing
body shall allocate such amounts to the participating cities
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and counties for deposit in each city or county general fund
according to the chapter 28E agreement .
Sec. 123. Section 15J.8, Code 2020, is amended to read as
follows:
15J.8 End of deposits —— district dissolution.
1. As of the date twenty years after the district’s
commencement date, the department shall cease to deposit state
sales tax revenues and state hotel and motel tax revenues into
the district’s account within the fund, unless the municipality
dissolves the district by ordinance or resolution prior to that
date. Following the expiration of the twenty-year period, the
district shall be dissolved by ordinance or resolution of the
municipality adopted within twelve months of the conclusion of
the twenty-year period.
2. If the municipality dissolves the district by ordinance
or resolution prior to the expiration of the twenty-year
period specified in subsection 1 , the municipality shall
notify the director of revenue of the dissolution as soon as
practicable after adoption of the ordinance or resolution , and
the department shall, as of the effective date of dissolution,
cease to deposit state sales tax revenues and state hotel and
motel tax revenues into the district’s account within the fund.
3. Upon request of the municipality prior to the dissolution
of the district, and following a determination by the board
that the amounts of new state sales tax revenue and new state
hotel and motel tax revenue deposited in the municipality’s
reinvestment project fund under section 15J.7 are substantially
lower than the amounts established by the board under section
15J.4, subsection 3, paragraph “e” , the board may extend
the district’s twenty-year period of time for depositing and
receiving revenues under this chapter by up to five additional
years if such an extension is in the best interest of the
public.
DIVISION XVIII
INNOVATION FUNDS
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Sec. 124. Section 15.119, subsection 2, paragraphs d and e,
Code 2020, are amended to read as follows:
d. The tax credits for investments in qualifying businesses
issued pursuant to section 15E.43 . In allocating tax credits
pursuant to this subsection , the authority shall allocate at
least two million and not more than four million dollars for
purposes of this paragraph, unless the authority determines
that the tax credits awarded will be less than that amount.
e. The tax credits for investments in an innovation fund
pursuant to section 15E.52 . In allocating tax credits pursuant
to this subsection , the authority shall allocate at least six
million and not more than eight million dollars for purposes of
this paragraph, unless the authority determines that the tax
credits awarded will be less than that amount.
Sec. 125. Section 15.119, Code 2020, is amended by adding
the following new subsection:
NEW SUBSECTION . 2A. On or before June 30 of each year,
the authority shall determine the amount of tax credits that
shall be issued pursuant to sections 15E.43 and 15E.52 for
the following fiscal year. In allocating the amount of tax
credits authorized pursuant to subsection 1 among the programs
specified in subsection 2, the aggregate amount allocated by
the authority for purposes of subsection 2, paragraphs “d” and
“e” , shall not exceed ten million dollars.
Sec. 126. Section 15E.43, subsection 2, paragraphs b and c,
Code 2020, are amended to read as follows:
b. The maximum amount of a tax credit that may be issued
per calendar fiscal year to a natural person and the person’s
spouse or dependent shall not exceed one hundred thousand
dollars combined. For purposes of this paragraph, a tax
credit issued to a partnership, limited liability company, S
corporation, estate, or trust electing to have income taxed
directly to the individual shall be deemed to be issued to
the individual owners based upon the pro rata share of the
individual’s earnings from the entity. For purposes of this
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paragraph, “dependent” has the same meaning as provided by the
Internal Revenue Code.
c. The maximum amount of tax credits that may be issued
per calendar fiscal year for equity investments in any one
qualifying business shall not exceed five hundred thousand
dollars.
Sec. 127. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
DIVISION XIX
CAPITAL GAINS
Sec. 128. Section 422.7, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 21A. Subtract, to the extent included,
for tax years beginning on or after the 2020 calendar year and
not already deducted under another provision of this section,
fifteen percent of the taxpayer’s net capital gain as defined
in section 1222 of the Internal Revenue Code.
Sec. 129. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 130. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2020, for tax years
beginning on or after that date.
DIVISION XX
LOCAL ASSESSORS
Sec. 131. Section 441.6, subsection 2, Code 2020, is amended
to read as follows:
2. Upon receipt of the report of the examining board, the
chairperson of the conference board shall by written notice
call a meeting of the conference board to appoint an assessor.
The meeting shall be held not later than seven days after the
receipt of the report of the examining board by the conference
board. At the meeting, the conference board shall appoint an
assessor from the register of eligible candidates. However,
if a special examination has not been conducted previously for
the same vacancy, the conference board may request the director
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of revenue to hold a special examination pursuant to section
441.7 . The chairperson of the conference board shall give
written notice to the director of revenue of the appointment
and its effective date within ten days of the decision of the
board.
Sec. 132. Section 441.6, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 3. The appointee selected by the conference
board under subsection 2 shall not assume the office of city
or county assessor until such appointment is confirmed by
the director of revenue. If the director of revenue rejects
the appointment, the examining board shall conduct a new
examination and submit a new report to the conference board
under subsection 1. The director of revenue shall adopt rules
pursuant to chapter 17A to implement and administer this
subsection.
Sec. 133. Section 441.17, subsection 2, Code 2020, is
amended to read as follows:
2. Cause to be assessed, in accordance with section 441.21 ,
all the property in the assessor’s county or city, except
property exempt from taxation, or the assessment of which is
otherwise provided for by law. However, an assessor or deputy
assessor shall not personally assess a property if the person
or a member of the person’s immediate family owns the property,
has a financial interest in the property, or has a financial
interest in the entity that owns the property. The director of
revenue shall adopt rules pursuant to chapter 17A to implement
and administer this subsection.
Sec. 134. Section 441.41, Code 2020, is amended to read as
follows:
441.41 Legal counsel.
In the case of cities having an assessor, the city legal
department shall represent the assessor and board of review
in all litigation dealing with assessments. In the case of
counties, the county attorney shall represent the assessor and
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board of review in all litigation dealing with assessments.
Any taxing district interested in the taxes received from such
assessments may be represented by an attorney and shall be
required to appear by attorney upon written request of the
assessor to the presiding officer of any such taxing district.
The Subject to review and prior approval by either the city
legal department in the case of a city or the county attorney
in the case of a county, the conference board may employ
special counsel to assist the city legal department or county
attorney as the case may be.
DIVISION XXI
RURAL IMPROVEMENT ZONES
Sec. 135. Section 357H.1, subsection 1, Code 2020, is
amended to read as follows:
1. The board of supervisors of a county with less than
twenty thousand residents, not counting persons admitted or
committed to an institution enumerated in section 218.1 or
904.102 , based upon the most recent certified federal census,
and with a private lake real estate development adjacent to or
abutting in part a lake may designate an area surrounding the
lake, if it is an unincorporated area of the county, a rural
improvement zone upon receipt of a petition pursuant to section
357H.2 , and upon the board’s determination that the area is in
need of improvements.
Sec. 136. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 137. APPLICABILITY. This division of this Act applies
to rural improvement zones in existence on or established on or
after the effective date of this division of this Act.
DIVISION XXII
SCHOOL TUITION ORGANIZATION TAX CREDIT
Sec. 138. Section 422.11S, subsection 8, paragraph a,
subparagraph (2), Code 2020, is amended to read as follows:
(2) (a) “Total approved tax credits” means for the 2006
calendar year, two million five hundred thousand dollars, for
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the 2007 calendar year, five million dollars, for calendar
years beginning on or after January 1, 2008, but before January
1, 2012, seven million five hundred thousand dollars, for
calendar years beginning on or after January 1, 2012, but
before January 1, 2014, eight million seven hundred fifty
thousand dollars, for calendar years beginning on or after
January 1, 2014, but before January 1, 2019, twelve million
dollars, and for calendar years beginning on or after January
1, 2019, but before January 1, 2020, thirteen million dollars,
and for calendar years beginning on or after January 1, 2020,
fifteen million dollars.
(b) (i) During any calendar year beginning on or after
January 1, 2022, if the amount of awarded tax credits from the
preceding calendar year are equal to or greater than ninety
percent of the total approved tax credits for the current
calendar year, the total approved tax credits for the current
calendar year shall equal the product of ten percent multiplied
by the total approved tax credits for the current calendar year
plus the total approved tax credits for the current calendar
year.
(ii) If total approved tax credits are recomputed pursuant
to subparagraph subdivision (i), the total approved tax credits
shall equal the previous total approved tax credits recomputed
pursuant to subparagraph subdivision (i) for purposes of future
recomputations under subparagraph subdivision (i), provided
that the maximum total approved tax credits recomputed pursuant
to this subparagraph division (b) shall not exceed twenty
million dollars in a calendar year.
Sec. 139. Section 422.33, subsection 28, Code 2020, is
amended to read as follows:
28. The taxes imposed under this division shall be reduced
by a school tuition organization tax credit allowed under
section 422.11S . The maximum amount of tax credits that
may be approved under this subsection for a tax year equals
twenty-five percent of the school tuition organization’s tax
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credits that may be approved pursuant to section 422.11S,
subsection 8 , for a tax year.
DIVISION XXIII
PAYCHECK PROTECTION PROGRAM
Sec. 140. IOWA NET INCOME EXCLUSION FOR FEDERAL PAYCHECK
PROTECTION PROGRAM LOAN FORGIVENESS FOR CERTAIN FISCAL-YEAR
FILERS IN TAX YEAR 2019. Notwithstanding any other provision
of law to the contrary, for any tax year beginning on or after
January 1, 2019, and ending after March 27, 2020, Pub. L. No.
116-136, §1106(i), applies in computing net income for state
tax purposes under section 422.7 or 422.35.
Sec. 141. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
DIVISION XXIV
INCOME TAX EXCLUSION —— EMERGENCY STUDENT GRANT MONEY
Sec. 142. Section 422.7, Code 2020, is amended by adding the
following new subsection:
NEW SUBSECTION . 59. Notwithstanding any other provision of
law to the contrary, any funds received by a student through a
higher education institution to support the student’s financial
needs as a result of the COVID-19 pandemic pursuant to §§3504,
18004, or 18008 of Pub. L. No. 116-136 shall not be included
in the student’s Iowa net income for any tax year ending after
March 27, 2020.
Sec. 143. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
Sec. 144. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to March 27, 2020, for tax years
ending on or after that date.
DIVISION XXV
IOWA INCOME EXCLUSION —— STIMULUS CHECKS
Sec. 145. IOWA INCOME TAX EXCLUSION FOR ECONOMIC IMPACT
PAYMENTS. In determining the amount of deduction for federal
income tax under section 422.9 for tax years beginning in
the 2020 calendar year, the amount of the deduction for the
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tax year shall not be adjusted by the amount received during
the tax year of the income tax rebate provided pursuant to
the federal Recovery Rebates and Coronavirus Aid, Relief,
and Economic Security Act, Pub. L. No. 116-136, §2201, and
the amount of such income tax rebate shall not be subject to
taxation under chapter 422, division II.
DIVISION XXVI
HUNTING DEER AND TURKEY ON A FARM UNIT
Sec. 146. Section 483A.24, subsection 2, paragraphs b and c,
Code 2019, are amended to read as follows:
b. Upon written application on forms furnished by the
department, the department shall issue annually without fee one
wild turkey license to the owner of a farm unit or to a member
of the owner’s family, but not to both, and to the tenant or
to a member of the tenant’s family, but not to both. The wild
turkey hunting licenses issued shall be valid only on the
farm unit for which an applicant qualifies pursuant to this
subsection and shall be equivalent to the least restrictive
license issued under section 481A.38 . The owner or the tenant
need not reside on the farm unit to qualify for a free license
to hunt on that farm unit. The free turkey hunting licenses
issued pursuant to this paragraph shall be valid and may be
used during any bow or firearm established turkey hunting
season using the method of take authorized by rule for each
season being hunted. If a tag is filled during one of the
seasons, the license will not be valid in subsequent seasons .
c. Upon written application on forms furnished by the
department, the department shall issue annually without fee two
deer hunting licenses, one antlered or any sex deer hunting
license and one antlerless deer only deer hunting license, to
the owner of a farm unit or a member of the owner’s family,
but only a total of two licenses for both, and to the tenant
of a farm unit or a member of the tenant’s family, but only
a total of two licenses for both. The deer hunting licenses
issued shall be valid only for use on the farm unit for which
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the applicant applies pursuant to this paragraph. The owner or
the tenant need not reside on the farm unit to qualify for the
free deer hunting licenses to hunt on that farm unit. The free
deer hunting licenses issued pursuant to this paragraph shall
be valid and may be used during any bow or firearm established
deer hunting season using the method of take authorized by rule
for each season being hunted. If a tag is filled during one
of the seasons, the license will not be valid in subsequent
seasons . The licenses may be used to harvest deer in two
different seasons. In addition, a person who receives a free
deer hunting license pursuant to this paragraph shall pay a one
dollar twenty-five cent fee for each license that shall be used
and is appropriated for the purpose of deer herd population
management, including assisting with the cost of processing
deer donated to the help us stop hunger program administered
by the commission.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to state and local taxation, regulation,
the Iowa reinvestment act, innovation fund, hunting and fees,
and provides for properly related matters.
DEPARTMENT OF REVENUE ADMINISTRATION AND PENALTY PROVISIONS.
The amendment to Code section 421.6 enhances the readability of
the Code section by including in the definition of “return” the
moneys and credits tax turn administered by the department of
revenue under Code section 533.329.
The bill enacts new Code section 421.17(36) which permits
the director of revenue to enter into Code chapter 28E
agreements with the state fair or a county or district fair
to collect and remit sales taxes and fees from sellers making
retail sales on the grounds owned by the fair or through events
conducted by the fair.
The amendment to Code section 421.27(1) provides that in
the case of a specified business with no tax shown due or
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required to be shown due that fails to timely file their
income tax return or information return shall pay the greater
of the following penalty amounts: $200; or an amount equal
to 10 percent of the imputed Iowa liability of the specified
business, not to exceed $25,000.
The amendment to Code section 421.27(1) provides that the
penalty for individuals or specified businesses that fail to
timely file a return may be waived under certain circumstances.
The provision applies to tax years beginning on or after
January 1, 2022.
The amendment to Code section 421.27(4) provides that the
penalty for a specified business that willfully fails to file a
return with no tax shown due or required to be shown due with
the intent to evade such a filing requirement or reporting
Iowa-source income, the penalty imposed shall be the greater
of $1,500 or an amount equal to 75 percent of the imputed Iowa
liability of the specified business. The provision applies to
tax years beginning on or after January 1, 2022.
The amendment to Code section 421.27(4) expands penalty
provisions by providing that a person who willfully fails to
file a return or deposit form with intent to evade a filing
requirement shall be subject to a penalty of 75 percent of the
tax added to the amount of tax shown due or required to be shown
due, in lieu of other penalties. The provision applies to tax
years beginning on or after January 1, 2022.
The amendment to Code section 421.27(6) makes numerous
changes to the criminal offense of fraudulent practice
by expanding the criminal offense to include a person who
willfully makes a false application for an exemption or benefit
with the intent to receive the exemption or benefit to which
the person is not entitled.
The amendment to Code section 421.27(6) also expands the
fraudulent practice criminal offense to include when a person
willfully submits any false information, document, or document
containing false information in support of an application
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for a refund, credit, exemption, reimbursement, rebate, or
other payment or benefit with the intent to evade taxes;
and to include when a person willfully submits any false
information, document, or document containing false information
in support of an application for a refund, credit, exemption,
reimbursement, rebate, or other payment or benefit to which the
person is not entitled.
A person who commits fraudulent practice under Code section
421.76(6), in addition to the criminal penalties, is liable for
a penalty equal to 75 percent of the refund, credit, exemption,
reimbursement, rebate, or other payment or benefit being
fraudulently claimed.
The bill enacts new Code section 421.27(8) which defines
“imputed Iowa liability” and “specified business”. The
provision applies to tax years beginning on or after January
1, 2022.
The bill enacts new Code section 421.27(9) by adding an
additional penalty under Code section 421.27 in the amount
of $1,000 if a taxpayer fails to file a tax return within 90
days of written notice by the department that the taxpayer is
required to file such a return. The provision applies to a
return a taxpayer is required to file on or after January 1,
2022.
The bill enacts new Code section 421.27A by creating a
criminal offense for perjury. Currently, a different perjury
criminal offense exists in Code section 720.2. A person
commits perjury under the following circumstances in the bill:
the person makes a document containing false information in
support of an application for refund, credit, exemption,
reimbursement, rebate, or other payment or benefit with intent
to evade tax; the person makes a document containing false
information with intent to unlawfully receive a refund, credit,
exemption, reimbursement, rebate, or other payment or benefit,
to which the person is not entitled; the person knowingly makes
any false affidavit; the person knowingly swears or affirms
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falsely to any matter or thing required by the terms of title X
of the Code (financial resources) to be sworn to or affirmed.
A person who commits the criminal offense of perjury under new
Code section 421.27A commits a class “D” felony. A class “D”
felony is punishable by confinement for no more than five years
and a fine of at least $750 but not more than $7,500.
The bill enacts new Code section 421.59 relating to a
power of attorney or other authority to act on behalf of the
taxpayer. The bill formalizes a process for the following
persons to act and receive information on behalf of and
exercise all of the rights of a taxpayer, regardless of whether
a power of attorney has been filed with the department: a
guardian, conservator, or custodian appointed by the court; a
receiver appointed pursuant to Code chapter 680; an individual
who has been named as an authorized representative on a
fiduciary return filed under Code section 422.14 (fiduciary
return) or Code chapter 450 (inheritance tax); an individual
holding a title or position within a corporation, association,
partnership, or other business entity; a licensed attorney
who has appeared on behalf of the taxpayer or the taxpayer’s
estate; and a parent or legal guardian of the taxpayer who has
not reached the age of majority.
New Code section 421.59 also authorizes the department to
enter into a memorandum of understanding with the taxpayer
for each employee, officer, or member of a third-party entity
engaged with or otherwise hired by a taxpayer to manage
the taxpayer’s tax matters, in lieu of requiring a power of
attorney for each person.
The bill enacts new Code section 421.60(11) which allows a
taxpayer to elect to receive correspondence electronically from
the department rather than by regular mail.
The amendments to Code section 421.62 provide that the
regulations relating to tax return preparers apply to an
income tax return or claim or refund under Code chapter 422
(individual, corporate, and franchise taxes), but do not apply
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to withholding returns under Code section 422.16.
The amendment to Code section 421.64 enhances the
readability of the Code section.
The amendment to Code section 422.20(1) adds an intent
element “willfully or recklessly” to the criminal offense
related to the unlawful disclosure of tax return information
by state personnel or former state personnel. A person who
commits a violation under Code section 422.20(1) commits a
serious misdemeanor. A serious misdemeanor is punishable by
confinement for no more than one year and a fine of at least
$315 but not more than $1,875.
The amendment to Code section 422.20(3) provides that tax
return information may be disclosed to authorized individuals
pursuant to new Code section 421.59 created in the bill.
The bill enacts new Code section 422.20(3A) permitting the
director of revenue to disclose the tax return information of
a partnership, limited liability company, or S corporation to
a person who was a partner, shareholder, or member of such an
entity during any part of the period covered by the tax return.
The bill enacts new Code section 422.20(3B) specifying the
information the department is required to redact prior to
the disclosure of the record in an appeal or contested case.
The bill specifies the department may also redact other tax
information from the record in an appeal or contested case, if
the taxpayer proves by clear and convincing evidence that the
release of the tax information would disclose a trade secret
or be an unwarranted invasion of personal privacy. The bill
permits the department to disclose information that is required
to be redacted if the department determines such information is
necessary to the resolution or decision of the case.
The bill enacts new Code section 422.25(1)(c) (income tax)
that provides the period of examination and determination is
unlimited under title X (financial resources) in any action
by the department to recover or rescind a tax expenditure
as defined in Code section 2.48, or any other incentive or
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assistance administered by the economic development authority.
The amendment takes effect upon enactment. The bill also
provides that it is the intent of the general assembly that the
amendment to Code section 422.25(1) is a conforming amendment
consistent with current law, and that the amendment does not
change the application of current law. This provision takes
effect upon enactment.
The amendment to Code section 422.69 requires that all
fees, taxes, interest, and penalties under Code chapter 422
(individual income, corporate, and franchise taxes) shall
be paid to the department of revenue rather than the state
treasurer.
The amendment to Code section 422.72(1)(a) adds the intent
element of “willfully or recklessly” to the criminal offense
related to the unlawful disclosure by state personnel or
former state personnel of the business affairs, operations,
or information obtained through a tax-related investigation.
A person who unlawfully discloses such information commits a
serious misdemeanor under Code section 422.72(4). A serious
misdemeanor is punishable by confinement for no more than one
year and a fine of at least $315 but not more than $1,875.
The bill enacts new Code section 422.72(7A), a similar
provision to new Code section 422.20(3B) in the bill. New Code
section 422.72(7A) specifies the information the department
is required to redact prior to the disclosure to the general
public of the record in an appeal or contested case. The
bill specifies that the department may also redact other tax
information from the record in an appeal or contested case, if
the taxpayer proves by clear and convincing evidence that the
release of the tax information would disclose a trade secret
or be an unwarranted invasion of personal privacy. The bill
permits the department to disclose information that is required
to be redacted if the department determines such information is
necessary to the resolution or decision of the case.
The bill enacts new Code section 423.37(4) (sales and use
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tax) that provides the period of examination and determination
is unlimited under title X (financial resources) in any action
by the department to recover or rescind a tax expenditure
as defined in Code section 2.48 or any other incentive or
assistance administered by the economic development authority.
The amendment takes effect upon enactment. The bill also
provides that it is the intent of the general assembly that the
amendment to Code section 423.37(4) is a conforming amendment
consistent with current law, and that the amendment does not
change the application of current law. This provision takes
effect upon enactment.
The amendment to Code section 428A.1 (real estate
transfer tax) provides that a county recorder shall record
the declaration of value but is prohibited from charging a
recording fee for the filing.
The amendment to Code section 441.48 enhances the
readability of the Code section by specifying the board of
supervisors or city council, as applicable, shall provide
the department with notice of intent to protest prior to the
expiration of the 10 days’ notice to adjust the valuation of
any class of property issued by the department.
The amendments to Code sections 489.706, 490.1422, 501.813,
and 504.1423, remove the role of the department in the
application for reinstatement by a limited liability company,
corporation, cooperative, or nonprofit corporation after the
dissolution of such an entity.
The bill enacts new Code section 533.329(03) by specifying
that a money and credit tax return prepared by a credit union
shall be on a form prepared by the department of revenue, and
shall be filed with the department on or before the last day of
April.
The bill amends Code section 533.329(3) relating to
enforcement of the moneys and credits tax paid by credit
unions.
SALES AND USE TAX. The amendments to Code sections 321G.4
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(snowmobiles) and 321I.4 (all-terrain vehicles) require the
county recorder to collect sales or use tax if an owner of such
a vehicle is unable to present satisfactory evidence that the
sales or use tax has been paid.
The amendment to Code section 423.2(6)(bs) specifies that
any services arising from or related to software sold as
tangible personal property are subject to the sales tax.
The amendment to Code section 423.2(8)(d)(1) specifies that
the following is not subject to the sales tax: the retail
sale of a specified digital product and a service where the
specified digital product is essential and exclusive to the use
of the service, and the true object of the transaction is the
service.
The amendment to Code section 423.3(3A) provides that the
sales price from the sale of a commercial recreation service
offering the opportunity to hunt a preserve whitetail is
exempt from the sales tax if the sale occurred between July
1, 2005, and December 31, 2015. This provision takes effect
upon enactment an applies retroactively to July 1, 2005. The
bill prohibits any refunds resulting from the amendment to Code
section 423.3(3A).
The amendment to Code section 423.3(31) specifies that
the sales price of tangible personal property or specified
digital products sold to, or of services furnished to a
tribal government as defined in Code section 216A.161, or the
instrumentalities of such tribal government are exempt from the
sales tax under most circumstances.
The amendments to Code section 423.3(80)(b) and (c) specify
that services performed pursuant to a written construction
contract with a designated exempt entity as defined in Code
section 423.3(80)(a)(1) are exempt from the sales tax.
Currently, the construction contract is not required to be a
written contract and only building materials, supplies, and
equipment used in such a contract are exempt from the sales
tax. The bill also provides that the building materials,
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supplies, equipment, and services are exempt from the sales
tax only if the property that is subject to the construction
project becomes public property or the property of a designated
exempt entity, in addition to the requirement that the
exempt items be completely consumed in the performance of the
construction contract.
The amendment to Code section 423.4(1), relating to refunds
of sales or use taxes to tax-exempt entities, enhances the
readability of the Code section by defining a “designated
exempt entity” and thus removing repeated references to each
exempt entity in the Code section. The bill also adds a tribal
government to the definition of a designated exempt entity.
The bill strikes the terms “goods, wares, and merchandise” and
uses the terms “building materials, supplies, and equipment”
for purposes of claiming the exemption, when a designated
exempt entity makes an application to the department for the
refund of the sales or use tax upon the sales price of all
sales or services related to the performance of a written
construction contract. Additionally, if the sales price of
all building materials, supplies, equipment, or services
related to the performance of a written construction contract
are to be exempt from the sales or use tax under the bill,
all of the following must apply: the building materials,
supplies, equipment, or services are completely consumed in the
performance of a construction project; the property that is the
subject of the construction project becomes public property or
the property of an exempt entity; and the building materials,
supplies, equipment, or services furnished are not used in
the performance of a construction contract with a designated
exempt entity in connection with the construction of certain
facilities.
The amendments to Code section 423.4(2)(a) and (b) relate
to construction contracts for transportation projects by
specifying the contractor shall pay sales or use tax for the
services related to such contracts, and by making terminology
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more consistent in the subsection.
The amendments to Code sections 423.4(2) and 423.4(6) make
the terminology more consistent with other changes in the bill.
The amendment to Code section 423.5(1)(b) strikes the
imposition of a 6 percent excise tax on the use of manufactured
housing, or the purchase price if such housing is sold in the
form of tangible personal property, or the installed purchase
price if such housing is sold in the form of realty.
The amendment to Code section 423.29(1) provides that a
retailer maintaining a place of business in this state and
making taxable sales shall, at the time of making such sales,
collect the sales tax. The bill also provides that it is
the intent of the general assembly that the amendment to
Code section 423.29(1) is a conforming amendment consistent
with current law, and that the amendment does not change the
application of current law.
The amendment to Code section 423.33(1) enhances the
readability of the Code section by specifying that if a
purchaser fails to pay sales tax to a retailer required to
collect the sales tax, then the purchaser shall pay a use
tax directly to the department. The bill specifies that the
retailer and purchaser are jointly liable for the failure
to pay either the sales or use tax in most circumstances.
Additionally, the bill provides that it is the intent of the
general assembly that the addition of “joint liability” is a
conforming amendment consistent with current law, and that
the amendment does not change the application of current law.
The bill provides that if the purchaser pays the use tax,
the retailer remains liable for any local option sales and
services tax under Code chapter 423B that the retailer failed
to collect.
INCOME TAX. The bill strikes and replaces Code section
422.9(3)(c). The bill provides that a taxpayer may elect
to waive the entire carryback period with respect to an
Iowa net operating loss for any taxable year, in the manner
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prescribed by the department, and by the due date for filing
the taxpayer’s return, including extensions of time. After the
election is made for any taxable year, the election shall be
irrevocable for such taxable year. If an election has been
properly made, the bill provides that the Iowa net operating
loss shall be carried forward 20 taxable years.
The amendment to Code section 422.9(3)(d) modifies the
election for an Iowa farming loss, which may be carried back
for five taxable years prior to the taxable year of the loss.
The bill specifies that a farming business that has an Iowa
farming loss may make an election to carry back the loss for
five taxable years, in the manner prescribed by the department,
and shall be made by the due date for filing the taxpayer’s
return, including extensions of time. After the election is
made for any taxable year, the bill provides the election shall
be irrevocable for such taxable year.
The division applies to tax years beginning on or after
January 1, 2020.
RESEARCH ACTIVITIES TAX CREDIT. The amendments to Code
sections 15.335, 422.10, and 422.33 update references to the
Internal Revenue Code relating to the alternative simplified
credit for increasing research activities.
The division takes effect upon enactment and applies
retroactively to January 1, 2019, for tax years beginning on
or after that date.
PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING
OF FEDERAL ADJUSTMENTS. The amendment to Code section
421.27(2)(c) specifies that a taxpayer is required to pay
a penalty of 5 percent of the tax due, unless the taxpayer
provides written notification to the department of a federal
audit while it is in progress and voluntarily files an amended
return which includes the final disposition of the audit
and final federal adjustments to taxes paid within 180 days
of the final determination date. The bill defines “final
determination date” to generally mean the first day on which no
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federal adjustments to taxes arising from the audit or other
action remain to be finally determined. In cases of a final
federal partnership adjustment arising from a partnership
level audit, the taxpayer voluntarily and timely complies with
reporting and payment requirements under new Code section
422.25A(4) and (5) created in the bill.
The bill enacts new Code section 422.7(59) providing that
any income subtracted from federal taxable income shall be
added back in computing net income for state individual income
tax purposes when federal adjustments are made to taxes in the
adjustment year. The bill defines “adjustment year” to mean
the year in which the final determination of the adjustment
occurs.
The amendment to Code section 422.25 adds definitions to the
Code section for “federal adjustment”, “federal adjustments
report”, “final determination date”, and “final federal
adjustment”.
The bill enacts new Code section 422.25A which creates a
process for audited partnerships and their direct and indirect
partners to report final federal partnership adjustments to
the department. The bill provides that the state partnership
representative for the reviewed year shall have sole authority
to act on behalf of the partnership. The bill creates
reporting and payment requirements for audited partnerships
and their partners subject to final federal adjustments.
The bill permits an audited partnership or a tiered partner
(partner that is a partnership or pass-through entity) to make
irrevocable elections about the payment of any adjustments,
and specifies the consequences of making certain elections.
The bill permits an audited partnership or tiered partner to
enter into an agreement with the department to use alternative
reporting and payment methods. The bill permits the department
to assess additional Iowa income tax, interest, and penalties
arising from a federal partnership adjustments in the same
manner as provided in other tax-related provisions.
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The bill enacts new Code section 422.25B that requires
the state partnership representative acting on behalf of the
partnership for the reviewed year to be the partnership’s
federal partnership representative with respect to an action
required or permitted to be taken by a state partnership
representative, unless the partnership designates in writing in
the manner prescribed by the department another person to act
as the state partnership representative.
The bill enacts new Code section 422.25C relating to
partnership or pass-through entity audits and examinations.
The bill provides that for tax years beginning on or after
January 1, 2020, any adjustments to a partnership’s or
pass-through entity’s taxes or an adjustment allocated to a
partner’s taxes as a result of a department audit shall be
determined at the partnership or pass-through entity level in
the same manner as provided by federal law. The bill specifies
that the state partnership representative shall have the sole
authority to act on behalf of the partnership or pass-through
entity with respect to any actions taken due to the audit,
including appealing decisions to the director of revenue or
seeking judicial review of the director’s decision. The
provisions of new Code section 422.25C may be applied to tax
years beginning before January 1, 2020, if the partnership or
pass-through entity and the department agree.
The bill enacts new Code section 422.35(26) providing that
any income subtracted from federal taxable income shall be
added back in computing net income for state corporate income
tax purposes when federal adjustments are made to taxes in the
adjustment year. The bill defines “adjustment year” to mean
the year in which the final determination of the adjustment
occurs.
The bill amends Code section 422.39 by specifying that Code
sections relating to payments of interest, computation of tax,
liens, and final reports of fiduciaries apply to not just
payments and collections but to reporting, examinations, and
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assessments with respect to corporations including pass-through
entities organized as corporations.
The amendment to Code section 422.73 relates to credits
against taxes due because of errors. The bill changes the
period of limitation (statute of limitations) for a claim for
a refund of or a credit against individual income tax by a
taxpayer to one year from the final determination date of any
final adjustment with respect to the particular tax year to
claim an income tax refund or credit. Currently, a claim for
a refund of or a credit against the individual income tax by
a taxpayer is six months from the final disposition of any
income tax matter between the taxpayer and the internal revenue
service. The bill makes other changes relating to agreements
entered into by the department and the internal revenue
service for the transmission of federal income tax reports on
individuals who have been involved in an income tax matter with
the internal revenue service.
The division applies to federal adjustments and federal
partnership adjustments that have a final determination date
after the effective date of the division.
SETOFF PROCEDURES —— RULEMAKING —— EFFECTIVE DATE. The
bill modifies the effective date of either Senate File 2328 or
House File 2565 (setoff procedures), by providing that either
Senate File 2328 or House File 2565, if enacted, take effect
on the later of January 1, 2021, or the effective date of the
rules adopted by the department of revenue implementing the
bill other than the adopting of transitional rules by the
department. This provision takes effect upon enactment, and
applies retroactively to the effective date of either Act.
PRO RATA SHARE OF ENTITY-LEVEL INCOME TAX PAID BY
SHAREHOLDERS OR BENEFICIARIES. The bill provides that a
resident partner of an entity taxed as a partnership, a
resident shareholder of an S corporation, or a resident
beneficiary of an estate or trust shall be deemed to have paid
the resident partner’s, resident shareholder’s, or resident
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beneficiary’s pro rata share of entity-level income tax paid
by the partnership, S corporation, estate, or trust to another
state or foreign country on income that is also subject to
Iowa personal income tax, but only if the entity provides the
resident partner, resident shareholder, or resident beneficiary
a statement that documents the resident partner’s, resident
shareholder’s, or resident beneficiary’s share of the income
derived in the other state or foreign country, the income tax
liability of the entity in that state or foreign country, and
the income tax paid by the entity to that state or foreign
country.
The bill also provides that a resident shareholder of a
regulated investment company shall be deemed to have paid the
shareholder’s pro rata share of entity-level income tax paid by
the regulated investment company to another state or foreign
country and treated as paid by its shareholders pursuant to
section 853 of the Internal Revenue Code, but only if the
regulated investment company provides the resident shareholder
a statement that documents the resident shareholder’s share of
the income derived in the other state or foreign country, the
income tax liability of the regulated investment company in
that state or foreign country, and the income tax paid by the
regulated investment company to that state or foreign country.
This division takes effect upon enactment and applies
retroactively to January 1, 2020, for tax years beginning on
or after that date.
BONUS DEPRECIATION. The bill provides that for purposes
of Iowa taxes, the state will couple with any future changes
to the increased expensing allowance under section 179 of the
Internal Revenue Code (bonus depreciation). The change to
bonus depreciation applies retroactively to January 1, 2020,
for tax years beginning on or after that date.
MARRIED TAXPAYERS —— JOINT LIABILITY. The bill provides
that relief from Iowa joint tax liability is available under
all circumstances that are available under federal law. The
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bill also provides a mechanism for the department of revenue to
allow the spouse not requesting relief from joint tax liability
to intervene in the department’s process for deciding whether
to grant relief. This provision takes effect upon enactment.
SALES TAX PAID BY THIRD-PARTY DEVELOPERS. The bill allows
a pass-through entity awarded a refundable tax credit under
Code section 15.331C (corporate tax credit for sales and use
tax paid) to pass through the refundable tax credit to the
owners of the pass-through entity to claim the owner’s share
of the refundable tax credit. The provision takes effect upon
enactment, and applies retroactively to January 1, 2020, for
tax years beginning on or after that date.
IOWA EDUCATIONAL SAVINGS PLAN TRUST (529 PLANS). The bill
specifies that funds in a 529 plan may be used to pay expenses
for the participation in a certified apprenticeship program.
The bill also allows up to $10,000 of 529 plan funds to be used
to pay the student loans of the beneficiary of the 529 plan or a
sibling of the beneficiary, respectively.
IOWA EDUCATIONAL SAVINGS ACCOUNT —— EXTENSION. A
participant who makes a contribution to the Iowa educational
savings plan trust pursuant to Code section 12D.3, subsection
1, on or after January 1, 2020, and on or before July 31, 2020,
may elect to be deemed to have made the contribution on the
last day of calendar year 2019. This provision takes effect
upon enactment.
IOWA FIRST-TIME HOMEBUYER ACCOUNT —— EXTENSION. An
individual who opened a first-time homebuyer account during
calendar year 2019 and who wishes to participate in the
Iowa first-time homebuyer savings account program shall
designate the account as a first-time homebuyer account and the
beneficiary of such an account on or before July 31, 2020, on
forms provided by the department of revenue. This provision
takes effect upon enactment.
QUALIFYING PERSONAL PROTECTIVE EQUIPMENT (PPE) —— DONATION.
The bill exempts from the use tax qualifying protective
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personal equipment and materials assembled and donated by a
business during the period beginning with a state of disaster
emergency proclamation by the governor under Code section 29C.6
and ending 180 days after the expiration of such proclamation.
The division takes effect upon enactment and permits refunds of
taxes, interest, or penalties that arise from claims resulting
from the enactment of the division for donations occurring
prior to the effective date of the division. The division
specifies refund claims shall not be allowed unless claims
are filed prior to October 1, 2020. The division applies
retroactively to January 1, 2020, for qualifying personal
protective equipment and materials assembled and donated on or
after that date.
SHORT-TERM RENTAL PROPERTIES. The bill prohibits a county
or city from adopting or enforcing an ordinance that prohibits
short-term rental properties within the county or city. The
bill requires a county or city to consider short-term rental
properties as a residential land use for zoning purposes.
The bill authorizes a county or city to enact or enforce an
ordinance that regulates, prohibits, or otherwise limits
short-term rental properties if such enforcement is performed
in the same manner as enforcement applicable to similar
properties and if such enforcement meets a specified primary
purpose. The bill also prohibits a county or city from
adopting or enforcing any regulation, restriction, or other
ordinance related to distance separation requirements for
single-family homes and duplexes.
FUTURE TAX CHANGES. The bill amends 2018 Iowa Acts,
chapter 1161, section 133 (trigger), by striking the two
conditions necessary for the trigger to occur, and specifies
the provisions in 2018 Iowa Acts, chapter 1161, sections 99-132
simply go into effect January 1, 2023.
BUSINESS INTEREST EXPENSE DEDUCTION. The federal Tax Cuts
and Jobs Act (TCJA) created a new limitation on the deduction
of business interest expense for tax years beginning on or
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after January 1, 2018. Currently, the state couples with
federal law limiting the deduction of business interest expense
for tax years beginning on or after January 1, 2019.
The bill decouples, for Iowa individual and corporate income
tax purposes, from the federal limitation on deduction of
business interest expenses for tax years beginning on or after
January 1, 2019.
The decoupling from the federal limitation on deduction
of business interest expense does not apply during any tax
year in which the additional first-year depreciation allowance
authorized in section 168(k) of the Internal Revenue Code
(bonus depreciation) applies in computing net income for state
tax purposes.
For any tax year in which a taxpayer is not permitted to
deduct any amount of interest expense paid or accrued in a
previous taxable year due to the allowance of the additional
first-year depreciation, the bill prohibits the deduction of
any amount of interest expense paid or accrued in a previous
taxable year in the current taxable year by reason of the
carryforward of disallowed business interest provisions of
section 163(j)(2) of the Internal Revenue Code, if either of
the following apply: the interest expense was originally paid
or accrued during a tax year in which there was a decoupling
from the federal limitation on business expense, or the
interest expense was originally paid or accrued during a tax
year in which the taxpayer was not required to file an Iowa
return.
GLOBAL INTANGIBLE LOW-TAXED INCOME (GILTI). Federal
law includes in a taxpayer’s gross income global intangible
low-taxed income (GILTI) as defined in section 951A of the
Internal Revenue Code, subject to a deduction equal to 50
percent of the corporation’s GILTI under section 250(a)(1)(B)
of the Internal Revenue Code. The bill enacts new Code section
422.35(27) that allows a corporate taxpayer to deduct GILTI
under section 951A of the Internal Revenue Code.
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RESCISSION OF RULES. The division rescinds rules relating
to GILTI under section 951A of the Internal Revenue Code.
The division takes effect upon enactment, and applies
retroactively to January 1, 2019, for tax years beginning on
or after that date.
REINVESTMENT ACT. Code chapter 15J, the “Iowa Reinvestment
Act”, authorizes municipalities (a city or a county) to
establish reinvestment districts and receive remittances of
specified amounts of state sales tax and state hotel and
motel tax revenues collected in those districts for use in
undertaking projects in the district. Eligible municipalities
must seek approval from the economic development authority
board to establish a reinvestment district. Code chapter
15J currently prohibits the board from approving a proposed
district plan on or after July 1, 2018, and imposes a $100
million aggregate limit of state sales tax revenues and state
hotel and motel tax revenues that may be approved by the board
for remittance to all municipalities.
The bill establishes an additional period of time for the
board to approve reinvestment districts, beginning July 1,
2020, and ending July 1, 2025, and establishes an additional
$100 million aggregate limit of state sales tax revenues and
state hotel and motel tax revenues that may be approved by the
board for remittance to all municipalities for those districts
approved on or after July 1, 2020, but before July 1, 2025.
The bill also expands the definition of “municipality”
to include a joint board or other legal entity established
or designated in an agreement between two or more contiguous
cities or counties pursuant to Code chapter 28E. The bill also
makes corresponding changes to other provisions of Code chapter
15J to reflect such municipalities’ authority under the Iowa
reinvestment Act.
As part of the criteria for establishing a district, current
law requires the district to consist of contiguous parcels not
to exceed 25 acres in total. For districts approved under the
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bill on or after July 1, 2020, the area comprising the district
may consist of contiguous parcels not to exceed 75 acres in
total.
Part of the approval criteria for a district includes the
requirement that the amount of proposed capital investment
within the proposed district related to retail businesses does
not exceed 50 percent of the total capital investment for all
proposed projects in the proposed district plan, excluding “new
lessors”, as defined in Code section 15J.2, from the definition
of “retail business”. The bill adds businesses engaged in an
activity subject to the sales tax under Code section 423.2(3)
to that exclusion from the definition of “retail business”.
Code section 15J.7 prohibits revenues received by a
municipality from being used for a project that includes
relocation of a commercial or industrial enterprise not
presently located within the municipality. “Relocation”
is defined in Code section 15J.7 to mean the closure or
substantial reduction of an enterprise’s existing operations
in one area of the state and the initiation of substantially
the same operation in the same county or a contiguous county in
the state. The bill provides, however, that if the initiation
of operations includes an expanded scope or nature of the
enterprise’s existing operations, the new operation shall not
be considered to be “substantially the same operation”.
Code section 15J.8 provides that as of the date 20 years
after the district’s commencement date, the department of
revenue shall cease to deposit state sales tax revenues and
state hotel and motel tax revenues into the district’s account
within the fund, unless the municipality dissolves the district
prior to that date. The bill provides that, upon request of
the municipality prior to the dissolution of the district,
and following a determination by the economic development
authority board that the amounts of new state sales tax revenue
and new state hotel and motel tax revenue deposited in the
municipality’s reinvestment project fund are substantially
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lower than the amounts established by the board when the
district was approved, the board may extend the district’s
20-year period of time for depositing and receiving revenues by
up to five additional years if such an extension is in the best
interest of the public.
The bill relates to certain tax credits awarded by the
economic development authority for equity investments in a
qualifying business or innovation fund. The bill directs
the economic development authority to determine on or before
June 30 of each year the amount of tax credits that will be
issued for the following fiscal year for equity investments in
qualifying businesses pursuant to Code section 15E.43 and in
innovation funds pursuant to Code section 15E.52. The bill
caps the aggregate amount of these tax credits at $10 million.
The bill changes the maximum amount of tax credits that may
be issued in a year to a natural person and the person’s spouse
or dependant, or for equity investments in any one qualifying
business, from a calendar year basis to a fiscal year basis.
The division takes effect upon enactment.
CAPITAL GAINS. The bill provides a capital gains deduction
for tax years beginning on or after January 1, 2020, in the
amount of 15 percent of the taxpayer’s net capital gain as
defined in section 1222 of the Internal Revenue Code.
LOCAL ASSESSORS. This division of the bill relates to the
appointment and duties of local assessors.
Code section 441.6 establishes the process for filling the
office of county or city assessor. When a vacancy occurs, the
examining board requests the director of revenue to forward
a register containing the names of all individuals eligible
for appointment as assessor. The examining board then makes
a written report of the examination and submits the report
together with the names of those individuals certified by the
director of revenue to the conference board. Upon receipt
of the report of the examining board, the conference board
appoints an assessor from the register of eligible candidates
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and gives written notice to the director of revenue of the
appointment.
Under the bill, the appointee selected by the conference
board shall not assume the office of city or county assessor
until the appointment is confirmed by the director of revenue.
If the director of revenue rejects the appointment, the
examining board must conduct a new examination and submit a new
report to the conference board.
The bill also provides that an assessor or deputy assessor
shall not personally assess a property if the person or a
member of the person’s immediate family owns the property,
has a financial interest in the property, or has a financial
interest in the entity that owns the property.
Code section 441.41 authorizes the conference board to
employ special counsel to assist the city legal department or
the county attorney in litigation dealing with assessments.
The bill provides that such authority is subject to review
and prior approval by the city legal department or the county
attorney, as applicable.
RURAL IMPROVEMENT ZONES. Under Code chapter 357H, the board
of supervisors of a county with less than 20,000 residents
and with a private lake development may designate an area
surrounding the lake, if it is an unincorporated area of the
county, a rural improvement zone upon receipt of a qualifying
petition and upon the board’s determination that the area is in
need of improvements. The bill modifies that provision in Code
section 357H.1 to provide that the board of supervisors of such
a county with a private real estate development adjacent to or
abutting in part a lake may designate an area surrounding the
lake a rural improvement zone upon the receipt of the petition
and a determination that the area is in need of improvements.
This division of the bill takes effect upon enactment
and applies to rural improvement zones in existence on or
established on or after the effective date of the division of
the bill.
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SCHOOL TUITION ORGANIZATION TAX CREDITS. Beginning January
1, 2022, the bill allows the total approved school tuition
tax credits, currently set at $15 million for calendar year
2020, to increase each calendar year, if the amount of awarded
tax credits from the preceding calendar year are equal to or
greater than 90 percent of the total approved school tuition
tax credits for the current calendar year, until reaching a
maximum of amount of $20 million per calendar year.
Currently, the maximum amount of school tuition organization
tax credits that may be approved for corporations in the
aggregate shall not exceed 25 percent of the total amount of
school tuition organization tax credits allowable in a calendar
year in Code section 422.11S(8). The bill permits corporations
in the aggregate to be awarded more than the 25 percent of the
allowable school tuition organization tax credits in a calendar
year by striking the 25 percent limitation.
PAYCHECK PROTECTION PROGRAM. The bill excludes from the
calculation of Iowa income tax for certain fiscal filers the
federal paycheck protection program loan proceeds that were
forgiven and excluded from federal gross income. This division
takes effect upon enactment.
INCOME TAX EXCLUSION —— EMERGENCY STUDENT GRANT MONEY. The
bill excludes from Iowa net income federal Coronavirus Aid,
Relief, and Economic Security Act funds received by a student
through a higher education institution to support the student’s
financial needs as a result of the COVID-19 pandemic pursuant
for any tax year ending after March 27, 2020. This provision
takes effect upon enactment, and applies retroactively to March
27, 2020, for tax years ending on or after that date.
IOWA INCOME EXCLUSION —— STIMULUS CHECKS. In determining
the amount of deduction for federal income tax under Code
section 422.9 for tax years beginning in the 2020 calendar
year, the amount of the deduction for the tax year shall not
be adjusted by the amount received during the tax year of the
income tax rebate provided pursuant to the federal Recovery
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Rebates and Coronavirus Aid, Relief, and Economic Security Act,
and the amount of such income tax rebate shall not be subject
to taxation.
HUNTING DEER AND TURKEY ON A FARM UNIT. Current law allows
an owner or tenant of a farm unit or a member of that person’s
family who receives a wild turkey license for use on that
person’s farm unit to use the license during any bow or firearm
turkey hunting season. An owner or tenant of a farm unit or
a member of that person’s family who receives a deer hunting
license for use on that person’s farm unit may use the license
during any bow or firearm deer hunting season. Current law
requires the payment of a $1 fee that shall be appropriated
to the help us stop hunger (HUSH) program for each free deer
hunting license issued for use on a farm unit.
The bill allows an owner or tenant of a farm unit or a member
of that person’s family to use on the farm unit a wild turkey
hunting license during any established turkey hunting season
and a deer hunting license during any established deer hunting
season using the method of take authorized by rule for the
respective season being hunted. A tag filled during one of the
seasons will not be valid in subsequent seasons. An owner,
tenant, or family member who receives a free deer hunting
license for use on a farm unit shall pay a fee of $1.25 for each
license issued that shall be appropriated to the HUSH program.
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