PLEASE NOTE:
Rules will not be accepted after 12 o'clock noon on the Friday filing deadline days unless prior approval has been received from the Administrative Rules Coordinator's office.
If the filing deadline falls on a legal holiday, submissions made on the following Monday will be accepted.

CITATION of Administrative Rules

The Iowa Administrative Code shall be cited as (agency identification number) IAC
(chapter, rule, subrule, lettered paragraph, or numbered subparagraph).

441 IAC 79 (Chapter)

441 IAC 79.1(249A) (Rule)

441 IAC 79.1(1) (Subrule)

441 IAC 79.1(1)"a" (Paragraph)

441 IAC 79.1(1)"a"(1) (Subparagraph)

The Iowa Administrative Bulletin shall be cited as IAB (volume), (number), (publication
date), (page number), (ARC number).

IAB Vol. XII, No. 23 (5/16/90) p. 2050, ARC 872A

ITEM 2. Amend subrule 79.1(3) as follows:
79.1(3) Ambulatory surgical centers. Payment is made for facility services on a fee schedule which is determined by Medicare. These fees are grouped into eight categories corresponding to the difficulty or complexity of the surgical procedure involved. Procedures not classified by Medicare shall be included in the category with comparable procedures. based on Medicare reimbursement for the services as of July 1, 1998, pursuant to 42 CFR, Part 416, Subpart E, as amended to May 20, 1991; 55 Federal Register 4577 (February 8, 1990); and 62 Federal Register 8462 (February 19, 1998). New procedures must be recognized as appropriate for an ambulatory surgery center setting by Medicare before those procedures will be payable by Medicaid. Each new procedure will be placed into that one of the eight Medicare reimbursement categories as of July 1, 1998, that most closely represents comparable resource utilization for that service.
Services of the physician are reimbursed on the basis of a fee schedule Payment for physician services shall be independently billed to Medicaid (see subrule 79.1(1)"c"). and This payment is reimbursement made directly to the physician. Increases to the ambulatory surgery centers' fee schedule shall be based upon annual state appropriations to the department.
ARC 8411A

For sales larger than $5.89, tax is to be computed at straight 5 percent; one-half cent or more should be treated as one cent.
The department has adopted the following combined bracket system for state and local option sales and service tax, assuming the existence of a 5 percent state and 1 percent local option sales and tax service tax.

For sales larger than $5.91, tax is to be computed at straight 6 percent; one-half cent or more should be treated as one cent.
When practicable, the department will cooperate with retailers in applying either of the tax schedules set out in this rule. In no event will the schedules be administered in any manner that will result in the collection of substantially more than 5 percent of the amount on which state sales and service tax is to be computed or substantially more than 6 percent of the amount on which one state and local option sales and service tax is to be computed, or 7 percent if a jurisdiction imposes local option sales and service tax pursuant to Iowa Code chapter 422B and the local option school infrastructure sales and services tax pursuant to Iowa Code chapter 422E in addition to the state sales tax.
The department has adopted the following combined 7 percent bracket system for state and both previously mentioned local option sales and service taxes, assuming the existence of a 5 percent state sales tax rate and local option tax rates of 1 percent each.

For sales larger than $5.92, tax is to be computed at straight 7 percent; one-half cent or more should be treated as one cent.
This rule is intended to implement Iowa Code chapters 422 and 423 as amended by 1992 and 1998 Iowa Acts, Senate File 2393 House File 2282.

Amend subrule 42.2(6), introductory paragraph, as follows:
42.2(6) Research activities credit. Effective for tax years beginning on or after January 1, 1985, taxpayers are allowed a credit equal to 6½ percent of the state's apportioned share of qualified expenditures for increasing research activities. For purposes of this credit, "qualifying expenditures" means the qualifying expenditures as defined for the federal credit for increasing research activities computed under Section 30 of the Internal Revenue Code as amended to and including January 1, 1985. For tax years beginning on or after January 1, 1987, "qualifying expenditures" means the qualifying expenditures as defined for the federal credit for increasing research activities computed under Section 41 of the Internal Revenue Code. The state's apportioned share of qualifying expenditures for increasing research activities will be the qualified research expenditures in Iowa to the total qualified research expenditures. Effective for tax years beginning on or after January 1, 1991, the state research activities credit will be computed on the basis of the qualifying expenditures for increasing research activities as allowable under Section 41 of the Internal Revenue Code in effect on January 1, 1995 1998. The state's apportioned share of the qualifying expenditures for increasing research activities is a percent equal to the ratio of qualified research expenditures in Iowa to the total qualified research expenditures. The Iowa research activities credit is made permanent for tax years beginning on or after January 1, 1991, even though there may no longer be a research activities credit for federal income tax purposes.
Amend subrule 42.2(8) as follows:
42.2(8) Tuition and textbooks credit for dependents in grades kindergarten through 12 in Iowa. For tax years beginning on or after January 1, 1987, but prior to January 1, 1996, individuals who elect the optional standard deduction may claim a tax credit of 5 percent of the qualifying expenditures. For tax years beginning on or after January 1, 1996, all taxpayers, including individuals that have net incomes of $45,000 or more, may claim a tuition and textbook credit of 10 percent of qualifying expenditures. For tax years beginning on or after January 1, 1998, all taxpayers may claim a tuition and textbook credit of 25 percent of up to $1,000 of qualifying expenditures for each dependent attending grades kindergarten through 12 in Iowa. Qualifying expenditures include amounts paid for tuition and textbooks described in paragraphs "a" and "b" of 701--subrule 41.5(5) as well as amounts paid for extracurricular activities described in paragraph "c" of 701--subrule 41.5(5). For purposes of this subrule, the qualifying expenditures for tax years beginning in 1996 and 1997 are the same as would have been eligible for the deduction allowed under 701--subrule 41.5(5) if the qualifying expenditures had been paid in a tax year when the deduction was applicable. All the qualifications, definitions, and criteria in 701--subrule 41.5(5) are equally applicable to the credit for amounts paid for tuition and textbooks for dependents attending grades kindergarten through 12 in Iowa. In the case of married taxpayers who are filing separate returns or separately on the combined return, the spouses can allocate the credit for tuition and textbooks between them in the same ratio as described in paragraph "g" of 701--subrule 41.5(5).
Amend the implementation clause as follows:
This rule is intended to implement Iowa Code section sections 422.10, 422.11A, 422.12 and 422.12B as amended by 1998 Iowa Acts, House File 2513 and Senate File 2357.
ITEM 9. Amend rule 701--43.3(422) as follows:
Adopt the following new subrule:
43.3(14) Refunds--statute of limitations for taxpayers who paid state income tax on returns for tax years where federal income tax was refunded due to a provision of the Taxpayer Relief Act of 1997. Notwithstanding the three-year statute of limitations in Iowa Code section 422.73, claims for refund filed with the department on or before June 30, 1999, will be considered timely if the taxpayer's federal income tax was refunded due to a provision in the Taxpayer Relief Act of 1997 which affected the federal adjusted gross income of an individual or an estate or a trust. This particular provision may affect Iowa returns for a tax year beginning on or after January 1, 1977, to the extent the federal adjusted gross incomes on federal returns for the tax year were affected by the Taxpayer Relief Act of 1997.
Amend the implementation clause as follows:
This rule is intended to implement Iowa Code sections 421.17, 422.2, 422.16, and 422.73 as amended by 1994 1998 Iowa Acts, House File 2124 Senate File 2357.
ITEM 10. Amend rule 701--43.8(422) as follows:
Amend the introductory paragraph as follows:
701--43.8(422) Livestock production credit refunds for corporate taxpayers and individual taxpayers. For tax years beginning on or after January 1, 1996, corporate and individual taxpayers who own certain livestock, have livestock production operations in Iowa in the tax year, and who meet certain qualifications are eligible for a livestock production credit refund. The amount of a livestock production credit refund is determined by adding together for each head of livestock in the taxpayer's operation the product of 10 cents for each corn equivalent deemed to have been consumed by that animal in the taxpayer's operation in the tax year. However, for tax years beginning in the 1996 and the 1997 calendar year and for tax years beginning on or after January 1, 1997, years, only qualified taxpayers that have cow-calf livestock production operations described in paragraph "i" of subrule 43.8(2) will be eligible for the livestock production credit refunds and for tax years beginning on or after January 1, 1998, only qualified taxpayers that have cow-calf livestock operations described in paragraph "o" of subrule 43.8(2) will be eligible for the livestock production refunds, notwithstanding the other types of livestock operations mentioned in this rule. Note that the livestock production credit refund is also available to taxpayers who meet the qualifications described in subrule 43.8(1) and operate certain types of poultry operations in this state and own the poultry in the operations. The amounts of the livestock production credit refunds for these taxpayers are determined on the basis of 10 cents for each corn equivalent deemed to have been consumed by the chickens or the turkeys in the taxpayers' poultry operations in the tax year. However, the amount of livestock production credit refund may not exceed $3,000 per livestock or poultry operation for a tax year. In addition, the amount of livestock production credit refund per taxpayer for a tax year may not exceed $3,000. Therefore, if a particular taxpayer is involved in a cow-calf beef operation, a sheep-ewe flock operation, and a farrow-to-finish hog operation, the maximum livestock production credit refund for this taxpayer may not exceed $3,000.
Amend subrule 43.8(2), paragraph "i," as follows:
i. For purposes of this rule and only for tax years beginning in the 1996 and 1997 calendar years, "cow-calf beef operations" means those beef cattle production operations whereby the majority of the cattle in the operations were born and raised in the operations and many of the cattle in the operations were sold at a prime market weight of 700 pounds or more.
The livestock production credit refunds for cow-calf operations include the number of cattle raised in the operation, which are sold in the tax year at the stocker weight under the criteria described in paragraph "j" of this subrule and which are sold in the tax year at the feedlot weight under the criteria described in paragraph "k" of this subrule. However, those cattle in the operation that were sold at the feedlot weight in the tax year qualify for a combined stocker and feedlot production credit refund of $11.65 per head of cattle sold, to the extent the cattle sold had been in the operation at least 300 days after the cattle were weaned. Cattle in the operation that were sold at a weight below 700 pounds may not be counted for purposes of computing the livestock production credit refund for the operation. However, unbred replacement heifers in inventory on December 31 of the tax year would qualify for a production credit refund of $4.15 per head if these cattle had been born, raised and weaned in the operation and had been in the herd for at least two months after weaning on December 31.
Finally, the livestock production credit refunds for cow-calf operations include refund amounts determined on the number of bred cows, bred yearling heifers, and breeding bulls in inventory on December 31 of the tax year times the corn equivalent factor of 111.5 or $11.15. However, any bred cows, bred yearling heifers, and breeding bulls in inventory on December 31 which were not in the operation on July 1 of that calendar year may not be considered for purposes of computation of the livestock production credit refund.
Amend subrule 43.8(2) by adopting the following new paragraph:
o. For the purposes of this rule and for tax years beginning on or after January 1, 1998, "cow-calf beef operations" means those livestock cattle production operations that include mature beef cows bred or for breeding, bred yearling heifers, and breeding bulls. The livestock production credit refunds for cow-calf beef operations are determined only on the number of mature beef cows bred or for breeding, bred yearling heifers, and breeding bulls in inventory of the operations on December 31 of the tax year times the corn equivalent factor of 111.5 or $11.15. However, only those mature beef cows bred or for breeding, bred yearling heifers, and breeding bulls in inventory on December 31 which were also in inventory on July 1 of the same calendar year may be considered for purposes of computing the livestock production refunds.
ITEM 11. Amend rule 701--46.1(422) as follows:
Amend subrule 46.1(2), introductory paragraph, as follows:
46.1(2) Withholding on pensions, annuities and other nonwage payments to Iowa residents. Effective for nonwage payments made to individuals on or after January 1, 1992, state income tax is required to be withheld from payments of pensions, annuities, supplemental unemployment benefits and sick pay benefits and other nonwage income payments made to Iowa residents in those circumstances mentioned in the following paragraphs. This subrule is to cover those nonwage payments described in Sections 3402(o), 3402(p), 3402(s), 3405(a), 3405(b), and 3405(c) of the Internal Revenue Code. However, no state income tax withholding is required from nonwage payments to residents to the extent those payments are not subject to state income tax. See paragraph "h" for threshold amounts for withholding from payments of pensions, annuities, individual retirement accounts, deferred compensation plans, and other retirement incomes which are made on or after January 1, 1999, and paragraph "g" for threshold amounts for withholding from payments of pensions, annuities, individual retirement accounts, deferred compensation plans, and other retirement incomes which are made on or after January 1, 1996. Generally, no state income tax is required to be withheld from nonwage payments to residents in circumstances where the payment amounts are less than $200 or the taxable portions of the payments are less than $200 in situations where the payers know the taxable amounts. In instances where a payment amount or taxable amount is $200 or more but the payment amount or the taxable amount for the year is less than $2,400, no state income tax is required to be withheld. In the case of some nonwage payments to residents, such as payments of pensions and annuities, no state income tax is required to be withheld if no federal income tax is being withheld from the payments of the pensions and annuities. The rate of withholding on the nonwage payments described in this subrule is 5 percent of the payment amounts or 5 percent of the taxable amounts unless specified otherwise.
Amend subrule 46.1(2), paragraph "g," introductory paragraph, as follows:
g. Withholding from distributions made on or after January 1, 1996, but prior to January 1, 1999, from pensions, annuities, individual retirement accounts, deferred compensation plans and other retirement plans. Effective for distributions from pension plans, annuities, individual retirement accounts, deferred compensation and other retirement plans, state income tax is generally required to be withheld from the distributions, unless one of the exceptions for withholding in this paragraph applies. For purposes of this paragraph, the term "pensions and other retirement plans" includes all distributions of retirement benefits covered by the partial exemption described in rule 701--40.47(422).
Amend subrule 46.1(2) by adopting the following new paragraph:
h. Withholding from distributions made on or after January 1, 1999, from pensions, annuities, individual retirement accounts, deferred compensation plans, and other retirement plans. Effective for distributions made on or after January 1, 1999, from pension plans, annuities, individual retirement accounts, deferred compensation plans, and other retirement plans, state income tax is generally required to be withheld from the distributions when federal income tax is being withheld from the distributions, unless one of the exceptions for withholding in this paragraph applies. For purposes of this paragraph, the term "pension and other retirement plan" includes all distributions of retirement benefits covered by the partial exemption described in rule 701--40.47(422).
State income tax is not required to be withheld from a distribution from a pension or other retirement plan if the distribution is an income which is not subject to Iowa income tax, such as a distribution of railroad retirement benefits. State income tax is also not required to be withheld from a distribution from a pension plan or other retirement plan if the amount of the distribution is $417 per month or less or if the taxable amount is $417 per month or less and the person receiving the distribution is eligible for partial exemption of retirement benefits described in rule 701--40.47(422), if the state taxable amount can be determined by the payer of the distribution. There is also no requirement for withholding state income tax from a distribution from a pension or other retirement plan if the distribution is $834 per month or less or the state taxable amount is $834 per month or less and the person receiving the distribution is eligible for the partial exemption of retirement benefits described in rule 701-- 40.47(422) and that person has indicated an intention to file a joint state individual income tax return for the year in which the distribution is made. In instances where the payment amount or taxable amount is more than $417 per month but less than $5,000 for the year, no state income tax will be required to be withheld. Finally, there is no requirement for withholding from a lump-sum payment from a qualified retirement plan if the lump-sum payment is $5,000 or less, the recipient of the distribution is eligible for the partial exemption of distributions from pensions and other retirement plans, and the lump-sum payment is the only distribution from the retirement plan in the year.
Amend the implementation clause as follows:
This rule is intended to implement Iowa Code sections 96.3, 99B.21, 99D.16, 99E.19, and 99F.18 and Iowa Code sections 422.7, 422.15, and 422.16 as amended by 1996 1998 Iowa Acts, House File 2229 2513.

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Last update: Wed Oct 21 7:30:04 CDT 1998
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