2001 Summary of Legislation TAXATION Published by the Iowa General Assembly -- Legislative Service Bureau

TAXATION LEGISLATION

SENATE FILE 140 - Internal Revenue Code References and Income Tax Provisions (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act updates the references to the Internal Revenue Code to make the federal income tax revisions enacted by Congress in 2000 applicable for Iowa income tax purposes, with one exception relating to the method for computing income from installment sales.

   Code Sections 15.335, 15A.9, 422.10, and 422.33 are amended to update references to the state research activities credit for individuals, corporations, corporations in economic development areas, and corporations in quality jobs enterprise zones to include the 2000 federal changes in the research activities credit.

   The Act amends Code Section 422.7, relating to the computation of net income, to strike a subsection related to trusts that refers to a section of the Internal Revenue Code which was repealed. Code Section 422.7 is also amended to provide that the method for computing income from installment sales made by a taxpayer whose method of accounting is the accrual method shall be the accrual method and not the installment method, i.e., when the sale occurred rather than when installments are received.

   The Act amends Code Section 422.13 to raise from $4,000 to $5,000 the minimum net income that a dependent must earn in the tax year before the dependent is required to file a state income tax return.

   The provisions of the Act relating to updating changes in the Internal Revenue Code, installment sales, and to the repeal of the subsection related to trusts are retroactively applicable to January 1, 2000, for tax years beginning on or after that date. The provision affecting dependents is retroactively applicable to January 1, 2001, for tax years beginning on or after that date.

   The Act takes effect May 16, 2001.

SENATE FILE 141 - Accelerated Career Education Program - Allocation of Program Job Credits (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act amends the Accelerated Career Education Program to provide that, pursuant to an agreement or a statement of intent to enter into an agreement dated on or after July 1, 2000, program job credits may be allocated retroactively to program costs incurred on or after July 1, 2000.

   The Act takes effect May 2, 2001, and is retroactively applicable to July 1, 2000.

SENATE FILE 449 - Indian Housing Authority Property - Tax Exemption (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act exempts from property taxation property owned and operated by Indian housing authorities. Indian housing authorities are entities authorized to engage in or assist in the development or operation of low-income housing for Indians that is established under Indian or state law. The Act provides that an exemption agreement must be signed by the city council or, if the property is located outside a city, by the board of supervisors. The Act also provides that the state is not required to reimburse any local government as a result of the property tax exemption provided in the Act.

   The Act takes effect April 23, 2001.

SENATE FILE 516 - Allocation of Income of S Corporation - VETOED BY THE GOVERNOR (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. Under the state individual income tax, resident shareholders of S corporations doing business within and without the state are allowed to allocate income between Iowa and other states in determining their state income tax. As part of the allocation procedure, under current law, 50 percent of the amount of an S corporation distribution received by a shareholder, which is used to pay federal income tax, is not allocated to Iowa. The bill would have increased this percentage to 100 percent.

   The bill would have taken effect only had the Revenue Estimating Conference estimated that as a result of enactment of federal income tax legislation prior to January 1, 2002, Iowa's income tax receipts for FY 2001-2002 would increase by $7.9 million or more. The bill would have applied to tax years beginning on or after January 1, 2002.

SENATE FILE 519 - Tax Assessment of Property Rented or Leased to Low-Income Persons (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act provides that property, which is rented or leased to low-income individuals and families for use as habitation as authorized by the federal tax credit in IRC § 42 that limits the amount of rent or lease payments required, shall be valued on its actual earning capacity, based upon the actual rents received, and its restricted use in arriving at market value for purposes of property tax assessments. The fact that tax credit equity or other subsidized financing is provided in relation to such property is not to be taken into account as income in determining assessed value.

SENATE FILE 520 - Taxation of Methane Gas and Other Gas Conversion Property (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act allows a taxpayer to file an exemption from property taxation for methane gas or other gas conversion property if the taxpayer collects waste that would otherwise go to the landfill and decomposes the waste to produce methane gas or other gases for conversion into energy. Property used for the decomposition process is not eligible for the exemption.

   The Act applies retroactively to January 1, 1998, for purposes of providing a tax credit for electric generation taxes unpaid by a taxpayer for the 1998, 1999, 2000, and 2001 tax years if the taxpayer is allowed a methane gas conversion property tax exemption for those years. By operation of law, property generating electricity is exempt from the electric generation tax if it is methane gas conversion property that has received a property tax exemption. The property tax exemption for 1998, 1999, 2000, and 2001 must be applied for by June 1, 2001. The claim for electric generation tax credit for those tax years must be applied for by July 1, 2001.

   The Act provides that Code Section 25B.7, which requires the state to fund property tax credits or exemptions enacted after January 1, 1997, shall not apply.

   The Act takes effect May 16, 2001.

SENATE FILE 521 - Capital Gain Deduction for Sales of Capital Stock - VETOED BY THE GOVERNOR (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This bill would have provided a deduction under the individual income tax of 50 percent (25 percent for the 2001 tax year) of the capital gain from the sale or exchange of capital stock of a corporation acquired by the taxpayer on account of employment with the corporation. The benefits of the deduction would have been realized by means of a refund claim. This involves the taxpayer filing a return with tax liability determined without deduction for the capital gain and a special return with tax liability determined with the deduction for the capital gain. The reduction in tax liability would be treated as a claim for refund of the amount of the reduction. However, not more than $3 million in tax refunds would be allowed for any tax year. If more refunds are claimed, then each refund claim is payable at a pro rata amount, which is the final amount of the taxpayer's actual refund. A taxpayer could make two elections for two different corporations during the taxpayer's lifetime. The bill would have applied retroactively to January 1, 2001, for tax years beginning on or after that date.

HOUSE FILE 1 - Limited Sales and Use Tax Exemption for Residential Metered Gas and Electricity or Heating Fuel (full text of act)

   BY DIX, SUKUP, VAN FOSSEN, HORBACH, HANSEN, DE BOEF, RAECKER, KETTERING, ELGIN, RAYHONS, BROERS, DRAKE, ALONS, KLEMME, BOAL, SHEY, TYMESON, HOFFMAN, TYRRELL, AND HAHN. This Act contains two parts. Part one of the Act exempts from the sales and use taxes, for approximately two months, the sale or furnishing of metered gas used for energy and heating fuel used for heating purposes for residential-type dwellings. The Act provides that the exemption applies to the sale of metered gas if the utility billing date is during March 2001 or April 2001 and applies to the sale of heating fuel if the sale or furnishing of it occurs during the period beginning on February 5, 2001, and ending on March 31, 2001. The Act provides that if a utility cannot adjust its billing system to provide for the exemption in March then it can charge the tax but give the customer a credit on the customer's next billing.

   Part two of the Act provides for the phaseout of the sales tax, over a five-year period, on the sale and furnishing of metered gas and electricity to provide energy for residential customers and on the sale and furnishing of fuel, including propane and heating fuel, used to provide heat for residential dwellings. The phaseout begins in the 2002 calendar year and involves the reduction of the tax rate of one percentage point over a five-year period. The applicable reduced rate applies if the date of the utility billing of the customer for metered gas and electricity used for energy is between January 1 and December 31 or the sale or furnishing of fuel for heating occurs between January 1 and December 31.

   Part two of this Act is amended by H.F. 705, which maintains the phaseout of the sales tax over a five-year period and provides the following:

1. The reduction in the tax rate is one percentage point beginning on or after January 1 through December 31 each year beginning January 1, 2002, i.e., one percentage point reduction for each calendar year beginning with the 2002 calendar year.
2. The reduction in the rate applies to the sale or furnishing of metered gas, electricity, and fuel, including propane and heating fuel to residential customers, which is used to provide energy for residential dwellings.
3. The rate reduction of one percentage point applies if the date of the utility billing or meter reading cycle of the residential customer for the sale or furnishing of metered gas and electricity is in the specified calendar year or if the sale or furnishing of fuel for residential energy and the delivery occur during the specified calendar year.

   The Act takes effect February 5, 2001.

HOUSE FILE 705 - Taxation of Electricity, Natural Gas, and Fuels Used for Residential Energy (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act contains two sections that are separate from each other even though they both relate to electricity and gas.

   Section 1 exempts from sales and use taxes the charges paid to deliver electricity or natural gas if the sale or use of the electricity or natural gas is exempt from the sales and use taxes.

   Section 2 amends a previously enacted sales tax exemption that phases out the sales tax on the sale or furnishing of metered gas, electricity, and fuel. See H.F. 1.

HOUSE FILE 707 - Income Taxation of Foreign Corporations - Temporary Storage of Goods (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act provides that a foreign corporation is not required to file an income tax return if its only activity involves the storing of tangible personal property in Iowa for 60 consecutive days or less in a warehouse located in Iowa if such storage is its only activity and the stored property is not delivered or shipped so as to be included as part of the corporation's gross sales within the state.

   The Act takes effect April 30, 2001, and applies retroactively to January 1, 2001, for tax years beginning on or after that date.

HOUSE FILE 712 - Homestead and Family Farm Tax Credits - Miscellaneous Changes (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act amends the homestead and family farm tax credits.

   The homestead tax credit is amended to provide that a person who received the credit as a result of filing a fraudulent claim or affidavit has to repay the amount of the credit along with a penalty of 25 percent of the amount of the credit plus interest. Also, the penalty for failure to notify the assessor that the property is no longer used as a homestead is reduced from 50 percent of the amount of the credit to 5 percent of the amount of the credit.

   Prior to this Act, to obtain the family farm tax credit, an owner had to file annually. The Act provides that after the first filing and approval, the owner need not file again until such time as the person actively engaged in the farming of the tract of land changes. In addition, the owner must notify the assessor of such change. The Act also provides a penalty if the person actively engaged in farming changes and notification is not provided. The penalty equals the amount of credit paid plus 5 percent of the amount of credit paid. The Act also allows the owner claiming the credit to file at any time instead of between July 1 and October 15 as under the prior law. However, if the claim is filed after November 1, it shall be considered as being filed for the following year. If the tract is transferred, the new owner must file for the credit.

   The Act takes effect July 1, 2001, and applies to homestead tax credit claims filed or on file and family farm tax credit claims filed on or after that date.

HOUSE FILE 714 - Community Development Program - Tax Credits - VETOED BY THE GOVERNOR (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This bill would have established a Community Development Program to be administered by the Department of Economic Development. The program would provide tax incentives to businesses that make contributions to projects in communities or neighborhoods that benefit by these projects or which make expenditures to provide child care benefits to their employees.

   The tax incentives would have been provided in the form of tax credits that would have been used to offset the tax liability under the individual and corporate income taxes, the financial institution franchise tax, the insurance gross premiums tax, and the credit union moneys and credits tax. The amount of the community development tax credit, subject to limitation, equals 50 percent of the contributions made by the business to the project. Not more than $150,000 in tax credits could be allowed for any one project. The maximum amount of credit a business could receive for a project is $100,000. Projects and tax credits associated with the projects would need to be approved by the Department of Economic Development. The total amount of tax credits approved in a fiscal year could not exceed $2 million.

   The bill specified that the amount of the child care center tax credit would equal 25 percent of the expenditures for providing child care employee benefits, with a maximum credit of $100,000. These tax credits would also need to be approved by the Department of Economic Development. Not more than $2 million of these credits could be approved in a fiscal year.

   The bill would have taken effect only if the Revenue Estimating Conference estimated that as a result of federal income tax legislation enacted prior to January 1, 2002, Iowa income tax receipts would increase for the 2001-2002 fiscal year by at least $7.9 million.

HOUSE FILE 715 - Tax Administration and Related Matters (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act amends various tax provisions of state law to do the following:

1. Allow a business that is eligible to receive benefits under the New Jobs and Income Act to file a claim for refund of sales and use tax paid by the contractor under a building contract within one year of the project's completion, rather than the six-month time period previously allowed.
2. Specify that the length of time over which an urban revitalization property tax exemption may be allowed in situations where a timely application for exemption was not filed is equal to the number of remaining years left in the exemption schedule selected.
3. Expand the scope of the technical advice received from other state agencies to include that related to all taxes administered by the Department of Revenue and Finance (DORF) rather than just property taxes.
4. Authorize DORF to pay costs incurred by DORF associated with contracts with vendors to identify nonfilers or nonpayers of taxes, from tax, penalty and interest actually collected by the vendors from the identified nonfilers or nonpayers.
5. Specify that a seller of cigarettes who does not meet the definition of a retailer or wholesaler shall be considered a retailer for purposes of computing minimum price if the person is engaged in the business of selling cigarettes to a retailer or final consumer.
6. Provide that income from the sale of obligations of Iowa and its political subdivisions is taxable for purposes of the state individual income, corporate income, and franchise taxes unless the law authorizing the obligation specifically exempts the income from the sale from the tax. These provisions apply retroactively to January 1, 2001, for tax years beginning on or after that date.
7. Delete an obsolete provision that applies to the refund of the excess tax paid on a construction contract fully executed prior to July 1, 1992, when the sales tax rate was increased from four cents to five cents.
8. Allow a sales tax permit holder to keep the same permit when the business is relocated in the state if the ownership remains the same.
9. Replace the words "eligible purchasers" with the word "distributors" to reflect more accurate terminology as defined in Code Chapter 452A, relating to motor fuel and special fuel taxes.
10. Impose a duty upon the county auditor to notify, within 10 days, the Director of Revenue and Finance of the outcome of the election favoring the imposition, repeal, or rate change of the local hotel and motel tax.
11. Impose local options sales and services tax only on motor fuels and special fuels in which tax pursuant to the state motor fuel tax has not been imposed and, if paid, has not or cannot be refunded.
12. Prevent a lapse in time from the sunset of a local option tax if a jurisdiction votes to continue the tax.
13. Change the period of time for a construction contractor to claim a refund of local sales and services tax paid from six months to one year.
14. Provide that in addition to the sale of tangible property being exempt from the use tax if exempt from the sales tax, the rental of tangible property and providing of services are exempt if exempt for sale tax purposes.
15. Specify the effective date of the order when the Director of Revenue and Finance revokes or modifies a property tax exemption for a specific year either on the director's own motion or upon application by a taxpayer.
16. Provide that for taxation as real property, fixtures used for cooking, refrigeration or freezing of value-added agricultural products or used in the processing of such products are not considered attached to real property. Because it is not considered attached, the fixture is not taxable as real property. This change applies retroactively to January 1, 2000, for assessment years beginning on or after that date.
17. Provide that the Industrial Machinery, Equipment and Computers Property Tax Replacement Fund, currently funded with a standing unlimited appropriation, will be prorated to pay claims if the General Assembly elects to place a cap on the fund in the future.
18. Specify the tax treatment of fraternal and social organizations within the state inheritance tax. This change applies to estates of decedents dying on or after July 1, 2001.
19. Specify that an appeal of a cigarette permit suspension or revocation must be made to the authority that issued the permit. Cities and counties issue permits to retail establishments in their respective jurisdictions, and DORF issues distributor, manufacturer, wholesaler, and vendor permits.

HOUSE FILE 716 - Ethanol Blended Gasoline - Related Taxes (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act promotes the production and consumption of ethanol. The Act amends Code Section 15.333, which provides that an eligible business may claim a tax credit of up to 10 percent of a new investment that involves the creation of new jobs. Under Code Section 15.333, an eligible business involved in the production of value-added agricultural products may elect to refund the unused tax credit. This Act provides that an eligible business includes a cooperative involved in the production of ethanol.

   This Act also creates new provisions providing a tax credit for retail dealers of gasoline who sell ethanol blended gasoline (motor fuel containing at least 10 percent alcohol). The new tax credit applies to both taxpayers filing as individuals under new Code Section 422.11C as created by the Act and businesses under Code Section 422.33 as amended by the Act. The Act provides a tax credit for each service station at which more than 60 percent of the total gallons of gasoline sold by the retail dealer is ethanol blended gasoline. The amount of the tax credit is 2.5 cents multiplied by the total number of gallons of ethanol blended gasoline sold at that service station that is in excess of 60 percent of all gasoline sold at the service station during the tax year. The Act also provides for a refund or carryforward of any credit in excess of the taxpayer's liability.

   The Act also amends provisions in Code Section 452A.3 that provide for an excise tax on each gallon of motor fuel sold in the state. Previously, the general rate was 20 cents per gallon, but there were a number of exceptions, including an exception for ethanol blended gasoline. Until June 30, 2007, the rate currently in the Code is 19 cents per gallon of ethanol blended gasoline. This Act amends that section by providing that until June 30, 2007, the rates for unblended and blended motor fuel are adjusted each year based on the number of gallons of ethanol blended gasoline that are distributed in this state as expressed as a percentage of the total number of gallons of motor fuel distributed in this state. The Department of Revenue and Finance must determine the percentage basis. The rates will be set based on that determination effective for 12 months beginning on the following July 1. Under the new formula, the general rate for nonblended motor fuel fluctuates between 20 and 20.8 cents and the special rate for ethanol blended gasoline fluctuates between 19 and 20 cents. The Act does not affect provisions that provide special rates for other types of motor fuel.

   The Act contains special applicability provisions. It provides that the income tax credit provisions for retail dealers apply to tax years beginning on and after January 1, 2002. The Act also provides that the excise tax provisions apply on and after July 1, 2002.

HOUSE FILE 723 - Sales and Use Taxes on Irrigation Equipment (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act exempts irrigation equipment from sales and use taxes when purchased by a contractor or farmer if the equipment will be primarily used in agricultural operations. The exemption applies whether the equipment is installed above or below ground.

   The Act takes effect May 18, 2001, and applies retroactively to April 1, 1995. Because of the retroactive application, any claims for refunds of taxes paid are limited to $25,000 in the aggregate.

HOUSE FILE 731 - Utility Replacement Tax (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act makes changes to Code Chapter 437A, "Taxes on Electricity and Natural Gas Providers." The contents of this Act are the proposal of the Utility Replacement Tax Task Force.

   The Act changes the definition of "assessed value" in Code Section 437A.3 to provide that certain property of a municipal utility, which is not a major addition, was initially assessed to the taxpayer as of January 1, 1998, and is not located in a county where the taxpayer had property that was assessed for purposes of Code Chapter 437A as of January 1, 1997, should have the value associated with the 1998 date. This change is applicable to tax years commencing on or after January 1, 2001.

   The Act changes the definition of "major addition," with respect to the acquisition of property described in Code Section 437A.16, which addresses all operating property and all other property that is primarily and directly used in the production, generation, transmission, or delivery of electricity or natural gas subject to replacement tax or transfer replacement tax.

   The Act adds new subsections to Code Section 437A.6 to provide for a replacement generation tax on every hydroelectric power plant with a generating capacity of 100 megawatts or greater, and on every electric company that owns a joint interest in an electric power generating plant in this state and has a joint interest in less than five pole miles of transmission lines in this state. These changes are applicable to tax years commencing on or after January 1, 2001.

   The Act amends Code Section 437A.7 to exempt electric cooperatives that own, lease, or own and lease less than 750 pole miles of transmission lines in this state from the transmission replacement tax imposed under Code Section 437A.7, rather than electric cooperatives that own, lease, or own and lease between 50 and 750 pole miles of transmission lines. This change is applicable to tax years and assessment years commencing on or after January 1, 2001.

   The Act changes certain filing dates for tax returns for replacement taxes from February 28 to March 31 in Code Sections 437A.8 and 437A.21. These changes are applicable for returns due for tax years and assessment years, respectively, commencing on or after January 1, 2001.

   The Act amends Code Section 437A.8 to change the date by which a generation and transmission electric cooperative must notify the director if a distribution electric cooperative member or a municipal utility purchasing member fails to make timely payment of the replacement tax. The date is changed to within 10 days after September 10 instead of the current requirement of within 15 days of August 1. The Act expressly requires such notice to be in writing, and also requires the notice from the director to the generation and transmission electric cooperative to be in writing, within five days after delivery of notice to the director of nonpayment. The Act deletes language that addresses a payment to a generation and transmission electric cooperative that is less than all of the required payment. The generation and transmission electric cooperative must remit the amount specified by the director to the appropriate county treasurer by September 30. The Act also specifies the allowable methods of notification and defines when a mailed notice is considered to be delivered.

   The Act also amends Code Section 437A.8 to require that all electric companies, electric cooperatives, municipal utilities, and natural gas companies file a replacement tax return, regardless of the amount of the tax liability.

   The Act amends Code Section 437A.15 to change certain dates, and to add paragraphs addressing replacement tax allocation when operating property is transferred or acquired.

   Code Section 437A.19 is amended to specify that its provisions apply to transfers of less than a 100 percent interest in an electric power generating plant.

   The Act amends Code Section 437A.24 to change the record retention requirement for taxpayers subject to the replacement tax or statewide property tax from 10 years to five years following the filing of a return.

HOUSE FILE 736 - Tax Administration - Additional Related Matters (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act amends various provisions of state and local tax laws. The Act does the following:

1. Imposes the state sales tax on the gross receipts from sales of bundled services contracts and authorizes the Director of Revenue and Finance to enter into agreements to determine the taxable portion of a bundled services contract when both taxable and nontaxable services are provided and a consumer agrees to a single payment.
2. Imposes the sales tax on mobile telecommunication service, which the state is allowed to tax under the federal Mobile Telecommunications Sourcing Act signed into law on July 28, 2000, and which becomes effective August 1, 2002, and recognizes that communication services are furnished by out-of-state providers. The tax on mobile telecommunication service is imposed at the customer's place of primary use, regardless of where the mobile telecommunication service originates, terminates, or passes through.
3. Amends the use tax so that out-of-state providers are required to collect Iowa sales or use taxes on communication services they provide to consumers within the state.
4. Rewrites the exemption from sales tax of the proceeds from sales and services to the extent the proceeds are expended for a qualifying educational, religious or charitable purpose and eliminates the requirement that the fund-raising activity must be educational, religious or charitable. In addition, the Act defines "charitable" as meaning something done out of goodwill, benevolence, and a desire to add or improve the good of humankind in general, or any class, without pecuniary profit inuring to the giver. This provision takes effect January 1, 2002.
5. Provides a more narrow application of the exemption of "educational institution" under the sales tax exemption for sales used by those educational institutions. This results in the exemption being applied to institutions that are primarily educational institutions, as opposed to those institutions whose educational activities are additional or incidental. This provision takes effect January 1, 2002.
6. Exempts sales to, or services performed for, a nonprofit private art center if used in its operation.
7. Amends the definition of "retailer maintaining a place of business in this state" under the state use tax to specify that it includes lessors of tangible personal property within its terms.
8. Adds limited liability companies to the list of businesses that are exempt from the use tax for the transfer of vehicles subject to registration between businesses where the purpose of the transfer is to continue the business. The exemption is also made to apply to such transfer made by a corporation as part of its liquidation to its shareholders if the shareholders retransfer the vehicles to another business owned by them for the purpose of continuing the business of the corporation.
9. Reduces the period for assessing the environmental protection charge or for filing a claim for refund of an environmental protection charge paid from five to three years. This promotes consistency by bringing those periods into harmony with the time allowed for assessing or filing a claim for refund of sales or use tax paid.
10. Reduces the requirement that depositors of underground petroleum must keep records from a period of five years to a period of three years for purposes of the environmental protection charge.
11. Changes the dates for filing claims for various property tax exemptions to February 1 for purposes of uniformity. This change applies to claims for exemptions filed on or after January 1, 2002.
12. Provides that any additional real estate transfer tax owed that cannot be collected by the local county recorder shall be collected by the Department of Revenue and Finance in the same manner as individual income tax. Prior law makes no provision to collect unpaid real estate transfer taxes. If the tax is collected by the department, the county is to be paid its proportionate share of the tax. Also, the Act provides for a person who has overpaid the real estate transfer tax to be refunded the amount of overpayment.
13. Allows distributions to beneficiaries to be exempt from Iowa inheritance tax whether such distributions are lump sum in nature or in the form of installments. Current law exempts installment payments from the tax. The Act provides for the exemption from Iowa inheritance tax of distributions from nonresident employment-related pensions and pension income excluded from net income tax.
14. In regard to motor fuel taxes, "motor fuel" is redefined to include ethanol blended gasoline, the tax on alcohol shall be paid when it is withdrawn from the terminal rather than when it is sold within the terminal as is the case under current law, and, to conform with federal regulations, provision is made for a refund of tax paid on fuel used for racing.

HOUSE FILE 737 - Keep Iowa Beautiful Fund - Income Tax Checkoff (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act provides that taxpayers filing individual income tax returns will be allowed to designate $1 or more on the return to be paid to the Keep Iowa Beautiful Fund. The Act requires the Department of Revenue and Finance to annually remit moneys collected from the checkoff to the Keep Iowa Beautiful Fund created in the Office of the Treasurer of State. Moneys in the fund are subject to appropriation by the General Assembly annually to the Iowa Department of Transportation for the purpose of awarding financial assistance to an applicant who submits a plan for litter prevention, improving waste management and recycling efforts, or a beautification project along with its application.

   The Act provides that the Keep Iowa Beautiful Checkoff is subject to the limitation on the number of checkoffs allowed on the Iowa individual income tax return and, for that reason, is subject to repeal.

   The Act applies retroactively to January 1, 2001, for tax years beginning on or after that date.

HOUSE FILE 739 - Application of Sales and Services Tax Receipts to Bonded Indebtedness - Political Subdivisions (full text of act)

   BY COMMITTEE ON WAYS AND MEANS. This Act provides that local sales and services tax receipts and local sales and services tax for school infrastructure receipts may be applied for purposes consistent with Code Section 76.4, which authorizes the reduction of a levy for the payment of bonds when the governing authority of a political subdivision has non-taxation-related funds on hand to appropriate for the payment of bond interest or principal.

HOUSE FILE 757 - Individual Income Tax - Federal Income Tax Rebate - EXTRAORDINARY SESSION (full text of act)

   BY VAN FOSSEN, RANTS, SIEGRIST, ALONS, ARNOLD, BARRY, BAUDLER, BOAL, BODDICKER, BOGGESS, BRADLEY, BRAUNS, BROERS, CARROLL, CONNORS, CORMACK, DE BOEF, DIX, DOLECHECK, DRAKE, EDDIE, EICHHORN, FINCH, GARMAN, GIPP, HAHN, HANSEN, HEATON, HOFFMAN, HORBACH, HOVERSTEN, HUSEMAN, JACOBS, JENKINS, JOCHUM, JOHNSON, JONES, KETTERING, KLEMME, LARSON, MANTERNACH, MASCHER, MERTZ, METCALF, MILLAGE, O'BRIEN, PETERSEN, RAECKER, RAYHONS, REKOW, REYNOLDS, ROBERTS, SCHRADER, SHEY, SIEVERS, SUKUP, TEIG, TYMESON, TYRRELL, VAN ENGELENHOVEN, WARNSTADT, AND WEIDMAN. The recently enacted federal Economic Growth and Tax Relief Reconciliation Act of 2001 provides for a federal income tax rebate. Because Iowa individual income tax allows a deduction for federal income tax paid adjusted by any refunds, this tax rebate would be subject to state taxation. This Act provides that the rebate shall not be included in determining the amount of the federal income tax deduction and shall not be subject to tax. The Act applies retroactively to January 1, 2001, and applies to tax years beginning on or after that date and prior to January 1, 2002.

HOUSE JOINT RESOLUTION 5 - Nullification of Administrative Rule - Administration Fee for Local Option Sales and Services Tax (full text of resolution)

   BY METCALF, RAECKER, SIEVERS, HANSEN, JACOBS, BOAL, GRUNDBERG, VAN FOSSEN, HOVERSTEN, BUKTA, ATTEBERRY, MASCHER, HATCH, FOEGE, FALCK, WITT, PETERSEN, HUSER, MAY, FORD, CHIODO, TYRRELL, FINCH, BARRY, AND GIPP. This Joint Resolution nullifies an administrative rule of the Department of Revenue and Finance relating to the collection of a fee to recover the direct costs in the administration of a local option sales and services tax.

   The Joint Resolution takes effect April 10, 2001.

RELATED LEGISLATION

SENATE FILE 186 -- County Hospital Fund Tax Levy (Complete summary under LOCAL GOVERNMENT.)

   This Act authorizes a tax levy of $2.05 per $1,000 of taxable value for improvements and maintenance of a county hospital in a county having a population of more than 225,000, commencing with the levy of taxes payable in the fiscal year beginning July 1, 2001. The Act takes effect April 25, 2001.

SENATE FILE 524 -- Grape and Wine Development (Complete summary under AGRICULTURE.)

   This Act in part amends the wine gallonage tax law by providing that of the revenue collected from the tax on wine imported into this state for sale at wholesale and sold in this state at wholesale, which is in excess of the revenue estimated to be collected from such tax as last agreed to by the state Revenue Estimating Conference during the previous fiscal year, not more than $75,000 must be deposited into the Grape and Wine Development Fund each year to support programs to establish, improve or expand vineyards or winemaking operations in this state as provided in the Act.

HOUSE FILE 711 -- Drainage or Levee District Tax Assessment Levy (Complete summary under LOCAL GOVERNMENT.)

   This Act provides that levies for deficiencies in drainage or levee projects shall become due and payable in the same manner as the original assessment.

HOUSE FILE 713 -- County Lease or Lease-Purchase Contracts and Records, Fees, and Tax Credits Affecting Real Property (Complete summary under LOCAL GOVERNMENT.)

   This Act authorizes the county board of supervisors to approve leases or lease-purchase contracts under $25,000 without following procedures for issuing essential corporate bonds, provides new dates for reporting agricultural land and family farm tax credit information to the Director of Revenue and Finance, provides new dates for making agricultural land tax credit payments, provides for the recording of real estate installment contracts for a fee of $10, and strikes a recording requirement for name changes on real estate records from a return of marriage certificate.

HOUSE FILE 720 -- Licenses Issued by the Department of Natural Resources - Fees (Complete summary under NATURAL RESOURCES & OUTDOOR RECREATION.)

   This Act increases fees primarily for nonresidents who wish to hunt, fish, or fur harvest in this state. The fee increases range from $.50 for a fur dealer license to $69.50 for a deer hunting license. In addition, nonresidents who wish to hunt deer or wild turkey must purchase, in addition to the nonresident deer or wild turkey hunting license, a regular hunting license for $80, or $30 if under 18 years of age, and pay a wildlife habitat fee of $8. The Act also increases the wildlife habitat fee and the migratory game bird fee for residents from $5.50 to $8 and adds a new fish habitat fee of $3 for both residents and nonresidents. The Act takes effect December 15, 2001, and applies to licenses and fees for wildlife and game activities for the years beginning on or after January 1, 2002.

HOUSE FILE 722 -- Solid Waste - Tonnage Fees - Solid Waste Account Moneys (Complete summary under ENVIRONMENTAL PROTECTION.)

   This Act amends provisions of the Code relating to the amount of solid waste tonnage fees that may be retained by a solid waste planning area and relating to how moneys in the Solid Waste Account of the Groundwater Protection Fund are used.

HOUSE FILE 727 -- Mental Health, Mental Retardation, and Developmental Disabilities Services (Complete summary under HUMAN SERVICES.)

   This Act relates to mental health, mental retardation, and developmental disability services and county services funding and associated levies, and to court orders for placement of persons with a serious mental impairment.

HOUSE FILE 732 -- Appropriations - Human Services (Complete summary under APPROPRIATIONS.)

   This Act makes appropriations to the Department of Human Services and includes changes in the distribution of property tax relief payments to counties for the costs of mental health and developmental disabilities services.

HOUSE FILE 759 -- Miscellaneous Funding Restoration, Reductions, and Other Provisions - SECOND EXTRAORDINARY SESSION (Complete summary under APPROPRIATIONS.)

   This Act addresses public funding and regulatory matters, primarily making supplemental appropriations to restore appropriations that were subject to the Governor's across-the-board reductions of 4.3 percent to executive branch allotments and includes contingent language to allow for Iowa implementation if Congress enacts a federal sales tax holiday prior to the convening of the 2002 Legislative Session.

© 1998 Cornell College and League of Women Voters of Iowa

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Last update: 30-Nov-2001 03:06 PM
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