TAXATION

SENATE FILE 2026 - Sales and Use Tax on Gas, Electricity, and Fuel - Exemption for Residential Customers
SENATE FILE 2121 - Sales and Use Tax Exemption for Environmental Test Laboratory Services - VETOED BY THE GOVERNOR
SENATE FILE 2295 - School Tuition Organization Tax Credit - VETOED BY THE GOVERNOR
SENATE FILE 2296 - Administration of Tax Policy and Related Internal Revenue Code Revisions
SENATE FILE 2303 - Income Tax Deduction for Private 529 Plans - VETOED BY THE GOVERNOR
S.J.R. 2010 - Proposed Constitutional Amendment - Tax or Fee Increases
HOUSE FILE 401 - Property Rehabilitation Projects - Certification of Completion Procedures - Tax Credits
HOUSE FILE 2553 - Iowa Educational Savings Plan Trust Revisions

RELATED LEGISLATION

SENATE FILE 443 - Investments in Community-Based Seed Capital Funds or Qualifying Businesses

SEE ECONOMIC DEVELOPMENT. This Act relates to investments in qualifying businesses and community-based seed capital funds.

SENATE FILE 2112 - Appropriations - Transportation

SEE APPROPRIATIONS. This Act amends provisions relating to the administration of revenues derived from the income tax checkoff for the Keep Iowa Beautiful Fund.

SENATE FILE 2167 - Descent and Distribution of Property - Disclaimers of Powers, Rights, or Interests in Property and Medical Assistance Benefits Recovery

SEE CIVIL LAW, PROCEDURE & COURT ADMINISTRATION. This Act relates to the Iowa Probate Code, including provisions relating to estate recovery of medical assistance benefits and trusts. The Act also creates the Iowa Uniform Disclaimer of Property Interest Act, which applies to disclaimers of any interest in or power over property, and includes disclaimers used for estate and gift tax planning purposes.

SENATE FILE 2187 - Municipal Utilities and Local Exchange Services

SEE ENERGY & PUBLIC UTILITIES. This Act provides that the sales price of communication services furnished by a municipally owned public utility is not exempt from sales tax.

SENATE FILE 2217 - Cattle Industry Promotion, Education, and Research - Assessments on Cattle Sales

SEE AGRICULTURE. This Act amends Code Chapter 181, which provides for an excise tax (checkoff) on the sale of cattle to support cattle production and the marketing, education and research of beef products as administered by the executive committee of the Iowa Beef Cattle Producers Association. The Act takes effect April 7, 2004.

SENATE FILE 2290 - Economic Development Incentives - New Jobs and Income, New Capital Investment, and Enterprise Zone Programs

SEE ECONOMIC DEVELOPMENT. This Act amends the sales, services and use tax refund under the New Jobs and Income Program to provide that an eligible business under the program shall be entitled to a refund for taxes attributable to the purchase of racks, shelving, and conveyor equipment to be used in a warehouse or distribution center. The Act creates a corporate tax credit for an eligible business or a supporting business under the New Jobs and Income Program or under the New Capital Investment Program. The tax credit amount is equal to the sales, services and use taxes paid by a third-party developer in the construction or equipping of a facility. The Act takes effect March 17, 2004.

SENATE FILE 2291 - Development and Rehabilitation of Real Property - Local Government Activities

SEE LOCAL GOVERNMENT. This Act relates to a local government's authority to encourage development and rehabilitation of certain real property by allowing alternative urban revitalization property tax exemption schedules for abandoned property that has been rehabilitated, by allowing a city to purchase delinquent property taxes on residential property for use as any type of residential property, and by shortening the redemption period for redemption of delinquent property taxes sold to a city for use as housing.

SENATE FILE 2298 - Government Funding, Administration, and Regulation - Appropriations and Miscellaneous Changes

SEE APPROPRIATIONS. Division X of this Act changes the time period during which project costs could be incurred for purposes of the property rehabilitation tax credit and makes changes with regard to the local option sales and services tax for school infrastructure purposes.

Division XV exempts from the state sales and use taxes the lease or rental of certain building and construction machinery and equipment and specifies that the sales of such items are not exempt when purchased for resale other than those purchased for lease or rental.

Division XVI extends the due date for the prepayment of insurance premiums taxes by insurance companies and county and state mutual insurance associations.

Division XX provides a wind energy production tax credit based upon the amount of electricity sold which is produced by an electrical production facility that uses wind to produce the electricity. The tax credit may be used to offset the tax liability under the individual or corporate income tax, franchise tax, or insurance premiums tax.

Division XXII amends provisions relating to the administration of the income tax checkoff for the Keep Iowa Beautiful Fund and establishes an income tax checkoff for the Volunteer Fire Fighter Preparedness Fund. Division XXIII repeals the section of 2003 Iowa Acts, Chapter 1, which created the Property Tax Implementation Committee.

HOUSE FILE 2207 - Substantive Code Corrections

SEE STATE GOVERNMENT. This Act contains statutory corrections that adjust language to reflect current practices, insert earlier omissions, delete redundancies and inaccuracies, delete temporary language, resolve inconsistencies and conflicts, update ongoing provisions, or remove ambiguities. Changes made include changes to provisions regarding programs and institutions governed by the Department of Administrative Services, the Department of Revenue, and their predecessor agencies; sales conducted by the Legislative Services Agency; and property tax assessment.

HOUSE FILE 2302 - Gambling - Miscellaneous Changes

SEE GAMING. This Act makes several changes to provisions governing gambling in Iowa, including the operation, licensure, regulation, fee assessment, and taxation of racetracks, excursion gambling boats, and gambling games. Regarding taxation, the Act establishes new tax rates on adjusted gross receipts over $3 million received from gambling games from excursion gambling boats and racetracks. The current effective 20 percent rate is modified to 22 percent for excursion gambling boats and 22 or 24 percent for racetracks depending on whether another licensee is located in the same county, whether the racetrack has a table games license and is operating table games, and whether the racetrack's adjusted gross receipts are less than or more than $100,000. The Act also requires racetracks to pay 22 or 24 percent depending on whether the racetrack's adjusted gross receipts are less than or more than $100,000 for the fiscal years beginning July 1, 2002, and July 1, 2003. The Act also establishes new fees for issuance of a table games license to racetracks conducting gambling games, provides for issuance of any new licenses to operate an excursion gambling boat, and requires that two assessments on current excursion gambling boats be paid on June 1, 2005, and June 1, 2006.

HOUSE FILE 2347 - Uniform Limited Partnership Act

SEE BUSINESS, BANKING & INSURANCE. This Act is based on an updated version of the Uniform Limited Partnership Act, approved by the National Conference of Commissioners on Uniform State Laws in 2002. The Act creates a new Code Chapter 488 to replace Code Chapter 487. The Act includes a schedule of fees to be paid to the Secretary of State when filing or receiving documents.

HOUSE FILE 2381 - County Hospital Budget Certification

SEE LOCAL GOVERNMENT. This Act changes from March 1 to March 15 the budget certification deadline for county hospital budgets.

HOUSE FILE 2431 - Educational Institutions Under University-Based Research Utilization Program

SEE ECONOMIC DEVELOPMENT. This Act relates to eligibility for a tax credit under the University-Based Research Utilization Program.

HOUSE FILE 2541 - Utility Replacement Taxes

SEE ENERGY & PUBLIC UTILITIES. This Act amends provisions of Code Chapter 437A to add to the definition of "major addition" to include acquisition of electric transmission operating property of more than $1 million and the date for reporting estimated replacement taxes to the Department of Revenue.

HOUSE FILE 2544 - Real Estate Records and Transactions

SEE LOCAL GOVERNMENT. This Act broadens the $5 fee collected by the county auditor for each property transfer.

HOUSE FILE 2557 - Securities Regulation

SEE BUSINESS, BANKING & INSURANCE. This Act provides for the regulation of securities by revising Code Chapter 502, Iowa's "Blue Sky Law," including providing for fees. The Act takes effect January 1, 2005.

HOUSE FILE 2561 - Job Corps Center New Jobs Tax Credit - VETOED BY THE GOVERNOR

SEE ECONOMIC DEVELOPMENT. This bill would have created a Job Corps Center New Jobs Tax Credit to be used against personal or corporate income tax liability.

HOUSE FILE 2567 - Transportation and Disposal of Dead Animals SEE AGRICULTURE. This Act provides for the transportation and rendering of animal carcasses by persons licensed by the Department of Agriculture and Land Stewardship and provides for related fees.

HOUSE FILE 2581 - Miscellaneous Economic Development, Taxation, Regulatory, and Employment-Related Changes — EXTRAORDINARY SESSION

SEE ECONOMIC DEVELOPMENT. Division IX of the Act makes additions to the individual and corporate income taxes to couple with the changes made in federal legislation that increases the allowance for expensing certain depreciable assets and that allows a federal bonus depreciation of 50 percent for property acquired after May 5, 2003, and before January 1, 2005. The coupling with the increase in expensing allowance is retroactively applicable to tax years beginning on or after January 1, 2003. The coupling with the 50 percent bonus depreciation applies retroactively to tax years ending after May 5, 2003. The Act takes effect September 7, 2004.

TAXATION

SENATE FILE 2026 - Sales and Use Tax on Gas, Electricity, and Fuel - Exemption for Residential Customers (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This Act sets the state sales and use tax rates on gas, electricity and fuel for residential customers as follows: 2 percent for the second half of the 2004 calendar year; 1 percent for the 2005 calendar year; and 0 percent, total state exemption, for the 2006 and subsequent calendar years. The Act continues the present phaseout of the sales and use tax rates that began January 1, 2002, with a rate of 4 percent.

SENATE FILE 2121 - Sales and Use Tax Exemption for Environmental Test Laboratory Services - VETOED BY THE GOVERNOR (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This bill would have exempted from the sales and use taxes the furnishing of environmental test laboratory services, including field testing services and mobile environmental test laboratories.

SENATE FILE 2295 - School Tuition Organization Tax Credit - VETOED BY THE GOVERNOR (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This bill would have provided for an individual income tax credit equal to 75 percent of the voluntary contributions made to a school tuition organization that is exempt from federal income tax. The tax credit would be limited to $700 for single individuals and $800 for married persons filing jointly. If married individuals filed separately, the $800 would have been divided between them based upon each individual's net income. The bill required the organization to use at least 90 percent of total contributions to provide educational scholarships or tuition grants to children attending nonpublic elementary or secondary schools or preschools for disabled students that are accredited under state law and adhere to the federal Civil Rights Act of 1964 and the state Civil Rights Law.

The bill would have applied to tax years beginning on or after January 1, 2005, but before January 1, 2013.

SENATE FILE 2296 - Administration of Tax Policy and Related Internal Revenue Code Revisions (full text of bill)

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

1. Update the Iowa Code 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 2003 federal changes in the research activities credit.
2. Permit the Department of Revenue to appeal decisions of the State Board of Tax Review to district court.
3. Amend the administrative levy and the administrative wage assignment, which apply to the debtors of the state, as follows:
   • Limit recovery by a debtor in district court when a wrongful administrative levy or wage assignment is alleged and limit the ability of a debtor to litigate administrative levies and wage assignments.
   • Specify that a challenge to an administrative levy or administrative wage assignment will result in the facts of the levy or assignment being reviewed and not the amount or validity of the tax.
   • Provide that the administrative levy remedy is cumulative and that the election to use such remedy does not forestall the use of any other remedy provided by law.
   • Provide more uniformity between the administrative wage assignment statute and the administrative levy statute and reflect actual practice.
4. Exclude from gross receipts for sales and use tax purposes trade discounts given or allowed by manufacturers, distributors or wholesalers to retailers or payments made by such persons to retailers to reduce the sales price of such persons' products. The exclusion takes effect April 14, 2004, and is retroactive to January 1, 1997, with refunds arising from such retroactivity limited to $25,000. Claims for refunds must be filed prior to October 1, 2004. The exclusion does not apply to coupons issued to consumers.
5. Give priority to the Department of Revenue and, in certain instances, to local jurisdictions in the collection of taxes by treating them as trust fund taxes.
6. Define "sales price" to include rents, royalties, and copyright and license fees.
7. Clarify that it is the Legislative Services Agency and not the Legislative Service Bureau that is not a retailer for purposes of sales under the sales and use taxes. This means sales by the agency are exempt from such taxes.
8. Expand the exemption from the sales and use taxes of molding and sand handling machinery and equipment to include replacement parts and the costs of utilities and installation costs associated with such machinery and equipment.
9. Place the exemption from Iowa sales and use tax applicable to the reciprocal shipment of wine contained in Code Section 123.187 in the sales and use taxes chapter of the Code.
10. Require the owner of Section 42 property under the Internal Revenue Code to notify the assessor when the property is withdrawn from the Internal Revenue Code program. A monetary penalty of $500 is also included if this notification is not forthcoming.
11. Provide that an inheritance tax return is not required to be filed if all property is passed to an exempt entity. Iowa law currently requires estates of $25,000 or more to file a return regardless of to whom the property passes. In the case where a return is not required to be filed and the estate involves real property, an affidavit of such fact must be filed.
12. Extend from 30 to 60 days the period of time the Director of Revenue has to request an appraisal after an inheritance tax return is filed.
13. Impose a penalty against any person found to have altered a cigarette tax stamp.
14. Extend the statute of limitations for cigarette and tobacco tax audits and imposition of penalties for various violations from two to three years. This three year period is consistent with all other taxes.
15. Increase the penalty for possessing more than 2,000 unstamped cigarettes (10 cartons).
16. Make it unlawful to ship or import into Iowa or sell, distribute or possess counterfeit cigarettes and allow for the confiscation and destruction of those cigarettes. "Counterfeit cigarettes" are cigarettes that are marked in such a manner that would lead someone to believe the cigarettes were of a specific known brand or manufacturer, though the markings are false or otherwise used without the consent of the cigarette manufacturer.
17. Place restrictions on manufacturers, distributors, wholesalers, and retailers in providing cigarette samples to the public.
18. Repeal the requirement that two voter registration forms be inserted in each individual income tax instruction booklet every other year. In addition, the official electronic Iowa voter registration form and a link to the Secretary of State's website are to be placed on the Department of Revenue's official website.

SENATE FILE 2303 - Income Tax Deduction for Private 529 Plans - VETOED BY THE GOVERNOR (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This bill would have allowed for an individual income tax deduction for contributions made to a qualified tuition program established by one or more educational institutions pursuant to Section 529 of the federal Internal Revenue Code (529 Plan). The program is the counterpart to the Iowa Educational Savings Plan Trust (state program under the 529 Plan) and the bill would have allowed a taxpayer to make contributions to a trust set up in the name of a designated beneficiary to pay the costs associated with higher education. The amount that would have been deducted is the maximum amount that may be deducted for contributions to the state program ($2,000, to be adjusted for inflation) less any amount that had been deducted for the tax year for contributions to the state program.

The bill would also have provided that any refunds or withdrawals made which the taxpayer receives and which are not used for qualified tuition costs would be included in income to the extent previously deducted.

The bill would have applied retroactively to January 1, 2004, for tax years beginning on or after that date.

SENATE JOINT RESOLUTION 2010 - Proposed Constitutional Amendment - Tax or Fee Increases(full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This Joint Resolution proposes an amendment to the Constitution of the State of Iowa requiring that certain tax or fee increases will not take effect unless approved by majority vote at a state general election.

The amendment requires that a law or laws increasing any taxes or fees that would result in new annual revenue of more than 1 percent of total State General Fund revenue received in the fiscal year preceding enactment of the law or laws must receive voter approval at a state general election. The amendment defines "new annual revenue" and "increase."

The amendment allows the General Assembly, at the Governor's request and by two thirds vote, to increase taxes in emergency situations.

The amendment allows any citizen or taxpayer to bring suit to enforce compliance with the voter approval requirement within two years of adoption of a tax or fee increase. The amendment also provides that the General Assembly shall enact laws to implement the amendment.

The Joint Resolution will be referred to the next General Assembly. If the next General Assembly adopts the Joint Resolution, the amendment will be submitted to the voters for ratification.

HOUSE FILE 401 - Property Rehabilitation Projects - Certification of Completion Procedures - Tax Credits (full text of bill)

BY COMMITTEE ON ECONOMIC GROWTH. This Act gives the responsibility to the Department of Cultural Affairs to establish by administrative rule the procedures for the application, review, selection, and awarding of certificates of completion of property rehabilitation projects for which tax credits under the individual and corporate income, franchise, and insurance premiums taxes would be available.

HOUSE FILE 2553 - Iowa Educational Savings Plan Trust Revisions (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This Act makes several technical and substantive changes regarding operation of the Iowa Educational Savings Plan Trust pursuant to Code Chapter 12D.

The Act eliminates the endowment fund previously established pursuant to Code Section 12D.4 and eliminates provisions establishing a penalty assessed by the Treasurer of State for cancellation of a participation agreement. The inclusion of penalty provisions had previously been required in order for plan qualification pursuant to Section 529 of the Internal Revenue Code, but is no longer necessary due to the incorporation of such provisions in federal tax legislation. The Act further eliminates age restrictions that limited plan participation to individuals establishing an account for a child prior to the child's attainment of age 18. Such restrictions are not required for plan qualification pursuant to Section 529 of the Internal Revenue Code. Consistent with the elimination of beneficiary age restrictions, the Act additionally eliminates a provision providing for a refund of the balance remaining in a participant's account after the 30-day period following the beneficiary's 30th birthday.

The Act also adjusts plan provisions intended to promote clarity or increase flexibility. The Act adds a provision to the definition of "higher education costs," providing that such costs include, in the case of a special needs beneficiary, expenses for special needs services incurred in connection with enrollment or attendance at an institution of higher education. The Act allows payments to be made by the Treasurer of State not only to institutions of higher learning, but also to the participant and the beneficiary of the plan. The Act eliminates the current minimum contribution limit of $50 per year and deletes provisions that limited participation to individuals, thereby authorizing participation by entities such as trusts or estates. Additionally, the Act provides that refunds to participants made upon the termination of participation agreements can include or extend to a partial nonqualified distribution.

The Act also provides intent language regarding the establishment by the Treasurer of State of an additional educational savings plan option. The Act provides that the additional option shall be marketed through licensed securities agents, who may be compensated from the product distributor, fund company, insurance company, or other distribution agent for their activities in marketing and advising investors regarding the program. The Act provides that the additional option shall be established by December 31, 2005.

The Act takes effect April 15, 2004.