701—302.86(422) COVID-19 grant exclusion.
	302.86(1) Definitions. For purposes of this rule:
“Administering agency” means the economic development authority, the Iowa finance authority, or the department of agriculture and land stewardship.
“Grant recipient” means a person who applies for and is issued a qualifying COVID-19 grant by an administering agency.
“Issued” means the approval of the grant recipient’s application and amount for a qualifying COVID-19 grant by an administering agency, regardless of when the grant funds were paid by the administering agency.
	302.86(2) Qualifying COVID-19 grant programs.
	a. 	The department is responsible for determining whether a grant program provides a “qualifying COVID-19 grant” as defined in Iowa Code section 422.7(62) as amended by 2021 Iowa Acts, Senate File 619, section 5. In making this determination, and for purposes of the definition of “qualifying COVID-19 grant,” a grant program is “created to primarily provide COVID-19 related financial assistance to economically impacted individuals and businesses located in this state” if that grant program, at the time of its inception, was intended by the administering agency to provide a majority (more than 50 percent) of its financial assistance to or for the benefit of either or both of the following persons economically affected by the COVID-19 pandemic:
	(1)	Individuals living in Iowa.
	(2)	Businesses that are doing business in Iowa or are deriving income from sources within Iowa.
	b. 	The administering agency shall notify the director of the existence of any grant program it believes may be a qualifying COVID-19 grant program. Upon such notification, the department will request from the administering agency the information necessary to determine whether that program is a qualifying COVID-19 grant as defined in Iowa Code section 422.7(62) as amended by 2021 Iowa Acts, Senate File 619, section 5, and this rule. The administering agency shall provide the department with the requested information within the time frame prescribed by the department in its request. Failure to provide the requested information to the department shall prevent the department from determining that the grant program is a qualifying COVID-19 grant. Grant programs not specifically listed below in paragraph 40.86(2)“c” are not qualifying COVID-19 grants and are not eligible for the exclusion provided in this rule, even if that program may otherwise meet the definition of “qualifying COVID-19 grant” in Iowa Code section 422.7(62) as amended by 2021 Iowa Acts, Senate File 619, section 5.
	c. 	The following is an exhaustive list of programs that have been identified by the department as qualifying COVID-19 grants, including a general description of each program’s grant recipients, that may qualify for the exclusion from Iowa net income under subrule 40.86(3):
	(1)	Beef up Iowa program administered by the department of agriculture and land stewardship. Grant recipient is Iowa State University.
	(2)	Iowa beginning farmer debt relief fund administered by the Iowa finance authority. Grant recipients include Iowa beginning farmers.
	(3)	Iowa biofuels relief program administered by the economic development authority. Grant recipients include Iowa biodiesel and ethanol producers.
	(4)	Iowa county fairs relief fund administered by the economic development authority. Grant recipients include Iowa county and district fairs.
	(5)	Iowa COVID-19 business disruption relief program administered by the economic development authority. Grant recipients include Iowa bars, taverns, breweries, distilleries, wineries, and other similar drinking establishments.
	(6)	Iowa COVID-19 targeted small business sole operator fund administered by the economic development authority. Grant recipients include Iowa targeted small businesses.
	(7)	Iowa disposal assistance program administered by the department of agriculture and land stewardship. Grant recipients include Iowa pork and egg producers.
	(8)	Iowa eviction and foreclosure prevention program administered by the Iowa finance authority. Grant recipients include Iowa residential renters and homeowners.
	(9)	Iowa homeowner foreclosure prevention program administered by the Iowa finance authority. Grant recipients include Iowa residential homeowners.
	(10)	Iowa hospital COVID-19 relief fund administered by the economic development authority. Grant recipients include Iowa hospitals.
	(11)	Iowa livestock producer relief fund administered by the economic development authority. Grant recipients include Iowa livestock producers.
	(12)	Iowa movie theatre relief grant program administered by the economic development authority. Grant recipients include Iowa movie theaters.
	(13)	Iowa nonprofit recovery fund administered by the economic development authority. Grant recipients include Iowa nonprofit organizations.
	(14)	Iowa renewable fuel retail recovery program administered by the department of agriculture and land stewardship. Grant recipients include Iowa fuel retailers.
	(15)	Iowa rent and utility assistance program administered by the Iowa finance authority. Grant recipients include Iowa residential renters.
	(16)	Iowa residential utility disruption prevention program administered by the economic development authority. Grant recipients include Iowa residential renters and homeowners.
	(17)	Iowa restaurant and bar relief grant program administered by the economic development authority. Grant recipients include Iowa bars, breweries, brewpubs, distilleries, wineries, and restaurants.
	(18)	Iowa small business relief grant program administered by the economic development authority. Grant recipients include Iowa small businesses.
	(19)	Iowa small business utility disruption prevention program administered by the economic development authority. Grant recipients include Iowa small businesses and small nonprofit organizations.
	(20)	Local produce and protein program administered by the department of agriculture and land stewardship. Grant recipients include Iowa schools, early childcare centers, specialty crop producers, and food hubs.
	(21)	Meat processing expansion and development program administered by the department of agriculture and land stewardship. Grant recipients include Iowa meat and poultry processing businesses and employees and Iowa livestock producers.
	(22)	Pack the pantry program administered by the department of agriculture and land stewardship. Grant recipients include Iowa food pantries.
	(23)	Pass the pork program administered by the department of agriculture and land stewardship. Grant recipients include Iowa food banks.
	(24)	Turkey to table program administered by the department of agriculture and land stewardship. Grant recipients include Iowa food banks.
	302.86(3) Excluding qualifying COVID-19 grants from Iowa net income.
	a. 	Generally. A grant recipient may subtract a qualifying COVID-19 grant when calculating Iowa net income if all of the following apply:
	(1)	The grant was issued as part of a qualifying COVID-19 grant program identified in paragraph 40.86(2)“c.”
	(2)	The grant was issued on or after March 17, 2020, and on or before December 31, 2021.
	(3)	The grant funds were included in the grant recipient’s net income for a tax year ending on or after March 17, 2020, but beginning before January 1, 2024. The grant may only be subtracted to the extent it is included in the grant recipient’s net income for that qualifying tax year. A qualifying COVID-19 grant that is exempt from federal income tax, and thus not included in the grant recipient’s Iowa net income, does not qualify for an additional subtraction on the grant recipient’s Iowa return.
	b. 	Third-party payee of grant funds. A third-party payee of qualifying COVID-19 grant funds is not eligible for this exemption from Iowa income. If the proceeds of a qualifying COVID-19 grant are paid to someone other than the grant recipient, only the grant recipient on whose behalf the grant proceeds were paid may qualify for this exemption from Iowa income.
	c. 	Repayment. Grant funds that were repaid to the administering agency for any reason are not eligible for this exemption from Iowa income.
	d. 	Reporting requirements. A grant recipient who received qualifying COVID-19 grant funds and who excludes those funds when calculating Iowa net income should retain documentation to support the claimed exclusion. A grant recipient must provide such documentation to the department if requested. The required documentation may include, but is not limited to, documentation to support that the grant recipient was issued and received the grant within the qualifying periods.
This rule is intended to implement Iowa Code section 422.7(62) as amended by 2021 Iowa Acts, Senate File 619, section 5.
[ARC 5817C, IAB 8/11/21, effective 7/13/21; Editorial change: IAC Supplement 11/2/22]