Senate Amendment to House File 2641 H-8319 Amend House File 2641, as amended, passed, and reprinted by 1 the House, as follows: 2 1. By striking everything after the enacting clause and 3 inserting: 4 < DIVISION I 5 DEPARTMENT OF REVENUE ADMINISTRATION AND PENALTY PROVISIONS 6 Section 1. Section 421.6, Code 2020, is amended to read as 7 follows: 8 421.6 Definition of return. 9 For purposes of this title , unless the context otherwise 10 requires, “return” means any tax or information return, amended 11 return, declaration of estimated tax, or claim for refund 12 that is required by, provided for, or permitted under, the 13 provisions of this title or section 533.329, and which is filed 14 with the department by, on behalf of, or with respect to any 15 person. “Return” includes any amendment or supplement to these 16 items, including supporting schedules, attachments, or lists 17 which are supplemental to or part of the filed return. 18 Sec. 2. Section 421.17, Code 2020, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 36. To enter into an agreement pursuant 21 to chapter 28E with the state fair organized under chapter 173 22 or with a fair defined in section 174.1, to collect and remit 23 taxes and fees from sellers making sales at retail on property 24 owned, controlled, or operated by a fair or through events 25 conducted by a fair. 26 Sec. 3. Section 421.27, subsection 1, Code 2020, is amended 27 to read as follows: 28 1. Failure to timely file a return or deposit form. 29 a. If a person fails to file with the department on or 30 before the due date a return or deposit form there shall be 31 added to the tax shown due or required to be shown due a penalty 32 of ten percent of the tax shown due or required to be shown due. 33 b. In the case of a specified business with no tax shown 34 due or required to be shown due that fails to timely file an 35 -1- HF2641.4512.S (1) 88 mb 1/ 86 #1.
income return, the specified business shall pay the greater of 1 the following penalty amounts: 2 (1) Two hundred dollars. 3 (2) An amount equal to ten percent of the imputed Iowa 4 liability of the specified business, not to exceed twenty-five 5 thousand dollars. 6 c. The penalty, if assessed pursuant to paragraph “a” or 7 “b” , shall be waived by the department upon a showing of any of 8 the following conditions: 9 a. (1) At An amount of tax greater than zero is required to 10 be shown due and at least ninety percent of the tax required to 11 be shown due has been paid by the due date of the tax. 12 b. (2) Those taxpayers who are required to file quarterly 13 returns, or monthly or semimonthly deposit forms may have one 14 late return or deposit form within a three-year period. The 15 use of any other penalty exception will not count as a late 16 return or deposit form for purposes of this exception. 17 c. (3) The death of a taxpayer, death of a member of 18 the immediate family of the taxpayer, or death of the person 19 directly responsible for filing the return and paying the tax, 20 when the death interferes with timely filing. 21 d. (4) The onset of serious, long-term illness or 22 hospitalization of the taxpayer, of a member of the immediate 23 family of the taxpayer, or of the person directly responsible 24 for filing the return and paying the tax. 25 e. (5) Destruction of records by fire, flood, or other act 26 of God. 27 f. (6) The taxpayer presents proof that the taxpayer 28 relied upon applicable, documented, written advice specifically 29 made to the taxpayer, to the taxpayer’s preparer, or to an 30 association representative of the taxpayer from the department, 31 state department of transportation, county treasurer, or 32 federal internal revenue service, whichever is appropriate, 33 that has not been superseded by a court decision, ruling by a 34 quasi-judicial body, or the adoption, amendment, or repeal of 35 -2- HF2641.4512.S (1) 88 mb 2/ 86
a rule or law. 1 g. (7) Reliance upon results in a previous audit was a 2 direct cause for the failure to file where the previous audit 3 expressly and clearly addressed the issue and the previous 4 audit results have not been superseded by a court decision, or 5 the adoption, amendment, or repeal of a rule or law. 6 h. (8) Under rules prescribed by the director, the taxpayer 7 presents documented proof of substantial authority to rely 8 upon a particular position or upon proof that all facts and 9 circumstances are disclosed on a return or deposit form. 10 i. (9) The return, deposit form, or payment is timely, 11 but erroneously, mailed with adequate postage to the internal 12 revenue service, another state agency, or a local government 13 agency and the taxpayer provides proof of timely mailing with 14 adequate postage. 15 j. (10) The tax has been paid by the wrong licensee and the 16 payments were timely remitted to the department for one or more 17 tax periods prior to notification by the department. 18 k. (11) The failure to file was discovered through a 19 sanctioned self-audit program conducted by the department. 20 l. (12) If the availability of funds in payment of tax 21 required to be made through electronic funds transfer is 22 delayed and the delay of availability is due to reasons beyond 23 the control of the taxpayer. “Electronic funds transfer” means 24 any transfer of funds, other than a transaction originated 25 by check, draft, or similar paper instrument, that is 26 initiated through an electronic terminal telephone, computer, 27 magnetic tape, or similar device for the purpose of ordering, 28 instructing, or authorizing a financial institution to debit or 29 credit an account. 30 m. (13) The failure to file a timely inheritance tax return 31 resulting solely from a disclaimer that required the personal 32 representative to file an inheritance tax return. The penalty 33 shall be waived if such return is filed and any tax due is paid 34 within the later of nine months from the date of death or sixty 35 -3- HF2641.4512.S (1) 88 mb 3/ 86
days from the delivery or filing of the disclaimer pursuant to 1 section 633E.12 . 2 n. (14) That an Iowa inheritance tax return is filed for 3 an estate within the later of nine months from the date of 4 death or sixty days from the filing of a disclaimer by the 5 beneficiary of the estate refusing to take the property or 6 right or interest in the property. 7 Sec. 4. Section 421.27, subsections 4 and 6, Code 2020, are 8 amended to read as follows: 9 4. Willful failure to file or deposit. 10 a. (1) In case of willful failure to file a return 11 or deposit form with the intent to evade tax or a filing 12 requirement , or in case of willfully filing a false return 13 or deposit form with the intent to evade tax, in lieu of the 14 penalties otherwise provided in this section , a penalty of 15 seventy-five percent shall be added to the amount shown due or 16 required to be shown as tax on the return or deposit form. 17 (2) In case of a willful failure by a specified business to 18 file an income return with no tax shown due or required to be 19 shown due with intent to evade a filing requirement, or in case 20 of willfully filing a false income return with no tax shown due 21 or required to be shown due with the intent to evade reporting 22 of Iowa-source income, the penalty imposed shall be the greater 23 of the following amounts: 24 (a) One thousand five hundred dollars. 25 (b) An amount equal to seventy-five percent of the imputed 26 Iowa liability of the specified business. 27 (3) If penalties are applicable for failure to file a 28 return or deposit form and failure to pay the tax shown due or 29 required to be shown due on the return or deposit form, the 30 penalty provision for failure to file shall be in lieu of the 31 penalty provisions for failure to pay the tax shown due or 32 required to be shown due on the return or deposit form, except 33 in the case of willful failure to file a return or deposit form 34 or willfully filing a false return or deposit form with intent 35 -4- HF2641.4512.S (1) 88 mb 4/ 86
to evade tax. 1 b. The penalties imposed under this subsection are not 2 subject to waiver. 3 6. Improper receipt of payments Liability —— fraudulent 4 practice . A person who makes an erroneous application for 5 refund, credit, reimbursement, rebate, or other payment shall 6 be liable for any overpayment received or tax liability reduced 7 plus interest at the rate in effect under section 421.7 . 8 a. In addition, a person who willfully commits a fraudulent 9 practice and is liable for a penalty equal to seventy-five 10 percent of the refund, credit, exemption, reimbursement, 11 rebate, or other payment or benefit being claimed if the person 12 does any of the following: 13 (1) Willfully makes a false or frivolous application for 14 refund, credit , exemption , reimbursement, rebate, or other 15 payment or benefit with intent to evade tax or with intent to 16 receive a refund, credit, exemption, reimbursement, rebate, 17 or other payment or benefit, to which the person is not 18 entitled is guilty of a fraudulent practice and is liable for a 19 penalty equal to seventy-five percent of the refund, credit, 20 reimbursement, rebate, or other payment being claimed . 21 (2) Willfully submits any false information, document, 22 or document containing false information in support of an 23 application for refund, credit, exemption, reimbursement, 24 rebate, or other payment or benefit with the intent to evade 25 tax. 26 (3) Willfully submits with any false information, document, 27 or document containing false information in support of an 28 application for refund with the intent to receive a refund, 29 credit, exemption, reimbursement, rebate, or other payment 30 benefit, to which the person is not entitled. 31 b. Payments, penalties, and interest due under this 32 subsection may be collected and enforced in the same manner as 33 the tax imposed. 34 Sec. 5. Section 421.27, Code 2020, is amended by adding the 35 -5- HF2641.4512.S (1) 88 mb 5/ 86
following new subsections: 1 NEW SUBSECTION . 8. Definitions. As used in this section: 2 a. “Imputed Iowa liability” means any of the following: 3 (1) In the case of corporations other than corporations 4 described in section 422.34 or section 422.36, subsection 5, 5 the corporation’s Iowa net income after the application of the 6 Iowa business activity ratio, if applicable, multiplied by the 7 top income tax rate imposed under section 422.33 for the tax 8 year. 9 (2) In the case of financial institutions as defined in 10 section 422.61, the financial institution’s Iowa net income 11 after the application of the Iowa business activity ratio, if 12 applicable, multiplied by the franchise tax rate imposed under 13 section 422.63 for the tax year. 14 (3) In this case of all other entities, including 15 corporations described in section 422.36, subsection 5, and all 16 other entities required to file an information return under 17 section 422.15, subsection 2, the entity’s Iowa net income 18 after the application of the Iowa business activity ratio, if 19 applicable, multiplied by the top income tax rate imposed under 20 section 422.5A for the tax year. 21 b. “Income return” means an income tax return or information 22 return required under section 422.15, subsection 2, or section 23 422.36, 422.37, or 422.62. 24 c. “Specified business” means a partnership or other entity 25 required to file an information return under section 422.15, 26 subsection 2, a corporation required to file a return under 27 section 422.36 or 422.37, or a financial institution required 28 to file a return under section 422.62. 29 NEW SUBSECTION . 9. Additional penalty. In addition to the 30 penalties imposed by this section, if a taxpayer fails to file 31 a return within ninety days of written notice by the department 32 that the taxpayer is required to do so, there shall be added to 33 the amount shown due or required to be shown due a penalty in 34 the amount of one thousand dollars. 35 -6- HF2641.4512.S (1) 88 mb 6/ 86
Sec. 6. NEW SECTION . 421.27A Perjury. 1 1. For purposes of this title, a form, application, or any 2 other documentation required or requested by the department 3 shall be required to be certified under penalty of perjury that 4 the information contained in the form, application, or other 5 documentation is true and correct. 6 2. A person commits a class “D” felony under any of the 7 following circumstances: 8 a. The person makes a form, application, or other document 9 containing false information in support of an application for 10 refund, credit, exemption, reimbursement, rebate, or other 11 payment or benefit with intent to evade tax. 12 b. The person makes a form, application, or other document 13 containing false information with intent to unlawfully receive 14 a refund, credit, exemption, reimbursement, rebate, or other 15 payment or benefit, to which the person is not entitled. 16 c. The person knowingly makes any false affidavit. 17 d. The person knowingly swears or affirms falsely to any 18 matter or thing required by the terms of this title to be sworn 19 to or affirmed. 20 Sec. 7. NEW SECTION . 421.59 Power of attorney —— authority 21 to act on behalf of taxpayer. 22 1. a. A taxpayer may authorize an individual to act on 23 behalf of the taxpayer by filing a power of attorney with the 24 department, on a form prescribed by the department. 25 b. A taxpayer may at any time revoke a power of attorney 26 filed with the department pursuant to subsection 1. Upon 27 processing of the taxpayer’s revocation of a power of attorney, 28 the department shall cease honoring the power of attorney. 29 2. The department may authorize the following persons to act 30 and receive information on behalf of and exercise all of the 31 rights of a taxpayer, regardless of whether a power of attorney 32 has been filed pursuant to subsection 1: 33 a. A guardian, conservator, or custodian appointed by a 34 court, if a taxpayer has been deemed legally incompetent by a 35 -7- HF2641.4512.S (1) 88 mb 7/ 86
court. The authority of the appointee to act on behalf of the 1 taxpayer shall be limited to the extent specifically stated in 2 the order of appointment. 3 (1) Upon request, a guardian, conservator, or custodian of 4 a taxpayer shall submit to the department a copy of the court 5 order appointing the guardian, conservator, or custodian. 6 (2) The department may petition the court that appointed the 7 guardian, conservator, or custodian to verify the appointment 8 or to determine the scope of the appointment. 9 b. A receiver appointed pursuant to chapter 680. An 10 appointed receiver shall be limited to act on behalf of the 11 taxpayer by the authority stated in the order of appointment. 12 (1) Upon the request of the department, a receiver shall 13 submit to the department a copy of the court order appointing 14 the receiver. 15 (2) The department may petition the court that appointed the 16 receiver to verify the appointment or to determine the scope 17 of the appointment. 18 c. An individual who has been named as an authorized 19 representative on a fiduciary return of income filed under 20 section 422.14 or a tax return filed under chapter 450. 21 d. (1) An individual holding the following title or 22 position within a corporation, association, partnership, or 23 other business entity: 24 (a) A president or chief executive officer, or any other 25 officer of the corporation or association if the president or 26 chief executive officer certifies that the officer has the 27 authority to legally bind the corporation or association. 28 (b) A designated partner duly authorized to act on behalf 29 of the partnership. 30 (c) A person authorized to act on behalf of a limited 31 liability company in tax matters pursuant to a valid statement 32 of authority. 33 (2) An individual seeking to act on behalf of a taxpayer 34 pursuant to this paragraph shall file an affidavit with the 35 -8- HF2641.4512.S (1) 88 mb 8/ 86
department attesting to the identity and qualifications of the 1 individual and any necessary certifications required under this 2 paragraph. The department may require any documents or other 3 evidence to demonstrate the individual has authority to act on 4 behalf of the taxpayer before the department. 5 e. A licensed attorney who has appeared on behalf of the 6 taxpayer or the taxpayer’s estate in a court proceeding. 7 Authorization under this paragraph is limited to those matters 8 within the scope of the representation. 9 f. A parent or guardian of a taxpayer who has not reached 10 the age of majority where the parent or guardian has signed the 11 taxpayer’s return on behalf of the taxpayer. Authorization 12 under this paragraph is limited to those matters relating to 13 the return signed by the parent or guardian. Authorization 14 under this paragraph automatically terminates when the taxpayer 15 reaches the age of majority pursuant to section 599.1. 16 3. a. In lieu of executing a power of attorney pursuant 17 to subsection 1, the department may enter into a memorandum of 18 understanding with the taxpayer for each employee, officer, 19 or member of a third-party entity engaged with or otherwise 20 hired by a taxpayer to manage the tax matters of the taxpayer, 21 to permit the disclosure of confidential tax information to 22 the third-party entity and the authority to act on behalf of 23 the taxpayer. The memorandum of understanding shall adhere to 24 requirements as established by the director. 25 b. The memorandum of understanding shall be signed by 26 the director, the taxpayer, and the third-party entity or an 27 authorized representative of the third-party entity. 28 c. At any time, a taxpayer may unilaterally revoke 29 a memorandum of understanding entered into pursuant to 30 this subsection by filing a notice of revocation with the 31 department. Upon the filing of such a revocation by the 32 taxpayer, the department shall cease honoring the memorandum 33 of understanding. 34 4. The department shall adopt rules pursuant to chapter 17A 35 -9- HF2641.4512.S (1) 88 mb 9/ 86
to administer this section. 1 Sec. 8. Section 421.60, subsection 2, paragraph a, 2 subparagraph (2), Code 2020, is amended to read as follows: 3 (2) The statement prepared in accordance with this 4 paragraph shall be available on the department’s internet site. 5 The internet site for this information shall be distributed by 6 the department to all taxpayers at the first contact by the 7 department with respect to the determination or collection of 8 any tax, except in the case of simply providing tax forms. 9 Sec. 9. Section 421.60, Code 2020, is amended by adding the 10 following new subsection: 11 NEW SUBSECTION . 11. Electronic communication. 12 Notwithstanding any provision of the law to the contrary, for 13 purposes of this title and sections 321.105A and 533.329, a 14 taxpayer may elect to receive any notices, correspondence, 15 or other communication electronically that the department is 16 required to send by regular mail. The director may establish 17 procedures and limitations for obtaining this election from the 18 taxpayer. 19 Sec. 10. Section 421.62, subsection 1, Code 2020, is amended 20 by adding the following new paragraph: 21 NEW PARAGRAPH . 0b. “Income tax return or claim for refund” 22 means any tax return or claim for refund under chapter 422, 23 excluding withholding returns under section 422.16. 24 Sec. 11. Section 421.62, subsection 1, paragraph c, 25 subparagraph (1), Code 2020, is amended to read as follows: 26 (1) “Tax return preparer” means any individual who, for 27 a fee or other consideration, prepares ten or more income 28 tax returns or claims for refund under chapter 422 during 29 a calendar year, or who assumes final responsibility for 30 completed work on such income tax returns or claims for refund 31 under chapter 422 on which preliminary work has been done by 32 another individual. 33 Sec. 12. Section 421.62, subsection 2, paragraph a, Code 34 2020, is amended to read as follows: 35 -10- HF2641.4512.S (1) 88 mb 10/ 86
a. On or after January 1, 2020, a tax return preparer 1 is required to include the tax return preparer’s PTIN on 2 any income tax return or claim for refund prepared by the 3 tax return preparer and filed under chapter 422 with the 4 department . 5 Sec. 13. Section 421.64, subsection 1, Code 2020, is amended 6 to read as follows: 7 1. For purposes of this section , “tax return preparer” means 8 the same as defined in section 421.61 421.62 . 9 Sec. 14. Section 422.20, subsections 1 and 2, Code 2020, are 10 amended to read as follows: 11 1. It shall be unlawful for any present or former officer 12 or employee of the state to willfully or recklessly divulge or 13 to make known in any manner whatever not provided by law to 14 any person the amount or source of income, profits, losses, 15 expenditures, or any particular thereof, set forth or disclosed 16 in any income return, or to permit any income return or copy 17 thereof or any book containing any abstract or particulars 18 thereof to be seen or examined by any person except as provided 19 by law; and it shall be unlawful for any person to willfully or 20 recklessly print or publish in any manner whatever not provided 21 by law any income return, or any part thereof or source of 22 income, profits, losses, or expenditures appearing in any 23 income return; and any person committing an offense against the 24 foregoing provision shall be guilty of a serious misdemeanor. 25 If the offender is an officer or employee of the state, such 26 person shall also be dismissed from office or discharged from 27 employment. Nothing herein shall prohibit turning over to duly 28 authorized officers of the United States or tax officials of 29 other states state information and income returns pursuant 30 to agreement between the director and the secretary of the 31 treasury of the United States or the secretary’s delegate or 32 pursuant to a reciprocal agreement with another state. 33 2. It is unlawful for an officer, employee, or agent, or 34 former officer, employee, or agent of the state to willfully 35 -11- HF2641.4512.S (1) 88 mb 11/ 86
or recklessly disclose to any person, except as authorized 1 in subsection 1 of this section , any federal tax return 2 or return information as defined in section 6103(b) of the 3 Internal Revenue Code. It is unlawful for a person to whom 4 any federal tax return or return information, as defined in 5 section 6103(b) of the Internal Revenue Code, is disclosed 6 in a manner unauthorized by subsection 1 of this section 7 to thereafter willfully or recklessly print or publish in 8 any manner not provided by law any such return or return 9 information. A person violating this provision is guilty of 10 a serious misdemeanor. 11 Sec. 15. Section 422.20, subsection 3, paragraph a, Code 12 2020, is amended to read as follows: 13 a. Unless otherwise expressly permitted by section 8A.504 , 14 section 8G.4 , section 11.41 , section 96.11, subsection 6 , 15 section 421.17, subsections 22, 23, and 26 , section 421.17, 16 subsection 27 , paragraph “k” , section 421.17, subsection 31 , 17 section 252B.9 , section 321.40, subsection 6 , sections 321.120 , 18 421.19 , 421.28 , 421.59, 422.72 , and 452A.63 , this section , or 19 another provision of law, a tax return, return information, or 20 investigative or audit information shall not be divulged to any 21 person or entity, other than the taxpayer, the department, or 22 internal revenue service for use in a matter unrelated to tax 23 administration. 24 Sec. 16. Section 422.20, Code 2020, is amended by adding the 25 following new subsections: 26 NEW SUBSECTION . 3A. The director may disclose the tax 27 return of a partnership, limited liability company, or S 28 corporation, any such return information, or any investigative 29 information related to the return, to any person who was a 30 partner, shareholder, or member of such an entity during any 31 part of the period covered by the return. 32 NEW SUBSECTION . 3B. a. Prior to being made available for 33 public inspection, the department shall redact from the record 34 in an appeal or contested case the following information from 35 -12- HF2641.4512.S (1) 88 mb 12/ 86
any pleading, exhibit, attachment, motion, written evidence, 1 final order, decision, or opinion: 2 (1) A financial account number. 3 (2) An account number generated by the department to 4 identify an audit or examination. 5 (3) A social security number. 6 (4) A federal employer identification number. 7 (5) The name of a minor. 8 (6) A medical record or other medical information. 9 b. Upon a motion filed by the taxpayer, the department 10 may redact from the record in an appeal or contested case any 11 other information from a pleading, exhibit, attachment, motion, 12 or written evidence, if the taxpayer proves by clear and 13 convincing evidence that the release of such information would 14 disclose a trade secret or be a clear, unwarranted invasion of 15 personal privacy. 16 c. Notwithstanding paragraph “a” , when making final orders, 17 decisions, or opinions available for public inspection, the 18 department may disclose the items in paragraph “a” if the 19 department determines such information is necessary to the 20 resolution or decision of the appeal or case. 21 d. Except as described in paragraphs “a” and “b” , all 22 information contained in a pleading, exhibit, attachment, 23 motion, written evidence, final order, decision, opinion, 24 and the record in an appeal or contested case is subject to 25 examination to the extent provided by chapter 22. 26 Sec. 17. Section 422.25, subsection 1, Code 2020, is amended 27 by adding the following new paragraph: 28 NEW PARAGRAPH . c. The period of examination and 29 determination is unlimited under this title in the case of 30 any action by the department to recover or rescind any tax 31 expenditure as defined by section 2.48, subsection 1, or any 32 other incentive or assistance, due to a failure to meet or 33 maintain the requirements of a program administered by the 34 economic development authority. 35 -13- HF2641.4512.S (1) 88 mb 13/ 86
Sec. 18. Section 422.69, subsection 1, Code 2020, is amended 1 to read as follows: 2 1. All fees, taxes, interest, and penalties imposed under 3 this chapter shall be paid to the department in the form of 4 remittances payable to the state treasurer department and the 5 department shall transmit each payment daily to the state 6 treasurer. 7 Sec. 19. Section 422.72, subsection 1, paragraph a, 8 subparagraph (1), Code 2020, is amended to read as follows: 9 (1) It is unlawful for the director, or any person having 10 an administrative duty under this chapter , or any present or 11 former officer or other employee of the state authorized by the 12 director to examine returns, to willfully or recklessly divulge 13 in any manner whatever, the business affairs, operations, or 14 information obtained by an investigation under this chapter of 15 records and equipment of any person visited or examined in the 16 discharge of official duty, or the amount or source of income, 17 profits, losses, expenditures or any particular thereof, set 18 forth or disclosed in any return, or to willfully or recklessly 19 permit any return or copy of a return or any book containing 20 any abstract or particulars thereof to be seen or examined by 21 any person except as provided by law. 22 Sec. 20. Section 422.72, Code 2020, is amended by adding the 23 following new subsection: 24 NEW SUBSECTION . 7A. a. Prior to being made available for 25 public inspection, the department shall redact from the record 26 in an appeal or contested case the following information from 27 any pleading, exhibit, attachment, motion, written evidence, 28 final order, decision, or opinion: 29 (1) A financial account number. 30 (2) An account number generated by the department to 31 identify an audit or examination. 32 (3) A social security number. 33 (4) A federal employer identification number. 34 (5) The name of a minor. 35 -14- HF2641.4512.S (1) 88 mb 14/ 86
(6) A medical record or other medical information. 1 b. Upon a motion filed by the taxpayer, the department 2 may redact from the record in an appeal or contested case any 3 other information from a pleading, exhibit, attachment, motion, 4 or written evidence, if the taxpayer proves by clear and 5 convincing evidence that the release of such information would 6 disclose a trade secret or be a clear, unwarranted invasion of 7 personal privacy. 8 c. Notwithstanding paragraph “a” , when making final orders, 9 decisions, or opinions available for public inspection, the 10 department may disclose the items in paragraph “a” if the 11 department determines such information is necessary to the 12 resolution or decision of the appeal or case. 13 d. Except as described in paragraphs “a” and “b” , all 14 information contained in a pleading, exhibit, attachment, 15 motion, written evidence, final order, decision, opinion, 16 and the record in an appeal or contested case is subject to 17 examination to the extent provided by chapter 22. 18 Sec. 21. Section 423.37, Code 2020, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 4. The period of limitation on examination 21 and determination is unlimited under this title in the case 22 of any action by the department to recover or rescind any tax 23 expenditure as defined by section 2.48, subsection 1, or any 24 other incentive or assistance, due to a failure to meet or 25 maintain the requirements of a program administered by the 26 economic development authority. 27 Sec. 22. Section 428A.1, subsection 3, Code 2020, is amended 28 to read as follows: 29 3. The declaration of value shall state the full 30 consideration paid for the real property transferred. If 31 agricultural land, as defined in section 9H.1 , is purchased by 32 a corporation, limited partnership, trust, alien or nonresident 33 alien, the declaration of value shall include the name and 34 address of the buyer, the name and address of the seller, a 35 -15- HF2641.4512.S (1) 88 mb 15/ 86
legal description of the agricultural land, and identify the 1 buyer as a corporation, limited partnership, trust, alien, or 2 nonresident alien. The county recorder shall not record the 3 declaration of value, but shall enter on the declaration of 4 value information the director of revenue requires for the 5 production of the sales/assessment ratio study and transmit 6 all declarations of value to the city or county assessor in 7 whose jurisdiction the property is located. The city or county 8 assessor shall enter on the declaration of value provide the 9 information the director of revenue requires for the production 10 of the sales/assessment ratio study and transmit one copy of 11 each declaration of value to the director of revenue, at times 12 as directed by the director of revenue. The assessor shall 13 retain one copy of each declaration of value for three years 14 from December 31 of the year in which the transfer of realty 15 for which the declaration was filed took place. The director 16 of revenue shall, upon receipt of the information required to 17 be filed under this chapter by the city or county assessor, 18 send to the office of the secretary of state that part of the 19 declaration of value which identifies a corporation, limited 20 partnership, trust, alien, or nonresident alien as a purchaser 21 of agricultural land as defined in section 9H.1 . 22 Sec. 23. Section 441.48, Code 2020, is amended to read as 23 follows: 24 441.48 Notice of adjustment. 25 1. Before the department of revenue shall adjust the 26 valuation of any class of property any such percentage, the 27 department shall first serve ten days’ notice by mail, on the 28 county auditor of the county whose valuation is proposed to be 29 adjusted. The department shall hold an adjourned meeting after 30 such 31 2. If the county or assessing jurisdiction intends to 32 protest the proposed adjustment, the board of supervisors or 33 city council, as applicable, shall provide the department with 34 notice of intent to protest prior to expiration of the ten 35 -16- HF2641.4512.S (1) 88 mb 16/ 86
days’ notice. 1 3. After expiration of the ten days’ notice, at which time 2 the county or assessing jurisdiction may appear by its city 3 council or board of supervisors, city or county attorney, and 4 other assessing jurisdiction, or city or county officials, and 5 make written or oral protest against such proposed adjustment. 6 4. The protest shall consist simply of a statement of the 7 error, or errors, complained of with such facts as may lead to 8 their correction. At the adjourned meeting 9 5. After written protest is received, or an oral protest 10 is heard, the final action may be taken in reference to the 11 proposed adjustment. 12 Sec. 24. Section 489.706, subsection 2, Code 2020, is 13 amended to read as follows: 14 2. The secretary of state shall refer the federal tax 15 identification number contained in the application for 16 reinstatement to the departments department of revenue and 17 workforce development. The departments department of revenue 18 and workforce development shall report to the secretary of 19 state the tax status of the limited liability company. If 20 either the department reports to the secretary of state that 21 a filing delinquency or liability exists against the limited 22 liability company, the secretary of state shall not cancel the 23 declaration of dissolution until the filing delinquency or 24 liability is satisfied. 25 Sec. 25. Section 490.1422, subsection 2, paragraph a, Code 26 2020, is amended to read as follows: 27 a. The secretary of state shall refer the federal tax 28 identification number contained in the application for 29 reinstatement to the departments department of revenue and 30 workforce development. The departments department of revenue 31 and workforce development shall report to the secretary 32 of state the tax status of the corporation. If either the 33 department reports to the secretary of state that a filing 34 delinquency or liability exists against the corporation, 35 -17- HF2641.4512.S (1) 88 mb 17/ 86
the secretary of state shall not cancel the certificate of 1 dissolution until the filing delinquency or liability is 2 satisfied. 3 Sec. 26. Section 501.813, subsection 2, paragraph a, Code 4 2020, is amended to read as follows: 5 a. The secretary of state shall refer the federal tax 6 identification number contained in the application for 7 reinstatement to the departments department of revenue and 8 workforce development. The departments department of revenue 9 and workforce development shall report to the secretary 10 of state the tax status of the cooperative. If either the 11 department reports to the secretary of state that a filing 12 delinquency or liability exists against the cooperative, 13 the secretary of state shall not cancel the certificate of 14 dissolution until the filing delinquency or liability is 15 satisfied. 16 Sec. 27. Section 504.1423, subsection 2, paragraph a, Code 17 2020, is amended to read as follows: 18 a. The secretary of state shall refer the federal tax 19 identification number contained in the application for 20 reinstatement to the departments department of revenue and 21 workforce development. The departments department of revenue 22 and workforce development shall report to the secretary 23 of state the tax status of the corporation. If either the 24 department reports to the secretary of state that a filing 25 delinquency or liability exists against the corporation, 26 the secretary of state shall not cancel the certificate of 27 dissolution until the filing delinquency or liability is 28 satisfied. 29 Sec. 28. Section 533.329, Code 2020, is amended by adding 30 the following new subsection: 31 NEW SUBSECTION . 03. Returns shall be in the form the 32 director of revenue prescribes, and shall be filed with the 33 department of revenue on or before the last day of the fourth 34 month after the expiration of the tax year. The moneys and 35 -18- HF2641.4512.S (1) 88 mb 18/ 86
credits tax is due and payable on the last day of the fourth 1 month after the expiration of the tax year. 2 Sec. 29. Section 533.329, subsection 3, Code 2020, is 3 amended to read as follows: 4 3. The department of revenue shall administer and enforce 5 the provisions of this section , and except as explicitly 6 provided in this section or another provision of law, shall 7 apply all applicable penalty, interest, and administrative 8 provisions of chapters 421 and 422 as nearly as possible in 9 administering and enforcing the moneys and credits tax imposed 10 by this section . 11 Sec. 30. LEGISLATIVE INTENT. It is the intent of the 12 general assembly that the sections of this division amending 13 Code sections 422.25 and 423.37 are conforming amendments 14 consistent with current state law, and that the amendments 15 do not change the application of current law but instead 16 reflect current law both before and after the enactment of this 17 division of this Act. 18 Sec. 31. EFFECTIVE DATE. The following, being deemed of 19 immediate importance, take effect upon enactment: 20 1. The section of this division of this Act amending section 21 422.25. 22 2. The section of this division of this Act amending section 23 423.37. 24 Sec. 32. APPLICABILITY. The following applies to any 25 return for which a written notice that the taxpayer is required 26 to file such return is issued by the department on or after 27 January 1, 2022: 28 The portion of the section of this division of this Act 29 enacting section 421.27, subsection 9. 30 Sec. 33. APPLICABILITY. The following apply to tax years 31 beginning on or after January 1, 2022: 32 1. The section of this division of this Act amending section 33 421.27, subsection 1. 34 2. The portion of the section of this division of this Act 35 -19- HF2641.4512.S (1) 88 mb 19/ 86
amending section 421.27, subsection 4. 1 3. The portion of the section of this division of this Act 2 enacting section 421.27, subsection 8. 3 DIVISION II 4 SALES AND USE TAX 5 Sec. 34. Section 321G.4, subsection 2, Code 2020, is amended 6 to read as follows: 7 2. a. The owner of the snowmobile shall file an application 8 for registration with the department through the county 9 recorder of the county of residence in the manner established 10 by the commission. The application shall be completed by the 11 owner and shall be accompanied by a fee of fifteen dollars and 12 a writing fee as provided in section 321G.27 . A snowmobile 13 shall not be registered by the county recorder until the 14 county recorder is presented with receipts, bills of sale, 15 or other satisfactory evidence that the sales or use tax has 16 been paid for the purchase of the snowmobile or that the 17 owner is exempt from paying the tax. A snowmobile that has 18 an expired registration certificate from another state may be 19 registered in this state upon proper application, payment of 20 all applicable registration and writing fees, and payment of a 21 penalty of five dollars. 22 b. If the owner of the snowmobile is unable to present 23 satisfactory evidence that the sales or use tax has been paid, 24 the county recorder shall collect the tax. On or before the 25 tenth day of each month, the county recorder shall remit to 26 the department of revenue the amount of the taxes collected 27 during the preceding month, together with an itemized statement 28 on forms furnished by the department of revenue showing the 29 name of each taxpayer, the make and purchase price of each 30 snowmobile, the amount of tax paid, and such other information 31 as the department of revenue requires. 32 Sec. 35. Section 321I.4, subsection 2, Code 2020, is amended 33 to read as follows: 34 2. a. The owner of the all-terrain vehicle shall file an 35 -20- HF2641.4512.S (1) 88 mb 20/ 86
application for registration with the department through the 1 county recorder of the county of residence, or in the case 2 of a nonresident owner, in the county of primary use, in the 3 manner established by the commission. The application shall 4 be completed by the owner and shall be accompanied by a fee 5 of fifteen dollars and a writing fee as provided in section 6 321I.29 . An all-terrain vehicle shall not be registered by the 7 county recorder until the county recorder is presented with 8 receipts, bills of sale, or other satisfactory evidence that 9 the sales or use tax has been paid for the purchase of the 10 all-terrain vehicle or that the owner is exempt from paying the 11 tax. An all-terrain vehicle that has an expired registration 12 certificate from another state may be registered in this state 13 upon proper application, payment of all applicable registration 14 and writing fees, and payment of a penalty of five dollars. 15 b. If the owner of the all-terrain vehicle is unable to 16 present satisfactory evidence that the sales or use tax has 17 been paid, the county recorder shall collect the tax. On or 18 before the tenth day of each month, the county recorder shall 19 remit to the department of revenue the amount of the taxes 20 collected during the preceding month, together with an itemized 21 statement on forms furnished by the department of revenue 22 showing the name of each taxpayer, the make and purchase price 23 of each all-terrain vehicle, the amount of tax paid, and such 24 other information as the department of revenue requires. 25 Sec. 36. Section 423.2, subsection 6, paragraph bs, Code 26 2020, is amended to read as follows: 27 bs. Services arising from or related to installing, 28 maintaining, servicing, repairing, operating, upgrading, or 29 enhancing either specified digital products or software sold 30 as tangible personal property . 31 Sec. 37. Section 423.2, subsection 8, paragraph d, 32 subparagraph (1), Code 2020, is amended to read as follows: 33 (1) The retail sale of tangible personal property or 34 specified digital product and a service , where the tangible 35 -21- HF2641.4512.S (1) 88 mb 21/ 86
personal property or specified digital product is essential 1 to the use of the service, and is provided exclusively in 2 connection with the service, and the true object of the 3 transaction is the service. 4 Sec. 38. Section 423.3, subsection 3A, Code 2020, is amended 5 to read as follows: 6 3A. The sales price from the sale of a commercial recreation 7 service offering the opportunity to hunt a preserve whitetail 8 as defined in section 484C.1 if the sale occurred between July 9 1, 2005, and December 31, 2015. 10 Sec. 39. Section 423.3, subsection 31, unnumbered paragraph 11 1, Code 2020, is amended to read as follows: 12 The sales price of tangible personal property or specified 13 digital products sold to and of services furnished to a tribal 14 government as defined in 216A.161, or the sales price of 15 tangible personal property or specified digital products sold 16 to and of services furnished , and used for public purposes 17 sold to a tax-certifying or tax-levying body of the state or a 18 governmental subdivision of the state, including the following: 19 regional transit systems, as defined in section 324A.1 , ; 20 the state board of regents , ; department of human services , ; 21 state department of transportation , ; any municipally owned 22 solid waste facility which sells all or part of its processed 23 waste as fuel to a municipally owned public utility , ; and all 24 divisions, boards, commissions, agencies, or instrumentalities 25 of state, federal, county, or municipal government , or tribal 26 government which have no earnings going to the benefit of an 27 equity investor or stockholder, except any of the following: 28 Sec. 40. Section 423.3, subsection 80, paragraphs b and c, 29 Code 2020, are amended to read as follows: 30 b. Subject to the limitations in paragraph “c” , if a 31 contractor, subcontractor, or builder is to use building 32 materials, supplies, and equipment , or services in the 33 performance of a written construction contract with a 34 designated exempt entity, the person shall purchase such 35 -22- HF2641.4512.S (1) 88 mb 22/ 86
items of tangible personal property or services without 1 liability for the tax if such property or services will be 2 used in the performance of the written construction contract 3 and a purchasing agent authorization letter and an exemption 4 certificate, issued by the designated exempt entity, are 5 presented to the retailer. 6 c. (1) With regard to a written construction contract 7 with a designated exempt entity described in paragraph “a” , 8 subparagraph (1), the sales price of building materials, 9 supplies, or equipment , or services is exempt from tax by this 10 subsection only to the extent the building materials, supplies, 11 or equipment , or services are completely consumed in the 12 performance of the construction contract with the designated 13 exempt entity , and only if the property that is the subject 14 of the construction project becomes public property or the 15 property of the designated exempt entity . 16 (2) With regard to a written construction contract with 17 a designated exempt entity described in paragraph “a” , 18 subparagraph (2), the sales price of building materials, 19 supplies, or equipment , or services is exempt from tax by this 20 subsection only to the extent the building materials, supplies, 21 or equipment , or services are completely consumed in the 22 performance of a construction contract to construct a project, 23 as defined in section 15J.2, subsection 10 , which project has 24 been approved by the economic development authority board in 25 accordance with chapter 15J . 26 Sec. 41. Section 423.4, subsection 1, Code 2020, is amended 27 to read as follows: 28 1. a. For purposes of this subsection, a “designated exempt 29 entity” means any of the following: 30 (1) A private nonprofit educational institution in this 31 state , . 32 (2) A nonprofit Iowa affiliate of a nonprofit international 33 organization whose primary activity is the promotion of the 34 construction, remodeling, or rehabilitation of one-family or 35 -23- HF2641.4512.S (1) 88 mb 23/ 86
two-family dwellings for low-income families , . 1 (3) A nonprofit private museum in this state , . 2 (4) A tax-certifying or tax-levying body or governmental 3 subdivision of the state, including the state board of regents, 4 state department of human services, state department of 5 transportation , a . 6 (5) A municipally owned solid waste facility which sells all 7 or part of its processed waste as fuel to a municipally owned 8 public utility , and all . 9 (6) The state of Iowa. 10 (7) Any political subdivision of the state. 11 (8) All divisions, boards, commissions, agencies, or 12 instrumentalities of state, federal, county, or municipal 13 government which do not have earnings going to the benefit of 14 an equity investor or stockholder , . 15 (9) A tribal government as defined in section 216A.161, 16 and any instrumentalities of the tribal government which do 17 not have earnings going to the benefit of an equity investor 18 or stockholder. 19 b. A designated exempt entity may make application apply 20 to the department for the refund of the sales or use tax upon 21 the sales price of all sales of goods, wares, or merchandise 22 building materials, supplies, equipment , or from services 23 furnished to a contractor, used in the fulfillment performance 24 of a written contract with the state of Iowa, any political 25 subdivision of the state, or a division, board, commission, 26 agency, or instrumentality of the state or a political 27 subdivision, a private nonprofit educational institution in 28 this state, a nonprofit Iowa affiliate described in this 29 subsection , or a nonprofit private museum in this state if the 30 property becomes an integral part of the project under contract 31 and at the completion of the project becomes public property, 32 is devoted to educational uses, becomes part of a low-income 33 one-family or two-family dwelling in the state, or becomes a 34 nonprofit private museum; except goods, wares, or merchandise, 35 -24- HF2641.4512.S (1) 88 mb 24/ 86
designated exempt entity if all of the following apply: 1 (1) The building materials, supplies, equipment, or 2 services are completely consumed in the performance of a 3 construction project with the designated entity. 4 (2) The property that is subject of the construction project 5 becomes public property or the property of an exempt entity. 6 (3) The building materials, supplies, equipment, or 7 services furnished which are not used in the performance of 8 any contract in connection with the operation of any municipal 9 utility engaged in selling gas, electricity, or heat to 10 the general public or in connection with the operation of a 11 municipal pay television system; and except goods, wares, and 12 merchandise are not used in the performance of a contract for a 13 “project” under chapter 419 as defined in that chapter other 14 than goods, wares, or merchandise used in the performance of 15 a contract for a “project” under chapter 419 for which a bond 16 issue was approved by a municipality prior to July 1, 1968, or 17 for which the goods, wares, or merchandise becomes an integral 18 part of the project under contract and at the completion of the 19 project becomes public property or is devoted to educational 20 uses. 21 a. c. Such A contractor shall state under oath, on forms 22 provided by the department, the amount of such sales of goods, 23 wares, or merchandise, or services furnished and used in the 24 performance of such contract, and upon which sales or use tax 25 has been paid, and shall file such forms with the governmental 26 unit, private nonprofit educational institution, nonprofit Iowa 27 affiliate, or nonprofit private museum designated exempt entity 28 which has made any written contract for performance by the 29 contractor. The forms shall be filed by the contractor with 30 the governmental unit, educational institution, nonprofit Iowa 31 affiliate, or nonprofit private museum designated exempt entity 32 before final settlement is made. 33 b. d. Such governmental unit, educational institution, 34 nonprofit Iowa affiliate, or nonprofit private museum A 35 -25- HF2641.4512.S (1) 88 mb 25/ 86
designated exempt entity shall, not more than one year after 1 the final settlement has been made, make application apply 2 to the department for any refund of the amount of the sales 3 or use tax which shall have been paid upon any goods, wares, 4 or merchandise building materials, supplies, equipment , 5 or services furnished, the application to be made in the 6 manner and upon forms to be provided by the department, 7 and the department shall forthwith audit the claim and, if 8 approved, issue a warrant to the governmental unit, educational 9 institution, nonprofit Iowa affiliate, or nonprofit private 10 museum designated exempt entity in the amount of the sales or 11 use tax which has been paid to the state of Iowa under the 12 contract. 13 c. e. Refunds authorized under this subsection shall accrue 14 interest in accordance with section 421.60, subsection 2 , 15 paragraph “e” . 16 d. f. Any contractor who willfully makes a false report of 17 tax paid under the provisions of this subsection is guilty of 18 a simple misdemeanor and in addition shall be liable for the 19 payment of the tax and any applicable penalty and interest. 20 Sec. 42. Section 423.4, subsection 2, paragraphs a and b, 21 Code 2020, are amended to read as follows: 22 a. A contractor awarded a contract for a transportation 23 construction project is considered the consumer of all building 24 materials, building supplies, and equipment , and services and 25 shall pay sales tax to the supplier or remit consumer use tax 26 directly to the department. 27 b. The contractor is not required to file information with 28 the state department of transportation stating the amount of 29 goods, wares, or merchandise, or services rendered, furnished, 30 or performed and building materials, supplies, equipment, or 31 services used in the performance of the contract or the amount 32 of sales or use tax paid. 33 Sec. 43. Section 423.4, subsection 6, paragraph a, 34 subparagraph (1), Code 2020, is amended to read as follows: 35 -26- HF2641.4512.S (1) 88 mb 26/ 86
(1) The owner of a collaborative educational facility 1 in this state may make application to the department for the 2 refund of the sales or use tax upon the sales price of all sales 3 of goods, wares, or merchandise building materials, supplies, 4 equipment , or from services furnished to a contractor, used 5 in the fulfillment of a written construction contract with 6 the owner of the collaborative educational facility for the 7 original construction, or additions or modifications to, a 8 building or structure to be used as part of the collaborative 9 educational facility. 10 Sec. 44. Section 423.4, subsection 6, paragraphs b and c, 11 Code 2020, are amended to read as follows: 12 b. Such A contractor shall state under oath, on forms 13 provided by the department, the amount of such sales of goods, 14 wares, or merchandise building materials, supplies, equipment , 15 or services furnished and used in the performance of such 16 contract, and upon which sales or use tax has been paid, and 17 shall file such forms with the owner of the collaborative 18 educational facility which has made any written contract for 19 performance by the contractor. 20 c. (1) The owner of the collaborative educational facility 21 shall, not more than one year after the final settlement has 22 been made, make application to the department for any refund 23 of the amount of the sales or use tax which shall have been 24 paid upon any goods, wares, or merchandise building materials, 25 supplies, equipment , or services furnished, the application 26 to be made in the manner and upon forms to be provided by 27 the department, and the department shall forthwith audit the 28 claim and, if approved, issue a warrant to the owner of the 29 collaborative educational facility in the amount of the sales 30 or use tax which has been paid to the state of Iowa under the 31 contract. 32 (2) Refunds authorized under this subsection shall accrue 33 interest in accordance with section 421.60, subsection 2 , 34 paragraph “e” . 35 -27- HF2641.4512.S (1) 88 mb 27/ 86
Sec. 45. Section 423.5, subsection 1, paragraph b, Code 1 2020, is amended by striking the paragraph. 2 Sec. 46. Section 423.29, subsection 1, Code 2020, is amended 3 to read as follows: 4 1. Every seller who is a retailer and who is making taxable 5 sales of tangible personal property or specified digital 6 products in Iowa or who is a retailer maintaining a place 7 of business in this state making taxable sales of tangible 8 personal property or specified digital products shall, at 9 the time of making the sale, collect the sales tax. Every 10 seller who is a retailer that is not otherwise required to 11 collect sales tax under the provisions of this chapter and who 12 is selling tangible personal property or specified digital 13 products for use in Iowa shall, at the time of making the sale, 14 whether within or without the state, collect the use tax. 15 Sellers required to collect sales or use tax shall give to any 16 purchaser a receipt for the tax collected in the manner and 17 form prescribed by the director. 18 Sec. 47. Section 423.33, subsection 1, Code 2020, is amended 19 to read as follows: 20 1. Liability of purchaser for sales tax and retailer . 21 a. If a purchaser fails to pay sales tax to the retailer 22 required to collect the tax, then in addition to all of the 23 rights, obligations, and remedies provided, the a use tax 24 is payable by the purchaser directly to the department, and 25 sections 423.31 , 423.32 , 423.37 , 423.38 , 423.39 , 423.40 , 26 423.41 , and 423.42 apply to the purchaser. 27 b. For failure to pay the sales or use tax as described 28 in paragraph “a” , the retailer and purchaser are jointly 29 liable, unless the circumstances described in section 29C.24, 30 subsection 3, paragraph “a” , subparagraph (2), section 421.60, 31 subsection 2 , paragraph “m” , section 423.34A , or section 32 423.45, subsection 4 , paragraph “b” or “e” , or subsection 5 , 33 paragraph “c” or “e” , are applicable. 34 c. If the retailer fails to collect sales tax at the time 35 -28- HF2641.4512.S (1) 88 mb 28/ 86
of the transaction, the retailer shall thereafter remit the 1 applicable sales tax, or the purchaser thereafter shall remit 2 the applicable use tax. If the purchaser remits all applicable 3 use tax, the retailer remains liable for any local sales and 4 services tax under chapter 423B that the retailer failed to 5 collect. 6 Sec. 48. REFUNDS RELATED TO PRESERVE WHITETAIL DEER 7 HUNTING. Refunds of taxes, interest, or penalties that arise 8 from claims resulting from the amendment of section 423.3, 9 subsection 3A, for sales occurring between July 1, 2005, 10 and the effective date of the amendment to section 423.3, 11 subsection 3A, shall not be allowed, notwithstanding any other 12 law to the contrary. 13 Sec. 49. LEGISLATIVE INTENT. 14 1. It is the intent of the general assembly that the section 15 of this division of this Act amending section 423.29 is a 16 conforming amendment consistent with current state law, and 17 that the amendment does not change the application of current 18 law but instead reflects current law both before and after the 19 enactment of this division of this Act. 20 2. It is the intent of the general assembly that the 21 addition of “jointly” in the section of this division of 22 this Act amending section 423.33 is a conforming amendment 23 consistent with current state law, and that the amendment 24 does not change the application of current law but instead 25 reflects current law both before and after the enactment of 26 this division of this Act. 27 Sec. 50. EFFECTIVE DATE. The following, being deemed of 28 immediate importance, take effect upon enactment: 29 1. The section of this division of this Act amending section 30 423.3, subsection 3A. 31 2. The section of this division of this Act relating 32 to refunds for commercial recreation services offering an 33 opportunity to hunt preserve whitetail deer. 34 Sec. 51. RETROACTIVE APPLICABILITY. The following applies 35 -29- HF2641.4512.S (1) 88 mb 29/ 86
retroactively to July 1, 2005: 1 The section of this division of this Act amending section 2 423.3, subsection 3A. 3 DIVISION III 4 INCOME TAX 5 Sec. 52. Section 422.9, subsection 3, paragraph c, Code 6 2020, is amended by striking the paragraph and inserting in 7 lieu thereof the following: 8 c. A taxpayer may elect to waive the entire carryback period 9 with respect to an Iowa net operating loss for any taxable year 10 beginning on or after January 1, 2020. The election shall be 11 made in the manner and form prescribed by the department, and 12 shall be made by the due date for filing the taxpayer’s Iowa 13 return, including extensions of time. After the election is 14 made for any taxable year, the election shall be irrevocable 15 for such taxable year. When an election has been properly 16 made, the Iowa net operating loss shall be carried forward 17 twenty taxable years. 18 Sec. 53. Section 422.9, subsection 3, paragraph d, Code 19 2020, is amended to read as follows: 20 d. Notwithstanding paragraph “a” , for a taxpayer who is 21 engaged in the trade or business of farming , which means the 22 same as a “farming business” as defined in section 263A(e)(4) of 23 the Internal Revenue Code , and has a farming loss from farming 24 as defined in section 172(b)(1)(B) of the Internal Revenue Code 25 including modifications prescribed by rule by the director, 26 the Iowa farming loss from the trade or business of farming is 27 a net operating loss which may , at the time of the election of 28 the taxpayer, be carried back five taxable years prior to the 29 taxable year of the loss. The election shall be made in the 30 manner and form prescribed by the department, and shall be made 31 by the due date for filing the taxpayer’s return, including 32 extensions of time. After the election is made for any taxable 33 year, the election shall be irrevocable for such taxable year. 34 Sec. 54. APPLICABILITY. This division of this Act applies 35 -30- HF2641.4512.S (1) 88 mb 30/ 86
to tax years beginning on or after January 1, 2020. 1 DIVISION IV 2 RESEARCH ACTIVITIES CREDIT 3 Sec. 55. Section 15.335, subsection 4, paragraph a, Code 4 2020, is amended to read as follows: 5 a. In lieu of the credit amount computed in subsection 2 , an 6 eligible business may elect to compute the credit amount for 7 qualified research expenses incurred in this state in a manner 8 consistent with the alternative simplified credit described in 9 section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The 10 taxpayer may make this election regardless of the method used 11 for the taxpayer’s federal income tax. The election made under 12 this paragraph is for the tax year and the taxpayer may use 13 another or the same method for any subsequent year. 14 Sec. 56. Section 15.335, subsection 4, paragraph b, 15 unnumbered paragraph 1, Code 2020, is amended to read as 16 follows: 17 For purposes of the alternate credit computation method in 18 paragraph “a” , the credit percentages applicable to qualified 19 research expenses described in section 41(c)(5)(A) 41(c)(4)(A) 20 and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the 21 Internal Revenue Code are as follows: 22 Sec. 57. Section 422.10, subsection 1, paragraphs c and d, 23 Code 2020, are amended to read as follows: 24 c. In lieu of the credit amount computed in paragraph “b” , 25 subparagraph (1), subparagraph division (a), a taxpayer may 26 elect to compute the credit amount for qualified research 27 expenses incurred in this state in a manner consistent with the 28 alternative simplified credit described in section 41(c)(5) 29 41(c)(4) of the Internal Revenue Code. The taxpayer may make 30 this election regardless of the method used for the taxpayer’s 31 federal income tax. The election made under this paragraph is 32 for the tax year and the taxpayer may use another or the same 33 method for any subsequent year. 34 d. For purposes of the alternate credit computation 35 -31- HF2641.4512.S (1) 88 mb 31/ 86
method in paragraph “c” , the credit percentages applicable to 1 qualified research expenses described in section 41(c)(5)(A) 2 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) 3 of the Internal Revenue Code are four and fifty-five 4 hundredths percent and one and ninety-five hundredths percent, 5 respectively. 6 Sec. 58. Section 422.33, subsection 5, paragraphs c and d, 7 Code 2020, are amended to read as follows: 8 c. In lieu of the credit amount computed in paragraph 9 “a” , subparagraph (1), a corporation may elect to compute the 10 credit amount for qualified research expenses incurred in this 11 state in a manner consistent with the alternative simplified 12 credit described in section 41(c)(5) 41(c)(4) of the Internal 13 Revenue Code. The taxpayer may make this election regardless 14 of the method used for the taxpayer’s federal income tax. The 15 election made under this paragraph is for the tax year and the 16 taxpayer may use another or the same method for any subsequent 17 year. 18 d. For purposes of the alternate credit computation 19 method in paragraph “c” , the credit percentages applicable to 20 qualified research expenses described in section 41(c)(5)(A) 21 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) 22 of the Internal Revenue Code are four and fifty-five 23 hundredths percent and one and ninety-five hundredths percent, 24 respectively. 25 Sec. 59. EFFECTIVE DATE. This division of this Act, being 26 deemed of immediate importance, takes effect upon enactment. 27 Sec. 60. RETROACTIVE APPLICABILITY. This division of this 28 Act applies retroactively to January 1, 2019, for tax years 29 beginning on or after that date. 30 DIVISION V 31 PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF 32 FEDERAL ADJUSTMENTS 33 Sec. 61. Section 421.27, subsection 2, paragraph c, Code 34 2020, is amended to read as follows: 35 -32- HF2641.4512.S (1) 88 mb 32/ 86
c. (1) The Except in the case of a final federal 1 partnership adjustment governed by subparagraph (2), the 2 taxpayer provides written notification to the department of a 3 federal audit while it is in progress and voluntarily files an 4 amended return which includes a copy of the federal document 5 showing the final disposition or final federal adjustments 6 and pays any additional Iowa tax due within sixty one hundred 7 eighty days of the final disposition determination date of the 8 federal government’s audit. For purposes of this subparagraph, 9 “final determination date” means the same as defined in section 10 422.25. 11 (2) (a) In the case of a final federal partnership 12 adjustment arising from a partnership level audit, with respect 13 to the audited partnership or a direct partner or indirect 14 partner of the audited partnership, the audited partnership, 15 direct partner, or indirect partner voluntarily and timely 16 complies with its reporting and payment requirements under 17 section 422.25A, subsection 4 or 5. 18 (b) As used in this subparagraph, all words and phrases 19 defined in section 422.25A shall have the same meaning given 20 them by that section. 21 Sec. 62. Section 422.7, Code 2020, is amended by adding the 22 following new subsection: 23 NEW SUBSECTION . 59. Any income subtracted from federal 24 taxable income for an adjustment year pursuant to section 6225 25 of the Internal Revenue Code and the regulations thereunder 26 shall be added back in computing net income for state tax 27 purposes for the adjustment year. 28 Sec. 63. Section 422.25, subsections 1 and 2, Code 2020, 29 are amended by striking the subsections and inserting in lieu 30 thereof the following: 31 1. a. For purposes of this subsection: 32 (1) “Federal adjustment” means a change to an item or amount 33 required to be determined under the Internal Revenue Code and 34 the regulations thereunder that is used by the taxpayer to 35 -33- HF2641.4512.S (1) 88 mb 33/ 86
compute state tax owed whether such change results from action 1 by the internal revenue service, or the filing of a timely 2 amended federal return or timely federal refund claim. A 3 federal adjustment is positive to the extent that it increases 4 Iowa taxable income as determined under this title and is 5 negative to the extent that it decreases Iowa taxable income 6 as determined under this title. 7 (2) “Federal adjustments report” means the method or form 8 required by the department by rule to report final federal 9 adjustments or final federal partnership adjustments as defined 10 in section 422.25A, and in the case of any entity taxed as a 11 partnership or S corporation for federal income tax purposes, 12 identifies all owners that hold an interest directly in such 13 entity and provides the effect of the final federal adjustments 14 on such owner’s Iowa income. 15 (3) “Final determination date” means the following: 16 (a) Except as provided in subparagraph divisions (b) and 17 (c), for federal adjustments arising from an internal revenue 18 service audit or other action by the internal revenue service, 19 the final determination date is the first day on which no 20 federal adjustments arising from that audit or other action 21 remain to be finally determined, whether by internal revenue 22 service decision with respect to which all rights of appeal 23 have been waived or exhausted, by agreement, or, if appealed 24 or contested, by a final decision with respect to which all 25 rights of appeal have been waived or exhausted. For agreements 26 required to be signed by the internal revenue service and the 27 taxpayer, the final determination date is the date on which the 28 last party signed the agreement. 29 (b) For federal adjustments arising from an internal 30 revenue service audit or other action by the internal revenue 31 service, if the taxpayer filed as a member of a consolidated 32 return under section 422.37, the final determination date 33 is the first day on which no related federal adjustments 34 arising from that audit or other action remain to be finally 35 -34- HF2641.4512.S (1) 88 mb 34/ 86
determined, as described in subparagraph division (a), for the 1 entire group. 2 (c) For federal adjustments arising from a timely filed 3 amended federal return or a timely filed federal refund 4 claim, or if it is a federal adjustment reported on a timely 5 amended federal return or other similar report filed pursuant 6 to section 6225(c) of the Internal Revenue Code, the final 7 determination date is the day on which the amended return, 8 refund claim, or other similar report was filed. 9 (4) “Final federal adjustment” means a federal adjustment 10 after the final determination date for that federal adjustment 11 has passed. 12 b. Within three years after the return is filed or within 13 three years after the return became due, including any 14 extensions of time for filing, whichever time is the later, 15 the department shall examine the return and determine the tax. 16 However, if the taxpayer omits from income an amount which 17 will, under the Internal Revenue Code, extend the statute of 18 limitations for assessment of federal tax to six years under 19 the federal law, the period for examination and determination 20 is six years. 21 c. The period for examination and determination of the 22 correct amount of tax is unlimited in the case of a false or 23 fraudulent return made with the intent to evade tax or in the 24 case of a failure to file a return. 25 d. In lieu of the period of limitation for any prior year 26 for which an overpayment of tax or an elimination or reduction 27 of an underpayment of tax due for that prior year results from 28 the carryback to that prior year of a net operating loss or 29 net capital loss, the period is the period of limitation for 30 the taxable year of the net operating loss or net capital loss 31 which results in the carryback. 32 e. (1) In addition to the applicable period of limitation 33 for examination and determination in paragraph “b” , “c” , or “d” , 34 the department may make an examination and determination at any 35 -35- HF2641.4512.S (1) 88 mb 35/ 86
time within one year from the date of receipt by the department 1 of a federal adjustments report with respect to a final 2 federal adjustment or final federal partnership adjustment 3 as defined in section 422.25A for a particular tax year. In 4 order to begin the running of the one-year period, the federal 5 adjustments report related to the final federal adjustment or 6 final federal partnership adjustment shall be transmitted to 7 the department by the taxpayer in the form and manner specified 8 by the department by rule. 9 (2) The department in its discretion may adopt rules to 10 establish a de minimis amount for which subparagraph (1) shall 11 not apply and the taxpayer shall not be required to file a 12 federal adjustments report. 13 (3) The department may in its discretion and when 14 administratively feasible adopt a process through rule by 15 which a taxpayer may make estimated payments of tax expected 16 to result from a pending internal revenue service audit 17 prior to the filing of a federal adjustments report with the 18 department. The process shall provide that the estimated 19 tax payments shall be credited against any tax liability 20 ultimately found to be due to the state from the internal 21 revenue service audit and will limit the accrual of further 22 statutory interest on that liability. The process shall also 23 provide that if the estimated tax payments exceed the final 24 tax liability and statutory interest ultimately determined to 25 be due, the taxpayer is entitled to a refund or credit for 26 the excess, without interest, provided the taxpayer files a 27 federal adjustments report, or a claim for refund or credit of 28 tax under section 422.73, no later than one year following the 29 final determination date. 30 2. a. If the tax found due under subsection 1 is greater 31 than the amount paid, the department shall compute the amount 32 due, together with interest and penalties as provided in 33 paragraph “b” , and shall mail a notice of assessment to the 34 taxpayer and, if applicable, to the taxpayer’s authorized 35 -36- HF2641.4512.S (1) 88 mb 36/ 86
representative of the total, which shall be computed as a sum 1 certain, with interest computed to the last day of the month 2 in which the notice is dated. 3 b. In addition to the tax or additional tax determined 4 by the department under subsection 1, the taxpayer shall pay 5 interest on the tax or additional tax at the rate in effect 6 under section 421.7 for each month counting each fraction of 7 a month as an entire month, computed from the date the return 8 was required to be filed. In addition to the tax or additional 9 tax, the taxpayer shall pay a penalty as provided in section 10 421.27. 11 Sec. 64. NEW SECTION . 422.25A Reporting and treatment of 12 certain partnership adjustments. 13 1. Definitions. As used in this section and sections 14 422.25B and 422.25C, unless the context otherwise requires: 15 a. “Administrative adjustment request” means the same as 16 provided in section 6227 of the Internal Revenue Code. 17 b. “Audited partnership” means a partnership subject 18 to a final federal partnership adjustment resulting from a 19 partnership level audit. 20 c. “C corporation” means an entity that elects or is 21 required to be taxed as a corporation under title 26, chapter 22 1, subchapter A, part 2, of the Internal Revenue Code. 23 d. “Corporate partner” means a C corporation partner that is 24 subject to tax pursuant to section 422.33. 25 e. “Direct partner” means a person that holds an interest 26 directly in a partnership or pass-through entity. 27 f. “Exempt partner” means a partner that is exempt from 28 taxation pursuant to section 422.34. 29 g. “Federal adjustments report” means the same as defined 30 in section 422.25. 31 h. “Federal partnership adjustment” means a change to an 32 item or amount required to be determined under the Internal 33 Revenue Code and the regulations thereunder that is used by a 34 partnership and its direct and indirect partners to compute 35 -37- HF2641.4512.S (1) 88 mb 37/ 86
state tax owed for the reviewed year where such change results 1 from a partnership level audit or an administrative adjustment 2 request. A federal partnership adjustment is positive to the 3 extent that it increases Iowa taxable income as determined 4 under this title and is negative to the extent that it 5 decreases Iowa taxable income as determined under this title. 6 A federal adjustment reported on an amended federal return 7 or other similar report filed pursuant to section 6225(c) of 8 the Internal Revenue Code shall not be considered a federal 9 partnership adjustment for purposes of this section. 10 i. “Federal partnership representative” means the person 11 the partnership designates for the taxable year as the 12 partnership’s representative, or the person the internal 13 revenue service has appointed to act as the federal partnership 14 representative, pursuant to section 6223(a) of the Internal 15 Revenue Code and the regulations thereunder. 16 j. “Fiduciary partner” means a partner that is a fiduciary 17 that is subject to tax pursuant to sections 422.5 and 422.6. 18 k. “Final determination date” means any one of the following 19 dates: 20 (1) In the case of a federal partnership adjustment that 21 arises from a partnership level audit, the first day on which 22 no federal adjustments arising from that audit remain to be 23 finally determined, whether by agreement, or, if appealed 24 or contested, by a final decision with respect to which all 25 rights of appeal have been waived or exhausted. For agreements 26 required to be signed by the internal revenue service and the 27 audited partnership, the final determination date is the date 28 on which the last party signed the agreement. 29 (2) In the case of a federal partnership adjustment that 30 results from a timely filed administrative adjustment request, 31 the day on which the administrative adjustment request was 32 filed with the internal revenue service. 33 l. “Final federal partnership adjustment” means a federal 34 partnership adjustment after the final determination date for 35 -38- HF2641.4512.S (1) 88 mb 38/ 86
that federal partnership adjustment has passed. 1 m. “Indirect partner” means a partner in a partnership or 2 pass-through entity where such partnership or pass-through 3 entity itself holds an interest directly, or through another 4 indirect partner, in a partnership or pass-through entity. 5 n. “Individual partner” means a partner who is a natural 6 person that is subject to tax pursuant to section 422.5. 7 o. “Nonresident partner” means a partner that is not a 8 resident partner as defined in this subsection. 9 p. “Partner” means a person that holds an interest, directly 10 or indirectly, in a partnership or pass-through entity. 11 q. “Partnership” means an entity subject to taxation 12 under subchapter K of the Internal Revenue Code and the 13 regulations thereunder and includes but is not limited to a 14 syndicate, group, pool, joint venture, or other unincorporated 15 organization through or by means of which any business, 16 financial operation, or venture is carried on and which is 17 not, within the meaning of this chapter, a trust, estate, or 18 corporation. 19 r. “Partnership level audit” means an examination by the 20 internal revenue service at the partnership level pursuant to 21 subchapter C, title 26, subtitle F, chapter 63, of the Internal 22 Revenue Code, as enacted by the Bipartisan Budget Act of 2015, 23 Pub. L. No. 114-74, and as amended, which results in final 24 federal partnership adjustments initiated and made by the 25 internal revenue service. 26 s. “Pass-through entity” means an entity, other than 27 a partnership, that is not subject to tax under section 28 422.33 for C corporations but excluding an exempt partner. 29 “Pass-through entity” includes but is not limited to S 30 corporations, estates, and trusts other than grantor trusts. 31 t. “Reallocation adjustment” means a final federal 32 partnership adjustment that changes the shares of items of 33 partnership income, gain, loss, expense, or credit allocated 34 to a partner that holds an interest directly in a partnership 35 -39- HF2641.4512.S (1) 88 mb 39/ 86
or pass-through entity. A positive reallocation adjustment 1 means the portion of a reallocation adjustment that would 2 increase Iowa taxable income for such partners, and a negative 3 reallocation adjustment means the portion of a reallocation 4 adjustment that would decrease Iowa taxable income for such 5 partners. 6 u. “Resident partner” means any of the following: 7 (1) For an individual partner, a “resident” as defined in 8 section 422.4. 9 (2) For a fiduciary partner, one with situs in Iowa. 10 (3) For all other partners, a partner whose headquarters or 11 principal place of business is located in Iowa. 12 v. “Reviewed year” means the taxable year of a partnership 13 that is subject to a partnership level audit from which final 14 federal partnership adjustments arise, or otherwise means the 15 taxable year of the partnership or pass-through entity that is 16 the subject of a state partnership audit. 17 w. “State partnership audit” means an examination by the 18 director at the partnership or pass-through entity level which 19 results in adjustments to partnership or pass-through entity 20 related items or reallocations of income, gains, losses, 21 expenses, credits, and other attributes among such partners for 22 the reviewed year. 23 x. “Tiered partner” means any partner that is a partnership 24 or pass-through entity. 25 y. “Unrelated business income” means the income which is 26 defined in section 512 of the Internal Revenue Code and the 27 regulations thereunder. 28 2. Application. Partnerships and their direct partners 29 and indirect partners shall report final federal partnership 30 adjustments as provided in this section. 31 3. State partnership representative. Notwithstanding any 32 other law to the contrary, the state partnership representative 33 for the reviewed year shall have the sole authority to act on 34 behalf of the partnership or pass-through entity with respect 35 -40- HF2641.4512.S (1) 88 mb 40/ 86
to an action required or permitted to be taken by a partnership 1 or pass-through entity under this section or section 422.28 or 2 422.29 with respect to final federal partnership adjustments 3 arising from a partnership level audit or an administrative 4 adjustment request, and its direct partners and indirect 5 partners shall be bound by those actions. 6 4. Reporting and payment requirements for audited 7 partnerships and their partners subject to final federal 8 partnership adjustments. 9 a. Unless an audited partnership makes the election in 10 subsection 5, the audited partnership shall do all of the 11 following for all final federal partnership adjustments no 12 later than ninety days after the final determination date of 13 the audited partnership: 14 (1) File a completed federal adjustments report. 15 (2) Notify each direct partner of such partner’s 16 distributive share of the adjustments in the manner and form 17 prescribed by the department by rule. 18 (3) File an amended composite return under section 422.13 19 if one was originally filed, and if applicable for withholding 20 from partners, file an amended withholding report under 21 section 422.16, and pay the additional amount under this title 22 that would have been due had the final federal partnership 23 adjustments been reported properly as required, including any 24 applicable interest and penalties. 25 b. Unless an audited partnership paid an amount on behalf 26 of the direct partners of the audited partnership pursuant to 27 subsection 5, all direct partners of the audited partnership 28 shall do all of the following no later than one hundred 29 eighty days after the final determination date of the audited 30 partnership: 31 (1) File a completed federal adjustments report reporting 32 the direct partner’s distributive share of the adjustments 33 required to be reported to such partners under paragraph “a” . 34 (2) If the direct partner is a tiered partner, notify all 35 -41- HF2641.4512.S (1) 88 mb 41/ 86
partners that hold an interest directly in the tiered partner 1 of such partner’s distributive share of the adjustments in the 2 manner and form prescribed by the department by rule. 3 (3) If the direct partner is a tiered partner and subject to 4 section 422.13, file an amended composite return under section 5 422.13 if such return was originally filed, and if applicable 6 for withholding from partners file an amended withholding 7 report under section 422.16 if one was originally required to 8 be filed. 9 (4) Pay any additional amount under this title that would 10 have been due had the final federal partnership adjustments 11 been reported properly as required, including any applicable 12 penalty and interest. 13 c. Unless a partnership or tiered partner paid an amount on 14 behalf of the partners pursuant to subsection 5, each indirect 15 partner shall do all of the following: 16 (1) Within ninety days after the time for filing and 17 furnishing statements to tiered partners and their partners 18 as established by section 6226 of the Internal Revenue Code 19 and the regulations thereunder, file a completed federal 20 adjustments report. 21 (2) If the indirect partner is a tiered partner, within 22 ninety days after the time for filing and furnishing statements 23 to tiered partners and their partners as established by 24 section 6226 of the Internal Revenue Code and the regulations 25 thereunder but within sufficient time for all indirect partners 26 to also complete the requirements of this subsection, notify 27 all of the partners that hold an interest directly in the 28 tiered partner of such partner’s distributive share of the 29 adjustments in the manner and form prescribed by the department 30 by rule. 31 (3) Within ninety days after the time for filing and 32 furnishing statements to tiered partners and their partners 33 as established by section 6226 of the Internal Revenue Code 34 and the regulations thereunder, if the indirect partner 35 -42- HF2641.4512.S (1) 88 mb 42/ 86
is a tiered partner and subject to section 422.13, file an 1 amended composite return under section 422.13 if such return 2 was originally filed, and if applicable for withholding from 3 partners, file an amended withholding report under section 4 422.16 if one was originally required to be filed. 5 (4) Within ninety days after the time for filing and 6 furnishing statements to tiered partners and the partners of 7 the tiered partners as established by section 6226 of the 8 Internal Revenue Code and the regulations thereunder, pay any 9 additional amount due under this title, including any penalty 10 and interest that would have been due had the final federal 11 partnership adjustments been reported properly as required. 12 5. Election for partnership or tiered partners to pay. 13 a. An audited partnership, or a tiered partner that receives 14 a notification of a final federal partnership adjustment under 15 subsection 4, may make an election to pay as provided under 16 this subsection. 17 b. An audited partnership or tiered partner makes an 18 election to pay under this subsection by filing a completed 19 federal adjustments report, notifying the department in the 20 manner and form prescribed by the department that it is making 21 the election under this subsection, notifying each of the 22 direct partners of such partner’s distributive share of the 23 adjustments, and paying on behalf of its partners an amount 24 calculated in paragraph “c” , including any applicable penalty 25 and interest. These requirements shall all be fulfilled within 26 one of the following time periods: 27 (1) For the audited partnership, no later than ninety days 28 after the final determination date of the audited partnership. 29 (2) For a direct tiered partner, no later than one hundred 30 eighty days after the final determination date of the audited 31 partnership. 32 (3) For an indirect tiered partner, within ninety days 33 after the time for filing and furnishing statements to a 34 tiered partner and the partner of the tiered partner, as 35 -43- HF2641.4512.S (1) 88 mb 43/ 86
established by section 6226 of the Internal Revenue Code and 1 the regulations thereunder. 2 c. The amount due under this subsection from an audited 3 partnership or tiered partner shall be calculated as follows: 4 (1) Exclude from final federal partnership adjustments and 5 any positive reallocation adjustments the distributive share 6 of such adjustments reported to an exempt partner that holds 7 an interest directly in the audited partnership if the audited 8 partnership is making the election or that holds an interest 9 directly in the tiered partner if the tiered partner is making 10 the election, but only to the extent the distributive share is 11 not unrelated business income. 12 (2) Determine the total distributive share of all final 13 federal partnership adjustments and positive reallocation 14 adjustments as modified by this title that are reported to 15 corporate partners, and to exempt partners to the extent the 16 distributive share is unrelated business income, and allocate 17 and apportion such adjustments as provided in section 422.33 18 at the partnership or tiered partner level, and multiply the 19 resulting amount by the maximum state corporate income tax rate 20 pursuant to section 422.33 for the reviewed year. 21 (3) Determine the total distributive share of all final 22 federal partnership adjustments and positive reallocation 23 adjustments as modified by this title that are reported to 24 nonresident individual partners and nonresident fiduciary 25 partners and allocate and apportion such adjustments as 26 provided in section 422.33 at the partnership or tiered 27 partner level, and multiply the resulting amount by the maximum 28 individual income tax rate pursuant to section 422.5A for the 29 reviewed year. 30 (4) For the total distributive share of all final federal 31 partnership adjustments and positive reallocation adjustments 32 as modified by this title that are reported to tiered partners: 33 (a) Determine the amount of such adjustments which are of a 34 type that would be subject to sourcing to Iowa under section 35 -44- HF2641.4512.S (1) 88 mb 44/ 86
422.8, subsection 2, paragraph “a” , as a nonresident, and then 1 determine the portion of this amount that would be sourced to 2 Iowa under those provisions as if the tiered partner were a 3 nonresident. 4 (b) Determine the amount of such adjustments which are of 5 a type that would not be subject to sourcing to Iowa under 6 section 422.8, subsection 2, paragraph “a” , as a nonresident. 7 (c) Determine the portion of the amount in subparagraph 8 division (b) that can be established, as prescribed by the 9 department by rule, to be properly allocable to indirect 10 partners that are nonresident partners or other partners not 11 subject to tax on the adjustments. 12 (d) Multiply the total of the amounts determined in 13 subparagraph divisions (a) and (b), reduced by any amount 14 determined in subparagraph division (c), by the highest 15 individual income tax rate pursuant to section 422.5A for the 16 reviewed year. 17 (5) For the total distributive share of all final federal 18 partnership adjustments and positive reallocation adjustments 19 as modified by this title that are reported to resident 20 individual partners and resident fiduciary partners, multiply 21 that amount by the highest individual income tax rate pursuant 22 to section 422.5A for the reviewed year. 23 (6) Total the amounts computed pursuant to subparagraphs 24 (2) through (5) and calculate any interest and penalty as 25 provided under this title. Notwithstanding any provision of 26 law to the contrary, interest and penalties on the amount due 27 by the audited partnership or tiered partner shall be computed 28 from the day after the due date of the reviewed year return 29 without extension, and shall be imposed as if the audited 30 partnership or tiered partner was required to pay tax or show 31 tax due on the original return for the reviewed year. 32 d. Adjustments subject to the election in this subsection 33 do not include any adjustments arising from an administrative 34 adjustment request. 35 -45- HF2641.4512.S (1) 88 mb 45/ 86
e. An audited partnership or tiered partner not otherwise 1 subject to any reporting or payment obligation to Iowa that 2 makes an election under this subsection consents to be subject 3 to the Iowa laws related to reporting, assessment, collection, 4 and payment of Iowa tax, interest, and penalties calculated 5 under the election. 6 6. Modified reporting and payment method. The department may 7 adopt procedures for an audited partnership or tiered partner 8 to enter into an agreement with the department to use an 9 alternative reporting and payment method, including applicable 10 time requirements or any other provision of this section. The 11 audited partnership or tiered partner must demonstrate that 12 the requested method will reasonably provide for the reporting 13 and payment of taxes, penalties, and interest due under the 14 provisions of this section. Application for approval of an 15 alternative reporting and payment method must be made by the 16 audited partnership or tiered partner within the time for 17 making an election to pay under subsection 5 and in the manner 18 prescribed by the department. Approval of such an alternative 19 reporting and payment method shall be at the discretion of the 20 department. 21 7. Effect of election by partnership or tiered partner and 22 payment of amount due. 23 a. The election made under subsection 5 is irrevocable, 24 unless in the discretion of the director, the director 25 determines otherwise. 26 b. The amount determined in subsection 5, when properly 27 reported and paid by the audited partnership or tiered partner, 28 shall be treated as paid on behalf of the partners of such 29 audited partnership or tiered partner on the same final federal 30 partnership adjustments, provided, however, that no partner may 31 take any deduction or credit for the amount, claim a refund of 32 the amount, or include the amount on such partner’s Iowa return 33 in any manner. 34 c. In the event another state offers to an audited 35 -46- HF2641.4512.S (1) 88 mb 46/ 86
partnership or tiered partner a similar election to pay state 1 tax resulting from final federal partnership adjustments, 2 nothing in this subsection shall prohibit a resident who holds 3 an interest directly in that audited partnership or tiered 4 partner, as the case may be, from claiming a credit for taxes 5 paid by the resident to another state under section 422.8, 6 subsection 1, for any amounts paid by the audited partnership 7 or tiered partner on such resident partner’s behalf to another 8 state, provided such payment otherwise meets the requirements 9 of section 422.8, subsection 1. 10 d. Nothing in this section shall prohibit the department 11 from assessing direct partners and indirect partners for taxes 12 they owe in the event that an audited partnership or tiered 13 partner fails to timely make any report or payment required by 14 this section for any reason. 15 8. Assessments of additional Iowa income tax, interest, and 16 penalties, and claims for refund, arising from final federal 17 partnership adjustments. 18 a. The department shall assess additional Iowa income 19 tax, interest, and penalties arising from final federal 20 partnership adjustments in the same manner as provided in 21 this title unless a different treatment is provided by this 22 subsection. Since final federal partnership adjustments are 23 determined at the audited partnership level, any assessment 24 issued to partners shall not be appealable by the partner. 25 The department may assess any taxes, including on-behalf-of 26 amounts, interest, and penalties arising from the final federal 27 partnership adjustments if it issues a notice of assessment to 28 the audited partnership, tiered partner, or other direct or 29 indirect partner on or before the expiration of the applicable 30 limitations period specified in section 422.25. 31 b. In addition to the period for claiming a refund or credit 32 provided in section 422.73, subsection 1, paragraph “a” , and 33 notwithstanding section 422.73, subsection 1, paragraph “b” , 34 a partnership, tiered partner, or other direct or indirect 35 -47- HF2641.4512.S (1) 88 mb 47/ 86
partner, as the case may be, may file a claim for refund of 1 Iowa income tax arising directly or indirectly from a final 2 federal partnership adjustment arising from a partnership level 3 audit on or before the date which is one year from the date the 4 federal adjustments report for that final federal partnership 5 adjustment was required to be filed by such person under this 6 section. 7 9. Rules. The department may adopt any rules pursuant to 8 chapter 17A to implement this section. 9 Sec. 65. NEW SECTION . 422.25B State partnership 10 representative. 11 1. As used in this section, all words and phrases defined 12 in section 422.25A shall have the same meaning given them by 13 that section. 14 2. The state partnership representative for the reviewed 15 year for a partnership shall be the partnership’s federal 16 partnership representative with respect to an action required 17 or permitted to be taken by a state partnership representative 18 under this chapter for a reviewed year, unless the partnership 19 designates in writing another person as the state partnership 20 representative as provided in subsection 3. The state 21 partnership representative for the reviewed year for a 22 pass-through entity is the person designated in subsection 3. 23 3. The department may establish reasonable qualifications 24 for a person to be a state partnership representative. If 25 a partnership desires to designate a person other than the 26 federal partnership representative, the partnership shall 27 designate such person in the manner and form prescribed by the 28 department. A pass-through entity shall designate a person as 29 the state partnership representative in the manner and form 30 prescribed by the department. A partnership or pass-through 31 entity shall be allowed to change such designation by notifying 32 the department at the time the change occurs in the manner and 33 form prescribed by the department. 34 4. The department may adopt any rules pursuant to chapter 35 -48- HF2641.4512.S (1) 88 mb 48/ 86
17A to implement this section. 1 Sec. 66. NEW SECTION . 422.25C Partnership and pass-through 2 entity audits and examinations —— consistent treatment of 3 entity-level items —— binding actions —— amended returns. 4 1. As used in this section, all words and phrases defined 5 in section 422.25A shall have the same meaning given them by 6 that section. 7 2. For tax years beginning on or after January 1, 2020, any 8 adjustments to a partnership’s or pass-through entity’s items 9 of income, gain, loss, expense, or credit, or an adjustment 10 to such items allocated to a partner that holds an interest 11 in a partnership or pass-through entity for the reviewed year 12 by the department as a result of a state partnership audit, 13 shall be determined at the partnership level or pass-through 14 entity level in the same manner as provided by section 6221(a) 15 of the Internal Revenue Code and the regulations thereunder 16 unless a different treatment is specifically provided in this 17 title. The provisions of sections 6222, 6223, and 6227 of the 18 Internal Revenue Code and the regulations thereunder shall also 19 apply to a partnership or pass-through entity and its direct 20 or indirect partners in the same manner as provided in such 21 sections unless a different treatment is specifically provided 22 in this title. For purposes of applying such sections, due 23 account shall be made for differences in federal and Iowa 24 terminology. The adjustment provided by section 6221(a) of 25 the Internal Revenue Code shall be determined as provided in 26 such section but shall be based on Iowa taxable income or 27 other tax attributes of the partnership as determined pursuant 28 to this chapter for the reviewed year. The department shall 29 issue a notice of adjustment to the partnership or pass-through 30 entity. Such notice shall be treated as an assessment for 31 the purposes of section 422.25, and the notice shall be 32 appealable by the partnership or pass-through entity pursuant 33 to sections 422.28 and 422.29 and shall be issued within the 34 time period provided by section 422.25. Once the adjustments 35 -49- HF2641.4512.S (1) 88 mb 49/ 86
to partnership-related or pass-through entity-related items or 1 reallocations of income, gains, losses, expenses, credits, and 2 other attributes among such partners for the reviewed year are 3 finally determined, the partnership or pass-through entity and 4 any direct partners or indirect partners shall then be subject 5 to the provisions of section 422.25, subsection 1, paragraph 6 “e” , and section 422.25A in the same manner as if the state 7 partnership audit were a federal partnership level audit, and 8 as if the final state partnership audit adjustment were a final 9 federal partnership adjustment. The penalty exceptions in 10 section 421.27, subsection 2, paragraphs “b” and “c” , shall not 11 apply to a state partnership audit. 12 3. The state partnership representative for the reviewed 13 year as determined under section 422.25B shall have the sole 14 authority to act on behalf of the partnership or pass-through 15 entity with respect to an action required or permitted to 16 be taken by a partnership or pass-through entity under this 17 section, including proceedings under section 422.28 or 422.29, 18 and the partnership’s or pass-through entity’s direct partners 19 and indirect partners shall be bound by those actions. 20 4. If the department, the partnership or pass-through 21 entity, and the partnership or pass-through entity owners 22 agree, the provisions of this section may be applied to tax 23 years beginning before January 1, 2020. 24 5. The department may adopt rules pursuant to chapter 17A to 25 implement this section. 26 Sec. 67. Section 422.35, Code 2020, is amended by adding the 27 following new subsection: 28 NEW SUBSECTION . 26. Any income subtracted from federal 29 taxable income for an adjustment year pursuant to section 6225 30 of the Internal Revenue Code and the regulations thereunder 31 shall be added back in computing net income for state tax 32 purposes for the adjustment year. 33 Sec. 68. Section 422.39, Code 2020, is amended by striking 34 the section and inserting in lieu thereof the following: 35 -50- HF2641.4512.S (1) 88 mb 50/ 86
422.39 Statutes applicable to corporations and corporation 1 tax. 2 All the provisions of sections 422.24 through 422.27 3 of division II, respecting payment, collection, reporting, 4 examination, and assessment, shall apply in respect to a 5 corporation subject to the provisions of this division and to 6 the tax due and payable by a corporation taxable under this 7 division. This includes but is not limited to a corporation 8 that is a pass-through entity as defined in section 422.25A. 9 Sec. 69. Section 422.73, Code 2020, is amended by adding the 10 following new subsection: 11 NEW SUBSECTION . 01. For purposes of this section, “federal 12 adjustment” , “final determination date” , and “final federal 13 adjustment” all mean the same as defined in section 422.25. 14 Sec. 70. Section 422.73, subsections 1 and 3, Code 2020, are 15 amended to read as follows: 16 1. a. If it appears that an amount of tax, penalty, or 17 interest has