House Study Bill 279
HOUSE FILE
BY (PROPOSED COMMITTEE ON WAYS
AND MEANS BILL BY
CHAIRPERSON SHOMSHOR)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act directing the director of revenue to negotiate reciprocal
2 income tax agreements with other states.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 2687HC 83
5 tw/mg:sc/24
PAG LIN
1 1 Section 1. Section 422.8, subsection 5, Code 2009, is
1 2 amended to read as follows:
1 3 5. a. The director may, in accordance with the provisions
1 4 of this subsection, and when cost=efficient, administratively
1 5 feasible, and of mutual benefit to both states, enter into
1 6 reciprocal agreements with tax administration agencies of
1 7 other states to further tax administration and eliminate
1 8 duplicate withholding by exempting from Iowa taxation income
1 9 earned from personal services in Iowa by residents of another
1 10 state, if the other state provides a tax exemption for the
1 11 same type of income earned from personal services by Iowa
1 12 residents in the other state. For purposes of this
1 13 subsection, "income earned from personal services" means
1 14 wages, salaries, commissions, and tips, and earned income from
1 15 other sources. This subsection does not authorize the
1 16 department to withhold taxes on deferred compensation
1 17 payments, pension distributions, and annuity payments when
1 18 paid to a nonresident of the state of Iowa. All the terms of
1 19 the agreements shall be described in the rules adopted by the
1 20 department.
1 21 b. The director shall enter into negotiations with other
1 22 states to establish reciprocal agreements with the tax
1 23 administration agencies of these states to further tax
1 24 administration and eliminate duplicate withholding by
1 25 exempting from Iowa taxation income earned from personal
1 26 services in Iowa by residents of another state, if the other
1 27 state provides a tax exemption for the same type of income
1 28 earned from personal services by Iowa residents in the other
1 29 state. The director shall annually report to the general
1 30 assembly on the states with which negotiations are being
1 31 carried out and the possibility of agreements being reached.
1 32 c. A reciprocal agreement entered into on or after April
1 33 4, 2002, with a tax administration agency of another state
1 34 shall not take effect until such agreement has been authorized
1 35 by a constitutional majority of each house of the general
2 1 assembly and approved by the governor. A reciprocal agreement
2 2 in effect on or after January 1, 2002, shall not be terminated
2 3 by the state of Iowa unless the termination has been
2 4 authorized by a constitutional majority of each house of the
2 5 general assembly and approved by the governor. An amendment
2 6 to an existing reciprocal agreement does not constitute a new
2 7 agreement.
2 8 EXPLANATION
2 9 This bill directs the director of revenue to enter into
2 10 negotiations with other states for the purpose of establishing
2 11 reciprocal agreements that would assist in tax administration
2 12 and exempt from taxation income earned from wages, salaries,
2 13 commissions, and tips in Iowa by residents of the other state
2 14 if a like kind exemption is provided to Iowa residents by that
2 15 state. At present, Illinois is the only state with which Iowa
2 16 has such an agreement.
2 17 The director is to report annually to the general assembly
2 18 on the negotiations that are taking place and the possibility
2 19 of agreements being entered into.
2 20 LSB 2687HC 83
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