House Study Bill 705 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF REVENUE BILL) A BILL FOR An Act relating to the policy administration of the tax 1 and related laws by the department of revenue, including 2 administration of income taxes, sales and use taxes, motor 3 fuel taxes, property taxes, and inheritance taxes, providing 4 for taxpayer information exchanges with the department 5 of workforce development, making penalties applicable, 6 and including effective date and retroactive and other 7 applicability provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 5433XD (27) 83 tw/sc

S.F. _____ H.F. _____ DIVISION I 1 WITHHOLDING TAX CREDITS 2 Section 1. Section 15A.7, unnumbered paragraph 1, Code 3 Supplement 2009, is amended to read as follows: 4 In order to promote the creation of additional high-quality 5 new jobs within the state, an agreement under section 260E.3 6 may include a provision for a supplemental new jobs credit from 7 withholding from jobs created under the agreement. As used in 8 this section, “new jobs credit from withholding” means the same 9 as defined in section 260E.2. A provision in an agreement for 10 which a supplemental credit from withholding is included shall 11 provide for the following: 12 Sec. 2. Section 15A.9, subsection 3, paragraph a, 13 unnumbered paragraph 1, Code Supplement 2009, is amended to 14 read as follows: 15 At the request of the primary business or a supporting 16 business, an agreement authorizing a supplemental new 17 jobs credit from withholding from jobs within the zone 18 may be entered into between the department of revenue, a 19 community college, and the primary business or a supporting 20 business. As used in this subsection, “new jobs credit from 21 withholding” means the same as defined in section 260E.2. The 22 agreement shall be for program services for an additional job 23 training project, as defined in chapter 260E. The agreement 24 shall provide for the following: 25 Sec. 3. Section 15E.197, subsection 4, Code Supplement 26 2009, is amended to read as follows: 27 4. For purposes of this section, “eligible business” means 28 a business which has been approved to receive incentives and 29 assistance by the department of economic development pursuant 30 to application as provided in section 15E.195 , and “new jobs 31 credit from withholding” means the same as defined in section 32 260E.2 . 33 Sec. 4. Section 260E.2, subsection 11, Code 2009, is amended 34 to read as follows: 35 -1- LSB 5433XD (27) 83 tw/sc 1/ 35

S.F. _____ H.F. _____ 11. “New jobs credit from withholding” means the 1 credit procedure for crediting to employers the amount of 2 withholding tax payments made by the department of revenue to 3 community colleges as provided in section 260E.5. 4 Sec. 5. Section 260E.5, subsections 2, 4, 5, and 6, Code 5 2009, are amended to read as follows: 6 2. a. The employer shall remit the total amount of 7 withholding payments due pursuant to section 422.16 to the 8 department of revenue. An amount equal to one and one-half 9 percent of the gross wages paid by the employer to each 10 employee participating in a project shall be credited from the 11 payment made by an employer pursuant to section 422.16 . If 12 the amount of the withholding by the employer is less than one 13 and one-half percent of the gross wages paid to the employees 14 covered by the agreement, then the employer shall receive a 15 credit against other withholding taxes due by the employer. 16 The employer shall remit the amount of the credit quarterly 17 in the same manner as withholding payments are reported to 18 the department of revenue, withholding tax payments to be 19 made by the department of revenue on a quarterly basis to the 20 account of each community college to be allocated to and when 21 collected paid into a special fund of the community college to 22 pay the principal of and interest on certificates issued by the 23 community college to finance or refinance, in whole or in part, 24 the project. 25 b. When the principal and interest on the certificates have 26 been paid, the employer credits department of revenue shall 27 cease and any money to credit withholding tax moneys to the 28 account of the community college. All moneys received after 29 the certificates have been paid shall be remitted to the 30 treasurer of state to be deposited in the general fund of the 31 state. 32 4. The employer shall certify to the department of revenue 33 that the new jobs credit in from withholding is in accordance 34 with an agreement and shall provide any other information the 35 -2- LSB 5433XD (27) 83 tw/sc 2/ 35

S.F. _____ H.F. _____ department may require. 1 5. A In order to receive the moneys credited to a community 2 college’s account, the community college shall certify to 3 the department of revenue the amount of new jobs credit 4 from withholding an employer has remitted to be allocated 5 and paid to the special fund and shall provide any other 6 information the department may require. Upon reviewing the 7 required information and verifying that the certified amount 8 is correct, the department of revenue shall pay the certified 9 amount into the special fund of the community college. 10 6. An employee participating in a project will must receive 11 full credit for the amount withheld as provided in section 12 422.16. 13 Sec. 6. Section 260G.2, subsection 13, Code 2009, is amended 14 to read as follows: 15 13. “Program job credit” means the credit procedure for 16 crediting to employers the amount of withholding tax payments 17 made by the department of revenue to community colleges as 18 provided in section 260G.4A. 19 Sec. 7. Section 260G.4A, subsections 2 through 5, Code 2009, 20 are amended to read as follows: 21 2. a. Eligibility for program job credits shall be 22 based on certification of program job positions and program 23 job wages by the employer at the time established in the 24 agreement. An employer shall remit the total amount of 25 withholding payments due pursuant to section 422.16 to the 26 department of revenue. An amount up to ten percent of the 27 gross program job wage as certified by the employer in the 28 agreement shall be credited from the total payment made by 29 an employer pursuant to section 422.16 . The employer shall 30 receive a credit against all withholding taxes due by the 31 employer regardless of whether or not the withholding from the 32 employer of current program job wages is less than ten percent. 33 The employer shall remit the amount of the credit quarterly in 34 the same manner as withholding payments are reported to the 35 -3- LSB 5433XD (27) 83 tw/sc 3/ 35

S.F. _____ H.F. _____ department of revenue, withholding tax payments to be made by 1 the department of revenue on a quarterly basis to the account 2 of each community college to be allocated to and when collected 3 paid into a special fund of the community college to pay, in 4 part, the program costs. 5 b. When the program costs have been paid, the employer 6 credits department of revenue shall cease and any to credit 7 withholding tax moneys to the account of the community college. 8 All moneys received after the program costs have been paid 9 shall be remitted to the treasurer of state to be deposited in 10 the general fund of the state. 11 3. The employer shall certify to the department of revenue 12 that the program job credit is in accordance with the agreement 13 and shall provide any other information the department may 14 require. 15 4. A In order to receive the moneys credited to a community 16 college’s account, the community college shall certify to 17 the department of revenue that the amount of the program job 18 credit to be allocated and paid to the special fund is correct 19 and in accordance with an agreement and shall provide any other 20 information the department may require. Upon reviewing the 21 required information and verifying that the certified amount 22 is correct, the department of revenue shall pay the certified 23 amount into the special fund of the community college. 24 5. Employees from of an employer participating in an 25 agreement shall must receive full credit for the amount 26 withheld as provided in section 422.16. 27 Sec. 8. Section 403.19A, subsection 1, Code Supplement 28 2009, is amended by adding the following new paragraph: 29 NEW PARAGRAPH . Og. “Targeted jobs withholding credit” 30 means the procedure for crediting to employers the amount of 31 withholding tax payments made by the department of revenue to a 32 pilot project city as provided in subsection 3. 33 Sec. 9. Section 403.19A, subsection 3, paragraphs a, b, 34 e, f, g, and h, Code Supplement 2009, are amended to read as 35 -4- LSB 5433XD (27) 83 tw/sc 4/ 35

S.F. _____ H.F. _____ follows: 1 a. A pilot project city may provide by ordinance for 2 the deposit into a designated account in the special fund 3 described in section 403.19, subsection 2 , of the targeted 4 jobs withholding credit described in this section and an 5 employer may enter into a withholding agreement pursuant to 6 this subsection. Such an agreement may include a provision 7 for a targeted jobs withholding credit . The targeted jobs 8 withholding credit shall be based upon the wages paid to 9 employees pursuant to a withholding agreement. 10 b. The employer shall remit the total amount of withholding 11 payments due pursuant to section 422.16 to the department 12 of revenue. An amount equal to three percent of the gross 13 wages paid by an employer to each employee under a withholding 14 agreement shall be credited from the payment made by the 15 employer pursuant to section 422.16 . If the amount of the 16 withholding by the employer is less than three percent of the 17 gross wages paid to the employees covered by the withholding 18 agreement, the employer shall receive a credit against other 19 withholding taxes due by the employer or may carry the credit 20 forward for up to ten years or until depleted, whichever is the 21 earlier. The employer shall remit the amount of the credit 22 quarterly, in the same manner as withholding payments are 23 reported to the department of revenue, withholding tax payments 24 to be made by the department of revenue on a quarterly basis to 25 the account of each pilot project city to be allocated to and 26 when collected paid into a designated account in the special 27 fund for the urban renewal area in which the targeted jobs are 28 located. All amounts so deposited shall be used or pledged by 29 the pilot project city for an urban renewal project related to 30 the employer pursuant to the withholding agreement. 31 e. (1) The employer shall certify to the department 32 of revenue that the targeted jobs withholding credit is in 33 accordance with the withholding agreement and shall provide 34 any other information the department may require. Notice of 35 -5- LSB 5433XD (27) 83 tw/sc 5/ 35

S.F. _____ H.F. _____ any withholding agreement shall be provided promptly to the 1 department of revenue following execution of the agreement by 2 the pilot project city and the employer. 3 (2) Following termination of the withholding agreement, 4 the employer credits department of revenue shall cease and any 5 money to credit withholding tax moneys to the account of the 6 pilot project city. All moneys received by the pilot project 7 city after termination shall be remitted to the treasurer of 8 state to be deposited into the general fund of the state. 9 Notice shall be provided promptly to the department of revenue 10 following termination. 11 f. If the employer ceases to meet the requirements of the 12 withholding agreement, the agreement shall be terminated and 13 any targeted jobs withholding tax credits for the benefit 14 of payments credited to the employer employer’s obligations 15 under the agreement shall cease. However, in regard to the 16 number of new jobs that are to be created, if the employer 17 has met the number of new jobs to be created pursuant to 18 the withholding agreement and subsequently the number of new 19 jobs falls below the required level, the employer shall not 20 be considered as not meeting the new job requirement until 21 eighteen months after the date of the decrease in the number of 22 new jobs created. 23 g. A In order to receive the moneys credited to a pilot 24 project city’s account, the pilot project city shall certify 25 to the department of revenue the amount of the targeted jobs 26 withholding credit an employer has remitted to the city to 27 be allocated and paid to the special fund as provided for 28 under the agreement and shall provide any other information 29 the department may require. Upon reviewing the required 30 information and verifying that the certified amount is correct, 31 the department of revenue shall pay the certified amount into 32 the designated account of the special fund of the urban renewal 33 area in which the targeted jobs are located. 34 h. An employee whose wages are subject to a withholding 35 -6- LSB 5433XD (27) 83 tw/sc 6/ 35

S.F. _____ H.F. _____ agreement shall must receive full credit for the amount 1 withheld as provided in section 422.16. 2 Sec. 10. Section 403.19A, subsection 3, paragraph j, 3 subparagraph (1), Code Supplement 2009, is amended to read as 4 follows: 5 (1) A pilot project city entering into a withholding 6 agreement shall arrange for matching local financial support 7 for the project. The local match required under this paragraph 8 “j” shall be in an amount equal to one dollar for every dollar 9 of targeted jobs withholding credit tax payments received by 10 the pilot project city from the department of revenue . 11 Sec. 11. Section 422.16A, Code 2009, is amended to read as 12 follows: 13 422.16A Job training withholding —— certification and 14 transfer. 15 Upon the completion by a business of its repayment 16 obligation of the payment of program costs for a training 17 project funded under chapter 260E, including a job training 18 project funded under section 15A.8 or repaid in whole or in 19 part by the supplemental new jobs credit from withholding 20 under section 15A.7 or section 15E.197, the sponsoring 21 community college shall report to the department of economic 22 development the amount of withholding paid by the business tax 23 payments credited by the department of revenue to the account 24 of the community college during the final twelve months of 25 withholding payments. The department of economic development 26 shall notify the department of revenue of that the amount 27 reported by the community college . The department of 28 revenue shall credit to the workforce development fund account 29 established in section 15.342A twenty-five percent of that 30 amount each quarter for a period of ten years. If the amount 31 of withholding from the business or employer credited by 32 the department of revenue is insufficient, the department 33 of revenue shall prorate the quarterly amount credited to 34 the workforce development fund account. The maximum amount 35 -7- LSB 5433XD (27) 83 tw/sc 7/ 35

S.F. _____ H.F. _____ from all employers of withholding tax credit which shall be 1 transferred to the workforce development fund account in any 2 year is four million dollars. 3 Sec. 12. RETROACTIVE APPLICABILITY. 4 1. This division of this Act applies to all agreements 5 concerning withholding tax credit payments entered into 6 pursuant to the provisions of chapters 260E and 260G and 7 section 403.19A. 8 2. An agreement entered into prior to the effective date of 9 this division of this Act shall be re-executed and its terms 10 renegotiated in compliance with the provisions of this division 11 of this Act. 12 DIVISION II 13 PROPERTY TAXES 14 Sec. 13. Section 421.17, subsection 17, Code 2009, is 15 amended to read as follows: 16 17. To prepare and issue a state appraisal manual which each 17 county and city assessor shall use in assessing and valuing all 18 classes of property in the state. The appraisal manual shall 19 be continuously revised and the manual and revisions shall be 20 issued to the county and city assessors in such form and manner 21 as prescribed by the director. The director may approve an 22 alternate appraisal manual for use by a city or county assessor 23 if the director determines that the manual is uniform and 24 consistent with the state appraisal manual. 25 Sec. 14. Section 421.30, subsection 7, Code 2009, is amended 26 to read as follows: 27 7. Any reassessment of property ordered by the director, 28 whether or not undertaken with funds provided in this section, 29 shall be conducted by the assessor in accordance with the Iowa 30 real property appraisal manual issued under authority of or an 31 approved alternate appraisal manual as described in section 32 421.17, subsection 17, the assessment laws of this state, and 33 any reassessment order issued by the director under authority 34 of this chapter. The conference board may employ appraisers 35 -8- LSB 5433XD (27) 83 tw/sc 8/ 35

S.F. _____ H.F. _____ or other expert help to assist the assessor in completing 1 the reassessment, except that no conference board receiving 2 funds under this section shall enter into a contract for 3 the reassessment of property until the board’s proposal for 4 completing the reassessment is approved. The director shall 5 supervise the conduct of all reassessments of property and 6 issue to the assessor or conference board such instructions, 7 directives, or orders as are necessary to ensure compliance 8 with the provisions of this section and the assessment laws of 9 this state. 10 Sec. 15. Section 427B.4, Code 2009, is amended to read as 11 follows: 12 427B.4 Application for exemption by property owner. 13 1. a. An application shall be filed for each project 14 resulting in actual value added for which an exemption is 15 claimed. The first application for exemption shall be filed 16 by the owner of the property with the local assessor governing 17 body of the city or county in which the property is located by 18 February 1 of the assessment year in which the value added is 19 first assessed for taxation for which the exemption is first 20 claimed, but not later than the year in which all improvements 21 included in the project are first assessed for taxation, or the 22 following two assessment years . 23 b. Applications for exemption shall be made on forms 24 prescribed by the director of revenue and shall contain 25 information pertaining to the nature of the improvement, its 26 cost, the estimated or actual date of completion, whether 27 the exemption schedule described in section 427B.3 or an 28 alternate schedule adopted pursuant to section 427B.1 will be 29 elected, and any other information deemed necessary by the 30 director of revenue. 31 2. a. A person may submit a proposal to the city council 32 of the city or the board of supervisors of a county to receive 33 prior approval for eligibility for a tax exemption on new 34 construction. The city council or the board of supervisors, by 35 -9- LSB 5433XD (27) 83 tw/sc 9/ 35

S.F. _____ H.F. _____ ordinance, may give its prior approval of a tax exemption for 1 new construction if the new construction is in conformance with 2 the zoning plans for the city or county. The prior approval 3 shall also be subject to the hearing requirements of section 4 427B.1. 5 b. Prior approval received under this subsection does not 6 entitle the owner to exemption from taxation until the new 7 construction has been completed and found to be qualified real 8 estate. However, if the tax exemption for new construction is 9 not approved, the person may submit an amended proposal to the 10 city council or board of supervisors to approve or reject. 11 Sec. 16. Section 441.21, subsection 1, paragraphs h and i, 12 Code Supplement 2009, are amended to read as follows: 13 h. The assessor shall determine the value of real property 14 in accordance with rules adopted by the department of revenue 15 and in accordance with either the forms and guidelines 16 contained in the real property appraisal manual prepared by the 17 department as updated from time to time or with an alternate 18 appraisal manual approved for use pursuant to section 421.17, 19 subsection 17 . Such rules, forms, and guidelines shall not 20 be inconsistent with or change the means, as provided in this 21 section, of determining the actual, market, taxable, and 22 assessed values. 23 i. (1) If the department finds that a city or county 24 assessor is not in compliance with the rules of the department 25 relating to valuation of property or has disregarded either the 26 forms and guidelines contained in the real property appraisal 27 manual or an alternate appraisal manual approved for use 28 pursuant to section 421.17, subsection 17 , the department shall 29 notify the assessor and each member of the conference board for 30 the appropriate assessing jurisdiction. The notice shall be 31 mailed by restricted certified mail. The notice shall specify 32 the areas of noncompliance and the steps necessary to achieve 33 compliance. The notice shall also inform the assessor and 34 conference board that if compliance is not achieved, a penalty 35 -10- LSB 5433XD (27) 83 tw/sc 10/ 35

S.F. _____ H.F. _____ may be imposed. 1 (2) The conference board shall respond to the department 2 within thirty days of receipt of the notice of noncompliance. 3 The conference board may respond to the notice by asserting 4 that the assessor is in compliance with the rules, guidelines, 5 and forms of the department or by informing the department that 6 the conference board intends to submit a plan of action to 7 achieve compliance. If the conference board responds to the 8 notification by asserting that the assessor is in compliance, a 9 hearing before the director of revenue shall be scheduled on 10 the matter. 11 (3) A plan of action shall be submitted within sixty days of 12 receipt of the notice of noncompliance. The plan shall contain 13 a time frame under which compliance shall be achieved which 14 shall be no later than January 1 of the following assessment 15 year. The plan of action shall contain the signature of the 16 assessor and of the chairperson of the conference board. The 17 department shall review the plan to determine whether the plan 18 is sufficient to achieve compliance. Within thirty days of 19 receipt of the plan, the department shall notify the assessor 20 and the chairperson of the conference board that it has 21 accepted the plan or that it is necessary to submit an amended 22 plan of action. 23 (4) By January 1 of the assessment year following 24 the calendar year in which the plan was submitted to the 25 department, the conference board shall submit a report to the 26 department indicating that the plan of action was followed and 27 compliance has been achieved. The department may conduct a 28 field inspection to ensure that the assessor is in compliance. 29 By January 31, the department shall notify the assessor and the 30 conference board, by restricted certified mail, either that 31 compliance has been achieved or that the assessor remains in 32 noncompliance. If the department determines that the assessor 33 remains in noncompliance, the department shall take steps 34 to withhold up to five percent of the reimbursement payment 35 -11- LSB 5433XD (27) 83 tw/sc 11/ 35

S.F. _____ H.F. _____ authorized in section 425.1 until the director of revenue 1 determines that the assessor is in compliance. 2 (5) If the conference board disputes the determination of 3 the department, the chairperson of the conference board may 4 appeal the determination to the state board of tax review. 5 (6) The department shall adopt rules relating to the 6 administration of this paragraph “i” . 7 Sec. 17. Section 441.21, subsection 2, Code Supplement 8 2009, is amended to read as follows: 9 2. a. In the event market value of the property being 10 assessed cannot be readily established in the foregoing manner, 11 then the assessor may determine the value of the property using 12 the other uniform and recognized appraisal methods including 13 its productive and earning capacity, if any, industrial 14 conditions, its cost, physical and functional depreciation 15 and obsolescence and replacement cost, and all other factors 16 which would assist in determining the fair and reasonable 17 market value of the property but the actual value shall not be 18 determined by use of only one such factor. 19 b. The following shall not be taken into consideration: 20 Special value or use value of the property to its present 21 owner, and the goodwill or value of a business which uses the 22 property as distinguished from the value of the property as 23 property. However, in assessing property that is rented or 24 leased to low-income individuals and families as authorized by 25 section 42 of the Internal Revenue Code, as amended, and which 26 section limits the amount that the individual or family pays 27 for the rental or lease of units in the property, the assessor 28 shall use the productive and earning capacity from the actual 29 rents received as a method of appraisal and shall take into 30 account the extent to which that use and limitation reduces the 31 market value of the property. 32 c. The assessor shall not consider any tax credit equity or 33 other subsidized financing as income provided to the property 34 in determining the assessed value. The property owner shall 35 -12- LSB 5433XD (27) 83 tw/sc 12/ 35

S.F. _____ H.F. _____ notify the assessor when property is withdrawn from section 1 42 eligibility under the Internal Revenue Code. The property 2 shall not be subject to section 42 assessment procedures 3 for the assessment year for which section 42 eligibility is 4 withdrawn. This notification must be provided to the assessor 5 no later than March 1 of the assessment year or the owner 6 will be subject to a penalty of five hundred dollars for that 7 assessment year. The penalty shall be collected at the same 8 time and in the same manner as regular property taxes. 9 d. Upon adoption of uniform rules by the department of 10 revenue or succeeding authority covering assessments and 11 valuations of such properties, the valuation on such properties 12 shall be determined in accordance with such rules and in 13 accordance with either the forms and guidelines contained in 14 the real property appraisal manual prepared by the department 15 as updated from time to time for assessment purposes to 16 assure uniformity , but or with an alternate appraisal manual 17 approved for use pursuant to section 421.17, subsection 18 17. However, such rules, forms, and guidelines shall not be 19 inconsistent with or change the foregoing means of determining 20 the actual, market, taxable and assessed values. 21 DIVISION III 22 FINANCIAL ACCOUNT MATCHING AND DEBT COLLECTION 23 Sec. 18. Section 421.17, Code 2009, is amended by adding the 24 following new subsection: 25 NEW SUBSECTION . 27A. a. To establish a data match system. 26 b. The director may require financial institutions doing 27 business in Iowa to enter into agreements to provide the 28 information described in paragraph “c” regarding individuals 29 with accounts at financial institutions who may be subject to 30 a levy issued by the facility. 31 c. A financial institution, or its agent, shall provide on 32 a quarterly basis the following information for each individual 33 identified pursuant to paragraph “b” : 34 (1) Name. 35 -13- LSB 5433XD (27) 83 tw/sc 13/ 35

S.F. _____ H.F. _____ (2) Address. 1 (3) Account numbers. 2 (4) Social security or tax identification number, as 3 applicable. 4 d. An agreement shall provide that the information described 5 in paragraph “c” be provided by doing one of the following: 6 (1) Using a data match system to identify individuals 7 by means of a social security or tax identification number 8 provided by the facility. 9 (2) Submitting reports containing the information described 10 in paragraph “c” on individuals identified in paragraph “b” to 11 the department. Information in such reports shall be used by 12 the department solely for purposes of collecting obligor debts. 13 e. If, based on the information provided in paragraph 14 “d” pursuant to the agreement, the facility determines that 15 an account belongs to an individual who is an obligor, the 16 facility may initiate an administrative action under section 17 421.17A to levy against the obligor’s account. 18 f. The facility shall reimburse a financial institution, 19 or its agent, for the actual and reasonable costs incurred in 20 providing the information described in paragraph “c” . For 21 purposes of this paragraph “f” , “actual and reasonable costs” 22 means either the cost of developing a data match system to 23 provide information pursuant to paragraph “d” , subparagraph 24 (1), or the cost of providing reports pursuant to paragraph “d” , 25 subparagraph (2). 26 g. Notwithstanding any other provision of law to the 27 contrary, an agreement with a financial institution pursuant 28 to this subsection shall specify a date by which the financial 29 institution shall submit a claim for reimbursement pursuant to 30 paragraph “f” . 31 h. This subsection shall not be construed to preclude a 32 financial institution from doing either of the following: 33 (1) Recouping a deposit made to an individual’s account, if 34 the financial institution is lawfully entitled to do so. 35 -14- LSB 5433XD (27) 83 tw/sc 14/ 35

S.F. _____ H.F. _____ (2) Collecting standard or contractual account activity 1 fees to the extent such fees are necessary to maintain the 2 account during any period in which access to the account is 3 blocked or encumbered. 4 i. The information provided by a financial institution, 5 or its agent, under this subsection shall be confidential and 6 shall be available only to the department and the facility for 7 use in levy collection activities. 8 j. A financial institution, or its agent, providing the 9 information described in this subsection shall not be held 10 liable for either of the following: 11 (1) Blocking access to or surrendering an individual’s 12 assets in response to a levy action under this subsection. 13 (2) Any other action taken in good faith to comply with the 14 requirements of this subsection. 15 k. This subsection shall not be construed to preclude 16 the department from encumbering an obligor’s account with a 17 financial institution by another available means or provision 18 of law. 19 l. The director shall adopt rules for the administration 20 of this subsection. The rules shall specify an implementation 21 plan for the data match system. The plan, to the extent 22 practicable, shall reflect the practices and capabilities of 23 similar systems utilized by private entities or government 24 agencies. 25 m. As used in this subsection, unless the context otherwise 26 requires: 27 (1) “Data match system” means an automated process for 28 matching and comparing obligor information from the centralized 29 debt collection data bank described in subsection 27 with 30 account information from financial institutions. 31 (2) The terms “account” , “bank” , “credit union” , “facility” , 32 “financial institution” , “obligor” , and “savings and loan 33 association” have the same meaning as defined in section 34 421.17A, subsection 1. 35 -15- LSB 5433XD (27) 83 tw/sc 15/ 35

S.F. _____ H.F. _____ DIVISION IV 1 IDENTIFICATION OF WORKER MISCLASSIFICATION 2 Sec. 19. Section 421.17, Code 2009, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 31. To assist the department of workforce 5 development in identifying taxpayers who have failed to 6 file a return or to pay the taxes, penalties, or interest 7 required pursuant to any of the tax provisions administered 8 by the department of workforce development. In assisting the 9 department of workforce development, and notwithstanding any 10 provisions to the contrary in sections 422.20 and 422.72, the 11 director is authorized to provide the following information for 12 purposes of identifying such taxpayers: 13 a. Withholding tax and payroll information. 14 b. The identity, including the date of birth and social 15 security number, of any taxpayer who has previously been or is 16 currently being audited or investigated by the department. 17 c. The result or most recent status of the audit or 18 investigation. 19 Sec. 20. Section 422.20, subsection 3, paragraph a, Code 20 2009, is amended to read as follows: 21 a. Unless otherwise expressly permitted by section 8A.504, 22 section 96.11, subsection 6, section 421.17, subsections 22, 23 23, and 26, and 31, sections 252B.9, 321.120, 421.19, 421.28, 24 422.72, and 452A.63, and this section, a tax return, return 25 information, or investigative or audit information shall not 26 be divulged to any person or entity, other than the taxpayer, 27 the department, or internal revenue service for use in a matter 28 unrelated to tax administration. 29 Sec. 21. Section 422.72, subsection 3, paragraph a, Code 30 2009, is amended to read as follows: 31 a. Unless otherwise expressly permitted by section 8A.504, 32 section 96.11, subsection 6, section 421.17, subsections 22, 33 23, and 26, and 31, sections 252B.9, 321.120, 421.19, 421.28, 34 422.20, and 452A.63, and this section, a tax return, return 35 -16- LSB 5433XD (27) 83 tw/sc 16/ 35

S.F. _____ H.F. _____ information, or investigative or audit information shall not 1 be divulged to any person or entity, other than the taxpayer, 2 the department, or internal revenue service for use in a matter 3 unrelated to tax administration. 4 Sec. 22. EFFECTIVE UPON ENACTMENT. This division of this 5 Act, being deemed of immediate importance, takes effect upon 6 enactment. 7 DIVISION V 8 FALSE CLAIMS FOR CREDIT 9 Sec. 23. Section 421.27, subsection 6, Code 2009, is amended 10 to read as follows: 11 6. Improper receipt of refund or credit. A person who makes 12 an erroneous application for refund or credit shall be liable 13 for any overpayment received or tax liability reduced plus 14 interest at the rate in effect under section 421.7. In 15 addition, a person who willfully makes a false or frivolous 16 application for refund or credit with intent to evade tax 17 or with intent to receive a refund or credit to which the 18 person is not entitled is guilty of a fraudulent practice 19 and is liable for a penalty equal to seventy-five percent of 20 the refund or credit being claimed. Repayments Payments , 21 penalties, and interest due under this subsection may be 22 collected and enforced in the same manner as the tax imposed. 23 DIVISION VI 24 REFUND INTEREST ACCRUAL 25 Sec. 24. Section 421.60, subsection 2, paragraph e, Code 26 2009, is amended to read as follows: 27 e. Unless otherwise provided by law, all Iowa taxes which 28 are administered by the department and which result in a refund 29 shall accrue interest at the rate in effect under section 421.7 30 from the first day of the second third calendar month following 31 the date of payment or the date the return was due to be filed 32 or was filed, whichever is the latest. 33 Sec. 25. Section 422.16, subsection 9, Code 2009, is amended 34 to read as follows: 35 -17- LSB 5433XD (27) 83 tw/sc 17/ 35

S.F. _____ H.F. _____ 9. a. The amount of any overpayment of the individual 1 income tax liability of the employee taxpayer, nonresident, 2 or other person which may result from the withholding and 3 payment of withheld tax by the employer or withholding agent 4 to the department under subsections 1 and 12, as compared to 5 the individual income tax liability of the employee taxpayer, 6 nonresident, or other person properly and correctly determined 7 under the provisions of section 422.4, to and including section 8 422.25, may be credited against any income tax or installment 9 thereof then due the state of Iowa and any balance of one 10 dollar or more shall be refunded to the employee taxpayer, 11 nonresident or other person with interest at the rate in 12 effect under section 421.7 for each month or fraction of a 13 month, the interest to begin to accrue on the first day of the 14 second third calendar month following the date the return was 15 due to be filed or was filed, whichever is the later date. 16 b. Amounts of less than one dollar shall be refunded to 17 the taxpayer, nonresident, or other person only upon written 18 application, in accordance with section 422.73, and only if 19 the application is filed within twelve months after the due 20 date of the return. Refunds in the amount of one dollar 21 or more provided for by this subsection shall be paid by 22 the treasurer of state by warrants drawn by the director of 23 the department of administrative services, or an authorized 24 employee of the department, and the taxpayer’s return of 25 income shall constitute a claim for refund for this purpose, 26 except in respect to amounts of less than one dollar. There 27 is appropriated, out of any funds in the state treasury not 28 otherwise appropriated, a sum sufficient to carry out the 29 provisions of this subsection. 30 Sec. 26. Section 422.25, subsection 3, Code 2009, is amended 31 to read as follows: 32 3. If the amount of the tax as determined by the department 33 is less than the amount paid, the excess shall be refunded with 34 interest, the interest to begin to accrue on the first day of 35 -18- LSB 5433XD (27) 83 tw/sc 18/ 35