SSB 3172 (LSB 5339SC (4) 83)

SENATE FILE _____

BY  (PROPOSED COMMITTEE ON REBUILD IOWA BILL BY CHAIRPERSON HOGG)

A BILL FOR

An Act providing for the waiver of tax penalties and interest under certain disaster loss circumstances and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  WAIVER OF PENALTIES AND INTEREST —— DISASTER-RELATED LOSSES —— REFUNDS.
   1.  Notwithstanding Code sections 421.8, 421.27, and 422.25, if a taxpayer has filed a return for tax year 2008 relying in good faith on the expectation that the state of Iowa would conform to the federal treatment of disaster-related casualty losses under section 165(h) of the Internal Revenue Code, as modified by the Heartland Disaster Relief Act of 2008, Pub. L. No. 110-343, in computing net income for state tax purposes, the director of revenue shall, for any taxpayer amending the return in the time permitted by statute, waive any penalty or interest due as a result of either a failure to timely pay the tax due or the filing of a defective or incorrect return.
   2.  If, prior to the effective date of this Act, a taxpayer paid penalties or interest as a result of a good-faith reliance on the state conforming to section 165(h) of the Internal Revenue Code, the department of revenue shall refund such penalties and interest to the taxpayer.
    Sec. 2.  EFFECTIVE UPON ENACTMENT AND RETROACTIVE APPLICABILITY.  This Act, being deemed of immediate importance, takes effect upon enactment and applies retroactively to January 1, 2008, for tax years beginning on or after that date and before January 1, 2009.
EXPLANATION
   This bill relates to the assessment of penalties and interest against taxpayers who filed returns expecting the state of Iowa to conform with certain federal income tax provisions.
   In 2008, the midwest suffered significant property casualty losses due to natural disasters. In response, the federal government passed the Heartland Disaster Relief Act which amended the casualty loss provisions of the Internal Revenue Code. In 2009, the state of Iowa did not conform to the federal provisions related to the computation of net income. This bill allows the director of revenue to waive the assessment of penalties and interest against taxpayers who relied in good faith on the state conforming to the federal provisions and who timely amend their return. The waiver relates only to the casualty loss provisions in section 165(h) of the Internal Revenue Code. Any penalty and interest paid are to be refunded.
   The bill takes effect upon enactment and applies only to tax year 2008.