Senate Study Bill 3202 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON CHAPMAN) A BILL FOR An Act relating to state and local taxation and regulation, the 1 Iowa reinvestment Act, innovation fund, hunting and fees, 2 and providing for properly related matters, and including 3 effective date and retroactive applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6414XC (14) 88 jm/jh
S.F. _____ DIVISION I 1 DEPARTMENT OF REVENUE ADMINISTRATION AND PENALTY PROVISIONS 2 Section 1. Section 421.6, Code 2020, is amended to read as 3 follows: 4 421.6 Definition of return. 5 For purposes of this title , unless the context otherwise 6 requires, “return” means any tax or information return, amended 7 return, declaration of estimated tax, or claim for refund 8 that is required by, provided for, or permitted under, the 9 provisions of this title or section 533.329, and which is filed 10 with the department by, on behalf of, or with respect to any 11 person. “Return” includes any amendment or supplement to these 12 items, including supporting schedules, attachments, or lists 13 which are supplemental to or part of the filed return. 14 Sec. 2. Section 421.17, Code 2020, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 36. To enter into an agreement pursuant 17 to chapter 28E with the state fair organized under chapter 173 18 or with a fair defined in section 174.1, to collect and remit 19 taxes and fees from sellers making sales at retail on property 20 owned, controlled, or operated by a fair or through events 21 conducted by a fair. 22 Sec. 3. Section 421.27, subsections 1, 4, and 6, Code 2020, 23 are amended to read as follows: 24 1. Failure to timely file a return or deposit form. a. If 25 a person fails to file with the department on or before the due 26 date a return or deposit form there shall be added to the tax 27 shown due or required to be shown due a penalty of ten percent 28 of the tax shown due or required to be shown due. 29 b. In the case of a specified business with no tax shown 30 due or required to be shown due that fails to timely file an 31 income return, the specified business shall pay the greater of 32 the following penalty amounts: 33 (1) Two hundred dollars. 34 (2) An amount equal to ten percent of the imputed Iowa 35 -1- LSB 6414XC (14) 88 jm/jh 1/ 102
S.F. _____ liability of the specified business, not to exceed twenty-five 1 thousand dollars. 2 c. The penalty, if assessed pursuant to paragraph “a” or 3 “b” , shall be waived by the department upon a showing of any of 4 the following conditions: 5 a. (1) At An amount of tax greater than zero is required to 6 be shown due and at least ninety percent of the tax required to 7 be shown due has been paid by the due date of the tax. 8 b. (2) Those taxpayers who are required to file quarterly 9 returns, or monthly or semimonthly deposit forms may have one 10 late return or deposit form within a three-year period. The 11 use of any other penalty exception will not count as a late 12 return or deposit form for purposes of this exception. 13 c. (3) The death of a taxpayer, death of a member of 14 the immediate family of the taxpayer, or death of the person 15 directly responsible for filing the return and paying the tax, 16 when the death interferes with timely filing. 17 d. (4) The onset of serious, long-term illness or 18 hospitalization of the taxpayer, of a member of the immediate 19 family of the taxpayer, or of the person directly responsible 20 for filing the return and paying the tax. 21 e. (5) Destruction of records by fire, flood, or other act 22 of God. 23 f. (6) The taxpayer presents proof that the taxpayer 24 relied upon applicable, documented, written advice specifically 25 made to the taxpayer, to the taxpayer’s preparer, or to an 26 association representative of the taxpayer from the department, 27 state department of transportation, county treasurer, or 28 federal internal revenue service, whichever is appropriate, 29 that has not been superseded by a court decision, ruling by a 30 quasi-judicial body, or the adoption, amendment, or repeal of 31 a rule or law. 32 g. (7) Reliance upon results in a previous audit was a 33 direct cause for the failure to file where the previous audit 34 expressly and clearly addressed the issue and the previous 35 -2- LSB 6414XC (14) 88 jm/jh 2/ 102
S.F. _____ audit results have not been superseded by a court decision, or 1 the adoption, amendment, or repeal of a rule or law. 2 h. (8) Under rules prescribed by the director, the taxpayer 3 presents documented proof of substantial authority to rely 4 upon a particular position or upon proof that all facts and 5 circumstances are disclosed on a return or deposit form. 6 i. (9) The return, deposit form, or payment is timely, 7 but erroneously, mailed with adequate postage to the internal 8 revenue service, another state agency, or a local government 9 agency and the taxpayer provides proof of timely mailing with 10 adequate postage. 11 j. (10) The tax has been paid by the wrong licensee and the 12 payments were timely remitted to the department for one or more 13 tax periods prior to notification by the department. 14 k. (11) The failure to file was discovered through a 15 sanctioned self-audit program conducted by the department. 16 l. (12) If the availability of funds in payment of tax 17 required to be made through electronic funds transfer is 18 delayed and the delay of availability is due to reasons beyond 19 the control of the taxpayer. “Electronic funds transfer” means 20 any transfer of funds, other than a transaction originated 21 by check, draft, or similar paper instrument, that is 22 initiated through an electronic terminal telephone, computer, 23 magnetic tape, or similar device for the purpose of ordering, 24 instructing, or authorizing a financial institution to debit or 25 credit an account. 26 m. (13) The failure to file a timely inheritance tax return 27 resulting solely from a disclaimer that required the personal 28 representative to file an inheritance tax return. The penalty 29 shall be waived if such return is filed and any tax due is paid 30 within the later of nine months from the date of death or sixty 31 days from the delivery or filing of the disclaimer pursuant to 32 section 633E.12 . 33 n. (14) That an Iowa inheritance tax return is filed for 34 an estate within the later of nine months from the date of 35 -3- LSB 6414XC (14) 88 jm/jh 3/ 102
S.F. _____ death or sixty days from the filing of a disclaimer by the 1 beneficiary of the estate refusing to take the property or 2 right or interest in the property. 3 4. Willful failure to file or deposit. 4 a. (1) In case of willful failure to file a return 5 or deposit form with the intent to evade tax or a filing 6 requirement , or in case of willfully filing a false return 7 or deposit form with the intent to evade tax, in lieu of the 8 penalties otherwise provided in this section , a penalty of 9 seventy-five percent shall be added to the amount shown due or 10 required to be shown as tax on the return or deposit form. 11 (2) In case of a willful failure by a specified business to 12 file an income return with no tax shown due or required to be 13 shown due with intent to evade a filing requirement, or in case 14 of willfully filing a false income return with no tax shown due 15 or required to be shown due with the intent to evade reporting 16 of Iowa-source income, the penalty imposed shall be the greater 17 of the following amounts: 18 (a) One thousand five hundred dollars. 19 (b) An amount equal to seventy-five percent of the imputed 20 Iowa liability of the specified business. 21 (3) If penalties are applicable for failure to file a 22 return or deposit form and failure to pay the tax shown due or 23 required to be shown due on the return or deposit form, the 24 penalty provision for failure to file shall be in lieu of the 25 penalty provisions for failure to pay the tax shown due or 26 required to be shown due on the return or deposit form, except 27 in the case of willful failure to file a return or deposit form 28 or willfully filing a false return or deposit form with intent 29 to evade tax. 30 b. The penalties imposed under this subsection are not 31 subject to waiver. 32 6. Improper receipt of payments Liability —— fraudulent 33 practice . A person who makes an erroneous application for 34 refund, credit, reimbursement, rebate, or other payment shall 35 -4- LSB 6414XC (14) 88 jm/jh 4/ 102
S.F. _____ be liable for any overpayment received or tax liability reduced 1 plus interest at the rate in effect under section 421.7 . 2 a. In addition, a person who willfully commits a fraudulent 3 practice and is liable for a penalty equal to seventy-five 4 percent of the refund, credit, exemption, reimbursement, 5 rebate, or other payment or benefit being claimed if the person 6 does any of the following: 7 (1) Willfully makes a false or frivolous application for 8 refund, credit, reimbursement, rebate, or other payment or 9 benefit with intent to evade tax or with intent to receive 10 a refund, credit, reimbursement, rebate, or other payment or 11 benefit, to which the person is not entitled is guilty of 12 a fraudulent practice and is liable for a penalty equal to 13 seventy-five percent of the refund, credit, reimbursement, 14 rebate, or other payment being claimed . 15 (2) Willfully submits any false information, document, 16 or document containing false information in support of an 17 application for refund, credit, exemption, reimbursement, 18 rebate, or other payment or benefit with the intent to evade 19 tax. 20 (3) Willfully submits with any false information, document, 21 or document containing false information in support of an 22 application for refund with the intent to receive a refund, 23 credit, exemption, reimbursement, rebate, or other payment 24 benefit, to which the person is not entitled. 25 b. Payments, penalties, and interest due under this 26 subsection may be collected and enforced in the same manner as 27 the tax imposed. 28 Sec. 4. Section 421.27, Code 2020, is amended by adding the 29 following new subsections: 30 NEW SUBSECTION . 8. Definitions. As used in this section: 31 a. “Imputed Iowa liability” means any of the following: 32 (1) In the case of corporations other than corporations 33 described in section 422.34 or section 422.36, subsection 5, 34 the corporation’s Iowa net income after the application of the 35 -5- LSB 6414XC (14) 88 jm/jh 5/ 102
S.F. _____ Iowa business activity ratio, if applicable, multiplied by the 1 top income tax rate imposed under section 422.33 for the tax 2 year. 3 (2) In the case of financial institutions as defined in 4 section 422.61, the financial institution’s Iowa net income 5 after the application of the Iowa business activity ratio, if 6 applicable, multiplied by the franchise tax rate imposed under 7 section 422.63 for the tax year. 8 (3) In the case of all other entities, including 9 corporations described in section 422.36, subsection 5, and all 10 other entities required to file an information return under 11 section 422.15, subsection 2, the entity’s Iowa net income 12 after the application of the Iowa business activity ratio, if 13 applicable, multiplied by the top income tax rate imposed under 14 section 422.5A for the tax year. 15 b. “Income return” means an income tax return or information 16 return required under section 422.15, subsection 2, or section 17 422.36, 422.37, or 422.62. 18 c. “Specified business” means a partnership or other entity 19 required to file an information return under section 422.15, 20 subsection 2, a corporation required to file a return under 21 section 422.36 or 422.37, or a financial institution required 22 to file a return under section 422.62. 23 NEW SUBSECTION . 9. Additional penalty. In addition to the 24 penalties imposed by this section, if a taxpayer fails to file 25 a return within ninety days of written notice by the department 26 that the taxpayer is required to do so, there shall be added to 27 the amount shown due or required to be shown due a penalty in 28 the amount of one thousand dollars. 29 Sec. 5. NEW SECTION . 421.27A Perjury. 30 1. For purposes of this title, a form, application, or any 31 other documentation required or requested by the department 32 shall be required to be certified under penalty of perjury that 33 the information contained in the form, application, or other 34 documentation is true and correct. 35 -6- LSB 6414XC (14) 88 jm/jh 6/ 102
S.F. _____ 2. A person commits a class “D” felony under any of the 1 following circumstances: 2 a. The person makes a form, application, or other document 3 containing false information in support of an application for 4 refund, credit, exemption, reimbursement, rebate, or other 5 payment or benefit with intent to evade tax. 6 b. The person makes a form, application, or other document 7 containing false information with intent to unlawfully receive 8 a refund, credit, exemption, reimbursement, rebate, or other 9 payment or benefit, to which the person is not entitled. 10 c. The person knowingly makes any false affidavit. 11 d. The person knowingly swears or affirms falsely to any 12 matter or thing required by the terms of this title to be sworn 13 to or affirmed. 14 Sec. 6. NEW SECTION . 421.59 Power of attorney —— authority 15 to act on behalf of taxpayer. 16 1. a. A taxpayer may authorize an individual to act on 17 behalf of the taxpayer by filing a power of attorney with the 18 department, on a form prescribed by the department. 19 b. A taxpayer may at any time revoke a power of attorney 20 filed with the department pursuant to subsection 1. Upon 21 processing of the taxpayer’s revocation of a power of attorney, 22 the department shall cease honoring the power of attorney. 23 2. The department may authorize the following persons to act 24 and receive information on behalf of and exercise all of the 25 rights of a taxpayer, regardless of whether a power of attorney 26 has been filed pursuant to subsection 1: 27 a. A guardian, conservator, or custodian appointed by a 28 court, if a taxpayer has been deemed legally incompetent by a 29 court. The authority of the appointee to act on behalf of the 30 taxpayer shall be limited to the extent specifically stated in 31 the order of appointment. 32 (1) Upon request, a guardian, conservator, or custodian of 33 a taxpayer shall submit to the department a copy of the court 34 order appointing the guardian, conservator, or custodian. 35 -7- LSB 6414XC (14) 88 jm/jh 7/ 102
S.F. _____ (2) The department may petition the court that appointed the 1 guardian, conservator, or custodian to verify the appointment 2 or to determine the scope of the appointment. 3 b. A receiver appointed pursuant to chapter 680. An 4 appointed receiver shall be limited to act on behalf of the 5 taxpayer by the authority stated in the order of appointment. 6 (1) Upon the request of the department, a receiver shall 7 submit to the department a copy of the court order appointing 8 the receiver. 9 (2) The department may petition the court that appointed the 10 receiver to verify the appointment or to determine the scope 11 of the appointment. 12 c. An individual who has been named as an authorized 13 representative on a fiduciary return of income filed under 14 section 422.14 or a tax return filed under chapter 450. 15 d. (1) An individual holding the following title or 16 position within a corporation, association, partnership, or 17 other business entity: 18 (a) A president or chief executive officer, or any other 19 officer of the corporation or association if the president or 20 chief executive officer certifies that the officer has the 21 authority to legally bind the corporation or association. 22 (b) A designated partner duly authorized to act on behalf 23 of the partnership. 24 (c) A person authorized to act on behalf of a limited 25 liability company in tax matters pursuant to a valid statement 26 of authority. 27 (2) An individual seeking to act on behalf of a taxpayer 28 pursuant to this paragraph shall file an affidavit with the 29 department attesting to the identity and qualifications of the 30 individual and any necessary certifications required under this 31 paragraph. The department may require any documents or other 32 evidence to demonstrate the individual has authority to act on 33 behalf of the taxpayer before the department. 34 e. A licensed attorney who has appeared on behalf of the 35 -8- LSB 6414XC (14) 88 jm/jh 8/ 102
S.F. _____ taxpayer or the taxpayer’s estate in a court proceeding. 1 Authorization under this paragraph is limited to those matters 2 within the scope of the representation. 3 f. A parent or guardian of a taxpayer who has not reached 4 the age of majority where the parent or guardian has signed the 5 taxpayer’s return on behalf of the taxpayer. Authorization 6 under this paragraph is limited to those matters relating to 7 the return signed by the parent or guardian. Authorization 8 under this paragraph automatically terminates when the taxpayer 9 reaches the age of majority pursuant to section 599.1. 10 3. a. In lieu of executing a power of attorney pursuant 11 to subsection 1, the department may enter into a memorandum of 12 understanding with the taxpayer for each employee, officer, 13 or member of a third-party entity engaged with or otherwise 14 hired by a taxpayer to manage the tax matters of the taxpayer, 15 to permit the disclosure of confidential tax information to 16 the third-party entity and the authority to act on behalf of 17 the taxpayer. The memorandum of understanding shall adhere to 18 requirements as established by the director. 19 b. The memorandum of understanding shall be signed by 20 the director, the taxpayer, and the third-party entity or an 21 authorized representative of the third-party entity. 22 c. At any time, a taxpayer may unilaterally revoke 23 a memorandum of understanding entered into pursuant to 24 this subsection by filing a notice of revocation with the 25 department. Upon the filing of such a revocation by the 26 taxpayer, the department shall cease honoring the memorandum 27 of understanding. 28 4. The department shall adopt rules pursuant to chapter 17A 29 to administer this section. 30 Sec. 7. Section 421.60, subsection 2, paragraph a, 31 subparagraph (2), Code 2020, is amended to read as follows: 32 (2) The statement prepared in accordance with this 33 paragraph shall be available on the department’s internet site. 34 The internet site for this information shall be distributed by 35 -9- LSB 6414XC (14) 88 jm/jh 9/ 102
S.F. _____ the department to all taxpayers at the first contact by the 1 department with respect to the determination or collection of 2 any tax, except in the case of simply providing tax forms. 3 Sec. 8. Section 421.60, Code 2020, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 11. Electronic communication. 6 Notwithstanding any provision of the law to the contrary, for 7 purposes of this title and sections 321.105A and 533.329, a 8 taxpayer may elect to receive any notices, correspondence, 9 or other communication electronically that the department is 10 required to send by regular mail. The director may establish 11 procedures and limitations for obtaining this election from the 12 taxpayer. 13 Sec. 9. Section 421.62, subsection 1, Code 2020, is amended 14 by adding the following new paragraph: 15 NEW PARAGRAPH . 0b. “Income tax return or claim for refund” 16 means any tax return or claim for refund under chapter 422, 17 excluding withholding returns under section 422.16. 18 Sec. 10. Section 421.62, subsection 1, paragraph c, 19 subparagraph (1), Code 2020, is amended to read as follows: 20 (1) “Tax return preparer” means any individual who, for 21 a fee or other consideration, prepares ten or more income 22 tax returns or claims for refund under chapter 422 during 23 a calendar year, or who assumes final responsibility for 24 completed work on such income tax returns or claims for refund 25 under chapter 422 on which preliminary work has been done by 26 another individual. 27 Sec. 11. Section 421.62, subsection 2, paragraph a, Code 28 2020, is amended to read as follows: 29 a. On or after January 1, 2020, a tax return preparer 30 is required to include the tax return preparer’s PTIN on 31 any income tax return or claim for refund prepared by the 32 tax return preparer and filed under chapter 422 with the 33 department . 34 Sec. 12. Section 421.64, subsection 1, Code 2020, is amended 35 -10- LSB 6414XC (14) 88 jm/jh 10/ 102
S.F. _____ to read as follows: 1 1. For purposes of this section , “tax return preparer” means 2 the same as defined in section 421.61 421.62 . 3 Sec. 13. Section 422.20, subsections 1 and 2, Code 2020, are 4 amended to read as follows: 5 1. It shall be unlawful for any present or former officer 6 or employee of the state to willfully or recklessly divulge or 7 to make known in any manner whatever not provided by law to 8 any person the amount or source of income, profits, losses, 9 expenditures, or any particular thereof, set forth or disclosed 10 in any income return, or to permit any income return or copy 11 thereof or any book containing any abstract or particulars 12 thereof to be seen or examined by any person except as provided 13 by law; and it shall be unlawful for any person to willfully or 14 recklessly print or publish in any manner whatever not provided 15 by law any income return, or any part thereof or source of 16 income, profits, losses, or expenditures appearing in any 17 income return; and any person committing an offense against the 18 foregoing provision shall be guilty of a serious misdemeanor. 19 If the offender is an officer or employee of the state, such 20 person shall also be dismissed from office or discharged from 21 employment. Nothing herein shall prohibit turning over to duly 22 authorized officers of the United States or tax officials of 23 other states state information and income returns pursuant 24 to agreement between the director and the secretary of the 25 treasury of the United States or the secretary’s delegate or 26 pursuant to a reciprocal agreement with another state. 27 2. It is unlawful for an officer, employee, or agent, or 28 former officer, employee, or agent of the state to willfully 29 or recklessly disclose to any person, except as authorized 30 in subsection 1 of this section , any federal tax return 31 or return information as defined in section 6103(b) of the 32 Internal Revenue Code. It is unlawful for a person to whom 33 any federal tax return or return information, as defined in 34 section 6103(b) of the Internal Revenue Code, is disclosed 35 -11- LSB 6414XC (14) 88 jm/jh 11/ 102
S.F. _____ in a manner unauthorized by subsection 1 of this section 1 to thereafter willfully or recklessly print or publish in 2 any manner not provided by law any such return or return 3 information. A person violating this provision is guilty of 4 a serious misdemeanor. 5 Sec. 14. Section 422.20, subsection 3, paragraph a, Code 6 2020, is amended to read as follows: 7 a. Unless otherwise expressly permitted by section 8A.504 , 8 section 8G.4 , section 11.41 , section 96.11, subsection 6 , 9 section 421.17, subsections 22, 23, and 26 , section 421.17, 10 subsection 27 , paragraph “k” , section 421.17, subsection 31 , 11 section 252B.9 , section 321.40, subsection 6 , sections 321.120 , 12 421.19 , 421.28 , 421.59, 422.72 , and 452A.63 , this section , or 13 another provision of law, a tax return, return information, or 14 investigative or audit information shall not be divulged to any 15 person or entity, other than the taxpayer, the department, or 16 internal revenue service for use in a matter unrelated to tax 17 administration. 18 Sec. 15. Section 422.20, Code 2020, is amended by adding the 19 following new subsections: 20 NEW SUBSECTION . 3A. The director may disclose the tax 21 return of a partnership, limited liability company, or S 22 corporation, any such return information, or any investigative 23 information related to the return, to any person who was a 24 partner, shareholder, or member of such an entity during any 25 part of the period covered by the return. 26 NEW SUBSECTION . 3B. a. Prior to being made available for 27 public inspection, the department shall redact from the record 28 in an appeal or contested case the following information from 29 any pleading, exhibit, attachment, motion, written evidence, 30 final order, decision, or opinion: 31 (1) A financial account number. 32 (2) An account number generated by the department to 33 identify an audit or examination. 34 (3) A social security number. 35 -12- LSB 6414XC (14) 88 jm/jh 12/ 102
S.F. _____ (4) A federal employer identification number. 1 (5) The name of a minor. 2 (6) A medical record or other medical information. 3 b. Upon a motion filed by the taxpayer, the department 4 may redact from the record in an appeal or contested case any 5 other information from a pleading, exhibit, attachment, motion, 6 or written evidence, if the taxpayer proves by clear and 7 convincing evidence that the release of such information would 8 disclose a trade secret or be a clear, unwarranted invasion of 9 personal privacy. 10 c. Notwithstanding paragraph “a” , when making final orders, 11 decisions, or opinions available for public inspection, the 12 department may disclose the items in paragraph “a” if the 13 department determines such information is necessary to the 14 resolution or decision of the appeal or case. 15 d. Except as described in paragraphs “a” and “b” , all 16 information contained in a pleading, exhibit, attachment, 17 motion, written evidence, final order, decision, opinion, 18 and the record in an appeal or contested case is subject to 19 examination to the extent provided by chapter 22. 20 Sec. 16. Section 422.25, subsection 1, Code 2020, is amended 21 by adding the following new paragraph: 22 NEW PARAGRAPH . c. The period of examination and 23 determination is unlimited under this title in the case of 24 any action by the department to recover or rescind any tax 25 expenditure as defined by section 2.48, subsection 1, or any 26 other incentive or assistance, due to a failure to meet or 27 maintain the requirements of a program administered by the 28 economic development authority. 29 Sec. 17. Section 422.69, subsection 1, Code 2020, is amended 30 to read as follows: 31 1. All fees, taxes, interest, and penalties imposed under 32 this chapter shall be paid to the department in the form of 33 remittances payable to the state treasurer department and the 34 department shall transmit each payment daily to the state 35 -13- LSB 6414XC (14) 88 jm/jh 13/ 102
S.F. _____ treasurer. 1 Sec. 18. Section 422.72, subsection 1, paragraph a, 2 subparagraph (1), Code 2020, is amended to read as follows: 3 (1) It is unlawful for the director, or any person having 4 an administrative duty under this chapter , or any present or 5 former officer or other employee of the state authorized by the 6 director to examine returns, to willfully or recklessly divulge 7 in any manner whatever, the business affairs, operations, or 8 information obtained by an investigation under this chapter of 9 records and equipment of any person visited or examined in the 10 discharge of official duty, or the amount or source of income, 11 profits, losses, expenditures or any particular thereof, set 12 forth or disclosed in any return, or to willfully or recklessly 13 permit any return or copy of a return or any book containing 14 any abstract or particulars thereof to be seen or examined by 15 any person except as provided by law. 16 Sec. 19. Section 422.72, Code 2020, is amended by adding the 17 following new subsection: 18 NEW SUBSECTION . 7A. a. Prior to being made available for 19 public inspection, the department shall redact from the record 20 in an appeal or contested case the following information from 21 any pleading, exhibit, attachment, motion, written evidence, 22 final order, decision, or opinion: 23 (1) A financial account number. 24 (2) An account number generated by the department to 25 identify an audit or examination. 26 (3) A social security number. 27 (4) A federal employer identification number. 28 (5) The name of a minor. 29 (6) A medical record or other medical information. 30 b. Upon a motion filed by the taxpayer, the department 31 may redact from the record in an appeal or contested case any 32 other information from a pleading, exhibit, attachment, motion, 33 or written evidence, if the taxpayer proves by clear and 34 convincing evidence that the release of such information would 35 -14- LSB 6414XC (14) 88 jm/jh 14/ 102
S.F. _____ disclose a trade secret or be a clear, unwarranted invasion of 1 personal privacy. 2 c. Notwithstanding paragraph “a” , when making final orders, 3 decisions, or opinions available for public inspection, the 4 department may disclose the items in paragraph “a” if the 5 department determines such information is necessary to the 6 resolution or decision of the appeal or case. 7 d. Except as described in paragraphs “a” and “b” , all 8 information contained in a pleading, exhibit, attachment, 9 motion, written evidence, final order, decision, opinion, 10 and the record in an appeal or contested case is subject to 11 examination to the extent provided by chapter 22. 12 Sec. 20. Section 423.37, Code 2020, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 4. The period of limitation on examination 15 and determination is unlimited under this title in the case 16 of any action by the department to recover or rescind any tax 17 expenditure as defined by section 2.48, subsection 1, or any 18 other incentive or assistance, due to a failure to meet or 19 maintain the requirements of a program administered by the 20 economic development authority. 21 Sec. 21. Section 428A.1, subsection 3, Code 2020, is amended 22 to read as follows: 23 3. The declaration of value shall state the full 24 consideration paid for the real property transferred. If 25 agricultural land, as defined in section 9H.1 , is purchased by 26 a corporation, limited partnership, trust, alien or nonresident 27 alien, the declaration of value shall include the name and 28 address of the buyer, the name and address of the seller, a 29 legal description of the agricultural land, and identify the 30 buyer as a corporation, limited partnership, trust, alien, or 31 nonresident alien. The county recorder shall not record the 32 declaration of value, but shall enter on the declaration of 33 value information the director of revenue requires for the 34 production of the sales/assessment ratio study and transmit 35 -15- LSB 6414XC (14) 88 jm/jh 15/ 102
S.F. _____ all declarations of value to the city or county assessor in 1 whose jurisdiction the property is located. The city or county 2 assessor shall enter on the declaration of value provide the 3 information the director of revenue requires for the production 4 of the sales/assessment ratio study and transmit one copy of 5 each declaration of value to the director of revenue, at times 6 as directed by the director of revenue. The assessor shall 7 retain one copy of each declaration of value for three years 8 from December 31 of the year in which the transfer of realty 9 for which the declaration was filed took place. The director 10 of revenue shall, upon receipt of the information required to 11 be filed under this chapter by the city or county assessor, 12 send to the office of the secretary of state that part of the 13 declaration of value which identifies a corporation, limited 14 partnership, trust, alien, or nonresident alien as a purchaser 15 of agricultural land as defined in section 9H.1 . 16 Sec. 22. Section 441.48, Code 2020, is amended to read as 17 follows: 18 441.48 Notice of adjustment. 19 1. Before the department of revenue shall adjust the 20 valuation of any class of property any such percentage, the 21 department shall first serve ten days’ notice by mail, on the 22 county auditor of the county whose valuation is proposed to be 23 adjusted. The department shall hold an adjourned meeting after 24 such 25 2. If the county or assessing jurisdiction intends to 26 protest the proposed adjustment, the board of supervisors or 27 city council, as applicable, shall provide the department with 28 notice of intent to protest prior to expiration of the ten 29 days’ notice. 30 3. After expiration of the ten days’ notice, at which time 31 the county or assessing jurisdiction may appear by its city 32 council or board of supervisors, city or county attorney, and 33 other assessing jurisdiction, or city or county officials, and 34 make written or oral protest against such proposed adjustment. 35 -16- LSB 6414XC (14) 88 jm/jh 16/ 102
S.F. _____ 4. The protest shall consist simply of a statement of the 1 error, or errors, complained of with such facts as may lead to 2 their correction. At the adjourned meeting 3 5. After written protest is received, or an oral protest 4 is heard, the final action may be taken in reference to the 5 proposed adjustment. 6 Sec. 23. Section 489.706, subsection 2, Code 2020, is 7 amended to read as follows: 8 2. The secretary of state shall refer the federal tax 9 identification number contained in the application for 10 reinstatement to the departments department of revenue and 11 workforce development. The departments department of revenue 12 and workforce development shall report to the secretary of 13 state the tax status of the limited liability company. If 14 either the department reports to the secretary of state that 15 a filing delinquency or liability exists against the limited 16 liability company, the secretary of state shall not cancel the 17 declaration of dissolution until the filing delinquency or 18 liability is satisfied. 19 Sec. 24. Section 490.1422, subsection 2, paragraph a, Code 20 2020, is amended to read as follows: 21 a. The secretary of state shall refer the federal tax 22 identification number contained in the application for 23 reinstatement to the departments department of revenue and 24 workforce development. The departments department of revenue 25 and workforce development shall report to the secretary 26 of state the tax status of the corporation. If either the 27 department reports to the secretary of state that a filing 28 delinquency or liability exists against the corporation, 29 the secretary of state shall not cancel the certificate of 30 dissolution until the filing delinquency or liability is 31 satisfied. 32 Sec. 25. Section 501.813, subsection 2, paragraph a, Code 33 2020, is amended to read as follows: 34 a. The secretary of state shall refer the federal tax 35 -17- LSB 6414XC (14) 88 jm/jh 17/ 102
S.F. _____ identification number contained in the application for 1 reinstatement to the departments department of revenue and 2 workforce development. The departments department of revenue 3 and workforce development shall report to the secretary 4 of state the tax status of the cooperative. If either the 5 department reports to the secretary of state that a filing 6 delinquency or liability exists against the cooperative, 7 the secretary of state shall not cancel the certificate of 8 dissolution until the filing delinquency or liability is 9 satisfied. 10 Sec. 26. Section 504.1423, subsection 2, paragraph a, Code 11 2020, is amended to read as follows: 12 a. The secretary of state shall refer the federal tax 13 identification number contained in the application for 14 reinstatement to the departments department of revenue and 15 workforce development. The departments department of revenue 16 and workforce development shall report to the secretary 17 of state the tax status of the corporation. If either the 18 department reports to the secretary of state that a filing 19 delinquency or liability exists against the corporation, 20 the secretary of state shall not cancel the certificate of 21 dissolution until the filing delinquency or liability is 22 satisfied. 23 Sec. 27. Section 533.329, Code 2020, is amended by adding 24 the following new subsection: 25 NEW SUBSECTION . 03. Returns shall be in the form the 26 director of revenue prescribes, and shall be filed with the 27 department of revenue on or before the last day of the fourth 28 month after the expiration of the tax year. The moneys and 29 credits tax is due and payable on the last day of the fourth 30 month after the expiration of the tax year. 31 Sec. 28. Section 533.329, subsection 3, Code 2020, is 32 amended to read as follows: 33 3. The department of revenue shall administer and enforce 34 the provisions of this section , and except as explicitly 35 -18- LSB 6414XC (14) 88 jm/jh 18/ 102
S.F. _____ provided in this section or another provision of law, shall 1 apply all applicable penalty, interest, and administrative 2 provisions of chapters 421 and 422 as nearly as possible in 3 administering and enforcing the moneys and credits tax imposed 4 by this section . 5 Sec. 29. LEGISLATIVE INTENT. It is the intent of the 6 general assembly that the sections of this division amending 7 Code sections 422.25 and 423.37 are conforming amendments 8 consistent with current state law, and that the amendments 9 do not change the application of current law but instead 10 reflect current law both before and after the enactment of this 11 division of this Act. 12 Sec. 30. EFFECTIVE DATE. The following, being deemed of 13 immediate importance, take effect upon enactment: 14 1. The section of this division of this Act amending section 15 422.25. 16 2. The section of this division of this Act amending section 17 423.37. 18 Sec. 31. APPLICABILITY. The following applies to any 19 return for which a written notice that the taxpayer is required 20 to file such return is issued by the department on or after 21 January 1, 2022: 22 The portion of the section of this division of this Act 23 enacting section 421.27, subsection 9. 24 Sec. 32. APPLICABILITY. The following apply to tax years 25 beginning on or after January 1, 2022: 26 1. The section of this division of this Act amending section 27 421.27, subsection 1. 28 2. The portion of the section of this division of this Act 29 amending section 421.27, subsection 4. 30 3. The portion of the section of this division of this Act 31 enacting section 421.27, subsection 8. 32 DIVISION II 33 SALES AND USE TAX 34 Sec. 33. Section 321G.4, subsection 2, Code 2020, is amended 35 -19- LSB 6414XC (14) 88 jm/jh 19/ 102
S.F. _____ to read as follows: 1 2. a. The owner of the snowmobile shall file an application 2 for registration with the department through the county 3 recorder of the county of residence in the manner established 4 by the commission. The application shall be completed by the 5 owner and shall be accompanied by a fee of fifteen dollars and 6 a writing fee as provided in section 321G.27 . A snowmobile 7 shall not be registered by the county recorder until the 8 county recorder is presented with receipts, bills of sale, 9 or other satisfactory evidence that the sales or use tax has 10 been paid for the purchase of the snowmobile or that the 11 owner is exempt from paying the tax. A snowmobile that has 12 an expired registration certificate from another state may be 13 registered in this state upon proper application, payment of 14 all applicable registration and writing fees, and payment of a 15 penalty of five dollars. 16 b. If the owner of the snowmobile is unable to present 17 satisfactory evidence that the sales or use tax has been paid, 18 the county recorder shall collect the tax. On or before the 19 tenth day of each month, the county recorder shall remit to 20 the department of revenue the amount of the taxes collected 21 during the preceding month, together with an itemized statement 22 on forms furnished by the department of revenue showing the 23 name of each taxpayer, the make and purchase price of each 24 snowmobile, the amount of tax paid, and such other information 25 as the department of revenue requires. 26 Sec. 34. Section 321I.4, subsection 2, Code 2020, is amended 27 to read as follows: 28 2. a. The owner of the all-terrain vehicle shall file an 29 application for registration with the department through the 30 county recorder of the county of residence, or in the case 31 of a nonresident owner, in the county of primary use, in the 32 manner established by the commission. The application shall 33 be completed by the owner and shall be accompanied by a fee 34 of fifteen dollars and a writing fee as provided in section 35 -20- LSB 6414XC (14) 88 jm/jh 20/ 102
S.F. _____ 321I.29 . An all-terrain vehicle shall not be registered by the 1 county recorder until the county recorder is presented with 2 receipts, bills of sale, or other satisfactory evidence that 3 the sales or use tax has been paid for the purchase of the 4 all-terrain vehicle or that the owner is exempt from paying the 5 tax. An all-terrain vehicle that has an expired registration 6 certificate from another state may be registered in this state 7 upon proper application, payment of all applicable registration 8 and writing fees, and payment of a penalty of five dollars. 9 b. If the owner of the all-terrain vehicle is unable to 10 present satisfactory evidence that the sales or use tax has 11 been paid, the county recorder shall collect the tax. On or 12 before the tenth day of each month, the county recorder shall 13 remit to the department of revenue the amount of the taxes 14 collected during the preceding month, together with an itemized 15 statement on forms furnished by the department of revenue 16 showing the name of each taxpayer, the make and purchase price 17 of each all-terrain vehicle, the amount of tax paid, and such 18 other information as the department of revenue requires. 19 Sec. 35. Section 423.2, subsection 6, paragraph bs, Code 20 2020, is amended to read as follows: 21 bs. Services arising from or related to installing, 22 maintaining, servicing, repairing, operating, upgrading, or 23 enhancing either specified digital products or software sold 24 as tangible personal property . 25 Sec. 36. Section 423.2, subsection 8, paragraph d, 26 subparagraph (1), Code 2020, is amended to read as follows: 27 (1) The retail sale of tangible personal property or 28 specified digital product and a service , where the tangible 29 personal property or specified digital product is essential 30 to the use of the service, and is provided exclusively in 31 connection with the service, and the true object of the 32 transaction is the service. 33 Sec. 37. Section 423.3, subsection 3A, Code 2020, is amended 34 to read as follows: 35 -21- LSB 6414XC (14) 88 jm/jh 21/ 102
S.F. _____ 3A. The sales price from the sale of a commercial recreation 1 service offering the opportunity to hunt a preserve whitetail 2 as defined in section 484C.1 if the sale occurred between July 3 1, 2005, and December 31, 2015. 4 Sec. 38. Section 423.3, subsection 31, unnumbered paragraph 5 1, Code 2020, is amended to read as follows: 6 The sales price of tangible personal property or specified 7 digital products sold to and of services furnished to a tribal 8 government as defined in 216A.161, or the sales price of 9 tangible personal property or specified digital products sold 10 to and of services furnished , and used for public purposes 11 sold to a tax-certifying or tax-levying body of the state or a 12 governmental subdivision of the state, including the following: 13 regional transit systems, as defined in section 324A.1 , ; 14 the state board of regents , ; department of human services , ; 15 state department of transportation , ; any municipally owned 16 solid waste facility which sells all or part of its processed 17 waste as fuel to a municipally owned public utility , ; and all 18 divisions, boards, commissions, agencies, or instrumentalities 19 of state, federal, county, or municipal government , or tribal 20 government which have no earnings going to the benefit of an 21 equity investor or stockholder, except any of the following: 22 Sec. 39. Section 423.3, subsection 80, paragraphs b and c, 23 Code 2020, are amended to read as follows: 24 b. Subject to the limitations in paragraph “c” , if a 25 contractor, subcontractor, or builder is to use building 26 materials, supplies, and equipment , or services in the 27 performance of a written construction contract with a 28 designated exempt entity, the person shall purchase such 29 items of tangible personal property or services without 30 liability for the tax if such property or services will be 31 used in the performance of the written construction contract 32 and a purchasing agent authorization letter and an exemption 33 certificate, issued by the designated exempt entity, are 34 presented to the retailer. 35 -22- LSB 6414XC (14) 88 jm/jh 22/ 102
S.F. _____ c. (1) With regard to a written construction contract 1 with a designated exempt entity described in paragraph “a” , 2 subparagraph (1), the sales price of building materials, 3 supplies, or equipment , or services is exempt from tax by this 4 subsection only to the extent the building materials, supplies, 5 or equipment , or services are completely consumed in the 6 performance of the construction contract with the designated 7 exempt entity , and only if the property that is the subject 8 of the construction project becomes public property or the 9 property of the designated exempt entity . 10 (2) With regard to a written construction contract with 11 a designated exempt entity described in paragraph “a” , 12 subparagraph (2), the sales price of building materials, 13 supplies, or equipment , or services is exempt from tax by this 14 subsection only to the extent the building materials, supplies, 15 or equipment , or services are completely consumed in the 16 performance of a construction contract to construct a project, 17 as defined in section 15J.2, subsection 10 , which project has 18 been approved by the economic development authority board in 19 accordance with chapter 15J . 20 Sec. 40. Section 423.4, subsection 1, Code 2020, is amended 21 to read as follows: 22 1. a. For purposes of this subsection, a “designated exempt 23 entity” means any of the following: 24 (1) A private nonprofit educational institution in this 25 state , . 26 (2) A nonprofit Iowa affiliate of a nonprofit international 27 organization whose primary activity is the promotion of the 28 construction, remodeling, or rehabilitation of one-family or 29 two-family dwellings for low-income families , . 30 (3) A nonprofit private museum in this state , . 31 (4) A tax-certifying or tax-levying body or governmental 32 subdivision of the state, including the state board of regents, 33 state department of human services, state department of 34 transportation , a . 35 -23- LSB 6414XC (14) 88 jm/jh 23/ 102
S.F. _____ (5) A municipally owned solid waste facility which sells all 1 or part of its processed waste as fuel to a municipally owned 2 public utility , and all . 3 (6) The state of Iowa. 4 (7) Any political subdivision of the state. 5 (8) All divisions, boards, commissions, agencies, or 6 instrumentalities of state, federal, county, or municipal 7 government which do not have earnings going to the benefit of 8 an equity investor or stockholder , . 9 (9) A tribal government as defined in section 216A.161, 10 and any instrumentalities of the tribal government which do 11 not have earnings going to the benefit of an equity investor 12 or stockholder. 13 b. A designated exempt entity may make application apply 14 to the department for the refund of the sales or use tax upon 15 the sales price of all sales of goods, wares, or merchandise 16 building materials, supplies, equipment , or from services 17 furnished to a contractor, used in the fulfillment performance 18 of a written contract with the state of Iowa, any political 19 subdivision of the state, or a division, board, commission, 20 agency, or instrumentality of the state or a political 21 subdivision, a private nonprofit educational institution in 22 this state, a nonprofit Iowa affiliate described in this 23 subsection , or a nonprofit private museum in this state if the 24 property becomes an integral part of the project under contract 25 and at the completion of the project becomes public property, 26 is devoted to educational uses, becomes part of a low-income 27 one-family or two-family dwelling in the state, or becomes a 28 nonprofit private museum; except goods, wares, or merchandise, 29 designated exempt entity if all of the following apply: 30 (1) The building materials, supplies, equipment, or 31 services are completely consumed in the performance of a 32 construction project with the designated entity. 33 (2) The property that is subject of the construction project 34 becomes public property or the property of an exempt entity. 35 -24- LSB 6414XC (14) 88 jm/jh 24/ 102
S.F. _____ (3) The building materials, supplies, equipment, or 1 services furnished which are not used in the performance of 2 any contract in connection with the operation of any municipal 3 utility engaged in selling gas, electricity, or heat to 4 the general public or in connection with the operation of a 5 municipal pay television system; and except goods, wares, and 6 merchandise are not used in the performance of a contract for a 7 “project” under chapter 419 as defined in that chapter other 8 than goods, wares, or merchandise used in the performance of 9 a contract for a “project” under chapter 419 for which a bond 10 issue was approved by a municipality prior to July 1, 1968, or 11 for which the goods, wares, or merchandise becomes an integral 12 part of the project under contract and at the completion of the 13 project becomes public property or is devoted to educational 14 uses. 15 a. c. Such A contractor shall state under oath, on forms 16 provided by the department, the amount of such sales of goods, 17 wares, or merchandise, or services furnished and used in the 18 performance of such contract, and upon which sales or use tax 19 has been paid, and shall file such forms with the governmental 20 unit, private nonprofit educational institution, nonprofit Iowa 21 affiliate, or nonprofit private museum designated exempt entity 22 which has made any written contract for performance by the 23 contractor. The forms shall be filed by the contractor with 24 the governmental unit, educational institution, nonprofit Iowa 25 affiliate, or nonprofit private museum designated exempt entity 26 before final settlement is made. 27 b. d. Such governmental unit, educational institution, 28 nonprofit Iowa affiliate, or nonprofit private museum A 29 designated exempt entity shall, not more than one year after 30 the final settlement has been made, make application apply 31 to the department for any refund of the amount of the sales 32 or use tax which shall have been paid upon any goods, wares, 33 or merchandise building materials, supplies, equipment , 34 or services furnished, the application to be made in the 35 -25- LSB 6414XC (14) 88 jm/jh 25/ 102
S.F. _____ manner and upon forms to be provided by the department, 1 and the department shall forthwith audit the claim and, if 2 approved, issue a warrant to the governmental unit, educational 3 institution, nonprofit Iowa affiliate, or nonprofit private 4 museum designated exempt entity in the amount of the sales or 5 use tax which has been paid to the state of Iowa under the 6 contract. 7 c. e. Refunds authorized under this subsection shall accrue 8 interest in accordance with section 421.60, subsection 2 , 9 paragraph “e” . 10 d. f. Any contractor who willfully makes a false report of 11 tax paid under the provisions of this subsection is guilty of 12 a simple misdemeanor and in addition shall be liable for the 13 payment of the tax and any applicable penalty and interest. 14 Sec. 41. Section 423.4, subsection 2, paragraphs a and b, 15 Code 2020, are amended to read as follows: 16 a. A contractor awarded a contract for a transportation 17 construction project is considered the consumer of all building 18 materials, building supplies, and equipment , and services and 19 shall pay sales tax to the supplier or remit consumer use tax 20 directly to the department. 21 b. The contractor is not required to file information with 22 the state department of transportation stating the amount of 23 goods, wares, or merchandise, or services rendered, furnished, 24 or performed and building materials, supplies, equipment, or 25 services used in the performance of the contract or the amount 26 of sales or use tax paid. 27 Sec. 42. Section 423.4, subsection 6, paragraph a, 28 subparagraph (1), Code 2020, is amended to read as follows: 29 (1) The owner of a collaborative educational facility 30 in this state may make application to the department for the 31 refund of the sales or use tax upon the sales price of all sales 32 of goods, wares, or merchandise building materials, supplies, 33 equipment , or from services furnished to a contractor, used 34 in the fulfillment of a written construction contract with 35 -26- LSB 6414XC (14) 88 jm/jh 26/ 102
S.F. _____ the owner of the collaborative educational facility for the 1 original construction, or additions or modifications to, a 2 building or structure to be used as part of the collaborative 3 educational facility. 4 Sec. 43. Section 423.4, subsection 6, paragraphs b and c, 5 Code 2020, are amended to read as follows: 6 b. Such A contractor shall state under oath, on forms 7 provided by the department, the amount of such sales of goods, 8 wares, or merchandise building materials, supplies, equipment , 9 or services furnished and used in the performance of such 10 contract, and upon which sales or use tax has been paid, and 11 shall file such forms with the owner of the collaborative 12 educational facility which has made any written contract for 13 performance by the contractor. 14 c. (1) The owner of the collaborative educational facility 15 shall, not more than one year after the final settlement has 16 been made, make application to the department for any refund 17 of the amount of the sales or use tax which shall have been 18 paid upon any goods, wares, or merchandise building materials, 19 supplies, equipment , or services furnished, the application 20 to be made in the manner and upon forms to be provided by 21 the department, and the department shall forthwith audit the 22 claim and, if approved, issue a warrant to the owner of the 23 collaborative educational facility in the amount of the sales 24 or use tax which has been paid to the state of Iowa under the 25 contract. 26 (2) Refunds authorized under this subsection shall accrue 27 interest in accordance with section 421.60, subsection 2 , 28 paragraph “e” . 29 Sec. 44. Section 423.5, subsection 1, paragraph b, Code 30 2020, is amended by striking the paragraph. 31 Sec. 45. Section 423.29, subsection 1, Code 2020, is amended 32 to read as follows: 33 1. Every seller who is a retailer and who is making taxable 34 sales of tangible personal property or specified digital 35 -27- LSB 6414XC (14) 88 jm/jh 27/ 102
S.F. _____ products in Iowa or who is a retailer maintaining a place 1 of business in this state making taxable sales of tangible 2 personal property or specified digital products shall, at 3 the time of making the sale, collect the sales tax. Every 4 seller who is a retailer that is not otherwise required to 5 collect sales tax under the provisions of this chapter and who 6 is selling tangible personal property or specified digital 7 products for use in Iowa shall, at the time of making the sale, 8 whether within or without the state, collect the use tax. 9 Sellers required to collect sales or use tax shall give to any 10 purchaser a receipt for the tax collected in the manner and 11 form prescribed by the director. 12 Sec. 46. Section 423.33, subsection 1, Code 2020, is amended 13 to read as follows: 14 1. Liability of purchaser for sales tax and retailer . 15 a. If a purchaser fails to pay sales tax to the retailer 16 required to collect the tax, then in addition to all of the 17 rights, obligations, and remedies provided, the a use tax 18 is payable by the purchaser directly to the department, and 19 sections 423.31 , 423.32 , 423.37 , 423.38 , 423.39 , 423.40 , 20 423.41 , and 423.42 apply to the purchaser. 21 b. For failure to pay the sales or use tax as described 22 in paragraph “a” , the retailer and purchaser are jointly 23 liable, unless the circumstances described in section 29C.24, 24 subsection 3, paragraph “a” , subparagraph (2), section 421.60, 25 subsection 2 , paragraph “m” , section 423.34A , or section 26 423.45, subsection 4 , paragraph “b” or “e” , or subsection 5 , 27 paragraph “c” or “e” , are applicable. 28 c. If the retailer fails to collect sales tax at the time 29 of the transaction, the retailer shall thereafter remit the 30 applicable sales tax, or the purchaser thereafter shall remit 31 the applicable use tax. If the purchaser remits all applicable 32 use tax, the retailer remains liable for any local sales and 33 services tax under chapter 423B that the retailer failed to 34 collect. 35 -28- LSB 6414XC (14) 88 jm/jh 28/ 102
S.F. _____ Sec. 47. REFUNDS RELATED TO PRESERVE WHITETAIL DEER 1 HUNTING. Refunds of taxes, interest, or penalties that arise 2 from claims resulting from the amendment of section 423.3, 3 subsection 3A, for sales occurring between July 1, 2005, 4 and the effective date of the amendment to section 423.3, 5 subsection 3A, shall not be allowed, notwithstanding any other 6 law to the contrary. 7 Sec. 48. LEGISLATIVE INTENT. 8 1. It is the intent of the general assembly that the section 9 of this division of this Act amending section 423.29 is a 10 conforming amendment consistent with current state law, and 11 that the amendment does not change the application of current 12 law but instead reflects current law both before and after the 13 enactment of this division of this Act. 14 2. It is the intent of the general assembly that the 15 addition of “jointly” in the section of this division of 16 this Act amending section 423.33 is a conforming amendment 17 consistent with current state law, and that the amendment 18 does not change the application of current law but instead 19 reflects current law both before and after the enactment of 20 this division of this Act. 21 Sec. 49. EFFECTIVE DATE. The following, being deemed of 22 immediate importance, take effect upon enactment: 23 1. The section of this division of this Act amending section 24 423.3A. 25 2. The section of this division of this Act relating 26 to refunds for commercial recreation services offering an 27 opportunity to hunt preserve whitetail deer. 28 Sec. 50. RETROACTIVE APPLICABILITY. The following applies 29 retroactively to July 1, 2005: 30 The section of this division of this Act amending section 31 423.3A. 32 DIVISION III 33 INCOME TAX 34 Sec. 51. Section 422.9, subsection 3, paragraph c, Code 35 -29- LSB 6414XC (14) 88 jm/jh 29/ 102
S.F. _____ 2020, is amended by striking the paragraph and inserting in 1 lieu thereof the following: 2 c. A taxpayer may elect to waive the entire carryback period 3 with respect to an Iowa net operating loss for any taxable year 4 beginning on or after January 1, 2020. The election shall be 5 made in the manner and form prescribed by the department, and 6 shall be made by the due date for filing the taxpayer’s Iowa 7 return, including extensions of time. After the election is 8 made for any taxable year, the election shall be irrevocable 9 for such taxable year. When an election has been properly 10 made, the Iowa net operating loss shall be carried forward 11 twenty taxable years. 12 Sec. 52. Section 422.9, subsection 3, paragraph d, Code 13 2020, is amended to read as follows: 14 d. Notwithstanding paragraph “a” , for a taxpayer who is 15 engaged in the trade or business of farming , which means the 16 same as a “farming business” as defined in section 263A(e)(4) of 17 the Internal Revenue Code , and has a farming loss from farming 18 as defined in section 172(b)(1)(B) of the Internal Revenue Code 19 including modifications prescribed by rule by the director, 20 the Iowa farming loss from the trade or business of farming is 21 a net operating loss which may , at the time of the election of 22 the taxpayer, be carried back five taxable years prior to the 23 taxable year of the loss. The election shall be made in the 24 manner and form prescribed by the department, and shall be made 25 by the due date for filing the taxpayer’s return, including 26 extensions of time. After the election is made for any taxable 27 year, the election shall be irrevocable for such taxable year. 28 Sec. 53. APPLICABILITY. This division of this Act applies 29 to tax years beginning on or after January 1, 2020. 30 DIVISION IV 31 RESEARCH ACTIVITIES CREDIT 32 Sec. 54. Section 15.335, subsection 4, paragraph a, Code 33 2020, is amended to read as follows: 34 a. In lieu of the credit amount computed in subsection 2 , an 35 -30- LSB 6414XC (14) 88 jm/jh 30/ 102
S.F. _____ eligible business may elect to compute the credit amount for 1 qualified research expenses incurred in this state in a manner 2 consistent with the alternative simplified credit described in 3 section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The 4 taxpayer may make this election regardless of the method used 5 for the taxpayer’s federal income tax. The election made under 6 this paragraph is for the tax year and the taxpayer may use 7 another or the same method for any subsequent year. 8 Sec. 55. Section 15.335, subsection 4, paragraph b, 9 unnumbered paragraph 1, Code 2020, is amended to read as 10 follows: 11 For purposes of the alternate credit computation method in 12 paragraph “a” , the credit percentages applicable to qualified 13 research expenses described in section 41(c)(5)(A) 41(c)(4)(A) 14 and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the 15 Internal Revenue Code are as follows: 16 Sec. 56. Section 422.10, subsection 1, paragraphs c and d, 17 Code 2020, are amended to read as follows: 18 c. In lieu of the credit amount computed in paragraph “b” , 19 subparagraph (1), subparagraph division (a), a taxpayer may 20 elect to compute the credit amount for qualified research 21 expenses incurred in this state in a manner consistent with the 22 alternative simplified credit described in section 41(c)(5) 23 41(c)(4) of the Internal Revenue Code. The taxpayer may make 24 this election regardless of the method used for the taxpayer’s 25 federal income tax. The election made under this paragraph is 26 for the tax year and the taxpayer may use another or the same 27 method for any subsequent year. 28 d. For purposes of the alternate credit computation 29 method in paragraph “c” , the credit percentages applicable to 30 qualified research expenses described in section 41(c)(5)(A) 31 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) 32 of the Internal Revenue Code are four and fifty-five 33 hundredths percent and one and ninety-five hundredths percent, 34 respectively. 35 -31- LSB 6414XC (14) 88 jm/jh 31/ 102
S.F. _____ Sec. 57. Section 422.33, subsection 5, paragraphs c and d, 1 Code 2020, are amended to read as follows: 2 c. In lieu of the credit amount computed in paragraph 3 “a” , subparagraph (1), a corporation may elect to compute the 4 credit amount for qualified research expenses incurred in this 5 state in a manner consistent with the alternative simplified 6 credit described in section 41(c)(5) 41(c)(4) of the Internal 7 Revenue Code. The taxpayer may make this election regardless 8 of the method used for the taxpayer’s federal income tax. The 9 election made under this paragraph is for the tax year and the 10 taxpayer may use another or the same method for any subsequent 11 year. 12 d. For purposes of the alternate credit computation 13 method in paragraph “c” , the credit percentages applicable to 14 qualified research expenses described in section 41(c)(5)(A) 15 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) 16 of the Internal Revenue Code are four and fifty-five 17 hundredths percent and one and ninety-five hundredths percent, 18 respectively. 19 Sec. 58. EFFECTIVE DATE. This division of this Act, being 20 deemed of immediate importance, takes effect upon enactment. 21 Sec. 59. RETROACTIVE APPLICABILITY. This division of this 22 Act applies retroactively to January 1, 2019, for tax years 23 beginning on or after that date. 24 DIVISION V 25 PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF 26 FEDERAL ADJUSTMENTS 27 Sec. 60. Section 421.27, subsection 2, paragraph c, Code 28 2020, is amended to read as follows: 29 c. (1) The taxpayer provides written notification to the 30 department of a federal audit while it is in progress and 31 voluntarily files an amended return which includes a copy of 32 the federal document showing the final disposition or final 33 federal adjustments and pays any additional Iowa tax due 34 within sixty one hundred eighty days of the final disposition 35 -32- LSB 6414XC (14) 88 jm/jh 32/ 102
S.F. _____ determination date of the federal government’s audit. For 1 purposes of this subparagraph, “final determination date” means 2 the same as defined in section 422.25. 3 (2) (a) In the case of a final federal partnership 4 adjustment arising from a partnership level audit, with respect 5 to the audited partnership or a direct partner or indirect 6 partner of the audited partnership, the audited partnership, 7 direct partner, or indirect partner voluntarily and timely 8 complies with its reporting and payment requirements under 9 section 422.25A, subsection 4 or 5. 10 (b) As used in this subparagraph, all words and phrases 11 defined in section 422.25A shall have the same meaning given 12 them by that section. 13 Sec. 61. Section 422.7, Code 2020, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 59. Any income subtracted from federal 16 taxable income for an adjustment year pursuant to section 6225 17 of the Internal Revenue Code and the regulations thereunder 18 shall be added back in computing net income for state tax 19 purposes for the adjustment year. 20 Sec. 62. Section 422.25, subsections 1 and 2, Code 2020, 21 are amended by striking the subsections and inserting in lieu 22 thereof the following: 23 1. a. For purposes of this subsection: 24 (1) “Federal adjustment” means a change to an item or amount 25 required to be determined under the Internal Revenue Code and 26 the regulations thereunder that is used by the taxpayer to 27 compute state tax owed whether such change results from action 28 by the internal revenue service, or the filing of a timely 29 amended federal return or timely federal refund claim. A 30 federal adjustment is positive to the extent that it increases 31 Iowa taxable income as determined under this title and is 32 negative to the extent that it decreases Iowa taxable income 33 as determined under this title. 34 (2) “Federal adjustments report” means the method or form 35 -33- LSB 6414XC (14) 88 jm/jh 33/ 102
S.F. _____ required by the department by rule to report final federal 1 adjustments or final federal partnership adjustments as defined 2 in section 422.25A, and in the case of any entity taxed as a 3 partnership or S corporation for federal income tax purposes, 4 identifies all owners that hold an interest directly in such 5 entity and provides the effect of the final federal adjustments 6 on such owner’s Iowa income. 7 (3) “Final determination date” means the following: 8 (a) Except as provided in subparagraph divisions (b) and 9 (c), for federal adjustments arising from an internal revenue 10 service audit or other action by the internal revenue service, 11 the final determination date is the first day on which no 12 federal adjustments arising from that audit or other action 13 remain to be finally determined, whether by internal revenue 14 service decision with respect to which all rights of appeal 15 have been waived or exhausted, by agreement, or, if appealed 16 or contested, by a final decision with respect to which all 17 rights of appeal have been waived or exhausted. For agreements 18 required to be signed by the internal revenue service and the 19 taxpayer, the final determination date is the date on which the 20 last party signed the agreement. 21 (b) For federal adjustments arising from an internal 22 revenue service audit or other action by the internal revenue 23 service, if the taxpayer filed as a member of a consolidated 24 return under section 422.37, the final determination date 25 is the first day on which no related federal adjustments 26 arising from that audit or other action remain to be finally 27 determined, as described in subparagraph division (a), for the 28 entire group. 29 (c) For federal adjustments arising from a timely filed 30 amended federal return or a timely filed federal refund 31 claim, or if it is a federal adjustment reported on a timely 32 amended federal return or other similar report filed pursuant 33 to section 6225(c) of the Internal Revenue Code, the final 34 determination date is the day on which the amended return, 35 -34- LSB 6414XC (14) 88 jm/jh 34/ 102
S.F. _____ refund claim, or other similar report was filed. 1 (4) “Final federal adjustment” means a federal adjustment 2 after the final determination date for that federal adjustment 3 has passed. 4 b. Within three years after the return is filed or within 5 three years after the return became due, including any 6 extensions of time for filing, whichever time is the later, 7 the department shall examine the return and determine the tax. 8 However, if the taxpayer omits from income an amount which 9 will, under the Internal Revenue Code, extend the statute of 10 limitations for assessment of federal tax to six years under 11 the federal law, the period for examination and determination 12 is six years. 13 c. The period for examination and determination of the 14 correct amount of tax is unlimited in the case of a false or 15 fraudulent return made with the intent to evade tax or in the 16 case of a failure to file a return. 17 d. In lieu of the period of limitation for any prior year 18 for which an overpayment of tax or an elimination or reduction 19 of an underpayment of tax due for that prior year results from 20 the carryback to that prior year of a net operating loss or 21 net capital loss, the period is the period of limitation for 22 the taxable year of the net operating loss or net capital loss 23 which results in the carryback. 24 e. (1) In addition to the applicable period of limitation 25 for examination and determination in paragraph “b” , “c” , or “d” , 26 the department may make an examination and determination at any 27 time within one year from the date of receipt by the department 28 of a federal adjustments report with respect to a final 29 federal adjustment or final federal partnership adjustment 30 as defined in section 422.25A for a particular tax year. In 31 order to begin the running of the one-year period, the federal 32 adjustments report related to the final federal adjustment or 33 final federal partnership adjustment shall be transmitted to 34 the department by the taxpayer in the form and manner specified 35 -35- LSB 6414XC (14) 88 jm/jh 35/ 102
S.F. _____ by the department by rule. 1 (2) The department in its discretion may adopt rules to 2 establish a de minimis amount for which subparagraph (1) shall 3 not apply and the taxpayer shall not be required to file a 4 federal adjustments report. 5 (3) The department may in its discretion and when 6 administratively feasible adopt a process through rule by 7 which a taxpayer may make estimated payments of tax expected 8 to result from a pending internal revenue service audit 9 prior to the filing of a federal adjustments report with the 10 department. The process shall provide that the estimated 11 tax payments shall be credited against any tax liability 12 ultimately found to be due to the state from the internal 13 revenue service audit and will limit the accrual of further 14 statutory interest on that liability. The process shall also 15 provide that if the estimated tax payments exceed the final 16 tax liability and statutory interest ultimately determined to 17 be due, the taxpayer is entitled to a refund or credit for 18 the excess, without interest, provided the taxpayer files a 19 federal adjustments report, or a claim for refund or credit of 20 tax under section 422.73, no later than one year following the 21 final determination date. 22 2. a. If the tax found due under subsection 1 is greater 23 than the amount paid, the department shall compute the amount 24 due, together with interest and penalties as provided in 25 paragraph “b” , and shall mail a notice of assessment to the 26 taxpayer and, if applicable, to the taxpayer’s authorized 27 representative of the total, which shall be computed as a sum 28 certain, with interest computed to the last day of the month 29 in which the notice is dated. 30 b. In addition to the tax or additional tax determined 31 by the department under subsection 1, the taxpayer shall pay 32 interest on the tax or additional tax at the rate in effect 33 under section 421.7 for each month counting each fraction of 34 a month as an entire month, computed from the date the return 35 -36- LSB 6414XC (14) 88 jm/jh 36/ 102
S.F. _____ was required to be filed. In addition to the tax or additional 1 tax, the taxpayer shall pay a penalty as provided in section 2 421.27. 3 Sec. 63. NEW SECTION . 422.25A Reporting and treatment of 4 certain partnership adjustments. 5 1. Definitions. As used in this section and sections 6 422.25B and 422.25C, unless the context otherwise requires: 7 a. “Administrative adjustment request” means the same as 8 provided in section 6227 of the Internal Revenue Code. 9 b. “Audited partnership” means a partnership subject 10 to a final federal partnership adjustment resulting from a 11 partnership level audit. 12 c. “C corporation” means an entity that elects or is 13 required to be taxed as a corporation under title 26, chapter 14 1, subchapter A, part 2, of the Internal Revenue Code. 15 d. “Corporate partner” means a C corporation partner that is 16 subject to tax pursuant to section 422.33. 17 e. “Direct partner” means a person that holds an interest 18 directly in a partnership or pass-through entity. 19 f. “Exempt partner” means a partner that is exempt from 20 taxation pursuant to section 422.34. 21 g. “Federal adjustments report” means the same as defined 22 in section 422.25. 23 h. “Federal partnership adjustment” means a change to an 24 item or amount required to be determined under the Internal 25 Revenue Code and the regulations thereunder that is used by a 26 partnership and its direct and indirect partners to compute 27 state tax owed for the reviewed year where such change results 28 from a partnership level audit or an administrative adjustment 29 request. A federal partnership adjustment is positive to the 30 extent that it increases Iowa taxable income as determined 31 under this title and is negative to the extent that it 32 decreases Iowa taxable income as determined under this title. 33 A federal adjustment reported on an amended federal return 34 or other similar report filed pursuant to section 6225(c) of 35 -37- LSB 6414XC (14) 88 jm/jh 37/ 102
S.F. _____ the Internal Revenue Code shall not be considered a federal 1 partnership adjustment for purposes of this section. 2 i. “Federal partnership representative” means the person 3 the partnership designates for the taxable year as the 4 partnership’s representative, or the person the internal 5 revenue service has appointed to act as the federal partnership 6 representative, pursuant to section 6223(a) of the Internal 7 Revenue Code and the regulations thereunder. 8 j. “Fiduciary partner” means a partner that is a fiduciary 9 that is subject to tax pursuant to sections 422.5 and 422.6. 10 k. “Final determination date” means any one of the following 11 dates: 12 (1) In the case of a federal partnership adjustment that 13 arises from a partnership level audit, the first day on which 14 no federal adjustments arising from that audit remain to be 15 finally determined, whether by agreement, or, if appealed 16 or contested, by a final decision with respect to which all 17 rights of appeal have been waived or exhausted. For agreements 18 required to be signed by the internal revenue service and the 19 audited partnership, the final determination date is the date 20 on which the last party signed the agreement. 21 (2) In the case of a federal partnership adjustment that 22 results from a timely filed administrative adjustment request, 23 the day on which the administrative adjustment request was 24 filed with the internal revenue service. 25 l. “Final federal partnership adjustment” means a federal 26 partnership adjustment after the final determination date for 27 that federal partnership adjustment has passed. 28 m. “Indirect partner” means a partner in a partnership or 29 pass-through entity where such partnership or pass-through 30 entity itself holds an interest directly, or through another 31 indirect partner, in a partnership or pass-through entity. 32 n. “Individual partner” means a partner who is a natural 33 person that is subject to tax pursuant to section 422.5. 34 o. “Nonresident partner” means a partner that is not a 35 -38- LSB 6414XC (14) 88 jm/jh 38/ 102
S.F. _____ resident partner as defined in this subsection. 1 p. “Partner” means a person that holds an interest, directly 2 or indirectly, in a partnership or pass-through entity. 3 q. “Partnership” means an entity subject to taxation 4 under subchapter K of the Internal Revenue Code and the 5 regulations thereunder and includes but is not limited to a 6 syndicate, group, pool, joint venture, or other unincorporated 7 organization through or by means of which any business, 8 financial operation, or venture is carried on and which is 9 not, within the meaning of this chapter, a trust, estate, or 10 corporation. 11 r. “Partnership level audit” means an examination by the 12 internal revenue service at the partnership level pursuant to 13 subchapter C, title 26, subtitle F, chapter 63, of the Internal 14 Revenue Code, as enacted by the Bipartisan Budget Act of 2015, 15 Pub. L. No. 114-74, and as amended, which results in final 16 federal partnership adjustments initiated and made by the 17 internal revenue service. 18 s. “Pass-through entity” means an entity, other than 19 a partnership, that is not subject to tax under section 20 422.33 for C corporations but excluding an exempt partner. 21 “Pass-through entity” includes but is not limited to S 22 corporations, estates, and trusts other than grantor trusts. 23 t. “Reallocation adjustment” means a final federal 24 partnership adjustment that changes the shares of items of 25 partnership income, gain, loss, expense, or credit allocated 26 to a partner that holds an interest directly in a partnership 27 or pass-through entity. A positive reallocation adjustment 28 means the portion of a reallocation adjustment that would 29 increase Iowa taxable income for such partners, and a negative 30 reallocation adjustment means the portion of a reallocation 31 adjustment that would decrease Iowa taxable income for such 32 partners. 33 u. “Resident partner” means any of the following: 34 (1) For an individual partner, a “resident” as defined in 35 -39- LSB 6414XC (14) 88 jm/jh 39/ 102
S.F. _____ section 422.4. 1 (2) For a fiduciary partner, one with situs in Iowa. 2 (3) For all other partners, a partner whose headquarters or 3 principal place of business is located in Iowa. 4 v. “Reviewed year” means the taxable year of a partnership 5 that is subject to a partnership level audit from which final 6 federal partnership adjustments arise, or otherwise means the 7 taxable year of the partnership or pass-through entity that is 8 the subject of a state partnership audit. 9 w. “State partnership audit” means an examination by the 10 director at the partnership or pass-through entity level which 11 results in adjustments to partnership or pass-through entity 12 related items or reallocations of income, gains, losses, 13 expenses, credits, and other attributes among such partners for 14 the reviewed year. 15 x. “Tiered partner” means any partner that is a partnership 16 or pass-through entity. 17 y. “Unrelated business income” means the income which is 18 defined in section 512 of the Internal Revenue Code and the 19 regulations thereunder. 20 2. Application. Partnerships and their direct partners 21 and indirect partners shall report final federal partnership 22 adjustments as provided in this section. 23 3. State partnership representative. Notwithstanding any 24 other law to the contrary, the state partnership representative 25 for the reviewed year shall have the sole authority to act on 26 behalf of the partnership or pass-through entity with respect 27 to an action required or permitted to be taken by a partnership 28 or pass-through entity under this section or section 422.28 or 29 422.29 with respect to final federal partnership adjustments 30 arising from a partnership level audit or an administrative 31 adjustment request, and its direct partners and indirect 32 partners shall be bound by those actions. 33 4. Reporting and payment requirements for audited 34 partnerships and their partners subject to final federal 35 -40- LSB 6414XC (14) 88 jm/jh 40/ 102
S.F. _____ partnership adjustments. 1 a. Unless an audited partnership makes the election in 2 subsection 5, the audited partnership shall do all of the 3 following for all final federal partnership adjustments no 4 later than ninety days after the final determination date of 5 the audited partnership: 6 (1) File a completed federal adjustments report. 7 (2) Notify each direct partner of such partner’s 8 distributive share of the adjustments in the manner and form 9 prescribed by the department by rule. 10 (3) File an amended composite return under section 422.13 11 if one was originally filed, and if applicable for withholding 12 from partners, file an amended withholding report under 13 section 422.16, and pay the additional amount under this title 14 that would have been due had the final federal partnership 15 adjustments been reported properly as required, including any 16 applicable interest and penalties. 17 b. Unless an audited partnership paid an amount on behalf 18 of the direct partners of the audited partnership pursuant to 19 subsection 5, all direct partners of the audited partnership 20 shall do all of the following no later than one hundred 21 eighty days after the final determination date of the audited 22 partnership: 23 (1) File a completed federal adjustments report reporting 24 the direct partner’s distributive share of the adjustments 25 required to be reported to such partners under paragraph “a” . 26 (2) If the direct partner is a tiered partner, notify all 27 partners that hold an interest directly in the tiered partner 28 of such partner’s distributive share of the adjustments in the 29 manner and form prescribed by the department by rule. 30 (3) If the direct partner is a tiered partner and subject to 31 section 422.13, file an amended composite return under section 32 422.13 if such return was originally filed, and if applicable 33 for withholding from partners file an amended withholding 34 report under section 422.16 if one was originally required to 35 -41- LSB 6414XC (14) 88 jm/jh 41/ 102
S.F. _____ be filed. 1 (4) Pay any additional amount under this title that would 2 have been due had the final federal partnership adjustments 3 been reported properly as required, including any applicable 4 penalty and interest. 5 c. Unless a partnership or tiered partner paid an amount on 6 behalf of the partners pursuant to subsection 5, each indirect 7 partner shall do all of the following: 8 (1) Within ninety days after the time for filing and 9 furnishing statements to tiered partners and their partners 10 as established by section 6226 of the Internal Revenue Code 11 and the regulations thereunder, file a completed federal 12 adjustments report. 13 (2) If the indirect partner is a tiered partner, within 14 ninety days after the time for filing and furnishing statements 15 to tiered partners and their partners as established by 16 section 6226 of the Internal Revenue Code and the regulations 17 thereunder but within sufficient time for all indirect partners 18 to also complete the requirements of this subsection, notify 19 all of the partners that hold an interest directly in the 20 tiered partner of such partner’s distributive share of the 21 adjustments in the manner and form prescribed by the department 22 by rule. 23 (3) Within ninety days after the time for filing and 24 furnishing statements to tiered partners and their partners 25 as established by section 6226 of the Internal Revenue Code 26 and the regulations thereunder, if the indirect partner 27 is a tiered partner and subject to section 422.13, file an 28 amended composite return under section 422.13 if such return 29 was originally filed, and if applicable for withholding from 30 partners, file an amended withholding report under section 31 422.16 if one was originally required to be filed. 32 (4) Within ninety days after the time for filing and 33 furnishing statements to tiered partners and the partners of 34 the tiered partners as established by section 6226 of the 35 -42- LSB 6414XC (14) 88 jm/jh 42/ 102
S.F. _____ Internal Revenue Code and the regulations thereunder, pay any 1 additional amount due under this title, including any penalty 2 and interest that would have been due had the final federal 3 partnership adjustments been reported properly as required. 4 5. Election for partnership or tiered partners to pay. 5 a. An audited partnership, or a tiered partner that receives 6 a notification of a final federal partnership adjustment under 7 subsection 4, may make an election to pay as provided under 8 this subsection. 9 b. An audited partnership or tiered partner makes an 10 election to pay under this subsection by filing a completed 11 federal adjustments report, notifying the department in the 12 manner and form prescribed by the department that it is making 13 the election under this subsection, notifying each of the 14 direct partners of such partner’s distributive share of the 15 adjustments, and paying on behalf of its partners an amount 16 calculated in paragraph “c” , including any applicable penalty 17 and interest. These requirements shall all be fulfilled within 18 one of the following time periods: 19 (1) For the audited partnership, no later than ninety days 20 after the final determination date of the audited partnership. 21 (2) For a direct tiered partner, no later than one hundred 22 eighty days after the final determination date of the audited 23 partnership. 24 (3) For an indirect tiered partner, within ninety days 25 after the time for filing and furnishing statements to a 26 tiered partner and the partner of the tiered partner, as 27 established by section 6226 of the Internal Revenue Code and 28 the regulations thereunder. 29 c. The amount due under this subsection from an audited 30 partnership or tiered partner shall be calculated as follows: 31 (1) Exclude from final federal partnership adjustments and 32 any positive reallocation adjustments the distributive share 33 of such adjustments reported to an exempt partner that holds 34 an interest directly in the audited partnership if the audited 35 -43- LSB 6414XC (14) 88 jm/jh 43/ 102
S.F. _____ partnership is making the election or that holds an interest 1 directly in the tiered partner if the tiered partner is making 2 the election, but only to the extent the distributive share is 3 not unrelated business income. 4 (2) Determine the total distributive share of all final 5 federal partnership adjustments and positive reallocation 6 adjustments as modified by this title that are reported to 7 corporate partners, and to exempt partners to the extent the 8 distributive share is unrelated business income, and allocate 9 and apportion such adjustments as provided in section 422.33 10 at the partnership or tiered partner level, and multiply the 11 resulting amount by the maximum state corporate income tax rate 12 pursuant to section 422.33 for the reviewed year. 13 (3) Determine the total distributive share of all final 14 federal partnership adjustments and positive reallocation 15 adjustments as modified by this title that are reported to 16 nonresident individual partners and nonresident fiduciary 17 partners and allocate and apportion such adjustments as 18 provided in section 422.33 at the partnership or tiered 19 partner level, and multiply the resulting amount by the maximum 20 individual income tax rate pursuant to section 422.5A for the 21 reviewed year. 22 (4) For the total distributive share of all final federal 23 partnership adjustments and positive reallocation adjustments 24 as modified by this title that are reported to tiered partners: 25 (a) Determine the amount of such adjustments which are of a 26 type that would be subject to sourcing to Iowa under section 27 422.8, subsection 2, paragraph “a” , as a nonresident, and then 28 determine the portion of this amount that would be sourced to 29 Iowa under those provisions as if the tiered partner were a 30 nonresident. 31 (b) Determine the amount of such adjustments which are of 32 a type that would not be subject to sourcing to Iowa under 33 section 422.8, subsection 2, paragraph “a” , as a nonresident. 34 (c) Determine the portion of the amount in subparagraph 35 -44- LSB 6414XC (14) 88 jm/jh 44/ 102
S.F. _____ division (b) that can be established, as prescribed by the 1 department by rule, to be properly allocable to indirect 2 partners that are nonresident partners or other partners not 3 subject to tax on the adjustments. 4 (d) Multiply the total of the amounts determined in 5 subparagraph divisions (a) and (b), reduced by any amount 6 determined in subparagraph division (c), by the highest 7 individual income tax rate pursuant to section 422.5A for the 8 reviewed year. 9 (5) For the total distributive share of all final federal 10 partnership adjustments and positive reallocation adjustments 11 as modified by this title that are reported to resident 12 individual partners and resident fiduciary partners, multiply 13 that amount by the highest individual income tax rate pursuant 14 to section 422.5A for the reviewed year. 15 (6) Total the amounts computed pursuant to subparagraphs 16 (2) through (5) and calculate any interest and penalty as 17 provided under this title. Notwithstanding any provision of 18 law to the contrary, interest and penalties on the amount due 19 by the audited partnership or tiered partner shall be computed 20 from the day after the due date of the reviewed year return 21 without extension, and shall be imposed as if the audited 22 partnership or tiered partner was required to pay tax or show 23 tax due on the original return for the reviewed year. 24 d. Adjustments subject to the election in this subsection 25 do not include any adjustments arising from an administrative 26 adjustment request. 27 e. An audited partnership or tiered partner not otherwise 28 subject to any reporting or payment obligation to Iowa that 29 makes an election under this subsection consents to be subject 30 to the Iowa laws related to reporting, assessment, collection, 31 and payment of Iowa tax, interest, and penalties calculated 32 under the election. 33 6. Modified reporting and payment method. The department may 34 adopt procedures for an audited partnership or tiered partner 35 -45- LSB 6414XC (14) 88 jm/jh 45/ 102
S.F. _____ to enter into an agreement with the department to use an 1 alternative reporting and payment method, including applicable 2 time requirements or any other provision of this section. The 3 audited partnership or tiered partner must demonstrate that 4 the requested method will reasonably provide for the reporting 5 and payment of taxes, penalties, and interest due under the 6 provisions of this section. Application for approval of an 7 alternative reporting and payment method must be made by the 8 audited partnership or tiered partner within the time for 9 making an election to pay under subsection 5 and in the manner 10 prescribed by the department. Approval of such an alternative 11 reporting and payment method shall be at the discretion of the 12 department. 13 7. Effect of election by partnership or tiered partner and 14 payment of amount due. 15 a. The election made under subsection 5 is irrevocable, 16 unless in the discretion of the director, the director 17 determines otherwise. 18 b. The amount determined in subsection 5, when properly 19 reported and paid by the audited partnership or tiered partner, 20 shall be treated as paid on behalf of the partners of such 21 audited partnership or tiered partner on the same final federal 22 partnership adjustments, provided, however, that no partner may 23 take any deduction or credit for the amount, claim a refund of 24 the amount, or include the amount on such partner’s Iowa return 25 in any manner. 26 c. In the event another state offers to an audited 27 partnership or tiered partner a similar election to pay state 28 tax resulting from final federal partnership adjustments, 29 nothing in this subsection shall prohibit a resident who holds 30 an interest directly in that audited partnership or tiered 31 partner, as the case may be, from claiming a credit for taxes 32 paid by the resident to another state under section 422.8, 33 subsection 1, for any amounts paid by the audited partnership 34 or tiered partner on such resident partner’s behalf to another 35 -46- LSB 6414XC (14) 88 jm/jh 46/ 102
S.F. _____ state, provided such payment otherwise meets the requirements 1 of section 422.8, subsection 1. 2 d. Nothing in this section shall prohibit the department 3 from assessing direct partners and indirect partners for taxes 4 they owe in the event that an audited partnership or tiered 5 partner fails to timely make any report or payment required by 6 this section for any reason. 7 8. Assessments of additional Iowa income tax, interest, and 8 penalties, and claims for refund, arising from final federal 9 partnership adjustments. 10 a. The department shall assess additional Iowa income 11 tax, interest, and penalties arising from final federal 12 partnership adjustments in the same manner as provided in 13 this title unless a different treatment is provided by this 14 subsection. Since final federal partnership adjustments are 15 determined at the audited partnership level, any assessment 16 issued to partners shall not be appealable by the partner. 17 The department may assess any taxes, including on-behalf-of 18 amounts, interest, and penalties arising from the final federal 19 partnership adjustments if it issues a notice of assessment to 20 the audited partnership, tiered partner, or other direct or 21 indirect partner on or before the expiration of the applicable 22 limitations period specified in section 422.25. 23 b. In addition to the period for claiming a refund or credit 24 provided in section 422.73, subsection 1, paragraph “a” , and 25 notwithstanding section 422.73, subsection 1, paragraph “b” , 26 a partnership, tiered partner, or other direct or indirect 27 partner, as the case may be, may file a claim for refund of 28 Iowa income tax arising directly or indirectly from a final 29 federal partnership adjustment arising from a partnership level 30 audit on or before the date which is one year from the date the 31 federal adjustments report for that final federal partnership 32 adjustment was required to be filed by such person under this 33 section. 34 9. Rules. The department may adopt any rules pursuant to 35 -47- LSB 6414XC (14) 88 jm/jh 47/ 102
S.F. _____ chapter 17A to implement this section. 1 Sec. 64. NEW SECTION . 422.25B State partnership 2 representative. 3 1. As used in this section, all words and phrases defined 4 in section 422.25A shall have the same meaning given them by 5 that section. 6 2. The state partnership representative for the reviewed 7 year for a partnership shall be the partnership’s federal 8 partnership representative with respect to an action required 9 or permitted to be taken by a state partnership representative 10 under this chapter for a reviewed year, unless the partnership 11 designates in writing another person as the state partnership 12 representative as provided in subsection 3. The state 13 partnership representative for the reviewed year for a 14 pass-through entity is the person designated in subsection 3. 15 3. The department may establish reasonable qualifications 16 for a person to be a state partnership representative. If 17 a partnership desires to designate a person other than the 18 federal partnership representative, the partnership shall 19 designate such person in the manner and form prescribed by the 20 department. A pass-through entity shall designate a person as 21 the state partnership representative in the manner and form 22 prescribed by the department. A partnership or pass-through 23 entity shall be allowed to change such designation by notifying 24 the department at the time the change occurs in the manner and 25 form prescribed by the department. 26 4. The department may adopt any rules pursuant to chapter 27 17A to implement this section. 28 Sec. 65. NEW SECTION . 422.25C Partnership and pass-through 29 entity audits and examinations —— consistent treatment of 30 entity-level items —— binding actions —— amended returns. 31 1. As used in this section, all words and phrases defined 32 in section 422.25A shall have the same meaning given them by 33 that section. 34 2. For tax years beginning on or after January 1, 2020, any 35 -48- LSB 6414XC (14) 88 jm/jh 48/ 102
S.F. _____ adjustments to a partnership’s or pass-through entity’s items 1 of income, gain, loss, expense, or credit, or an adjustment 2 to such items allocated to a partner that holds an interest 3 in a partnership or pass-through entity for the reviewed year 4 by the department as a result of a state partnership audit, 5 shall be determined at the partnership level or pass-through 6 entity level in the same manner as provided by section 6221(a) 7 of the Internal Revenue Code and the regulations thereunder 8 unless a different treatment is specifically provided in this 9 title. The provisions of sections 6222, 6223, and 6227 of the 10 Internal Revenue Code and the regulations thereunder shall also 11 apply to a partnership or pass-through entity and its direct 12 or indirect partners in the same manner as provided in such 13 sections unless a different treatment is specifically provided 14 in this title. For purposes of applying such sections, due 15 account shall be made for differences in federal and Iowa 16 terminology. The adjustment provided by section 6221(a) of 17 the Internal Revenue Code shall be determined as provided in 18 such section but shall be based on Iowa taxable income or 19 other tax attributes of the partnership as determined pursuant 20 to this chapter for the reviewed year. The department shall 21 issue a notice of adjustment to the partnership or pass-through 22 entity. Such notice shall be treated as an assessment for 23 the purposes of section 422.25, and the notice shall be 24 appealable by the partnership or pass-through entity pursuant 25 to sections 422.28 and 422.29 and shall be issued within the 26 time period provided by section 422.25. Once the adjustments 27 to partnership-related or pass-through entity-related items or 28 reallocations of income, gains, losses, expenses, credits, and 29 other attributes among such partners for the reviewed year are 30 finally determined, the partnership or pass-through entity and 31 any direct partners or indirect partners shall then be subject 32 to the provisions of section 422.25, subsection 1, paragraph 33 “e” , and section 422.25A in the same manner as if the state 34 partnership audit were a federal partnership level audit, and 35 -49- LSB 6414XC (14) 88 jm/jh 49/ 102
S.F. _____ as if the final state partnership audit adjustment were a final 1 federal partnership adjustment. The penalty exceptions in 2 section 421.27, subsection 2, paragraphs “b” and “c” , shall not 3 apply to a state partnership audit. 4 3. The state partnership representative for the reviewed 5 year as determined under section 422.25B shall have the sole 6 authority to act on behalf of the partnership or pass-through 7 entity with respect to an action required or permitted to 8 be taken by a partnership or pass-through entity under this 9 section, including proceedings under section 422.28 or 422.29, 10 and the partnership’s or pass-through entity’s direct partners 11 and indirect partners shall be bound by those actions. 12 4. If the department, the partnership or pass-through 13 entity, and the partnership or pass-through entity owners 14 agree, the provisions of this section may be applied to tax 15 years beginning before January 1, 2020. 16 5. The department may adopt rules pursuant to chapter 17A to 17 implement this section. 18 Sec. 66. Section 422.35, Code 2020, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 26. Any income subtracted from federal 21 taxable income for an adjustment year pursuant to section 6225 22 of the Internal Revenue Code and the regulations thereunder 23 shall be added back in computing net income for state tax 24 purposes for the adjustment year. 25 Sec. 67. Section 422.39, Code 2020, is amended by striking 26 the section and inserting in lieu thereof