S.F. _____ H.F. _____ DIVISION I 1 IOWA EDUCATIONAL SAVINGS PLAN AND FIRST-TIME HOMEBUYERS DUE 2 DATES 3 Section 1. Section 422.7, subsection 22, paragraph a, Code 4 2023, is amended to read as follows: 5 a. Subtract the maximum contribution that may be deducted 6 for Iowa income tax purposes as a participant in the Iowa 7 educational savings plan trust pursuant to section 12D.3, 8 subsection 1 . For purposes of this paragraph, a participant 9 who makes a contribution on or before the date prescribed in 10 section 422.21 for making and filing an individual income tax 11 return, excluding extensions , or the date for making and filing 12 an individual income tax return determined by the director 13 pursuant to an order issued under section 421.17, subsection 14 30 , may elect to be deemed to have made the contribution on the 15 last day of the preceding calendar year. The director, after 16 consultation with the treasurer of state, shall prescribe by 17 rule the manner and method by which a participant may make an 18 election authorized by the preceding sentence. 19 Sec. 2. Section 541B.3, subsection 1, paragraph a, Code 20 2023, is amended to read as follows: 21 a. Beginning January 1, 2018, an An individual may open an 22 interest-bearing savings account with a financial institution 23 and designate the entire account as a first-time homebuyer 24 savings account for the purpose of paying or reimbursing a 25 designated beneficiary’s eligible home costs in connection with 26 a qualified home purchase. The first-time homebuyer savings 27 account designation shall be made no later than April 30 of the 28 year following the tax year during which the account is opened, 29 on forms provided by the department and shall be submitted on 30 or before the date prescribed in section 422.21 for making and 31 filing an individual income tax return, excluding extensions, 32 or the date for making and filing an individual income tax 33 return determined by the director pursuant to an order issued 34 under section 421.17, subsection 30, applicable to the tax year 35 -1- LSB 1239XD (12) 90 jm/jh 1/ 39

S.F. _____ H.F. _____ in which the account is opened . 1 Sec. 3. Section 541B.3, subsection 2, paragraph a, Code 2 2023, is amended to read as follows: 3 a. The account holder shall designate one individual as 4 beneficiary of the first-time homebuyer savings account. The 5 designation shall be made on forms provided by the department 6 and no later than April 30 of the year following the tax year 7 during which the account is opened and shall be submitted on 8 or before the date prescribed in section 422.21 for making and 9 filing an individual income tax return, excluding extensions, 10 or the date for making and filing an individual income tax 11 return determined by the director pursuant to an order issued 12 under section 421.17, subsection 30, applicable to the tax 13 year in which the designation is made . The account holder may 14 change the designated beneficiary of the first-time homebuyer 15 savings account at any time. 16 DIVISION II 17 BONUS DEPRECIATION AND INCREASED EXPENSING —— APPLICABILITY 18 Sec. 4. 2018 Iowa Acts, chapter 1161, section 134, is 19 amended to read as follows: 20 SEC. 134. APPLICABILITY. 21 1. This division of this Act applies to tax years beginning 22 on or after the effective date of this division of this Act. 23 2. The repeal of section 422.7, subsections 39, 39B, 43, 24 and 53, and section 422.35, subsections 19, 19B, 20, and 25 24, relating to bonus depreciation under section 168 of the 26 Internal Revenue Code or increased expensing under section 179 27 of the Internal Revenue Code, applies to property placed in 28 service on or after the effective date of this division of this 29 Act. 30 Sec. 5. EFFECTIVE DATE. This division of this Act, being 31 deemed of immediate importance, takes effect upon enactment. 32 Sec. 6. RETROACTIVE APPLICABILITY. This division of this 33 Act applies retroactively to January 1, 2023, for tax years 34 beginning on or after that date. 35 -2- LSB 1239XD (12) 90 jm/jh 2/ 39

S.F. _____ H.F. _____ DIVISION III 1 TAX FILING STATUS MODIFICATIONS 2 Sec. 7. Section 422.5, Code 2023, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 12. For tax years beginning on or after 5 January 1, 2023, a taxpayer shall use the same filing status 6 for Iowa income tax purposes as the taxpayer used for federal 7 income tax purposes. 8 Sec. 8. Section 422.7, subsection 4, Code 2023, is amended 9 to read as follows: 10 4. Individual taxpayers and married taxpayers who file a 11 joint federal income tax return and who elect to file a joint 12 return or separate returns for Iowa income tax purposes may 13 avail themselves of the disability income exclusion and shall 14 compute the amount of the disability income exclusion subject 15 to the limitations for joint federal income tax return filers 16 provided by section 105(d) of the Internal Revenue Code. The 17 disability income exclusion provided in section 105(d) of the 18 Internal Revenue Code, as amended up to and including December 19 31, 1982, continues to apply for state income tax purposes for 20 tax years beginning on or after January 1, 1984. 21 Sec. 9. Section 422.7, subsection 5, paragraph a, Code 2023, 22 is amended to read as follows: 23 a. For tax years beginning in the 2023 calendar year, 24 subtract the amount of federal income taxes paid during the tax 25 year to the extent payment is for a tax year beginning prior 26 to January 1, 2023, and add any federal income tax refunds 27 received during the tax year to the extent the federal income 28 tax was deducted for a tax year beginning prior to January 1, 29 2023. Where married persons who have filed a joint federal 30 income tax return file separately for state tax purposes, such 31 total shall be divided between them according to the portion 32 of the total paid by each. Federal income taxes paid for a tax 33 year in which an Iowa return was not required to be filed shall 34 not be subtracted. 35 -3- LSB 1239XD (12) 90 jm/jh 3/ 39

S.F. _____ H.F. _____ Sec. 10. Section 422.12B, subsection 2, Code 2023, is 1 amended to read as follows: 2 2. Married taxpayers electing to file separate returns may 3 avail themselves of the earned income credit by allocating the 4 earned income credit to each spouse in the proportion that each 5 spouse’s respective earned income bears to the total combined 6 earned income. Taxpayers affected by the allocation provisions 7 of section 422.8 shall be permitted a deduction for the credit 8 only in the amount fairly and equitably allocable to Iowa under 9 rules prescribed by the director. 10 Sec. 11. Section 422.12C, subsection 4, Code 2023, is 11 amended to read as follows: 12 4. Married taxpayers who have filed joint federal returns 13 electing to file separate returns must determine the child and 14 dependent care credit under subsection 1 or the early childhood 15 development tax credit under subsection 2 based upon their 16 combined net income and allocate the total credit amount to 17 each spouse in the proportion that each spouse’s respective net 18 income bears to the total combined net income. Nonresidents 19 or part-year residents of Iowa must determine their Iowa child 20 and dependent care credit in the ratio of their Iowa source 21 net income to their all source net income. Nonresidents or 22 part-year residents who are married and elect to file separate 23 returns must allocate the Iowa child and dependent care credit 24 between the spouses in the ratio of each spouse’s Iowa source 25 net income to the combined Iowa source net income of the 26 taxpayers. 27 Sec. 12. RETROACTIVE APPLICABILITY. This division of this 28 Act applies retroactively to January 1, 2023, for tax years 29 beginning on or after that date. 30 DIVISION IV 31 WITHHOLDING 32 Sec. 13. Section 99B.8, Code 2023, is amended to read as 33 follows: 34 99B.8 Tax on prizes. 35 -4- LSB 1239XD (12) 90 jm/jh 4/ 39

S.F. _____ H.F. _____ All prizes awarded pursuant to a gambling activity under 1 this chapter are Iowa earned income and are subject to state 2 and federal income tax laws. A person conducting a game of 3 skill, game of chance, bingo, or a raffle shall deduct state 4 income taxes, pursuant to section 422.16, subsection 1 2 , from 5 a cash prize awarded to an individual. An amount deducted from 6 the prize for payment of a state tax shall be remitted to the 7 department of revenue on behalf of the prize winner. 8 Sec. 14. Section 99D.16, Code 2023, is amended to read as 9 follows: 10 99D.16 Withholding tax on winnings. 11 All winnings provided in section 99D.11 are Iowa earned 12 income and are subject to state and federal income tax laws. 13 An amount deducted from winnings for payment of the state tax, 14 pursuant to section 422.16, subsection 1 2 , shall be remitted 15 to the department of revenue on behalf of the individual who 16 won the wager. 17 Sec. 15. Section 99F.18, Code 2023, is amended to read as 18 follows: 19 99F.18 Tax on winnings. 20 All winnings derived from slot machines operated pursuant to 21 this chapter are Iowa earned income and are subject to state 22 and federal income tax laws. An amount deducted from winnings 23 for payment of the state tax, pursuant to section 422.16, 24 subsection 1 2 , shall be remitted to the department of revenue 25 on behalf of the winner. 26 Sec. 16. Section 99G.31, subsection 3, paragraph i, Code 27 2023, is amended to read as follows: 28 i. The proceeds of any lottery prize shall be subject to 29 state and federal income tax laws. An amount deducted from the 30 prize for payment of a state tax, pursuant to section 422.16, 31 subsection 1 2 , shall be transferred by the authority to the 32 department of revenue on behalf of the prize winner. 33 Sec. 17. Section 422.16, Code 2023, is amended by striking 34 the section and inserting in lieu thereof the following: 35 -5- LSB 1239XD (12) 90 jm/jh 5/ 39

S.F. _____ H.F. _____ 422.16 Withholding of income tax at source —— penalties —— 1 interest —— declaration of estimated tax —— bond. 2 1. As used in this section, unless the context otherwise 3 requires, “withholding agent” means any individual, fiduciary, 4 estate, trust, corporation, partnership or association in 5 whatever capacity acting and including all officers and 6 employees of the state of Iowa, or any municipal corporation 7 of the state of Iowa and of any school district or school 8 board of the state, or of any political subdivision of the 9 state of Iowa, or any tax-supported unit of government that is 10 obligated to pay or has control of paying or does pay to any 11 resident or nonresident of the state of Iowa or the resident’s 12 or nonresident’s agent any wages that are subject to the Iowa 13 income tax in the hands of such resident or nonresident, or 14 any of the above-designated entities making payment or having 15 control of making such payment of any taxable Iowa income 16 to any nonresident. The term “withholding agent” shall also 17 include an officer or employee of a corporation or association, 18 or a member or employee of a partnership, who as such officer, 19 employee, or member has the responsibility to perform an act 20 under this section and who subsequently knowingly violates the 21 provisions of this section. The term “withholding agent” shall 22 also include every employer as defined in this subchapter and 23 further defined in the Internal Revenue Code. 24 2. a. (1) Every withholding agent paying wages to an 25 Iowa resident, or nonresident working in Iowa, shall deduct 26 and withhold from the wages an amount which will approximate 27 the annual tax liability of the person on a calendar year 28 basis, calculated on the basis of tables to be prepared by the 29 department and schedules or percentage rates, based on the 30 wages, to be prescribed by the department. 31 (2) Every employee or other person shall declare to the 32 withholding agent the amount of the employee’s or other 33 person’s withholding allowance to be used in applying the 34 tables and schedules or percentage rates. However, the amount 35 -6- LSB 1239XD (12) 90 jm/jh 6/ 39

S.F. _____ H.F. _____ of withholding allowance declared shall not exceed the amount 1 to which the employee or other person is entitled except 2 as allowed under sections 3402(m)(1) and 3402(m)(3) of the 3 Internal Revenue Code and as allowed by rules prescribed by the 4 director. The claiming of an amount of withholding allowance 5 in excess of entitlement is a serious misdemeanor. 6 b. (1) In the case of a nonresident having income subject 7 to taxation by Iowa, but not subject to withholding of such 8 tax under this subsection or subject to the provisions of 9 section 422.16B, a withholding agent shall withhold from such 10 income at the same rate as provided in this subsection. A 11 withholding agent and nonresident shall be subject to the 12 provisions of this section, according to the context, except 13 that a withholding agent may be absolved of the requirement to 14 withhold taxes from the income of a nonresident upon receipt of 15 a certificate from the department issued in accordance with the 16 provisions of section 422.17. 17 (2) In the case of a nonresident having income from a trade 18 or business carried on by the nonresident in whole or in part 19 within the state of Iowa, the nonresident shall be considered 20 to be subject to the provisions of this paragraph unless 21 such trade or business is of such nature that the business 22 entity itself, as a withholding agent, is required to and does 23 withhold Iowa income tax from the distributions made to such 24 nonresident from such trade or business. 25 c. For the purposes of this subsection, state income tax 26 shall be withheld, at a rate to be specified by the department 27 by rule, from pensions, annuities, other similar periodic 28 payments, and other income payments under sections 3402(o), 29 3402(p), 3402(s), 3405(a), 3405(b), and 3405(c) of the Internal 30 Revenue Code made to Iowa residents if those payments are 31 subject to Iowa income tax. 32 d. For the purposes of this subsection, state income tax 33 shall be withheld on winnings in excess of six hundred dollars 34 derived from gambling activities authorized under chapter 35 -7- LSB 1239XD (12) 90 jm/jh 7/ 39

S.F. _____ H.F. _____ 99B or 99G. State income tax shall be withheld on winnings 1 in excess of one thousand dollars from gambling activities 2 authorized under chapter 99D. State income tax shall be 3 withheld on winnings in excess of one thousand two hundred 4 dollars derived from slot machines authorized under chapter 5 99F. 6 e. For the purposes of this subsection, state income tax 7 shall be withheld at the highest rate described in section 8 422.5A from supplemental wages of an employee in those 9 circumstances in which the employer treats the supplemental 10 wages as wholly separate from regular wages for purposes 11 of withholding and federal income tax is withheld from the 12 supplemental wages under section 3402(g) of the Internal 13 Revenue Code. 14 3. a. A withholding agent is not required to withhold 15 state income tax from payments subject to taxation made 16 to a nonresident for commodity credit certificates, grain, 17 livestock, domestic fowl, or other agricultural commodities 18 or products sold to a withholding agent by a nonresident or 19 the nonresident’s representative, if the withholding agent 20 provides on forms prescribed by the department information 21 relating to the sales required by the department to determine 22 the state income tax liabilities of a nonresident. However, 23 a withholding agent may elect to make estimated tax payments 24 on behalf of a nonresident on the basis of the net income of 25 the nonresident from the agricultural commodities or products, 26 if the estimated tax payments are made on or before the last 27 day of the first month after the end of the tax years of the 28 nonresident. 29 b. Nonresidents engaged in any facet of feature film, 30 television, or educational production using the film or 31 videotape disciplines in the state are not subject to Iowa 32 withholding if the employer has applied to the department for 33 exemption from the withholding requirement and the department 34 has determined that any nonresident receiving wages would be 35 -8- LSB 1239XD (12) 90 jm/jh 8/ 39

S.F. _____ H.F. _____ entitled to a credit against Iowa income taxes paid. 1 c. Individuals described in section 29C.24 are not subject 2 to withholding, as provided in that section. 3 4. a. A withholding agent required to deduct and withhold 4 tax under subsection 2 shall file a return on or before the 5 last day of the month following the quarterly period on forms 6 prescribed by the director and remit to the department the 7 amount of tax due at the following frequencies: 8 (1) A withholding agent shall remit income tax withheld on 9 a quarterly basis if the withholding agent withholds less than 10 six thousand dollars annually and no more than five hundred 11 dollars in any one month. Payment shall be due on the same day 12 as the quarterly return. 13 (2) A withholding agent shall remit income tax withheld on 14 a monthly basis if the withholding agent withholds more than 15 five hundred dollars in any one month and not more than five 16 thousand dollars in a semimonthly period. Payment shall be 17 made on or before the fifteenth day of the month following 18 the month of withholding, except that a deposit for the third 19 month in a calendar quarter shall be due on the same day as the 20 quarterly return. 21 (3) A withholding agent shall remit income tax withheld on 22 a semimonthly basis if the withholding agent withholds more 23 than five thousand dollars in a semimonthly period. The first 24 semimonthly deposit for the period from the first of the month 25 through the fifteenth of the month is due on the twenty-fifth 26 day of the month in which the withholding occurs. The second 27 monthly deposit for the period from the sixteenth of the month 28 through the end of the month is due on the tenth day of the 29 month following the month in which the withholding occurs. 30 (4) A withholding agent may elect to remit on an annual 31 basis if the withholding agent employs not more than two 32 employees and expects to employ the employees for the full 33 calendar year. The electing withholding agent shall remit the 34 full amount of income taxes required to be withheld from the 35 -9- LSB 1239XD (12) 90 jm/jh 9/ 39

S.F. _____ H.F. _____ wages of the employees for the full calendar year with the 1 quarterly return for the first calendar quarter. The amount 2 to be paid shall be computed as if the employees were employed 3 for the full calendar year for the same wages and with the 4 same pay periods as prevailed during the first quarter of the 5 year with respect to such employees. The electing withholding 6 agent shall only remit the lump sum payment with the written 7 consent of all employees involved. The withholding agent shall 8 be entitled to recover from the employee any part of the lump 9 sum payment that represents an advance to the employee. If 10 a withholding agent pays a lump sum with the first quarterly 11 return, the withholding agent shall be excused from filing 12 further quarterly returns for the calendar year involved unless 13 the withholding agent hires other or additional employees. 14 b. Every withholding agent on or before February 15 15 following the close of the calendar year in which the 16 withholding occurs shall send to the department copies of 17 income statements required by subsection 8. At the discretion 18 of the director, the withholding agent shall not be required to 19 send income statements if the information is available from the 20 internal revenue service or other state or federal agencies. 21 c. If the director has reason to believe that the collection 22 of the tax provided for in subsection 2 is in jeopardy, the 23 director may require the withholding agent to file a return 24 as required in paragraph “a” , and pay the tax at any time, in 25 accordance with section 422.30. The director may authorize 26 incorporated banks, trust companies, or other depositories 27 authorized by law which are depositories or financial agents of 28 the United States or of this state, to receive any tax imposed 29 under this chapter, in the manner, at the times, and under the 30 conditions the director prescribes. The director shall also 31 prescribe the manner, times, and conditions under which the 32 receipt of the tax by those depositories is to be treated as 33 payment of the tax to the department. 34 d. The director, in cooperation with the department of 35 -10- LSB 1239XD (12) 90 jm/jh 10/ 39

S.F. _____ H.F. _____ management, may periodically change the filing and remittance 1 thresholds by administrative rule if in the best interest of 2 the state and the taxpayer. 3 5. Every withholding agent who fails to withhold or pay to 4 the department any sums required by this chapter to be withheld 5 and paid, shall be personally, individually, and corporately 6 liable to the state of Iowa, and any sum withheld in accordance 7 with the provisions of subsection 2, shall be deemed to be 8 held in trust for the state of Iowa. Notwithstanding section 9 489.304, this subsection applies to a member or manager of a 10 limited liability company. 11 6. In the event a withholding agent fails to withhold and 12 pay over to the department any amount required to be withheld 13 under subsection 2, such amount may be assessed against 14 such withholding agent in the same manner as prescribed for 15 the assessment of income tax under the provisions of this 16 subchapter and subchapter VI. 17 7. Whenever the director determines that any withholding 18 agent has failed to withhold or pay over to the department sums 19 required to be withheld under subsection 2, the unpaid amount 20 shall be a lien as described in section 422.26, shall attach 21 to the property of that withholding agent, and in all other 22 respects the procedure with respect to such lien shall apply 23 as set forth in section 422.26. 24 8. a. Every withholding agent required to deduct and 25 withhold tax under subsection 2 shall furnish to each employee, 26 nonresident, or other person with respect to the income 27 paid by the employer or withholding agent to each employee, 28 nonresident, or other person during the calendar year, on or 29 before January 31 of the succeeding year, or, in the case of 30 an employee, if the employment of the employee is terminated 31 before the close of the calendar year, within thirty days from 32 the day on which the last payment of wages or other taxable 33 income is made, if requested by the employee, but not later 34 than January 31 of the following year, an income statement 35 -11- LSB 1239XD (12) 90 jm/jh 11/ 39

S.F. _____ H.F. _____ showing all of the following: 1 (1) The name and address of the employer or withholding 2 agent, and the taxpayer identification number of the employer 3 or withholding agent. 4 (2) The name of the employee, nonresident, or other person 5 and the taxpayer identification number of that employee, 6 nonresident, or other person, together with the last known 7 address of the employee, nonresident, or other person to whom 8 wages or other taxable income has been paid during the period. 9 (3) The gross amount of wages or other taxable income paid 10 to the employee, nonresident, or other person. 11 (4) The total amount deducted and withheld as tax under the 12 provisions of subsection 2. 13 (5) The total amount of federal income tax withheld. 14 b. An income statement required to be furnished by this 15 subsection with respect to any wages or other taxable Iowa 16 income or any additional information required to be displayed 17 on the income statement shall be in such form or forms as the 18 director may prescribe by rule. 19 9. A withholding agent shall be liable for the payment of 20 the tax required to be deducted and withheld or the amount 21 actually deducted, whichever is greater, under subsection 22 2. Any amount deducted and withheld as tax under subsection 23 2 during any calendar year upon the wages of any employee, 24 nonresident, or other person shall be allowed as a credit to 25 the employee, nonresident, or other person against the tax 26 imposed by section 422.5 for the tax year in which it was 27 withheld, irrespective of whether or not such tax has been, or 28 will be, paid by the withholding agent to the department as 29 provided by this chapter. 30 10. a. If the amount of income tax withheld by the 31 withholding agent on behalf of an employee, nonresident, or 32 other person after complying with this section is more than the 33 income tax liability of said employee, nonresident, or other 34 person as determined under the provisions of this subchapter, 35 -12- LSB 1239XD (12) 90 jm/jh 12/ 39

S.F. _____ H.F. _____ the overpayment of tax may first be credited against any income 1 tax or installment payment then due the state of Iowa by 2 the employee, nonresident, or other person for the tax year, 3 and any balance of one dollar or more shall be refunded to 4 the employee, nonresident, or other person with interest in 5 accordance with section 421.60, subsection 2, paragraph “e” . 6 b. Amounts less than one dollar shall be refunded to the 7 taxpayer, nonresident, or other person only upon written 8 application, in accordance with section 422.73, and only if the 9 application is filed within twelve months after the due date 10 of the return. 11 c. Refunds in the amount of one dollar or more provided 12 for by this subsection shall be paid by the treasurer of 13 state by warrants drawn by the director of the department of 14 administrative services, or an authorized employee of the 15 department of administrative services, and the taxpayer’s 16 return of income shall constitute a claim for refund for this 17 purpose, except in respect to amounts of less than one dollar. 18 There is appropriated, out of any funds in the state treasury 19 not otherwise appropriated, a sum sufficient to carry out the 20 provisions of this subsection. 21 11. a. In addition to any other penalty provided by law, 22 a withholding agent required to furnish or file an income 23 statement required by this chapter is subject to a civil 24 penalty of five hundred dollars for each occurrence of the 25 following: 26 (1) Willful failure to furnish an employee, nonresident, or 27 other person with an income statement. 28 (2) Willfully furnishing an employee, nonresident, or other 29 person with a false or fraudulent income statement. 30 (3) Willful failure to file an income statement with the 31 department. 32 (4) Willfully filing a false or fraudulent income statement 33 with the department. 34 b. A withholding agent is subject to the penalty as provided 35 -13- LSB 1239XD (12) 90 jm/jh 13/ 39

S.F. _____ H.F. _____ in section 421.27. Any penalty assessed under section 421.27 1 shall be in addition to the tax or additional tax due under 2 this section. The taxpayer shall also pay interest on the tax 3 or additional tax at the rate in effect under section 421.7, 4 for each month counting each fraction of a month as an entire 5 month, computed from the date the semimonthly, monthly, or 6 quarterly deposit form was required to be filed. The penalty 7 and interest become a part of the tax due from the withholding 8 agent. 9 c. If any withholding agent, being a domestic or foreign 10 corporation, required under the provisions of this section 11 to withhold on wages or other taxable Iowa income subject to 12 this chapter, fails to withhold the amounts required to be 13 withheld, make the required returns or remit to the department 14 the amounts withheld, the director may, having exhausted 15 all other means of enforcement of the provisions of this 16 chapter, certify such fact or facts to the secretary of state, 17 who shall thereupon cancel the articles of incorporation or 18 foreign registration statement, as the case may be, of such 19 corporation, and the rights of such corporation to carry on 20 business in the state of Iowa shall cease. The secretary of 21 state shall immediately notify by registered mail such domestic 22 or foreign corporation of the action taken by the secretary of 23 state. The provisions of section 422.40, subsection 3, shall 24 be applicable. 25 d. The department shall, upon request of any fiduciary, 26 furnish said fiduciary with a certificate of acquittance 27 showing that no liability as a withholding agent exists with 28 respect to the estate or trust for which said fiduciary acts, 29 provided the department has determined that there is no such 30 liability. 31 12. a. (1) Taxpayers filing a return shall make estimated 32 tax payments if their Iowa income tax liability can reasonably 33 be expected to amount to two hundred dollars or more for the 34 year. 35 -14- LSB 1239XD (12) 90 jm/jh 14/ 39

S.F. _____ H.F. _____ (2) In the cases of farmers and fishermen, the exceptions 1 provided in the Internal Revenue Code with respect to making 2 estimated payments apply. 3 b. (1) The estimated tax shall be paid in quarterly 4 installments. The first installment shall be paid on or before 5 the last day of the fourth month of the taxpayer’s tax year for 6 which the estimated payments apply. The other installments 7 shall be paid on or before the last day of the sixth month of 8 the tax year, the last day of the ninth month of the tax year, 9 and the last day of the first month after the tax year. A 10 taxpayer may elect to pay an installment prior to the due date. 11 (2) If a taxpayer filing a return has reason to believe that 12 the taxpayer’s Iowa income tax may increase or decrease, either 13 for purposes of meeting the requirement to make estimated 14 tax payments or for the purpose of increasing or decreasing 15 estimated tax payments, the taxpayer shall increase or decrease 16 any subsequent estimated tax payments accordingly. 17 (3) Any tax still payable after applying credits for taxes 18 paid through withholding, estimated tax, and composite return 19 tax, is due and payable on or before the end of the fourth month 20 following the close of the tax year. 21 c. If a taxpayer is unable to make the taxpayer’s estimated 22 tax payments, the payments may be made by a duly authorized 23 agent, or by the guardian or other person charged with the care 24 of the person or property of the taxpayer. 25 d. (1) Estimated tax paid is a credit against the amount 26 of tax found payable on a final, completed return, as provided 27 in subsection 10, relating to the credit for the tax withheld 28 against the tax found payable on a return properly and 29 correctly prepared under sections 422.5 through 422.25. 30 (2) Any overpayment of one dollar or more shall be refunded 31 to the taxpayer and the return constitutes a claim for refund 32 for this purpose. Amounts less than one dollar shall not be 33 refunded. 34 (3) The method provided by section 6654 of the Internal 35 -15- LSB 1239XD (12) 90 jm/jh 15/ 39

S.F. _____ H.F. _____ Revenue Code for determining what is applicable to the addition 1 to tax for underpayment of the tax payable applies to persons 2 required to make payments of estimated tax under this section 3 except the amount to be added to the tax for underpayment of 4 estimated tax is an amount determined at the rate in effect 5 under section 421.7. This addition to tax specified for 6 underpayment of the tax payable is not subject to waiver 7 provisions relating to reasonable cause, except as provided in 8 the Internal Revenue Code. Underpayment of estimated tax shall 9 be determined in the same manner as provided under the Internal 10 Revenue Code and the exceptions in the Internal Revenue Code 11 also apply. 12 e. In lieu of claiming a refund, the taxpayer may elect to 13 have the overpayment shown on the taxpayer’s final, completed 14 return for the taxable year credited to the taxpayer’s tax 15 liability for the following taxable year. 16 13. The director shall enter into an agreement with the 17 secretary of the treasury of the United States with respect to 18 withholding of income tax as provided by this chapter, pursuant 19 to an Act of Congress, section 1207 of the Tax Reform Act of 20 1976, Pub. L. No. 94-455, amending 5 U.S.C. §5517. 21 14. a. The director may, when necessary and advisable 22 in order to secure the collection of the tax required to 23 be deducted and withheld or the amount actually deducted, 24 whichever is greater, require a withholding agent to file with 25 the director a bond, issued by a surety company authorized to 26 conduct business in this state and approved by the insurance 27 commissioner as to solvency and responsibility, in an amount 28 as the director may fix, to secure the payment of the tax and 29 penalty due or which may become due. In lieu of the bond, 30 securities shall be kept in the custody of the department and 31 may be sold by the director at public or private sale, without 32 notice to the depositor, if it becomes necessary to do so in 33 order to recover any tax and penalty due. Upon a sale, any 34 surplus above the amounts due under this section shall be 35 -16- LSB 1239XD (12) 90 jm/jh 16/ 39

S.F. _____ H.F. _____ returned to the withholding agent who deposited the securities. 1 b. If the withholding agent fails to file the bond as 2 requested by the director to secure collection of the tax, the 3 withholding agent is subject to penalty for failure to file the 4 bond. The penalty is equal to fifteen percent of the tax the 5 withholding agent is required to withhold on an annual basis. 6 However, the penalty shall not exceed five thousand dollars. 7 15. The director may allow additional time for filing 8 documents required under this section with the department in 9 the case of illness, disability, absence, or if good cause is 10 shown. 11 Sec. 18. Section 422.16B, subsection 7, Code 2023, is 12 amended to read as follows: 13 7. All powers of the director and requirements of the 14 director apply to returns filed under this section including 15 but not limited to the provisions of this subchapter and 16 subchapter VI . The provisions of section 422.16, subsection 2 17 4 , paragraph “c” , and subsections 6, 10 7, 11 , and 14, applying 18 to withholding agents, shall apply in the same manner to 19 pass-through entities under this section . 20 Sec. 19. Section 422.17, Code 2023, is amended to read as 21 follows: 22 422.17 Certificate issued by department to make payments 23 without withholding. 24 Any nonresident whose Iowa income is not subject to section 25 422.16, subsection 1 2, paragraph “a” , “c” , “d” , or “e” , in 26 whole or in part, and who elects to be governed by section 27 422.16, subsection 12 2, paragraph “b” , to the extent that the 28 nonresident pays the entire amount of tax properly estimated on 29 or before the last day of the fourth month of the nonresident’s 30 tax year, for the year, may for the year of the election 31 and payment, be granted a certificate from the department 32 authorizing each withholding agent, the income from whom the 33 nonresident has considered in the payment of estimated tax and 34 to the extent the income is included in the estimate, to make 35 -17- LSB 1239XD (12) 90 jm/jh 17/ 39

S.F. _____ H.F. _____ payments of income to the nonresident without withholding tax 1 from those payments. Withholding agents, if payments exceed 2 the tax liability estimated by the nonresident as indicated 3 upon the certificate, shall withhold tax in accordance with 4 section 422.16, subsection 12 2, paragraph “b” . 5 DIVISION V 6 FUTURE CORRESPONDING CHANGE 7 Sec. 20. Section 422.16, subsection 2, paragraph e, Code 8 2023, as amended in this Act, is amended to read as follows: 9 e. For the purposes of this subsection, state income tax 10 shall be withheld at the highest rate described in section 11 422.5A 422.5 from supplemental wages of an employee in those 12 circumstances in which the employer treats the supplemental 13 wages as wholly separate from regular wages for purposes 14 of withholding and federal income tax is withheld from the 15 supplemental wages under section 3402(g) of the Internal 16 Revenue Code. 17 Sec. 21. EFFECTIVE DATE. This division of this Act takes 18 effect January 1, 2026. 19 DIVISION VI 20 SETTLEMENT AUTHORITY —— NOTICE OF ASSESSMENT —— ESTIMATION OF 21 TAX 22 Sec. 22. Section 421.5, Code 2023, is amended by striking 23 the section and inserting in lieu thereof the following: 24 421.5 Settling claims for taxes, penalties, and interest —— 25 abatement. 26 1. As used in this section: 27 a. “Department” means the department of revenue. 28 b. “Settle” or “settlement” includes any compromise or 29 abatement of any taxes, penalties, or interest. 30 2. In addition to the authority granted to the department 31 pursuant to section 17A.10 and notwithstanding section 7D.9, 32 the department may, in its sole discretion, settle any taxes, 33 penalties, or interest. 34 3. The department may enter into a settlement in the 35 -18- LSB 1239XD (12) 90 jm/jh 18/ 39

S.F. _____ H.F. _____ case of doubtful liability, doubtful collectability, severe 1 economic hardship, or to promote effective tax administration, 2 regardless of whether the amount was the subject of a timely 3 filed appeal or return. 4 4. Whenever a settlement is made, the department shall 5 make a complete record of the case showing the tax assessed or 6 claimed due, tax refund claimed, recommendations, reports, and 7 audits of departmental personnel if any, the taxpayer’s grounds 8 for dispute or contest together with all of the evidence, and 9 the amounts, conditions, and settlement of the same. 10 5. A taxpayer shall not have the right to a settlement of 11 any tax, penalty, or interest liability under this section. 12 Any determination by the department regarding the settlement 13 shall be discretionary and shall be final and conclusive except 14 in the case of fraud, mutual mistake of material fact, or as 15 otherwise stated in a written settlement agreement between the 16 taxpayer and the department. 17 6. The department may require an application for relief 18 under this section. 19 7. The department shall adopt rules to administer this 20 section. 21 Sec. 23. Section 421.10, Code 2023, is amended to read as 22 follows: 23 421.10 Appeal period —— applicability. 24 The appeal period for revision of assessment of tax, 25 interest, and penalties set out under section 422.28 , 423.37 , 26 437A.9 , 437A.22 , 437B.5 , 437B.18 , 452A.64 , 453A.29 , or 453A.46 27 applies to appeals to notices from the department denying 28 changes in filing methods, denying refund claims, and denying 29 portions of refund claims for the tax covered by that section, 30 and notices of any adverse department action directed to a 31 specific taxpayer, other than licensing, which involves a 32 calculation. 33 Sec. 24. Section 421.60, subsection 2, paragraphs i and m, 34 Code 2023, are amended by striking the paragraphs. 35 -19- LSB 1239XD (12) 90 jm/jh 19/ 39

S.F. _____ H.F. _____ Sec. 25. Section 421B.11, subsection 3, Code 2023, is 1 amended to read as follows: 2 3. Judicial review of the actions of the director may be 3 sought in accordance with section 422.29 and chapter 17A and 4 section 423.38 . 5 Sec. 26. Section 422.25, subsection 1, paragraph c, Code 6 2023, is amended to read as follows: 7 c. (1) The period for examination and determination of the 8 correct amount of tax is unlimited in the case of a false or 9 fraudulent return made with the intent to evade tax or in the 10 case of a failure to file a return. 11 (2) If a person required to file a return with the 12 department fails to file the return with the department, the 13 department may, at any time, estimate the tax due based upon 14 information or knowledge the department is able to obtain. 15 (3) If the department estimates an amount of tax under 16 subparagraph (2), the following shall apply: 17 (a) The department shall issue a notice of assessment 18 to the person for which the tax is estimated in accordance 19 with section 421.60. The notice of assessment shall not be 20 appealable pursuant to section 422.28 or 422.29, except to 21 appeal the determination that the person is required to file a 22 return. 23 (b) The department shall include a statement with the 24 notice that if the person files a return within three years 25 from the date on the notice of assessment, the department 26 may replace the assessment with the amount shown due on the 27 person’s return, plus any applicable penalty and interest, 28 and the department may examine that return and determine the 29 tax, penalty, and interest within the period provided in this 30 section. 31 (c) If the person fails to file a return within three years 32 from the date on the notice of assessment, the person may pay 33 the tax, penalty, and interest and file a refund claim within 34 the time period provided in section 422.73, or may request 35 -20- LSB 1239XD (12) 90 jm/jh 20/ 39

S.F. _____ H.F. _____ relief under section 421.5. 1 Sec. 27. Section 422.75, Code 2023, is amended to read as 2 follows: 3 422.75 Statistics —— publication. 4 The department shall prepare and publish an annual report 5 which shall include statistics reasonably available, with 6 respect to the operation of this chapter , including amounts 7 collected, classification of taxpayers, and such other facts 8 as are deemed pertinent and valuable. The annual report shall 9 also include the reports and information required pursuant to 10 section 421.60, subsection 2 , paragraphs “i” and paragraph “l” . 11 Sec. 28. Section 423.33, subsection 1, paragraphs a and b, 12 Code 2023, are amended to read as follows: 13 a. If a purchaser fails to pay sales tax to the retailer 14 required to collect the tax, then in addition to all of the 15 rights, obligations, and remedies provided, a use tax is 16 payable by the purchaser directly to the department, and 17 sections 423.31 , 423.37 , 423.38 , 423.39 , 423.40 , 423.41 , and 18 423.42 apply to the purchaser. 19 b. For failure to pay the sales or use tax as described 20 in paragraph “a” , the retailer and purchaser are jointly 21 liable, unless the circumstances described in section 29C.24, 22 subsection 3 , paragraph “a” , subparagraph (2), section 421.60, 23 subsection 2 , paragraph “m” , section 423.34A , or section 24 423.45, subsection 4 , paragraph “b” or “e” , or subsection 5 , 25 paragraph “c” or “e” , are applicable. 26 Sec. 29. Section 423.33, subsection 3, Code 2023, is amended 27 to read as follows: 28 3. Event sponsor’s liability for sales or use tax. A person 29 sponsoring a flea market or a craft, antique, coin, or stamp 30 show or similar event shall obtain from every retailer selling 31 tangible personal property, specified digital products, or 32 taxable services at the event proof that the retailer possesses 33 a valid sales or use tax permit or secure from the retailer 34 a statement, taken in good faith, that tangible personal 35 -21- LSB 1239XD (12) 90 jm/jh 21/ 39

S.F. _____ H.F. _____ property, specified digital products, or services offered for 1 sale are not subject to sales tax. Failure to do so renders 2 a sponsor of the event liable for payment of any sales tax, 3 interest, and penalty due and owing from any retailer selling 4 property or services at the event. Sections 423.31 , 423.37 , 5 423.38 , 423.39 , 423.40 , 423.41 , and 423.42 apply to the 6 sponsors. For purposes of this subsection , a “person sponsoring 7 a flea market or a craft, antique, coin, or stamp show or similar 8 event” does not include a marketplace facilitator as defined in 9 section 423.14A, subsection 1 , an organization which sponsors 10 an event determined to qualify as an event involving casual 11 sales pursuant to section 423.3, subsection 39 , or the state 12 fair or a fair as defined in section 174.1 . 13 Sec. 30. Section 423.37, subsection 1, Code 2023, is amended 14 to read as follows: 15 1. a. As soon as practicable after a return is filed and 16 in any event within three years after the return is filed, 17 the department shall may examine it the return , assess and 18 determine the tax due if the return is found to be incorrect, 19 and give notice to the person liable for the tax of the 20 assessment and determination as provided in subsection 2 21 paragraph “b” . If a return, when filed, is incorrect or 22 insufficient, the department shall determine the amount of 23 tax due from information or knowledge the department is able 24 to obtain. The determination may be made using any generally 25 recognized valid and reliable sampling technique, whether or 26 not the person being audited has complete records, and if 27 mutually agreed upon by the department and the person being 28 audited . The period for the examination and determination of 29 the correct amount of tax is unlimited in the case of a false or 30 fraudulent return made with the intent to evade tax or in the 31 case of a failure to file a return . 32 b. The department shall issue a notice of assessment in 33 accordance with section 421.60. The notice shall be appealable 34 pursuant to sections 422.28 and 422.29. If the person fails to 35 -22- LSB 1239XD (12) 90 jm/jh 22/ 39

S.F. _____ H.F. _____ appeal the notice of assessment, the person may pay the tax, 1 penalty, and interest and file a refund claim within the time 2 period provided in section 422.73, or may request relief under 3 section 421.5. 4 Sec. 31. Section 423.37, subsection 2, Code 2023, is amended 5 by striking the subsection and inserting in lieu thereof the 6 following: 7 2. a. If a return required by this subchapter is not filed, 8 the period for examination and determination of the correct 9 amount of tax is unlimited. The department may, at any time, 10 estimate the tax due from the information or knowledge the 11 department is able to obtain. 12 b. If the department estimates an amount of tax under this 13 subsection, the following shall apply: 14 (1) The department shall issue a notice of assessment 15 to the person for which the tax is estimated in accordance 16 with section 421.60. The notice of assessment shall not be 17 appealable pursuant to sections 422.28 and 422.29, except to 18 appeal the determination that the person is required to file 19 the return. 20 (2) The department shall include a statement with the 21 notice that if the person files a return within three years 22 from the date on the notice of assessment, the department 23 may replace the assessment with the amount shown due on the 24 person’s return, plus any applicable penalty and interest, 25 and the department may examine that return and determine the 26 tax, penalty, and interest within the period provided in this 27 section. 28 (3) If the person fails to file a return within three years 29 from the date on the notice of assessment, the person may pay 30 the tax, penalty, and interest and file a refund claim within 31 the time period provided in section 422.73, or may request 32 relief under section 421.5. 33 Sec. 32. Section 423.45, subsection 4, paragraph b, Code 34 2023, is amended to read as follows: 35 -23- LSB 1239XD (12) 90 jm/jh 23/ 39

S.F. _____ H.F. _____ b. The sales tax liability for all sales of tangible 1 personal property and specified digital products and all sales 2 of services is upon the seller and the purchaser unless the 3 seller takes from the purchaser a valid exemption certificate 4 stating under penalty of perjury that the purchase is for a 5 nontaxable purpose and is not a retail sale as defined in 6 section 423.1 , or the seller is not obligated to collect tax 7 due, or unless the seller takes a fuel exemption certificate 8 pursuant to subsection 5 . If the tangible personal property, 9 specified digital products, or services are purchased tax free 10 pursuant to a valid exemption certificate and the tangible 11 personal property, specified digital products, or services are 12 used or disposed of by the purchaser in a nonexempt manner, the 13 purchaser is solely liable for the taxes and shall remit the 14 taxes directly to the department and sections 423.31 , 423.37 , 15 423.38 , 423.39 , 423.40 , 423.41 , and 423.42 shall apply to the 16 purchaser. 17 Sec. 33. Section 423.45, subsection 5, paragraphs c and d, 18 Code 2023, are amended to read as follows: 19 c. The seller may accept a completed fuel exemption 20 certificate, as prepared by the purchaser, for three 21 years unless the purchaser files a new completed exemption 22 certificate. If the fuel is purchased tax free pursuant to a 23 fuel exemption certificate which is taken by the seller, and 24 the fuel is used or disposed of by the purchaser in a nonexempt 25 manner, the purchaser is solely liable for the taxes, and shall 26 remit the taxes directly to the department and sections 423.31 , 27 423.37 , 423.38 , 423.39 , 423.40 , 423.41 , and 423.42 shall apply 28 to the purchaser. 29 d. The purchaser may apply to the department for its 30 review of the fuel exemption certificate. In this event, the 31 department shall review the fuel exemption certificate within 32 twelve months from the date of application and determine the 33 correct amount of the exemption. If the amount determined 34 by the department is different than the amount that the 35 -24- LSB 1239XD (12) 90 jm/jh 24/ 39

S.F. _____ H.F. _____ purchaser claims is exempt, the department shall promptly 1 notify the purchaser of the determination. Failure of the 2 department to make a determination within twelve months from 3 the date of application shall constitute a determination that 4 the fuel exemption certificate is correct as submitted. A 5 determination of exemption by the department is final unless 6 the purchaser appeals to the director for a revision of the 7 determination within sixty days after the date of the notice 8 of determination. The director shall grant a hearing, and 9 upon the hearing, the director shall determine the correct 10 exemption and notify the purchaser of the decision by mail. 11 The decision of the director is final unless the purchaser 12 seeks judicial review of the director’s decision under section 13 423.38 422.29 within sixty days after the date of the notice 14 of the director’s decision. Unless there is a substantial 15 change, the department shall not impose penalties pursuant 16 to section 423.40 both retroactively to purchases made after 17 the date of application and prospectively until the department 18 gives notice to the purchaser that a tax or additional tax is 19 due, for failure to remit any tax due which is in excess of a 20 determination made under this section . A determination made by 21 the department pursuant to this subsection does not constitute 22 an audit for purposes of section 423.37 . 23 Sec. 34. Section 423.57, Code 2023, is amended to read as 24 follows: 25 423.57 Statutes applicable. 26 The director shall administer this subchapter as it relates 27 to the taxes imposed in this chapter in the same manner and 28 subject to all the provisions of, and all of the powers, 29 duties, authority, and restrictions contained in sections 30 423.14 , 423.14A , 423.14B , 423.15 , 423.16 , 423.17 , 423.19 , 31 423.20 , 423.21 , 423.22 , 423.23 , 423.24 , 423.25 , 423.29 , 423.31 , 32 423.33 , 423.34 , 423.34A , 423.35 , 423.37 , 423.38 , 423.39 , 33 423.40 , 423.41 , and 423.42 , section 423.43, subsection 1 , and 34 sections 423.45 , 423.46 , and 423.47 . 35 -25- LSB 1239XD (12) 90 jm/jh 25/ 39

S.F. _____ H.F. _____ Sec. 35. Section 452A.66, subsection 1, Code 2023, is 1 amended to read as follows: 2 1. The appropriate state agency shall administer the taxes 3 imposed by this chapter in the same manner as and subject to 4 section 422.25, subsection 4 , and section 423.35 , and section 5 423.37, subsections 1 and 2 . 6 Sec. 36. Section 453A.28, subsection 1, Code 2023, is 7 amended to read as follows: 8 1. a. If after any audit, examination of records, or 9 other investigation the department finds that any person has 10 sold cigarettes without stamps affixed or that any person 11 responsible for paying the tax has not done so as required by 12 this subchapter , the department shall fix and determine the 13 amount of tax due, and shall assess the tax against the person, 14 together with a penalty as provided in section 421.27 . The 15 taxpayer shall pay interest on the tax or additional tax at the 16 rate determined under section 421.7 counting each fraction of 17 a month as an entire month, computed from the date the tax was 18 due. If any person fails to furnish evidence satisfactory to 19 the director showing purchases of sufficient stamps to stamp 20 unstamped cigarettes purchased by the person, the presumption 21 shall be that the cigarettes were sold without the proper 22 stamps affixed. Within three years after the report is filed 23 or within three years after the report became due, whichever is 24 later, the department shall examine the report and determine 25 the correct amount of tax. The period for examination and 26 determination of the correct amount of tax is unlimited in the 27 case of a false or fraudulent report made with the intent to 28 evade tax, or in the case of a failure to file a report, or if a 29 person purchases or is in possession of unstamped cigarettes. 30 b. If the department issues an estimated assessment due to 31 failure to file a report, the procedures described in section 32 423.37, subsections 1 and 2, shall apply to taxes, fees, and 33 interest imposed under this subchapter in the same manner and 34 with the same effect as the provisions apply to the taxes 35 -26- LSB 1239XD (12) 90 jm/jh 26/ 39

S.F. _____ H.F. _____ imposed under chapter 423. 1 Sec. 37. Section 453A.46, subsection 1, paragraph a, Code 2 2023, is amended to read as follows: 3 a. (1) On or before the twentieth day of each calendar 4 month every distributor with a place of business in this state 5 shall file a return with the director showing for the preceding 6 calendar month the quantity and wholesale sales price of each 7 tobacco product brought, or caused to be brought, into this 8 state for sale; made, manufactured, or fabricated in this state 9 for sale in this state; and any other information the director 10 may require. Every licensed distributor outside this state 11 shall in like manner file a return with the director showing 12 for the preceding calendar month the quantity and wholesale 13 sales price of each tobacco product shipped or transported to 14 retailers in this state to be sold by those retailers and any 15 other information the director may require. Returns shall 16 be made upon forms furnished or made available in electronic 17 form and prescribed by the director and shall contain other 18 information as the director may require. Each return shall be 19 accompanied by a remittance for the full tax liability shown 20 on the return, less a discount as fixed by the director not to 21 exceed five percent of the tax. Within three years after the 22 return is filed or within three years after the return became 23 due, whichever is later, the department shall examine it, 24 determine the correct amount of tax, and assess the tax against 25 the taxpayer for any deficiency. The period for examination 26 and determination of the correct amount of tax is unlimited in 27 the case of a false or fraudulent return made with the intent 28 to evade tax, or in the case of a failure to file a return. 29 (2) If the department issues an estimated assessment due to 30 failure to file a return, the procedures described in section 31 423.37, subsections 1 and 2, shall apply to taxes, fees, and 32 interest imposed under this subchapter in the same manner and 33 with the same effect as the provisions apply to the taxes 34 imposed under chapter 423. 35 -27- LSB 1239XD (12) 90 jm/jh 27/ 39

S.F. _____ H.F. _____ Sec. 38. REPEAL. Section 423.38, Code 2023, is repealed. 1 Sec. 39. EFFECTIVE DATE. This division of this Act takes 2 effect January 1, 2024. 3 DIVISION VII 4 TAX RETURN PREPARERS AND PERSONS AUTHORIZED TO ACT FOR 5 TAXPAYERS 6 Sec. 40. Section 421.59, subsections 1 and 2, Code 2023, are 7 amended to read as follows: 8 1. a. A taxpayer may authorize an individual to act on 9 behalf of the taxpayer by filing a power of attorney with 10 the department, on a form prescribed by the department. The 11 department may prescribe a separate form or integrate the 12 requirements of the form into a return when feasible. 13 b. A taxpayer may at any time revoke a power of attorney 14 filed with the department pursuant to this subsection . Upon 15 processing of the taxpayer’s revocation of a power of attorney, 16 the department shall cease honoring the power of attorney. 17 2. Unless otherwise prohibited by law, the department may 18 authorize the following persons to act and receive information 19 on behalf of and exercise all of the rights of a taxpayer, and 20 may establish by rule the documentation required to verify 21 authorization to act, regardless of whether a power of attorney 22 has been filed pursuant to subsection 1 : 23 a. A guardian, conservator, or custodian appointed by a 24 court, if a taxpayer has been deemed legally incompetent by a 25 court. The authority of the appointee to act on behalf of the 26 taxpayer shall be limited to the extent specifically stated in 27 the order of appointment. 28 (1) Upon request, a guardian, conservator, or custodian of 29 a taxpayer shall submit to the department a copy of the court 30 order appointing the guardian, conservator, or custodian. 31 (2) The department has standing to petition the court that 32 appointed the guardian, conservator, or custodian to verify the 33 appointment or to determine the scope of the appointment. 34 b. A receiver appointed pursuant to chapter 680 . An 35 -28- LSB 1239XD (12) 90 jm/jh 28/ 39

S.F. _____ H.F. _____ appointed receiver shall be limited to act on behalf of the 1 taxpayer by the authority stated in the order of appointment. 2 (1) Upon the request of the department, a receiver shall 3 submit to the department a copy of the court order appointing 4 the receiver. 5 (2) The department has standing to petition the court 6 that appointed the receiver to verify the appointment or to 7 determine the scope of the appointment. 8 c. An individual who has been named as an authorized 9 representative on a fiduciary return of income filed under 10 section 422.14 or a tax return filed under chapter 450 . 11 d. c. An individual holding the following title or position 12 within a corporation, association, partnership, or other 13 business entity: 14 (1) An officer or employee of the corporation or association 15 who is authorized to act on behalf of the corporation or 16 association in tax matters. 17 (2) A designated partner or employee of the partnership 18 who is authorized to act on behalf of the partnership in tax 19 matters. 20 (3) A person authorized to act on behalf of the limited 21 liability company in tax matters pursuant to a valid statement 22 of authority or employee of the company who is authorized to 23 act on behalf of the company in tax matters. 24 e. d. A licensed attorney who has appeared on behalf of 25 the taxpayer or the probate estate in a court proceeding. 26 Authorization under this paragraph is limited to those matters 27 within the scope of the representation. 28 f. e. A parent or guardian of a taxpayer who has not 29 reached the age of majority where the same parent or guardian 30 has signed the taxpayer’s return on behalf of the taxpayer. 31 Authorization under this paragraph is limited to those matters 32 relating to the return signed by the parent or guardian . 33 Authorization under this paragraph automatically terminates 34 when the taxpayer reaches the age of majority pursuant to 35 -29- LSB 1239XD (12) 90 jm/jh 29/ 39

S.F. _____ H.F. _____ section 599.1 . 1 g. f. A representative of a government entity. An 2 individual seeking to act on behalf of a government entity 3 pursuant to this paragraph shall affirm the authority of 4 the individual to act on behalf of the government entity in 5 a manner designated by the department. The department may 6 require evidence to demonstrate the individual has authority to 7 act on behalf of the government entity. 8 h. g. An executor or personal representative of an estate. 9 (1) Upon request, the executor or personal representative 10 shall submit to the department a copy of the will or court 11 order appointing the executor or personal representative. 12 (2) The department has standing to petition the court that 13 appointed the executor or personal representative to verify the 14 appointment or to determine the scope of the appointment. 15 i. h. A trustee. 16 (1) Upon request a trustee shall submit a certification of 17 trust, or in the absence of a certification of trust a copy of 18 the court order appointing the trustee if one has been issued, 19 or a copy of the trust. 20 (2) The department has standing to petition the court that 21 appointed the trustee to verify the appointment or to determine 22 the scope of the appointment. 23 j. i. A person named as an agent in a general or durable 24 power of attorney document that is currently in force and such 25 document has not been prescribed by the department of revenue. 26 k. j. A successor as defined in section 633.356, subsection 27 2 , of a very small estate. 28 Sec. 41. Section 421.62, subsection 2, Code 2023, is amended 29 by adding the following new paragraph: 30 NEW PARAGRAPH . c. Notwithstanding subsection 1, paragraph 31 “d” , subparagraph (2), for purposes of this subsection, “tax 32 return preparer” includes any of the following: 33 (1) An individual licensed as a certified public accountant 34 or a licensed public accountant under chapter 542 or a similar 35 -30- LSB 1239XD (12) 90 jm/jh 30/ 39

S.F. _____ H.F. _____ law of another state. 1 (2) An individual admitted to practice law in this state or 2 another state. 3 (3) An enrolled agent enrolled to practice before the 4 federal internal revenue service pursuant to 31 C.F.R. §10.4. 5 DIVISION VIII 6 SETOFF 7 Sec. 42. 2020 Iowa Acts, chapter 1064, section 16, 8 subsection 6, is amended to read as follows: 9 6. Fees. The department shall may establish fees for use of 10 the setoff system to be paid by participating public agencies 11 to the department. 12 Sec. 43. CONTINGENT EFFECTIVE DATE. This division of this 13 Act takes effect on the effective date of the rules adopted by 14 the department of revenue pursuant to chapter 17A implementing 15 2020 Iowa Acts, chapter 1064, other than transitional rules. 16 DIVISION IX 17 HOMESTEAD PROPERTY TAX CREDIT 18 Sec. 44. Section 425.11, subsection 1, paragraph e, Code 19 2023, is amended by striking the paragraph and inserting in 20 lieu thereof the following: 21 e. (1) “Owner” means the person who holds the fee simple 22 title to the homestead. “Owner” also includes the following: 23 (a) The person occupying as a surviving spouse. 24 (b) The person occupying under a contract of purchase which 25 contract has been recorded in the office of the county recorder 26 of the county in which the property is located. 27 (c) The person occupying the homestead under devise or by 28 operation of the inheritance laws where the whole interest 29 passes or where the divided interest is shared only by persons 30 related or formerly related to each other by blood, marriage, 31 or adoption. 32 (d) The person occupying the homestead is a shareholder of a 33 family farm corporation that owns the property. 34 (e) The person occupying the homestead under a deed which 35 -31- LSB 1239XD (12) 90 jm/jh 31/ 39

S.F. _____ H.F. _____ conveys a divided interest where the divided interest is shared 1 only by persons related or formerly related to each other by 2 blood, marriage, or adoption. 3 (f) Where the person occupying the homestead holds a 4 life estate with the reversion interest held by a nonprofit 5 corporation organized under chapter 504, provided that the 6 holder of the life estate is liable for and pays property tax 7 on the homestead. 8 (g) Where the person occupying the homestead holds an 9 interest in a horizontal property regime under chapter 10 499B, regardless of whether the underlying land committed to 11 the horizontal property regime is in fee or as a leasehold 12 interest, provided that the holder of the interest in the 13 horizontal property regime is liable for and pays property tax 14 on the homestead. 15 (h) Where the person occupying the homestead is a member 16 of a community land trust as defined in 42 U.S.C. §12773, 17 regardless of whether the underlying land is in fee or as a 18 leasehold interest, provided that the member of the community 19 land trust is occupying the homestead and is liable for and 20 pays property tax on the homestead. 21 (i) The person occupying the homestead regardless of 22 whether the underlying land is in fee or as a leasehold 23 interest, provided that the person is occupying the homestead 24 and is liable for and pays property tax on the homestead. 25 (2) For the purpose of this subchapter, the word “owner” 26 shall be construed to mean a bona fide owner and not one for 27 the purpose only of availing the person of the benefits of this 28 subchapter. In order to qualify for the homestead tax credit, 29 evidence of ownership shall be on file in the office of the 30 clerk of the district court or recorded in the office of the 31 county recorder at the time the owner files with the assessor 32 a verified statement of the homestead claimed by the owner as 33 provided in section 425.2. 34 Sec. 45. EFFECTIVE DATE. This division of this Act, being 35 -32- LSB 1239XD (12) 90 jm/jh 32/ 39

S.F. _____ H.F. _____ deemed of immediate importance, takes effect upon enactment. 1 Sec. 46. APPLICABILITY. This division of this Act applies 2 to claims under chapter 425, subchapter I, for credits against 3 property taxes due and payable in fiscal years beginning on or 4 after July 1, 2024. 5 DIVISION X 6 PROPERTY TAX CREDITS AND RENT REIMBURSEMENT 7 Sec. 47. Section 425.17, subsection 7, Code 2023, is amended 8 to read as follows: 9 7. “Income” means the sum of Iowa net income as defined 10 in section 422.7 , plus all of the following to the extent not 11 already included in Iowa net income: capital gains , ; alimony , ; 12 child support money , ; cash public assistance and relief, 13 except property tax relief granted under this subchapter , ; 14 amount of in-kind assistance for housing expenses , the gross 15 amount of any pension or annuity, including but not limited 16 to ; total amounts received from a governmental or other 17 pension or retirement plan, including defined benefit or 18 defined contribution plans; annuities; individual retirement 19 accounts; plans maintained or contributed to by an employer, 20 or maintained or contributed to by a self-employed person 21 as an employer; deferred compensation plans or any earnings 22 attributable to the deferred compensation plans; income 23 received pursuant to a farm tenancy agreement covering real 24 property; railroad retirement benefits , ; payments received 25 under the federal Social Security Act, except child insurance 26 benefits received by a member of the claimant’s household ; , and 27 all military retirement and veterans’ disability pensions , ; 28 interest received from the a state or federal government 29 or any of its instrumentalities , ; workers’ compensation ; 30 and the gross amount of disability income or “loss of time” 31 insurance. “Income” does not include gifts from nongovernmental 32 sources, or surplus foods or other relief in kind supplied by 33 a governmental agency. In determining income, net operating 34 losses and net capital losses shall not be considered. 35 -33- LSB 1239XD (12) 90 jm/jh 33/ 39

S.F. _____ H.F. _____ Sec. 48. EFFECTIVE DATE. This division of this Act, being 1 deemed of immediate importance, takes effect upon enactment. 2 Sec. 49. APPLICABILITY. 3 1. This division of this Act applies to claims under chapter 4 425, subchapter II, for credits against property taxes due and 5 payable in fiscal years beginning on or after July 1, 2024. 6 2. This division of this Act applies to claims under chapter 7 425, subchapter II, for reimbursement for rent constituting 8 property taxes paid in base years beginning on or after January 9 1, 2023. 10 3. This division of this Act applies to claims under section 11 435.22 for a credit for manufactured and mobile home taxes due 12 and payable in fiscal years beginning on or after July 1, 2024. 13 DIVISION XI 14 ELECTRONIC COMMUNICATIONS —— RULES 15 Sec. 50. Section 421.60, subsection 11, paragraph c, 16 subparagraph (1), Code 2023, is amended to read as follows: 17 (1) Notwithstanding any provision of law to the contrary, 18 when an electronic communication is posted to the department’s 19 electronic portal for a person who has made such an election, 20 the posting of the electronic communication shall satisfy any 21 requirement of mailing or personal service in this title , 22 chapter 17A, chapter 272D , or sections 321.105A and 533.329 . 23 EXPLANATION 24 The inclusion of this explanation does not constitute agreement with 25 the explanation’s substance by the members of the general assembly. 26 This bill relates to state and local finance and the 27 administration of the tax and related laws by the department 28 of revenue (department). 29 DIVISION I —— IOWA EDUCATIONAL SAVINGS PLAN AND FIRST-TIME 30 HOMEBUYERS DUE DATES. The bill makes changes to the Iowa 31 educational plan trust (529 plans) and the first-time home 32 buyer savings account program. 33 The bill provides that if the director of revenue (director) 34 extends the date for making and filing an individual income 35 -34- LSB 1239XD (12) 90 jm/jh 34/ 39

S.F. _____ H.F. _____ tax return in the case of a natural disaster as is currently 1 permitted in Code section 421.17(30), the taxpayer may elect 2 that a contribution made to a 529 plan during the extended time 3 to file such a return may be deemed to have been made for the 4 prior calendar year. 5 The bill provides that the first-time homebuyers savings 6 account designations must be provided to the department on 7 or before the date to file an individual income tax return, 8 excluding extensions, or on or before the extended filing date 9 if the director extends the date for making and filing an 10 individual income tax return in the case of a natural disaster. 11 DIVISION II —— BONUS DEPRECIATION AND INCREASED EXPENSING 12 —— APPLICABILITY. The “trigger” (2018 Iowa Acts, chapter 13 1161, sections 99 through 134) went into effect on January 1, 14 2023. The bill provides that the repeal of bonus depreciation 15 and increased expensing provisions in the trigger applies to 16 tax years beginning on or after January 1, 2023, for property 17 placed in service on or after January 1, 2023. 18 DIVISION III —— TAX FILING STATUS MODIFICATIONS. For tax 19 years beginning on or after January 1, 2023, the bill requires 20 a taxpayer to use the same filing status for Iowa individual 21 income tax purposes as the taxpayer used for federal individual 22 income tax purposes. The bill also strikes provisions implying 23 that a taxpayer may elect to use a different tax filing status 24 on the taxpayer’s Iowa and federal income tax returns. 25 The division applies to tax years beginning on or after 26 January 1, 2023. 27 DIVISION IV —— WITHHOLDING. The bill rewrites Code section 28 422.16 relating to withholding agents withholding Iowa tax from 29 the wages or other income of a resident or nonresident. The 30 bill defines “withholding agent” similarly to the definition 31 in Code section 422.4. 32 Under current law, most retirement income is no longer 33 subject to Iowa income tax. The bill strikes provisions 34 requiring the withholding of state income tax from retirement 35 -35- LSB 1239XD (12) 90 jm/jh 35/ 39

S.F. _____ H.F. _____ income made to Iowa residents if the retirement income is no 1 longer subject to Iowa income tax. 2 The bill excludes some pass-through entity income for 3 purposes of calculating whether a taxpayer is required to make 4 estimated tax payments. 5 DIVISION V —— FUTURE CORRESPONDING CHANGE. Commencing with 6 tax years beginning on or after January 1, 2026, the highest 7 individual Iowa income tax rate becomes a flat tax rate and the 8 individual income tax rate is moved from Code section 422.5A 9 to Code section 422.5. The bill strikes a reference to the 10 highest individual income tax rate in Code section 422.5A and 11 replaces that reference with Code section 422.5. 12 The division takes effect January 1, 2026. 13 DIVISION VI —— SETTLEMENT AUTHORITY —— NOTICE OF ASSESSMENT 14 —— ESTIMATION OF TAX. Under current law, the director may 15 compromise and settle doubtful claims for taxes or refunds. 16 The bill defines “settle” or “settlement” to include any 17 compromise or abatement of tax, penalties, and interest. The 18 bill specifies that the department may settle any taxes, 19 penalties, and interest in the case of doubtful liability, 20 doubtful collectability, economic hardship, or to promote 21 effective tax administration. The bill requires the department 22 to make a complete record of the settlement. A taxpayer shall 23 not have the right to a settlement under the bill, and any 24 determination by the department regarding a settlement shall be 25 discretionary and final, except in the case of fraud, mutual 26 mistake, or stated in a written settlement agreement. The 27 bill strikes Code section 421.60(2)(i) and (m) which relate to 28 the settlement of taxes owed the state and makes conforming 29 changes. 30 The bill amends Code section 421.10 relating to the appeal 31 period for the revision of the assessment of tax. The bill 32 specifies that the appeal period provisions apply to notices 33 from the department involving adverse department actions 34 directed at a specific taxpayer, other than licensing, which 35 -36- LSB 1239XD (12) 90 jm/jh 36/ 39

S.F. _____ H.F. _____ involves a calculation. Under current law, the appeal period 1 provisions relate to all agency actions regardless if the 2 action is adverse, if any department action is directed at 3 a specific taxpayer, other than licensing, and involves a 4 calculation. 5 The bill amends Code section 422.25 to specify that if a 6 taxpayer required to file a return with the department fails 7 to file the return or files a false or fraudulent return, the 8 department may, at any time, estimate the tax due based upon 9 information or knowledge the department is able to obtain. If 10 the department estimates the tax due, the bill requires the 11 department to issue a notice of assessment to the taxpayer 12 and creates procedures for the department to follow if the 13 taxpayer files a return within three years from the date of 14 the assessment, and creates procedures if the taxpayer fails 15 to file such a return within three years from the date of the 16 assessment. 17 The bill amends Code section 423.37(1) (sales and use tax) 18 to specify that the department may examine a sales tax return 19 within three years after the return is filed. Under current 20 law, the department is required to examine such a return 21 within three years. The bill establishes procedures for when 22 a sales tax return is incorrect or insufficient when filed. 23 The bill requires the department to determine the amount of 24 tax due from information or knowledge the department is able 25 to obtain including using any generally recognizable sampling 26 technique to determine the tax owed, if the sampling technique 27 is mutually agreed upon by the department and the person 28 being audited. The bill requires the department to issue a 29 notice of assessment if the return is found to be incorrect, 30 and establishes procedures for the taxpayer to appeal the 31 assessment, or pay the tax, penalty, and interest, and file a 32 refund claim on the estimated tax if necessary. 33 The bill amends Code section 423.37(2) establishing the 34 procedures for when a sales or use tax return is not filed. The 35 -37- LSB 1239XD (12) 90 jm/jh 37/ 39

S.F. _____ H.F. _____ bill states the period for examination and determination of the 1 correct amount of tax is unlimited, and allows the department 2 to estimate the amount of tax due. The bill requires the 3 department to issue a notice of assessment, and establishes 4 procedures for the taxpayer to appeal the assessment, or pay 5 the tax, penalty, and interest, and file a refund claim on the 6 estimated tax if necessary. 7 The bill specifies that the procedures for estimating taxes 8 in Code section 423.37(1) and (2), as amended by the bill, also 9 apply to Code chapters 452A (motor fuel and special fuel taxes) 10 and 453A (cigarette and tobacco taxes). 11 The bill repeals Code section 423.38 relating to provisions 12 that are applicable to the judicial review of the actions 13 of the department involving sales and use taxes, and makes 14 conforming changes. 15 The division takes effect January 1, 2024. 16 DIVISION VII —— TAX RETURN PREPARERS AND PERSONS AUTHORIZED 17 TO ACT FOR TAXPAYERS. The bill requires additional tax return 18 preparers to include the preparer’s personal identification 19 number on any return prepared by the preparer and filed with 20 the department if the preparer is licensed as a certified 21 public accountant or a licensed public accountant under Code 22 chapter 542 or a similar law of another state, if the preparer 23 is admitted to practice law in this state, or if the preparer 24 is an enrolled agent enrolled to practice before the Internal 25 Revenue Service. 26 The bill modifies provisions relating to the authority 27 of a person to act on behalf of a taxpayer in Code section 28 421.59, including striking the authority of an individual to 29 act on behalf of a taxpayer who has been named as an authorized 30 representative on a fiduciary return or an inheritance tax 31 return. 32 DIVISION VIII —— SETOFF. The bill allows but does not 33 require the department to establish a fee for use of the setoff 34 system. Currently, the department is required to charge a 35 -38- LSB 1239XD (12) 90 jm/jh 38/ 39

S.F. _____ H.F. _____ fee for use of the setoff system. The setoff system is a 1 centralized system designed to collect debt owed to public 2 agencies. The setoff system operated by the department is 3 currently not operational until the department adopts rules. 4 DIVISION IX —— HOMESTEAD PROPERTY TAX CREDIT. The bill 5 amends Code section 425.11 relating to the homestead credit. 6 The bill expands the definition of “owner” to allow a person 7 occupying a homestead to receive the homestead credit 8 regardless of whether the underlying land is held in fee or as 9 a leasehold interest, provided that the person is occupying 10 the homestead and is liable for and pays property tax on the 11 homestead. 12 The division takes effect upon enactment and applies to 13 claims under Code chapter 425, subchapter I, for credits 14 against property taxes due and payable in fiscal years 15 beginning on or after July 1, 2024. 16 DIVISION X —— PROPERTY TAX CREDITS AND RENT REIMBURSEMENT. 17 The bill modifies the definition of “income” to include 18 certain retirement, deferred, or rental income for purposes of 19 calculating eligibility for the elderly and disabled property 20 tax credit or for reimbursement of rent constituting property 21 taxes paid under Code chapter 425, subchapter II. 22 The division applies to claims under Code chapter 425 23 for credits due and payable in fiscal years beginning on or 24 after July 1, 2024, and for rent reimbursement in base years 25 beginning on or after January 1, 2023. The division also 26 applies to claims for a credit for manufactured and mobile home 27 taxes due in fiscal years beginning on or after July 1, 2024. 28 DIVISION XI —— ELECTRONIC COMMUNICATION —— RULES. The 29 bill provides that if the department posts a rule to the 30 department’s electronic portal, the posting of the electronic 31 communication shall satisfy any requirement of mailing or 32 personal service for purposes of Code chapter 17A (Iowa 33 administrative procedure Act). 34 -39- LSB 1239XD (12) 90 jm/jh 39/ 39