S.F. 2250 Section 1. Section 421.59, subsection 1, paragraph a, Code 1 2026, is amended to read as follows: 2 a. A taxpayer may authorize an individual to act on 3 behalf of the taxpayer by filing a power of attorney with 4 the department, on a form prescribed by the department. The 5 department may prescribe a separate form or shall integrate the 6 requirements of the form into a return when feasible. 7 Sec. 2. Section 421.59, subsection 1, Code 2026, is amended 8 by adding the following new paragraph: 9 NEW PARAGRAPH . c. (1) If a due date has not yet passed, 10 the running of the time period leading up to the due date shall 11 be tolled on the date a power of attorney form is filed with the 12 department. 13 (2) The tolling of the time period pursuant to subparagraph 14 (1) ceases upon the date the power of attorney is authorized 15 or denied. 16 (3) This paragraph shall not be construed to toll any time 17 period in a criminal proceeding. 18 Sec. 3. Section 421.60, subsection 2, paragraph b, Code 19 2026, is amended by striking the paragraph and inserting in 20 lieu thereof the following: 21 b. (1) The department shall furnish to the taxpayer an 22 explanation of the reasons for a proposed notice of assessment 23 or refund claim denial no less than thirty days before issuing 24 the notice. If the taxpayer requests a meeting before the 25 issuance of the notice of assessment or refund claim denial, 26 the department auditor and policy director, or compliance 27 supervisor or manager, if the policy director is not available 28 for the appropriate tax type in dispute, shall meet with the 29 taxpayer to discuss the explanation of the proposed assessment 30 or refund claim denial before issuing the notice. The meeting 31 shall be held in a format requested by the taxpayer that is 32 conducive to effective and efficient tax administration. 33 (2) An inadequate explanation shall not invalidate the 34 notice in subparagraph (1). However, if the notice does not 35 -1- LSB 5617XS (4) 91 jm/jh 1/ 5

S.F. 2250 present a particular factual or legal basis for the assessment 1 or refund claim denial, the department shall not allege a new 2 factual or legal basis for the assessment after the taxpayer 3 has timely filed an appeal. For purposes of this paragraph, 4 an explanation by the department shall be sufficient where 5 each factual and legal basis for the assessment or refund 6 claim denial is stated in the notice, and when applicable the 7 amount of tax, interest, and penalty is stated together with 8 an attachment setting forth the computation of the tax by the 9 department. 10 Sec. 4. Section 421.60, subsection 2, paragraph i, Code 11 2026, is amended to read as follows: 12 i. The director shall adopt rules for setting times and 13 places for taxpayer interviews and to permit any taxpayer . Any 14 taxpayer shall be allowed to record the interviews. 15 Sec. 5. Section 421.60, subsection 4, Code 2026, is amended 16 by striking the subsection and inserting in lieu thereof the 17 following: 18 4. Costs. 19 a. (1) A prevailing taxpayer in an administrative 20 hearing or a court proceeding related to the determination, 21 collection, or refund of a tax, penalty, or interest shall be 22 awarded reasonable costs by the department or a court that are 23 incurred subsequent to the issuance of the notice of assessment 24 or refund claim denial in the proceeding, based upon the 25 following: 26 (a) Reasonable court costs. 27 (b) Reasonable prevailing market rates based upon the 28 services provided including but not limited to: 29 (i) Expert witnesses. 30 (ii) The cost of a study, engineering report, test, 31 analysis, or project that is found by the director of revenue 32 or court to be necessary for the preparation of the case of the 33 taxpayer. 34 (iii) Fees paid or incurred for the services of an 35 -2- LSB 5617XS (4) 91 jm/jh 2/ 5

S.F. 2250 accountant. 1 (iv) (A) Fees paid or incurred by the taxpayer for the 2 services of an independent attorney including fees paid or 3 incurred in obtaining costs under this subsection. 4 (B) The fees awarded pursuant to this subparagraph 5 subdivision shall be based upon an hourly rate of two hundred 6 fifty dollars an hour, unless the court determines a higher 7 hourly rate is justified due to special factors such as 8 the limited availability of qualified attorneys for such a 9 proceeding, the difficulty of the issues presented in the case, 10 or the local availability of tax expertise. Beginning January 11 1, 2027, and each January 1 thereafter, the hourly rate shall 12 be annually adjusted by the department of revenue by adding 13 to the hourly rate in existence prior to this calculation 14 the product of the hourly rate in existence prior to this 15 calculation multiplied by the most recent cost-of-living 16 adjustment in effect under section 1(f)(3) of the Internal 17 Revenue Code. 18 b. An award under paragraph “a” shall not be made with 19 respect to any portion of the proceedings during which 20 the prevailing taxpayer has unreasonably protracted the 21 proceedings. 22 c. For purposes of this subsection, “prevailing taxpayer” 23 means a taxpayer who has substantially prevailed with respect 24 to the amount in controversy or has substantially prevailed 25 with respect to the most significant issue or set of issues 26 presented. The determination of whether a taxpayer is a 27 prevailing taxpayer is to be determined in accordance with 28 chapter 17A. If the taxpayer establishes that the taxpayer 29 has substantially prevailed with respect to the amount in 30 controversy or has substantially prevailed with respect to the 31 most significant issue or set of issues presented, the burden 32 of proof shifts to the department of revenue to prove that the 33 position taken by the department was substantially justified. 34 If the department meets the burden by proving the position of 35 -3- LSB 5617XS (4) 91 jm/jh 3/ 5

S.F. 2250 the department was substantially justified, the taxpayer shall 1 not be considered a prevailing taxpayer. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill relates to the administration of the tax by making 6 modifications to tax deadlines and tax disputes. 7 Under the bill, if a due date has not yet passed, the running 8 of the time period leading up to the due date shall be tolled on 9 the date a power of attorney form is filed with the department 10 of revenue (department). The tolling of the time period ceases 11 upon the date the power of attorney is authorized or denied by 12 the department. The bill specifies this provision shall not be 13 construed to toll any time period in a criminal proceeding. 14 The bill amends Code section 421.60(2)(b) relating to the 15 furnishing of an explanation for an assessment of tax or denial 16 of a refund claim. The bill requires the department to furnish 17 to the taxpayer an explanation of the reasons for a proposed 18 notice of assessment or refund claim denial no less than 30 19 days before issuing the notice. The bill allows the taxpayer 20 to request a meeting with specified department personnel before 21 the issuance of the notice of assessment or refund claim 22 denial. The appropriate department personnel relating to the 23 assessment or refund claim denial is required to meet with the 24 taxpayer in a format requested by the taxpayer to discuss the 25 explanation of the proposed assessment or refund claim denial 26 before issuing the notice. 27 Under the bill and in current law, an inadequate explanation 28 shall not invalidate the notice of an assessment or refund 29 claim denial. However, under the bill, if the notice does not 30 present a particular factual or legal basis for the assessment 31 or refund claim denial, the department may not allege a new 32 factual or legal basis for the assessment after the taxpayer 33 has timely filed an appeal. The bill specifies an explanation 34 by the department is sufficient where each factual and legal 35 -4- LSB 5617XS (4) 91 jm/jh 4/ 5

S.F. 2250 basis for the assessment or refund claim denial is stated in 1 the notice, and when applicable the amount of tax, interest, 2 and penalty is stated together with an attachment setting forth 3 the computation of the tax by the department. 4 The bill amends Code section 421.60(2)(i) relating to 5 taxpayer interviews by specifying the taxpayer is permitted to 6 record the interview. 7 The bill changes the costs allowed to be recovered in the 8 collection of tax penalties and interest (dispute). The 9 bill strikes the current $25,000 cap on litigation costs 10 that are recoverable by a taxpayer in a dispute and modifies 11 the various costs to be recoverable by the taxpayer. The 12 costs that may be awarded under the bill include reasonable 13 court costs; reasonable prevailing market rates for expert 14 witnesses, studies, tests, analysis, or special projects; and 15 reasonable attorney or accountant fees including fees related 16 to the recovery of costs allowed under the bill. However, 17 an award shall not be made with respect to any portion of 18 the proceedings during which the prevailing taxpayer has 19 unreasonably protracted the proceedings. The bill caps 20 the hourly rate for attorneys at $250 except under special 21 circumstances. The bill ties the $250 hourly rate cap to 22 consumer price index as calculated by the federal government 23 beginning January 1, 2027. 24 Under the bill, if the taxpayer substantially prevails in 25 the dispute relating to the amount in controversy or issues 26 involved, the burden of proof shifts to the department to 27 prove that the position of the department was substantially 28 justified. If the department proves the position of the 29 department was substantially justified, the bill prohibits 30 the taxpayer from recovering an award in the dispute. Under 31 current law, the taxpayer must prove the position of the 32 department was not substantially justified in addition to the 33 amount in controversy and issues involved. 34 -5- LSB 5617XS (4) 91 jm/jh 5/ 5