House File 498 - IntroducedA Bill ForAn Act 1relating to state taxes by eliminating the individual
2income tax, increasing the sales and use tax rates, making
3conforming changes, and including effective date and
4applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2REPEAL OF THE INDIVIDUAL INCOME TAX
3   Section 1.  Section 8.57E, subsection 2, Code 2019, is
4amended to read as follows:
   52.  Moneys in the taxpayer relief fund shall only be used
6pursuant to appropriations or transfers made by the general
7assembly for tax relief, including but not limited to increases
8in the general retirement income exclusion under section 422.7,
9subsection 31, or reductions in income tax rates
.
10   Sec. 2.  Section 12D.9, subsection 2, Code 2019, is amended
11by striking the subsection.
12   Sec. 3.  Section 12I.8, subsection 2, Code 2019, is amended
13by striking the subsection.
14   Sec. 4.  Section 12I.10, subsection 2, Code 2019, is amended
15by striking the subsection.
16   Sec. 5.  Section 15.293A, subsection 1, paragraph a, Code
172019, is amended to read as follows:
   18a.  A redevelopment tax credit shall be allowed against
19the taxes imposed in chapter 422, divisions II, III, and V,
20and in chapter 432, and against the moneys and credits tax
21imposed in section 533.329, for a portion of a taxpayer’s
22equity investment, as provided in subsection 3, in a qualifying
23redevelopment project.
24   Sec. 6.  Section 15.293A, subsection 1, paragraph b, Code
252019, is amended by striking the paragraph.
26   Sec. 7.  Section 15.293A, subsection 2, paragraphs c and f,
27Code 2019, are amended to read as follows:
   28c.  The tax credit certificate, unless rescinded by the
29authority, shall be accepted by the department of revenue as
30payment for taxes imposed pursuant to chapter 422, divisions
31II, III, and V, and in chapter 432, and for the moneys and
32credits tax imposed in section 533.329, subject to any
33conditions or restrictions placed by the authority upon
34the face of the tax credit certificate and subject to the
35limitations of this section.
-1-
   1f.  A tax credit shall not be claimed by a transferee
2under this section until a replacement tax credit certificate
3identifying the transferee as the proper holder has been
4issued. The transferee may use the amount of the tax credit
5transferred against the taxes imposed in chapter 422, divisions
6II, III, and V, and in chapter 432, and against the moneys and
7credits tax imposed in section 533.329, for any tax year the
8original transferor could have claimed the tax credit. Any
9consideration received for the transfer of the tax credit shall
10not be included as income under chapter 422, divisions II, III,
11 and V. Any consideration paid for the transfer of the tax
12credit shall not be deducted from income under chapter 422,
13divisions II, III, and V.
14   Sec. 8.  Section 15.293A, subsection 4, Code 2019, is amended
15to read as follows:
   164.  For purposes of individual and corporate income taxes and
17the franchise tax, the increase in the basis of the redeveloped
18property that would otherwise result from the qualified
19redevelopment costs shall be reduced by the amount of the
20credit computed under this part.
21   Sec. 9.  Section 15.319, subsection 2, Code 2019, is amended
22to read as follows:
   232.  The tax credit shall be allowed against taxes imposed
24under chapter 422, division II or III.
25   Sec. 10.  Section 15.319, subsection 4, Code 2019, is amended
26by striking the subsection.
27   Sec. 11.  Section 15.319, subsection 6, paragraph c, Code
282019, is amended to read as follows:
   29c.  The tax credit certificate, unless rescinded by the
30authority, shall be accepted by the department of revenue as
31payment for taxes imposed pursuant to chapter 422, divisions
32II and
 division III, subject to any conditions or restrictions
33placed by the authority upon the face of the tax credit
34certificate and subject to the limitations of the program.
35   Sec. 12.  Section 15.333, subsection 2, Code 2019, is amended
-2-1to read as follows:
   22.  An eligible business may claim a tax credit equal to a
3percentage of the new investment directly related to new jobs
4created or retained by the project. The tax credit shall be
5amortized equally over five calendar years. The tax credit
6shall be allowed against taxes imposed under chapter 422,
7division II, III, or V, and against the moneys and credits tax
8imposed in section 533.329. If the business is a partnership,
9S corporation, limited liability company, cooperative organized
10under chapter 501 and filing as a partnership for federal tax
11purposes, or estate or trust electing to have the income taxed
12directly to the individual, an individual may claim the tax
13credit allowed. The amount claimed by the individual shall
14be based upon the pro rata share of the individual’s earnings
15of the partnership, S corporation, limited liability company,
16cooperative organized under chapter 501 and filing as a
17partnership for federal tax purposes, or estate or trust.
The
18percentage shall be determined as provided in section 15.335A.
19 Any tax credit in excess of the tax liability for the tax year
20may be credited to the tax liability for the following seven
21years or until depleted, whichever occurs first.
22   Sec. 13.  Section 15.335, subsection 5, Code 2019, is amended
23to read as follows:
   245.  The credit allowed in this section is in addition to
25the credit authorized in section 422.10 and section 422.33,
26subsection 5. However, if the alternative credit computation
27method is used in section 422.10 or section 422.33, subsection
285, the credit allowed in this section shall also be computed
29using that method.
30   Sec. 14.  Section 15.335, subsection 6, Code 2019, is amended
31by striking the subsection.
32   Sec. 15.  Section 15.355, subsection 3, paragraph b, Code
332019, is amended to read as follows:
   34b.  The tax credit shall be allowed against the taxes imposed
35in chapter 422, divisions II, III, and V, and in chapter 432,
-3-1and against the moneys and credits tax imposed in section
2533.329.
3   Sec. 16.  Section 15.355, subsection 3, paragraph c, Code
42019, is amended by striking the paragraph.
5   Sec. 17.  Section 15.355, subsection 3, paragraph e,
6subparagraphs (3) and (6), Code 2019, are amended to read as
7follows:
   8(3)  The tax credit certificate, unless rescinded by the
9authority, shall be accepted by the department of revenue as
10payment for taxes imposed pursuant to chapter 422, divisions
11II, III, and V, and in chapter 432, and for the moneys and
12credits tax imposed in section 533.329, subject to any
13conditions or restrictions placed by the authority upon
14the face of the tax credit certificate and subject to the
15limitations of this program.
   16(6)  A tax credit shall not be claimed by a transferee
17under this section until a replacement tax credit certificate
18identifying the transferee as the proper holder has been
19issued. The transferee may use the amount of the tax credit
20transferred against the taxes imposed in chapter 422, divisions
21II, III, and V, and in chapter 432, and against the moneys and
22credits tax imposed in section 533.329, for any tax year the
23original transferor could have claimed the tax credit. Any
24consideration received for the transfer of the tax credit shall
25not be included as income under chapter 422, divisions II, III,
26 and V. Any consideration paid for the transfer of the tax
27credit shall not be deducted from income under chapter 422,
28divisions II, III, and V.
29   Sec. 18.  Section 15.355, subsection 3, paragraph f, Code
302019, is amended to read as follows:
   31f.  For purposes of the individual and corporate income
32taxes and the franchise tax, the increase in the basis of the
33property that would otherwise result from the qualifying new
34investment shall be reduced by the amount of the tax credit
35computed under this subsection.
-4-
1   Sec. 19.  Section 15A.7, subsection 1, Code 2019, is amended
2to read as follows:
   31.  That the project shall be administered in the same
4manner as a project under chapter 260E and that a supplemental
5new jobs credit from withholding in an amount equal to one
6and one-half percent of the gross wages paid by the employer
7pursuant to section 422.16, Code 2019, is authorized to fund
8the program services for the additional project.
9   Sec. 20.  Section 15E.43, subsection 1, Code 2019, is amended
10to read as follows:
   111.  a.  For tax years beginning on or after January 1, 2015,
12a tax credit shall be allowed against the taxes imposed in
13chapter 422, divisions II, III, and V, and in chapter 432, and
14against the moneys and credits tax imposed in section 533.329,
15for a portion of a taxpayer’s equity investment, as provided in
16subsection 2, in a qualifying business.
   17b.  An individual may claim a tax credit under this section
18 of a partnership, limited liability company, S corporation,
19estate, or trust electing to have income taxed directly to
20the individual. The amount claimed by the individual shall
21be based upon the pro rata share of the individual’s earnings
22from the partnership, limited liability company, S corporation,
23estate, or trust.
   24c.    b.  A tax credit shall be allowed only for an investment
25made in the form of cash to purchase equity in a qualifying
26business.
   27d.    c.  For a tax credit claimed against the taxes imposed
28in chapter 422, division II, any tax credit in excess of the
29tax liability is refundable. In lieu of claiming a refund,
30the taxpayer may elect to have the overpayment shown on
31the taxpayer’s final, completed return credited to the tax
32liability for the following tax year. For a tax credit claimed
33against the taxes imposed in chapter 422, divisions III and
34V, and in chapter 432, and against the moneys and credits tax
35imposed in section 533.329, any
 Any tax credit in excess of the
-5-1taxpayer’s liability for the tax year may be credited to the
2tax liability for the following three years or until depleted,
3whichever is earlier. A tax credit shall not be carried back
4to a tax year prior to the tax year in which the taxpayer
5redeems the tax credit.
6   Sec. 21.  Section 15E.43, subsection 2, paragraph b, Code
72019, is amended by striking the paragraph.
8   Sec. 22.  Section 15E.44, subsection 4, Code 2019, is amended
9to read as follows:
   104.  After verifying the eligibility of a qualifying
11business, the authority shall issue a tax credit certificate
12to be included with the equity investor’s tax return. The tax
13credit certificate shall contain the taxpayer’s name, address,
14tax identification number, the amount of credit, the name of
15the qualifying business, and other information required by the
16department of revenue. The tax credit certificate, unless
17rescinded by the authority, shall be accepted by the department
18of revenue as payment for taxes imposed pursuant to chapter
19422, divisions II, III, and V, and in chapter 432, and for the
20moneys and credits tax imposed in section 533.329, subject to
21any conditions or restrictions placed by the authority upon
22the face of the tax credit certificate and subject to the
23limitations of section 15E.43.
24   Sec. 23.  Section 15E.52, subsection 2, paragraph a, Code
252019, is amended to read as follows:
   26a.  A tax credit shall be allowed against the taxes imposed
27in chapter 422, divisions II, III, and V, and in chapter 432,
28and against the moneys and credits tax imposed in section
29533.329, for a portion of a taxpayer’s equity investment in the
30form of cash in an innovation fund.
31   Sec. 24.  Section 15E.52, subsection 2, paragraph b, Code
322019, is amended by striking the paragraph.
33   Sec. 25.  Section 15E.52, subsection 13, Code 2019, is
34amended to read as follows:
   3513.  The transferee may use the amount of the tax credit
-6-1transferred against the taxes imposed in chapter 422, divisions
2II, III, and V, and in chapter 432, and against the moneys and
3credits tax imposed in section 533.329, for any tax year the
4original transferor could have claimed the tax credit. Any
5consideration received for the transfer of the tax credit shall
6not be included as income under chapter 422, divisions II, III,
7 and V. Any consideration paid for the transfer of the tax
8credit shall not be deducted from income under chapter 422,
9divisions II, III, and V.
10   Sec. 26.  Section 15E.62, subsection 8, Code 2019, is amended
11to read as follows:
   128.  “Tax credit” means a contingent tax credit issued
13pursuant to section 15E.66 that is available against tax
14liabilities imposed by chapter 422, divisions II, III, and
15V, and by chapter 432 and against the moneys and credits tax
16imposed by section 533.329.
17   Sec. 27.  Section 15E.66, subsection 1, Code 2019, is amended
18to read as follows:
   191.  The board may issue certificates and related tax credits
20to designated investors which, if redeemed for the maximum
21possible amount, shall not exceed a total aggregate of sixty
22million dollars of tax credits. The certificates shall be
23issued contemporaneously with a commitment to invest in the
24Iowa fund of funds by a designated investor. A certificate
25issued by the board shall have a specific maturity date or
26dates designated by the board and shall be redeemable only in
27accordance with the contingencies reflected on the certificate
28or incorporated therein by reference. A certificate and the
29related tax credit shall be transferable by the designated
30investor. A tax credit shall not be claimed or redeemed except
31by a designated investor or transferee in accordance with the
32terms of a certificate from the board. A tax credit shall not
33be claimed for a tax year that begins earlier than the maturity
34date or dates stated on the certificate. An individual may
35claim the credit of a partnership, limited liability company,
-7-1S corporation, estate, or trust electing to have the income
2taxed directly to the individual. The amount claimed by the
3individual shall be based upon the pro rata share of the
4individual’s earnings from the partnership, limited liability
5company, S corporation, estate, or trust.
Any tax credit in
6excess of the taxpayer’s tax liability for the tax year may be
7credited to the tax liability for the following seven years, or
8until depleted, whichever is earlier.
9   Sec. 28.  Section 15E.305, subsection 1, Code 2019, is
10amended to read as follows:
   111.  For tax years beginning on or after January 1, 2003,
12a tax credit shall be allowed against the taxes imposed in
13chapter 422, divisions II, III, and V, and in chapter 432, and
14against the moneys and credits tax imposed in section 533.329
15equal to twenty-five percent of a taxpayer’s endowment gift to
16an endow Iowa qualified community foundation. An individual
17may claim a tax credit under this section of a partnership,
18limited liability company, S corporation, estate, or trust
19electing to have income taxed directly to the individual. The
20amount claimed by the individual shall be based upon the pro
21rata share of the individual’s earnings from the partnership,
22limited liability company, S corporation, estate, or trust.
A
23tax credit shall be allowed only for an endowment gift made to
24an endow Iowa qualified community foundation for a permanent
25endowment fund established to benefit a charitable cause in
26this state. The amount of the endowment gift for which the
27tax credit is claimed shall not be deductible in determining
28taxable income for state income tax purposes. Any tax credit
29in excess of the taxpayer’s tax liability for the tax year may
30be credited to the tax liability for the following five years
31or until depleted, whichever occurs first. A tax credit shall
32not be carried back to a tax year prior to the tax year in which
33the taxpayer claims the tax credit.
34   Sec. 29.  Section 16.64, subsection 2, Code 2019, is amended
35to read as follows:
-8-   12.  Bonds and notes issued by the authority for purposes of
2financing the beginning farmer loan program provided in section
316.75 are exempt from taxation by the state, and interest
4earned on the bonds and notes is deductible in determining
5net income for purposes of the state individual and corporate
6income tax under divisions II and division III of chapter 422.
7   Sec. 30.  Section 16.80, subsection 1, Code 2019, is amended
8to read as follows:
   91.  An agricultural assets transfer tax credit is allowed
10under this section. The tax credit is allowed against the
11taxes imposed in chapter 422, division II, as provided in
12section 422.11M, and in
chapter 422, division III, as provided
13in section 422.33, to facilitate the transfer of agricultural
14assets from a taxpayer to a beginning farmer.
15   Sec. 31.  Section 16.80, subsection 3, Code 2019, is amended
16by striking the subsection.
17   Sec. 32.  Section 16.80, subsection 7, Code 2019, is amended
18to read as follows:
   197.  A tax credit in excess of the taxpayer’s liability
20for the tax year may be credited to the tax liability for
21the following ten tax years or until depleted, whichever is
22earlier. A tax credit shall not be carried back to a tax year
23prior to the tax year in which the taxpayer redeems the tax
24credit. A tax credit shall not be transferable to any other
25person other than the taxpayer’s estate or trust upon the
26taxpayer’s death.

27   Sec. 33.  Section 28A.24, Code 2019, is amended to read as
28follows:
   2928A.24  Exemption from taxation.
   30Since an authority is performing essential governmental
31functions, an authority is not required to pay any taxes or
32assessments of any kind or nature upon any property required
33or used by it for its purposes, or any rates, fees, rentals,
34receipts, or incomes at any time received by it, and the
35bonds issued by an authority, their transfer, and the income,
-9-1including any profits made on the sale of the bonds, is
2deductible in determining net income for the purposes of the
3state individual and corporate income tax under chapter 422,
4divisions II and division III, and shall not be taxed by any
5political subdivision of this state.
6   Sec. 34.  Section 29C.24, subsection 3, paragraph a,
7subparagraph (3), Code 2019, is amended to read as follows:
   8(3)  The imposition of income taxes under chapter 422,
9divisions II and division III, including the requirement to
10file tax returns under sections 422.13 through 422.15 or
11 section 422.36, as applicable, and including the requirement
12to withhold and remit income tax from out-of-state employees
13under section 422.16
. In addition, the performance of disaster
14or emergency-related work during a disaster response period
15by an out-of-state business or out-of-state employee shall
16not require an out-of-state business to be included in a
17consolidated return under section 422.37, and shall not
18increase the amount of net income of the out-of-state business
19allocated and apportioned to the state under section 422.8 or
20 422.33, as applicable.
21   Sec. 35.  Section 29C.24, subsection 3, paragraph b,
22subparagraph (2), Code 2019, is amended by striking the
23subparagraph.
24   Sec. 36.  Section 35A.13, subsection 2, paragraph b, Code
252019, is amended to read as follows:
   26b.  Moneys credited to the fund pursuant to an income tax
27checkoff provided in chapter 422, division II, Code 2019, if
28applicable.
29   Sec. 37.  Section 85.61, subsection 6, paragraph b, Code
302019, is amended by striking the paragraph.
31   Sec. 38.  Section 96.3, subsection 4, unnumbered paragraph
322, Code 2019, is amended to read as follows:
   33The maximum weekly benefit amount, if not a multiple of one
34dollar, shall be rounded to the lower multiple of one dollar.
35However, until such time as sixty-five percent of the statewide
-10-1average weekly wage exceeds one hundred ninety dollars, the
2maximum weekly benefit amounts shall be determined using the
3statewide average weekly wage computed on the basis of wages
4reported for calendar year 1981. As used in this section
5“dependent” means dependent as defined in section 422.12,
6subsection 1, paragraph “a”
 has the same meaning as provided by
7the Internal Revenue Code
, as if the individual claimant was
8a taxpayer, except that an individual claimant’s nonworking
9spouse shall be deemed to be a dependent under this section.
10“Nonworking spouse” means a spouse who does not earn more than
11one hundred twenty dollars in gross wages in one week.
12   Sec. 39.  Section 99B.8, Code 2019, is amended to read as
13follows:
   1499B.8  Tax on prizes.
   15All prizes awarded pursuant to a gambling activity under
16this chapter are Iowa earned income and are subject to state
17and federal income tax laws. A person conducting a game of
18skill, game of chance, bingo, or a raffle shall deduct state
19income taxes, pursuant to section 422.16, subsection 1, from a
20cash prize awarded to an individual. An amount deducted from
21the prize for payment of a state tax shall be remitted to the
22department of revenue on behalf of the prize winner.

23   Sec. 40.  Section 99D.16, Code 2019, is amended to read as
24follows:
   2599D.16  Withholding tax on winnings.
   26All winnings provided in section 99D.11 are Iowa earned
27income and are subject to state and federal income tax laws.
28An amount deducted from winnings for payment of the state tax,
29pursuant to section 422.16, subsection 1, shall be remitted to
30the department of revenue on behalf of the individual who won
31the wager.

32   Sec. 41.  Section 99F.18, Code 2019, is amended to read as
33follows:
   3499F.18  Tax on winnings.
   35All winnings derived from slot machines operated pursuant to
-11-1this chapter are Iowa earned income and are subject to state
2and federal income tax laws. An amount deducted from winnings
3for payment of the state tax, pursuant to section 422.16,
4subsection 1, shall be remitted to the department of revenue
5on behalf of the winner.

6   Sec. 42.  Section 99G.31, subsection 2, paragraph i, Code
72019, is amended to read as follows:
   8i.  The proceeds of any lottery prize shall be subject to
9state and federal income tax laws. An amount deducted from the
10prize for payment of a state tax, pursuant to section 422.16,
11subsection 1, shall be transferred by the authority to the
12department of revenue on behalf of the prize winner.

13   Sec. 43.  Section 100B.13, subsection 2, paragraph a, Code
142019, is amended to read as follows:
   15a.  Moneys credited to the fund pursuant to an income tax
16checkoff provided in chapter 422, division II, Code 2019, if
17applicable.
18   Sec. 44.  Section 173.22, subsection 2, Code 2019, is amended
19to read as follows:
   202.  A foundation fund is created within the state treasury
21composed of moneys appropriated or available to and obtained or
22accepted by the foundation. The foundation fund shall include
23moneys credited to the fund as provided in section 422.12D.

24   Sec. 45.  Section 190B.103, Code 2019, is amended to read as
25follows:
   26190B.103  From farm to food donation tax credit.
   27A from farm to food donation tax credit is allowed against
28the taxes imposed in chapter 422, divisions II and division
29 III, as provided in this chapter.
30   Sec. 46.  Section 216B.3, subsection 15, Code 2019, is
31amended to read as follows:
   3215.  Develop a plan to provide telephone yellow pages
33information without charge to persons declared to be blind
34under the standards in section 422.12, subsection 2, paragraph
35“a”, subparagraph (5), Code 2019. The department may apply for
-12-1federal funds to support the service. The program shall be
2limited in scope by the availability of funds.
3   Sec. 47.  Section 217.39, Code 2019, is amended to read as
4follows:
   5217.39  Persecuted victims of World War II — reparations —
6heirs.
   7Notwithstanding any other law of this state, payments paid
8to and income from lost property of a victim of persecution for
9racial, ethnic, or religious reasons by Nazi Germany or any
10other Axis regime or as an heir of such victim which is exempt
11from state income tax as provided in section 422.7, subsection
1235, Code 2019, shall not be considered as income or an asset
13for determining the eligibility for state or local government
14benefit or entitlement programs. The proceeds are not subject
15to recoupment for the receipt of governmental benefits or
16entitlements, and liens, except liens for child support, are
17not enforceable against these sums for any reason.
18   Sec. 48.  Section 235A.2, subsection 1, Code 2019, is amended
19to read as follows:
   201.  A child abuse prevention program fund is created in
21the state treasury under the control of the department of
22human services. The fund is composed of moneys appropriated
23or available to and obtained or accepted by the treasurer of
24state for deposit in the fund. The fund shall include moneys
25transferred to the fund pursuant to an income tax checkoff
26provided in chapter 422, division II, Code 2019, if applicable.
27All interest earned on moneys in the fund shall be credited to
28and remain in the fund. Section 8.33 does not apply to moneys
29in the fund.
30   Sec. 49.  Section 257.19, subsection 2, Code 2019, is amended
31to read as follows:
   322.  Certification of a board’s intent to participate for
33a budget year, the method of funding, and the amount to be
34raised shall be made to the department of management not later
35than April 15 of the base year. Funding for the instructional
-13-1support program shall be obtained from instructional support
2state aid and from local funding using either an instructional
3support property tax or a combination of an instructional
4support property tax and an instructional support income
5surtax
.
6   Sec. 50.  Section 257.19, subsection 3, Code 2019, is amended
7by striking the subsection.
8   Sec. 51.  Section 257.21, Code 2019, is amended to read as
9follows:
   10257.21  Computation of instructional support amount.
   111.  The department of management shall establish the amount
12of instructional support property tax to be levied and the
13amount of instructional support income surtax to be imposed

14 by a district in accordance with the decision of the board
15under section 257.19 for each school year for which the
16instructional support program is authorized. The department
17of management shall determine these amounts based upon the
18most recent figures available for the district’s valuation of
19taxable property, individual state income tax paid, and budget
20enrollment in the district, and shall certify to the district’s
21county auditor the amount of instructional support property
22tax, and to the director of revenue the amount of instructional
23support income surtax to be imposed if an instructional support
24income surtax is to be imposed
 levied.
   252.  The instructional support income surtax shall be imposed
26on the state individual income tax for the calendar year during
27which the school’s budget year begins, or for a taxpayer’s
28fiscal year ending during the second half of that calendar year
29and after the date the board adopts a resolution to participate
30in the program or the first half of the succeeding calendar
31year, and shall be imposed on all individuals residing in the
32school district on the last day of the applicable tax year.
33As used in this section, “state individual income tax” means
34the taxes computed under section 422.5, less the amounts of
35nonrefundable credits allowed under chapter 422, division II.
-14-
1   Sec. 52.  Section 257.29, subsections 3 and 4, Code 2019, are
2amended to read as follows:
   33.  The educational improvement program shall be funded
4by either an educational improvement property tax or by a
5combination of an educational improvement property tax and an
6educational improvement income surtax
. The method of raising
7the educational improvement moneys shall be determined by the
8board. Subject to the limitation in section 298.14, if the
9board uses a combination of an educational improvement property
10tax and an educational improvement income surtax, the board
11shall determine the percent of income surtax to be imposed,
12expressed as full percentage points, not to exceed twenty
13percent.

   144.  The department of management shall establish the amount
15of the educational improvement property tax to be levied or
16the amount of the combination of the educational improvement
17property tax to be levied and the amount of the school district
18income surtax to be imposed
for each school year that the
19educational improvement amount is authorized. The educational
20improvement property tax and income surtax, if an income
21surtax is imposed,
shall be levied and imposed, collected,
22and paid to the school district in the manner provided for
23the instructional support program in sections section 257.21
24through 257.26. Moneys received by a school district under the
25educational improvement program are miscellaneous income.
26   Sec. 53.  Section 260E.2, subsection 6, Code 2019, is amended
27to read as follows:
   286.  “Employee” means the person employed in a new job.
29“Employee” does not include a person who would not be subject
30to the withholding of Iowa income pursuant to a reciprocal
31agreement under section 422.8, subsection 5, Code 2019.
32   Sec. 54.  Section 260E.5, subsections 2 and 6, Code 2019, are
33amended to read as follows:
   342.  An amount equal to one and one-half percent of the gross
35wages paid by the employer to each employee participating in a
-15-1project shall be credited from the payment made by an employer
2pursuant to section 422.16, Code 2019. If the amount of the
3withholding by the employer is less than one and one-half
4percent of the gross wages paid to the employees covered by the
5agreement, then the employer shall receive a credit against
6other withholding taxes due by the employer. The employer
7shall remit the amount of the credit quarterly in the same
8manner as withholding payments are reported to the department
9of revenue, to the community college to be allocated to and
10when collected paid into a special fund of the community
11college to pay the principal of and interest on certificates
12issued by the community college to finance or refinance, in
13whole or in part, the project. When the principal and interest
14on the certificates have been paid, the employer credits shall
15cease and any money received after the certificates have
16been paid shall be remitted to the treasurer of state to be
17deposited in the general fund of the state.
   186.  An employee participating in a project will receive full
19credit for the amount withheld as provided in section 422.16,
20Code 2019
.
21   Sec. 55.  Section 260G.4A, subsections 2 and 5, Code 2019,
22are amended to read as follows:
   232.  Eligibility for program job credits shall be based on
24certification of program job positions and program job wages
25by the employer at the time established in the agreement. An
26amount up to ten percent of the gross program job wage as
27certified by the employer in the agreement shall be credited
28from the total payment made by an employer pursuant to section
29422.16, Code 2019. The employer shall receive a credit against
30all withholding taxes due by the employer regardless of whether
31or not the withholding from the employer of current program
32job wages is less than ten percent. The employer shall remit
33the amount of the credit quarterly in the same manner as
34withholding payments are reported to the department of revenue,
35to the community college to be allocated to and when collected
-16-1paid into a special fund of the community college to pay, in
2part, the program costs. When the program costs have been
3paid, the employer credits shall cease and any moneys received
4after the program costs have been paid shall be remitted to the
5treasurer of state to be deposited in the general fund of the
6state.
   75.  Employees from an employer participating in an agreement
8shall receive full credit for the amount withheld as provided
9in section 422.16, Code 2019.
10   Sec. 56.  Section 279.63, subsection 2, paragraph a, Code
112019, is amended to read as follows:
   12a.  All property tax levies, income surtaxes, and local
13option sales taxes in place in the school district, listed by
14type of levy, rate, amount, duration, and notification of the
15maximum rate and amount limitations permitted by statute.
16   Sec. 57.  Section 298.2, subsection 1, paragraph a, Code
172019, is amended to read as follows:
   18a.  A physical plant and equipment levy of not exceeding
19one dollar and sixty-seven cents per thousand dollars of
20assessed valuation in the district is established except as
21otherwise provided in this subsection. The physical plant
22and equipment levy consists of the regular physical plant
23and equipment levy of not exceeding thirty-three cents per
24thousand dollars of assessed valuation in the district and
25a voter-approved physical plant and equipment levy of not
26exceeding one dollar and thirty-four cents per thousand
27dollars of assessed valuation in the district. However, the
28voter-approved physical plant and equipment levy may consist
29of a combination of a physical plant and equipment property
30tax levy and a physical plant and equipment income surtax as
31provided in subsection 4 with the maximum amount levied and
32imposed limited to an amount that could be raised by a one
33dollar and thirty-four cent property tax levy.

34   Sec. 58.  Section 298.2, subsection 4, Code 2019, is amended
35to read as follows:
-17-   14.  a.  The board may on its own motion, and upon the
2written request of not less than one hundred eligible electors
3or thirty percent of the number of eligible electors voting
4at the last regular school election, whichever is greater,
5shall, direct the county commissioner of elections to provide
6for submitting the proposition of levying the voter-approved
7physical plant and equipment levy for a period of time
8authorized by the voters at the election, not to exceed ten
9years. The election shall be held on a date specified in
10section 39.2, subsection 4, paragraph “c”. The proposition is
11adopted if a majority of those voting on the proposition at the
12election approves it. The voter-approved physical plant and
13equipment levy shall be funded either by a physical plant and
14equipment property tax or by a combination of a physical plant
15and equipment property tax and a physical plant and equipment
16income surtax, as determined by the board
. However, if the
17board intends to enter into a rental or lease arrangement under
18section 279.26, or intends to enter into a loan agreement under
19section 297.36, only a property tax shall be levied for those
20purposes. Subject to the limitations of section 298.14, if
21the board uses a combination of a physical plant and equipment
22property tax and a physical plant and equipment surtax, for
23each fiscal year the board shall determine the percent of
24income surtax to be imposed expressed as full percentage
25points, not to exceed twenty percent.

   26b.  If a combination of a property tax and income surtax
27is used, by April 15 of the previous school year, the board
28shall certify the percent of the income surtax to be imposed
29and the amount to be raised to the department of management
30and the department of management shall establish the rate of
31the property tax and income surtax for the school year.
The
32physical plant and equipment property tax and income surtax
33 shall be levied or imposed, collected, and paid to the school
34district in the manner provided for the instructional support
35program in sections section 257.21 through 257.26.
-18-
1   Sec. 59.  Section 403.19A, subsection 3, paragraphs b and i,
2Code 2019, are amended to read as follows:
   3b.  An amount equal to three percent of the gross wages paid
4by an employer to each employee under a withholding agreement
5shall be credited from the payment made by the employer
6pursuant to section 422.16, Code 2019. If the amount of the
7withholding by the employer is less than three percent of the
8gross wages paid to the employees covered by the withholding
9agreement, the employer shall receive a credit against other
10withholding taxes due by the employer or may carry the credit
11forward for up to ten years or until depleted, whichever is
12the earlier. The employer shall remit the amount of the
13credit quarterly, in the same manner as withholding payments
14are reported to the department of revenue, to the pilot
15project city to be allocated to and when collected paid into
16a designated withholding project fund for the project. All
17amounts so deposited shall be used or pledged by the pilot
18project city for a project related to the employer pursuant to
19the withholding agreement.
   20i.  An employee whose wages are subject to a withholding
21agreement shall receive full credit for the amount withheld as
22provided in section 422.16, Code 2019.
23   Sec. 60.  Section 404A.2, subsection 2, Code 2019, is amended
24to read as follows:
   252.  The tax credit shall be allowed against the taxes imposed
26in chapter 422, divisions II, III, and V, and in chapter
27432. An individual may claim a tax credit under this section
28 of a partnership, limited liability company, S corporation,
29estate, or trust electing to have income taxed directly to the
30individual. For an individual claiming a tax credit of an
31estate or trust, the amount claimed by the individual shall be
32based upon the pro rata share of the individual’s earnings from
33the estate or trust. For an individual claiming a tax credit
34of a partnership, limited liability company, or S corporation,
35the amount claimed by the partner, member, or shareholder,
-19-1respectively, shall be based upon the amounts designated by
2the eligible partnership, S corporation, or limited liability
3company, as applicable.

4   Sec. 61.  Section 404A.2, subsection 3, paragraph c, Code
52019, is amended to read as follows:
   6c.  A tax credit shall not be claimed by a transferee
7under this section until a replacement tax credit certificate
8identifying the transferee as the proper holder has been
9issued. The transferee may use the amount of the tax credit
10transferred against the taxes imposed in chapter 422, divisions
11II, III, and V, and in chapter 432, for any tax year the
12original transferor could have claimed the tax credit. Any
13consideration received for the transfer of the tax credit shall
14not be included as income under chapter 422, divisions II, III,
15 and V. Any consideration paid for the transfer of the tax
16credit shall not be deducted from income under chapter 422,
17divisions II, III, and V.
18   Sec. 62.  Section 404A.2, subsection 5, paragraph c, Code
192019, is amended to read as follows:
   20c.  The tax credit certificate, unless rescinded by the
21authority, shall be accepted by the department of revenue
22as payment for taxes imposed in chapter 422, divisions II,
23 III, and V, and in chapter 432, subject to any conditions
24or restrictions placed by the authority or the department of
25revenue upon the face of the tax credit certificate and subject
26to the limitations of this program.
27   Sec. 63.  Section 404A.2, subsection 6, Code 2019, is amended
28to read as follows:
   296.  For purposes of the individual and corporate income taxes
30
 tax and the franchise tax, the increase in the basis of the
31rehabilitated property that would otherwise result from the
32qualified rehabilitation expenditures shall be reduced by the
33amount of the credit computed under this section.
34   Sec. 64.  Section 421.60, subsection 2, paragraph c,
35subparagraph (1), Code 2019, is amended to read as follows:
-20-   1(1)  If the notice of assessment or denial of a claim for
2refund relates to a tax return filed pursuant to section 422.14
3 or
chapter 450 by the taxpayer which designates an individual
4as an authorized representative of the taxpayer with respect to
5that return, or if a power of attorney has been filed with the
6department by the taxpayer which designates an individual as
7an authorized representative of the taxpayer with respect to
8any tax that is included in the notice of assessment or denial
9of a claim for refund, a copy of the notice together with any
10additional information required to be sent to the taxpayer
11shall be sent to the authorized representative as well.
12   Sec. 65.  Section 422.1, subsection 2, Code 2019, is amended
13to read as follows:
   142.  Division IIPersonal net income tax Provisions
15related to the business tax on corporations
.
16   Sec. 66.  Section 422.11L, subsection 1, unnumbered
17paragraph 1, Code 2019, is amended to read as follows:
   18The taxes imposed under this division, less the credits
19allowed under section 422.12,
 III shall be reduced by a solar
20energy system tax credit equal to the sum of the following:
21   Sec. 67.  Section 422.11L, subsection 3, paragraph a, Code
222019, is amended by striking the paragraph.
23   Sec. 68.  Section 422.11N, subsection 3, unnumbered
24paragraph 1, Code 2019, is amended to read as follows:
   25The taxes imposed under this division, less the credits
26allowed under section 422.12,
 III shall be reduced by an
27ethanol promotion tax credit for each tax year that the
28taxpayer is eligible to claim the tax credit under this
29section. In order to be eligible, all of the following must
30apply:
31   Sec. 69.  Section 422.11N, subsection 9, Code 2019, is
32amended by striking the subsection.
33   Sec. 70.  Section 422.11O, subsection 2, unnumbered
34paragraph 1, Code 2019, is amended to read as follows:
   35The taxes imposed under this division, less the credits
-21-1allowed under section 422.12,
 III shall be reduced by an
2E-85 gasoline promotion tax credit for each tax year that
3the taxpayer is eligible to claim the tax credit under this
4subsection.
5   Sec. 71.  Section 422.11O, subsection 7, Code 2019, is
6amended by striking the subsection.
7   Sec. 72.  Section 422.11P, subsection 3, unnumbered
8paragraph 1, Code 2019, is amended to read as follows:
   9The taxes imposed under this division, less the credits
10allowed under section 422.12,
 III shall be reduced by a
11biodiesel blended fuel tax credit for each tax year that
12the taxpayer is eligible to claim a tax credit under this
13subsection.
14   Sec. 73.  Section 422.11P, subsection 7, Code 2019, is
15amended by striking the subsection.
16   Sec. 74.  Section 422.11S, subsection 1, Code 2019, is
17amended to read as follows:
   181.  The taxes imposed under this division, less the credits
19allowed under section 422.12,
 III shall be reduced by a
20school tuition organization tax credit equal to sixty-five
21percent of the amount of the voluntary cash or noncash
22contributions made by the taxpayer during the tax year to a
23school tuition organization, subject to the total dollar value
24of the organization’s tax credit certificates as computed in
25subsection 8. The tax credit shall be claimed by use of a tax
26credit certificate as provided in subsection 7.
27   Sec. 75.  Section 422.11S, subsections 4 and 5, Code 2019,
28are amended by striking the subsections.
29   Sec. 76.  Section 422.11S, subsection 8, paragraph a,
30subparagraph (2), Code 2019, is amended to read as follows:
   31(2)  “Total approved tax credits” means for the tax year
32beginning in the 2006 calendar year, two million five hundred
33thousand dollars, for the tax year beginning in the 2007
34calendar year, five million dollars, for tax years beginning
35on or after January 1, 2008, but before January 1, 2012, seven
-22-1million five hundred thousand dollars, for tax years beginning
2on or after January 1, 2012, but before January 1, 2014, eight
3million seven hundred fifty thousand dollars, and for tax years
4beginning on or after January 1, 2014, but before January 1,
52019, twelve million dollars, and
for tax years beginning on or
6after January 1, 2019, thirteen million dollars.
7   Sec. 77.  Section 422.11Y, subsection 3, unnumbered
8paragraph 1, Code 2019, is amended to read as follows:
   9The taxes imposed under this division, less the credits
10allowed under section 422.12,
 III shall be reduced by the
11amount of the E-15 plus gasoline promotion tax credit for each
12tax year that the taxpayer is eligible to claim a tax credit
13under this subsection.
14   Sec. 78.  Section 422.11Y, subsection 8, Code 2019, is
15amended by striking the subsection.
16   Sec. 79.  Section 422.15, subsections 2 and 3, Code 2019, are
17amended by striking the subsections.
18   Sec. 80.  Section 422.15, subsection 4, Code 2019, is amended
19to read as follows:
   204.  Notwithstanding subsections subsection 1, 2, and 3, or
21any other provision of this chapter, withholding of income
22tax and any reporting requirement shall not be imposed upon
23a person, corporation, or withholding agent or any payor of
24deferred compensation, pensions, or annuities with regard to
25such payments made to a nonresident of the state.
26   Sec. 81.  Section 422.21, Code 2019, is amended by striking
27the section and inserting in lieu thereof the following:
   28422.21  Form and time of return.
   29Returns shall be in the form the director prescribes, and
30shall be filed with the department on or before the last day
31of the fourth month after the expiration of the tax year.
32However, cooperative associations as defined in section 6072(d)
33of the Internal Revenue Code shall file their returns on or
34before the fifteenth day of the ninth month following the
35close of the taxable year and nonprofit corporations subject
-23-1to the unrelated business income tax imposed by section
2422.33, subsection 1A, shall file their returns on or before
3the fifteenth day of the fifth month following the close of
4the taxable year. If, under the Internal Revenue Code, a
5corporation is required to file a return covering a tax period
6of less than twelve months, the state return shall be for the
7same period and is due forty-five days after the due date of
8the federal tax return, excluding any extension of time to
9file. In case of sickness, absence, or other disability, or
10if good cause exists, the director may allow further time for
11filing returns. The director shall cause to be prepared blank
12forms for the returns and shall cause them to be distributed
13throughout the state and to be furnished upon application,
14but failure to receive or secure the form does not relieve
15the taxpayer from the obligation of making a return that is
16required. The department may as far as consistent with the
17Code draft income tax forms to conform to the income tax
18forms of the internal revenue department of the United States
19government.
20   Sec. 82.  Section 422.22, Code 2019, is amended to read as
21follows:
   22422.22  Supplementary returns.
   23If the director shall be of the opinion that any taxpayer
24required under this division III to file a return has failed
25to file such a return or to include in a return filed, either
26intentionally or through error, items of taxable income,
27the director may require from such taxpayer a return or
28supplementary return in such form as the director shall
29prescribe, of all the items of income which the taxpayer
30received during the year for which the return is made, whether
31or not taxable under the provisions of this division III. If
32from a supplementary return, or otherwise, the director finds
33that any items of income, taxable under this division III, have
34been omitted from the original return, the director may require
35the items so omitted to be added to the original return. Such
-24-1supplementary return and the correction of the original return
2shall not relieve the taxpayer from any of the penalties to
3which the taxpayer may be liable under any provisions of this
4 division III, whether or not the director required a return or
5a supplementary return under this section.
6   Sec. 83.  Section 422.32, Code 2019, is amended to read as
7follows:
   8422.32  Definitions.
   91.  For the purpose of this division and unless otherwise
10required by the context:
   11a.    1.  “Affiliated group” means a group of corporations as
12defined in section 1504(a) of the Internal Revenue Code.
   13b.   2.  a.  “Business income” means income arising from
14transactions and activity in the regular course of the
15taxpayer’s trade or business; or income from tangible and
16intangible property if the acquisition, management, and
17disposition of the property constitute integral parts of the
18taxpayer’s regular trade or business operations; or gain or
19loss resulting from the sale, exchange, or other disposition of
20real property or of tangible or intangible personal property,
21if the property while owned by the taxpayer was operationally
22related to the taxpayer’s trade or business carried on in
23Iowa or operationally related to sources within Iowa, or the
24property was operationally related to sources outside this
25state and to the taxpayer’s trade or business carried on in
26Iowa; or gain or loss resulting from the sale, exchange, or
27other disposition of stock in another corporation if the
28activities of the other corporation were operationally related
29to the taxpayer’s trade or business carried on in Iowa while
30the stock was owned by the taxpayer. A taxpayer may have more
31than one regular trade or business in determining whether
32income is business income.
   33(1)    b.  It is the intent of the general assembly to treat as
34apportionable business income all income that may be treated
35as apportionable business income under the Constitution of the
-25-1United States.
   2(2)    c.  The filing of an Iowa income tax return on a
3combined report basis is neither allowed nor required by this
4paragraph “b”.
   5c.    3.  “Commercial domicile” means the principal place from
6which the trade or business of the taxpayer is directed or
7managed.
   8d.    4.  “Corporation” includes joint stock companies, and
9associations organized for pecuniary profit, and partnerships
10and limited liability companies taxed as corporations under the
11Internal Revenue Code.
   12e.    5.  “Domestic corporation” means any corporation
13organized under the laws of this state.
   146.  “Fiduciary” means a guardian, trustee, executor,
15administrator, receiver, conservator, or any person, whether
16individual or corporate, acting in any fiduciary capacity for
17any person, trust, or estate.
   187.  “Fiscal year” means an accounting period of twelve
19months, ending on the last day of any month other than
20December.
   21f.    8.  “Foreign corporation” means any corporation other
22than a domestic corporation.
   239.  “Foreign country” means any jurisdiction other than one
24embraced within the United States. The words “United States”,
25when used in a geographical sense, include the states, the
26District of Columbia, and the possessions of the United States.
   27g.    10.  “Income from sources within this state” means income
28from real, tangible, or intangible property located or having
29a situs in this state.
   3011.  “Income year” means the calendar year or the fiscal year
31upon the basis of which the net income is computed under this
32division.
   3312.  “Individual” means a natural person.
   34h.    13.  “Internal Revenue Code” means one of the following:
   35(1)    a.  For tax years beginning during the 2019 calendar
-26-1year, “Internal Revenue Code” means the Internal Revenue Code of
21954, prior to the date of its redesignation as the Internal
3Revenue Code of 1986 by the Tax Reform Act of 1986, or means
4the Internal Revenue Code of 1986 as amended and in effect on
5March 24, 2018. This definition shall not be construed to
6include any amendment to the Internal Revenue Code enacted
7after the date specified in the preceding sentence, including
8any amendment with retroactive applicability or effectiveness.
   9(2)    b.  For tax years beginning on or after January 1,
102020, “Internal Revenue Code” means the Internal Revenue Code of
111954, prior to the date of its redesignation as the Internal
12Revenue Code of 1986 by the Tax Reform Act of 1986, or means the
13Internal Revenue Code of 1986, as amended.
   14i.    14.  “Nonbusiness income” means all income other than
15business income.
   1615.  “Paid”, for the purposes of the deductions under this
17division, means “paid or accrued” or “paid or incurred”, and
18the terms “paid or incurred” and “paid or accrued” shall be
19construed according to the method of accounting upon the basis
20of which the net income is computed under this division. The
21term “received”, for the purpose of the computation of net
22income under this division, means “received or accrued”, and
23the term “received or accrued” shall be construed according to
24the method of accounting upon the basis of which the net income
25is computed under this division.
   2616.  “Resident” applies only to individuals and includes, for
27the purpose of determining liability to the tax imposed by this
28division upon or with reference to the income of any tax year,
29any individual domiciled in the state, and any other individual
30who maintains a permanent place of abode within the state.
   31j.    17.  “State” means any state of the United States, the
32District of Columbia, the Commonwealth of Puerto Rico, any
33territory or possession of the United States, and any foreign
34country or political subdivision thereof.
   3518.  a.  “Tax year” means the calendar year, or the fiscal
-27-1year ending during such calendar year, upon the basis of which
2the net income is computed under this division.
   3b.  If a taxpayer has made the election provided by section
4441(f) of the Internal Revenue Code, “tax year” means the annual
5period so elected, varying from fifty-two to fifty-three weeks.
   6c.  If the effective date or the applicability of a provision
7of this division is expressed in terms of a tax year beginning,
8including, or ending with reference to a specified date which
9is the first or last day of a month, a tax year described in
10paragraph “a” of this subsection shall be treated as beginning
11with the first day of the calendar month beginning nearest to
12the first day of the tax year or as ending with the last day of
13the calendar month ending nearest to the last day of the tax
14year.
   15k.    19.  “Taxable in another state”. For purposes of
16allocation and apportionment of income under this division, a
17taxpayer is “taxable in another state” if:
   18(1)    a.  In that state the taxpayer is subject to a net
19income tax, a franchise tax measured by net income, a franchise
20tax for the privilege of doing business, or a corporate stock
21tax; or
   22(2)    b.  That state has jurisdiction to subject the taxpayer
23to a net income tax regardless of whether, in fact, the state
24does or does not.
   25l.    20.  “Unitary business” means a business carried on
26partly within and partly without a state where the portion
27of the business carried on within the state depends on or
28contributes to the business outside the state.
   292.  The words, terms, and phrases defined in section 422.4,
30subsections 4 through 6, 8, 9, 13, and 15 through 17, when used
31in this division, shall have the meanings ascribed to them
32in said section except where the context clearly indicates a
33different meaning.
34   Sec. 84.  Section 422.33, subsection 28, Code 2019, is
35amended to read as follows:
-28-   128.  The taxes imposed under this division shall be reduced
2by a school tuition organization tax credit allowed under
3section 422.11S. The maximum amount of tax credits that
4may be approved under this subsection for a tax year equals
5twenty-five percent of the school tuition organization’s tax
6credits that may be approved pursuant to section 422.11S,
7subsection 8, for a tax year.

8   Sec. 85.  Section 422.35, subsection 2, Code 2019, is amended
9to read as follows:
   102.  Add interest and dividends from foreign securities, from
11securities of state and other political subdivisions, and from
12regulated investment companies exempt from federal income tax
13under the Internal Revenue Code, except for those securities
14the interest and dividends from which are exempt from taxation
15by the state of Iowa as otherwise provided by law, including
16those set forth in section 422.7, subsection 2.:
   17a.  Vision Iowa program bonds pursuant to section 12.71,
18subsection 8.
   19b.  School infrastructure program bonds pursuant to section
2012.81, subsection 8.
   21c.  Iowa jobs program revenue bonds pursuant to section
2212.87, subsection 8.
   23d.  Iowa utility board and Iowa consumer advocate building
24project bonds pursuant to section 12.91, subsection 9.
   25e.  Iowa finance authority beginning farmer loan program
26bonds pursuant to section 16.64, subsection 2.
   27f.  Water pollution control works and drinking facilities
28financing program bonds pursuant to section 16.131, subsection
295.
   30g.  Iowa prison infrastructure revenue bonds pursuant to
31section 12.80, subsection 3, and section 16.177, subsection 8.
   32h.  Quad cities interstate metropolitan authority bonds
33pursuant to section 28A.24.
   34i.  Iowa finance authority E911 program bonds pursuant to
35section 34A.20, subsection 6.
-29-
   1j.  Soil and water conservation subdistrict bonds pursuant
2to section 161A.22.
   3k.  Community college residence hall and dormitory bonds
4pursuant to section 260C.61.
   5l.  Community college bond program bonds pursuant to section
6260C.71, subsection 6.
   7m.  Higher education loan authority bonds pursuant to section
8261A.27.
   9n.  State board of regents bonds pursuant to sections 262.41,
10262.51, 262.60, 262A.8, and 263A.6.
   11o.  Interstate bridges bonds pursuant to section 313A.36.
   12p.  Aviation authority bonds pursuant to section 330A.16.
   13q.  County health center bonds pursuant to section 331.441,
14subsection 2, paragraph “c”, subparagraph (7).
   15r.  Rural water district bonds pursuant to section 357A.15.
   16s.  Urban renewal bonds pursuant to section 403.9, subsection
172.
   18t.  Municipal housing project bonds pursuant to section
19403A.12.
   20u.  Comprehensive petroleum underground storage tank fund
21bonds pursuant to section 455G.6, subsection 14.
   22v.  Honey creek premier destination park bonds pursuant to
23section 463C.12, subsection 8.
24   Sec. 86.  Section 422.39, Code 2019, is amended to read as
25follows:
   26422.39  Statutes applicable to corporation tax.
   27All the provisions of sections 422.24 to 422.27 422.26 of
28division II, respecting payment and collection, shall apply in
29respect to the tax due and payable by a corporation taxable
30under this division.
31   Sec. 87.  Section 422.73, Code 2019, is amended to read as
32follows:
   33422.73  Correction of errors — refunds, credits, and
34carrybacks.
   351.  If it appears that an amount of tax, penalty, or interest
-30-1has been paid which was not due under division II, III or V
2of this chapter, then that amount shall be credited against
3any tax due on the books of the department by the person who
4made the excessive payment, or that amount shall be refunded
5to the person or with the person’s approval, credited to tax
6to become due. A claim for refund or credit that has not been
7filed with the department within three years after the return
8upon which a refund or credit claimed became due, or within one
9year after the payment of the tax upon which a refund or credit
10is claimed was made, whichever time is the later, shall not be
11allowed by the director. If, as a result of a carryback of a
12net operating loss or a net capital loss, the amount of tax
13in a prior period is reduced and an overpayment results, the
14claim for refund or credit of the overpayment shall be filed
15with the department within the three years after the return
16for the taxable year of the net operating loss or net capital
17loss became due. Notwithstanding the period of limitation
18specified, the taxpayer shall have six months from the day of
19final disposition of any income tax matter between the taxpayer
20and the internal revenue service with respect to the particular
21tax year to claim an income tax refund or credit.
   222.  Notwithstanding subsection 1, a claim for refund or
23credit of the individual income tax paid which resulted from a
24reduction in a person’s federal adjusted gross income due to
25section 1106 of the FAA Modernization and Reform Act of 2012,
26Pub.L. No.112-95, shall be considered timely if the claim is
27filed with the department on or before June 30, 2013.
   283.  The department shall enter into an agreement with the
29internal revenue service for the transmission of federal income
30tax reports on individuals required to file an Iowa income tax
31return who have been involved in an income tax matter with
32the internal revenue service. After final disposition of
33the income tax matter between the taxpayer and the internal
34revenue service, the department shall determine whether the
35individual is due a state income tax refund as a result of
-31-1final disposition of such income tax matter. If the individual
2is due a state income tax refund, the department shall notify
3the individual within thirty days and request the individual to
4file a claim for refund or credit with the department.
5   Sec. 88.  Section 422.110, Code 2019, is amended to read as
6follows:
   7422.110  Income tax credit in lieu of refund.
   81.  In lieu of the fuel tax refund provided in section
9452A.17, a person or corporation subject to taxation under
10division II or III of this chapter may elect to receive an
11income tax credit. The person or corporation which elects to
12receive an income tax credit shall cancel its refund permit
13obtained under section 452A.18 within thirty days after the
14first day of its tax year or the permit becomes invalid at that
15time. For the purposes of this section, “person” includes a
16person claiming a tax credit based upon the person’s pro rata
17share of the earnings from a partnership, limited liability
18company, or corporation which is not subject to a tax under
19division II or III of this chapter as a partnership, limited
20liability company, or corporation
 “corporation” means the same
21as defined in section 422.32
. If the election to receive
22an income tax credit has been made, it remains effective for
23at least one tax year, and for subsequent tax years unless
24a change is requested and a new refund permit applied for
25within thirty days after the first day of the person’s or
26 corporation’s tax year. The income tax credit shall be the
27amount of the Iowa fuel tax paid on fuel purchased by the
28person or corporation and is subject to the conditions provided
29in section 452A.17 with the exception that the income tax
30credit is not available for refunds relating to casualty
31losses, transport diversions, pumping credits, blending
32errors, idle time, power takeoffs, reefer units, and exports by
33distributors.
   342.  The right to a credit under this section is not
35assignable and the credit may be claimed only by the person or
-32-1 corporation that purchased the fuel.
2   Sec. 89.  Section 422D.1, Code 2019, is amended to read as
3follows:
   4422D.1  Authorization — election — imposition and repeal —
5use of revenues.
   61.  a.  A county board of supervisors may offer for voter
7approval any of the following taxes or a combination of the
8following taxes:

   9(1)  Local option income surtax.
   10(2)  An an ad valorem property tax.
   11b.  Revenues generated from these taxes the ad valorem
12property tax
shall be used for emergency medical services as
13provided in section 422D.6.
   142.  a.  The taxes property tax for emergency medical services
15shall only be imposed after an election at which a majority of
16those voting on the question of imposing the tax or combination
17of taxes specified in subsection 1, paragraph “a”, subparagraph
18(1) or (2),
vote in favor of the question. However, the tax
19or combination of taxes specified in subsection 1 shall not
20be imposed on property within or on residents of a benefited
21emergency medical services district under chapter 357F. The
22question of imposing the tax or combination of the taxes may
23be submitted at the regular city election, a special election,
24or the general election. Notice of the question shall be
25provided by publication at least sixty days before the time of
26the election and shall identify the tax or combination of taxes
27and
the levy rate or rates, as applicable. If a majority of
28those voting on the question approve the imposition of the tax
29or combination of taxes, the tax or combination of taxes shall
30be imposed as follows:
   31(1)  A local option income surtax shall be imposed for tax
32years beginning on or after January 1 of the fiscal year in
33which the favorable election was held.
   34(2)  An ad valorem property tax shall be imposed levied for
35the fiscal year in which the election was held.
-33-
   1b.  Before a county imposes an income surtax as specified
2in subsection 1, paragraph “a”, subparagraph (1), a benefited
3emergency medical services district in the county shall be
4dissolved, and the county shall be liable for the outstanding
5obligations of the benefited district. If the benefited
6district extends into more than one county, the county imposing
7the income surtax shall be liable for only that portion of the
8obligations relating to the portion of the benefited district
9in the county.
   103.  Revenues received by the county from the taxes imposed
11
 tax levied under this chapter shall be deposited into the
12emergency medical services trust fund created pursuant to
13section 422D.6 and shall be used as provided in that section.
   144.  Any tax or combination of taxes imposed levied under this
15chapter
shall be for a maximum period of five years.
16   Sec. 90.  Section 423.14A, subsection 3, paragraph f,
17subparagraph (2), subparagraph division (c), subparagraph
18subdivision (ii), Code 2019, is amended to read as follows:
   19(ii)  “Resident” includes an individual who is a resident
20of this state, as defined in section 422.4 422.32, and any
21business that owns any tangible or intangible property with
22a situs in this state, or that has one or more employees
23performing or providing services for the business in this
24state.
25   Sec. 91.  Section 425.17, subsection 7, Code 2019, is amended
26to read as follows:
   277.  “Income” means the sum of Iowa net income as defined
28in section 422.7, Code 2019, plus all of the following to
29the extent not already included in Iowa net income: capital
30gains, alimony, child support money, cash public assistance
31and relief, except property tax relief granted under this
32subchapter, amount of in-kind assistance for housing expenses,
33the gross amount of any pension or annuity, including but not
34limited to railroad retirement benefits, payments received
35under the federal Social Security Act, except child insurance
-34-1benefits received by a member of the claimant’s household, and
2all military retirement and veterans’ disability pensions,
3interest received from the state or federal government or
4any of its instrumentalities, workers’ compensation and the
5gross amount of disability income or “loss of time” insurance.
6“Income” does not include gifts from nongovernmental sources,
7or surplus foods or other relief in kind supplied by a
8governmental agency. In determining income, net operating
9losses and net capital losses shall not be considered.
10   Sec. 92.  Section 425.23, subsection 4, paragraph b, Code
112019, is amended to read as follows:
   12b.  The annual adjustment factor for the 1998 base year is
13one hundred percent. For each subsequent base year, the annual
14adjustment factor equals the annual inflation factor for the
15calendar year, in which the base year begins, as computed in
16section 422.4 for purposes of the individual income tax, Code
172019
.
18   Sec. 93.  Section 476.20, subsection 2, Code 2019, is amended
19to read as follows:
   202.  The board shall establish rules requiring a regulated
21public utility furnishing gas or electricity to include in
22the utility’s notice of pending disconnection of service a
23written statement advising the customer that the customer
24may be eligible to participate in the low income home energy
25assistance program or weatherization assistance program
26administered by the division of community action agencies of
27the department of human rights. The written statement shall
28list the address and telephone number of the local agency
29which is administering the customer’s low income home energy
30assistance program and the weatherization assistance program.
31The written statement shall also state that the customer
32is advised to contact the public utility to settle any of
33the customer’s complaints with the public utility, but if a
34complaint is not settled to the customer’s satisfaction, the
35customer may file the complaint with the board. The written
-35-1statement shall include the address and phone number of the
2board. If the notice of pending disconnection of service
3applies to a residence, the written statement shall advise
4that the disconnection does not apply from November 1 through
5April 1 for a resident who is a “head of household”, as
6defined in section 422.4,
 head of household and who has been
7certified to the public utility by the local agency which is
8administering the low income home energy assistance program and
9weatherization assistance program as being eligible for either
10the low income home energy assistance program or weatherization
11assistance program, and that if such a resident resides within
12the serviced residence, the customer should promptly have
13the qualifying resident notify the local agency which is
14administering the low income home energy assistance program and
15weatherization assistance program. The board shall establish
16rules requiring that the written notice contain additional
17information as it deems necessary and appropriate.
18   Sec. 94.  Section 476.20, subsection 3, paragraph b, Code
192019, is amended to read as follows:
   20b.  A qualified applicant for the low income home energy
21assistance program or the weatherization assistance program who
22is also a “head of household”, as defined in section 422.4,
23subsection 7,
 head of household shall be promptly certified
24by the local agency administering the applicant’s program to
25the applicant’s public utility that the resident is a “head
26of household” as defined in section 422.4, subsection 7,
 head
27of household
and is qualified for the low income home energy
28assistance program or weatherization assistance program.
29Notwithstanding subsection 1, a public utility furnishing gas
30or electricity shall not disconnect service from November 1
31through April 1 to a residence which has a resident that has
32been certified under this paragraph. For purposes of this
33section, “head of household” has the same meaning as provided
34by the Internal Revenue Code.

35   Sec. 95.  Section 476B.2, Code 2019, is amended to read as
-36-1follows:
   2476B.2  General rule.
   3The owner of a qualified facility shall, for each
4kilowatt-hour of qualified electricity that the owner sells
5or uses for on-site consumption during the ten-year period
6beginning on the date the qualified facility was originally
7placed in service, be allowed a wind energy production tax
8credit to the extent provided in this chapter against the tax
9imposed in chapter 422, divisions II, III, and V, and chapter
10432, and may claim a refund of tax imposed by chapter 423 or
11437A for any tax year within the time period set forth in
12section 423.47 or 437A.14.
13   Sec. 96.  Section 476B.6, subsection 5, paragraphs a, b, and
14c, Code 2019, are amended to read as follows:
   15a.  If the tax credit application is filed by a partnership,
16limited liability company, S corporation, estate, trust, or
17other reporting entity all of the income of which is taxed
18directly to its equity holders or beneficiaries, for the taxes
19imposed under chapter 422, division II or III, the tax credit
20certificate shall be issued directly to equity holders or
21beneficiaries of the applicant in proportion to their pro rata
22share of the income of such entity. The applicant shall, in
23the application made under this section, identify its equity
24holders or beneficiaries, and the percentage of such entity’s
25income that is allocable to each equity holder or beneficiary.
   26b.  If the tax credit applicant under this section is
27eligible to receive renewable electricity production credits
28authorized under section 45 of the Internal Revenue Code,
29as amended, and the tax credit applicant is a partnership,
30limited liability company, S corporation, estate, trust, or
31other reporting entity all of the income of which is taxed
32directly to its equity holders or beneficiaries, for the taxes
33imposed under chapter 422, division II or III, the tax credit
34certificate may be issued to a partner if the business is a
35partnership, a shareholder if the business is an S corporation,
-37-1or a member if the business is a limited liability company
2in the amounts designated by the eligible partnership, S
3corporation, or limited liability company. In absence of
4such designation, the credits under this section shall flow
5through to the partners, shareholders, or members in accordance
6with their pro rata share of the income of the entity. The
7applicant shall, in the application made under this section,
8identify the holders or beneficiaries that are to receive the
9tax credit certificates and the percentage of the tax credit
10that is allocable to each holder or beneficiary.
   11c.  If an applicant under this section is eligible to
12receive renewable electricity production credits authorized
13under section 45 of the Internal Revenue Code, as amended, and
14the tax credit applicant is a partnership, limited liability
15company, S corporation, estate, trust, or other reporting
16entity all of the income of which is taxed directly to its
17equity holders or beneficiaries, for the taxes imposed under
18chapter 422, division II or III, the tax credit certificates
19and all future rights to the tax credit in this section may be
20distributed to an equity holder or beneficiary as a liquidating
21distribution or portion thereof, of a holder or beneficiary’s
22interest in the applicant entity. The applicant shall, in the
23application made under this section, designate the percentage
24of the tax credit allocable to the liquidating equity holder
25or beneficiary that is to receive the current and future tax
26credit certificates under this section.
27   Sec. 97.  Section 476B.7, subsection 2, Code 2019, is amended
28to read as follows:
   292.  The tax credit shall be freely transferable. The
30transferee may use the amount of the tax credit transferred
31against the taxes imposed under chapter 422, divisions II, III,
32 and V, and chapter 432 for any tax year the original transferor
33could have claimed the tax credit. The transferee may claim
34a refund under chapter 423 or 437A for any tax year within
35the time period set forth in section 423.47 or 437A.14 for
-38-1which the original transferor could have claimed a refund.
2Any consideration received for the transfer of the tax credit
3shall not be included as income under chapter 422, divisions
4II, III, and V. Any consideration paid for the transfer of the
5tax credit shall not be deducted from income under chapter 422,
6divisions II, III, and V.
7   Sec. 98.  Section 476C.4, subsection 4, paragraph a, Code
82019, is amended to read as follows:
   9a.  If the tax credit application is filed by a partnership,
10limited liability company, S corporation, estate, trust, or
11other reporting entity all of the income of which is taxed
12directly to its equity holders or beneficiaries, for the taxes
13imposed under chapter 422, division II or III, the tax credit
14certificate shall be issued directly to equity holders or
15beneficiaries of the applicant in proportion to their pro rata
16share of the income of such entity. The applicant shall, in
17the application made under this section, identify its equity
18holders or beneficiaries, and the percentage of such entity’s
19income that is allocable to each equity holder or beneficiary.
20   Sec. 99.  Section 476C.4, subsection 4, paragraph b,
21subparagraph (1), Code 2019, is amended to read as follows:
   22(1)  If the tax credit applicant under this section is
23eligible to receive renewable electricity production credits
24authorized under section 45 of the Internal Revenue Code,
25as amended, and the tax credit applicant is a partnership,
26limited liability company, S corporation, estate, trust, or
27other reporting entity all of the income of which is taxed
28directly to its equity holders or beneficiaries, for the taxes
29imposed under chapter 422, division II or III, the tax credit
30certificate may be issued to a partner if the business is a
31partnership, a shareholder if the business is an S corporation,
32or a member if the business is a limited liability company
33in the amounts designated by the eligible partnership, S
34corporation, or limited liability company. In absence of such
35designation, the credits under this section shall flow through
-39-1to the partners, shareholders, or members in accordance with
2their pro rata share of the income of the entity.
3   Sec. 100.  Section 476C.4, subsection 4, paragraph c,
4subparagraph (1), Code 2019, is amended to read as follows:
   5(1)  If an applicant under this section is eligible to
6receive renewable electricity production credits authorized
7under section 45 of the Internal Revenue Code, as amended, and
8the tax credit applicant is a partnership, limited liability
9company, S corporation, estate, trust, or other reporting
10entity all of the income of which is taxed directly to its
11equity holders or beneficiaries, for the taxes imposed under
12chapter 422, division II or III, the tax credit certificates
13and all future rights to the tax credit in this section may be
14distributed to an equity holder or beneficiary as a liquidating
15distribution or portion thereof, of a holder or beneficiary’s
16interest in the applicant entity.
17   Sec. 101.  Section 476C.6, subsection 1, paragraph b, Code
182019, is amended to read as follows:
   19b.  The transferee may use the amount of the tax credit
20transferred against taxes imposed under chapter 422, divisions
21II, III, and V, and chapter 432 for any tax year the original
22transferor could have claimed the tax credit. The transferee
23may claim a refund under chapter 423 or 437A for any tax
24year within the time period set forth in section 423.47 or
25437A.14 for which the original transferor could have claimed
26the refund. Any consideration received for the transfer of
27the tax credit shall not be included as income under chapter
28422, divisions II, III, and V. Any consideration paid for the
29transfer of the tax credit shall not be deducted from income
30under chapter 422, divisions II, III, and V.
31   Sec. 102.  Section 483A.1A, subsection 10, paragraph e, Code
322019, is amended to read as follows:
   33e.  Is a member of the armed forces of the United States
34who is serving on active duty, and claims residency in this
35state, and has filed a state individual income tax return
-40-1as a resident pursuant to chapter 422, division II, for the
2preceding tax year,
or is stationed in this state.
3   Sec. 103.  Section 541A.2, subsection 6, unnumbered
4paragraph 1, Code 2019, is amended to read as follows:
   5An individual development account closed in accordance
6with this subsection is not subject to the limitations and
7benefits provided by this chapter but is subject to state tax
8in accordance with the provisions of section 422.7, subsection
928, and
section 450.4, subsection 6. An individual development
10account may be closed for any of the following reasons:
11   Sec. 104.  Section 541A.3, subsection 2, Code 2019, is
12amended by striking the subsection.
13   Sec. 105.  Section 541B.2, subsection 10, Code 2019, is
14amended to read as follows:
   1510.  “Resident” means the same as defined in section 422.4
16
 422.32.
17   Sec. 106.  Section 633.479, unnumbered paragraph 2, Code
182019, is amended to read as follows:
   19An order approving the final report and discharging
20the personal representative shall not be required if all
21distributees otherwise entitled to notice are adults, under no
22legal disability, have signed waivers of notice as provided in
23section 633.478, have signed statements of consent agreeing
24that the prayer of the final report shall constitute an
25order approving the final report and discharging the personal
26representative, and if the statements of consent are dated
27not more than thirty days prior to the date of the final
28report, and if compliance with sections section 422.27, Code
292019,
and section 450.58 have been fulfilled and receipts,
30sworn statements, and certificates, as any of these that are
31required, are on file. In those instances final order shall
32not be required and the prayer of the final report shall be
33considered as granted and shall have the same force and effect
34as an order of discharge of the personal representative and an
35order approving the final report.
-41-
1   Sec. 107.  Section 635.7, subsection 1, Code 2019, is amended
2to read as follows:
   31.  The personal representative is required to file the
4report and inventory for which provision is made in section
5633.361, including all probate and nonprobate assets. This
6chapter does not exempt the personal representative from
7complying with the requirements of section 422.27, Code 2019,
8 450.22, 450.58, 633.480, or 633.481, and the administration of
9an estate whether converted to or from a small estate shall be
10considered one proceeding pursuant to section 633.330.
11   Sec. 108.  Section 904.809, subsection 5, paragraph a,
12subparagraph (2), Code 2019, is amended to read as follows:
   13(2)  The inmate’s employer shall provide each employed
14inmate with the withholding statement required under section
15422.16, and
any other employment information necessary for the
16receipt of the remainder of an inmate’s payroll earnings.
17   Sec. 109.  REPEAL.  Sections 99B.8, 99D.16, 99F.18,
18190B.105, 257.22 through 257.26, 298.14, 422.4 through 422.11D,
19422.11F, 422.11H, 422.11J, 422.11M, 422.11Q, 422.11R, 422.11V,
20422.11W, 422.11Z, 422.12, 422.12A through 422.12E, 422.12H,
21422.12J through 422.12L, 422.13, 422.14, 422.16, 422.17,
22422.19, 422.23, 422.27, 422.31, 422D.2 through 422D.4, 456A.16,
23541B.6, Code 2019, are repealed.
24   Sec. 110.  EFFECTIVE DATE.  This division of this Act takes
25effect January 1, 2021.
26   Sec. 111.  APPLICABILITY.  This division of this Act applies
27to tax years beginning on or after January 1, 2021.
28DIVISION II
29SALES AND USE TAX
30   Sec. 112.  Section 423.2, subsection 1, unnumbered paragraph
311, Code 2019, is amended to read as follows:
   32There is imposed a tax of six eleven percent upon the sales
33price of all sales of tangible personal property, consisting
34of goods, wares, or merchandise, sold at retail in the state
35to consumers or users except as otherwise provided in this
-42-1subchapter.
2   Sec. 113.  Section 423.2, subsections 2 and 3, Code 2019, are
3amended to read as follows:
   42.  A tax of six eleven percent is imposed upon the sales
5price of the sale or furnishing of gas, electricity, water,
6heat, pay television service, and communication service,
7including the sales price from such sales by any municipal
8corporation or joint water utility furnishing gas, electricity,
9water, heat, pay television service, and communication service
10to the public in its proprietary capacity, except as otherwise
11provided in this subchapter, when sold at retail in the state
12to consumers or users.
   133.  A tax of six eleven percent is imposed upon the
14sales price of all sales of tickets or admissions to places
15of amusement, fairs, and athletic events except those of
16elementary and secondary educational institutions. A tax
17of six eleven percent is imposed on the sales price of an
18entry fee or like charge imposed solely for the privilege of
19participating in an activity at a place of amusement, fair, or
20athletic event unless the sales price of tickets or admissions
21charges for observing the same activity are taxable under this
22subchapter. A tax of six eleven percent is imposed upon that
23part of private club membership fees or charges paid for the
24privilege of participating in any athletic sports provided club
25members.
26   Sec. 114.  Section 423.2, subsection 4, paragraph a, Code
272019, is amended to read as follows:
   28a.  A tax of six eleven percent is imposed upon the sales
29price derived from the operation of all forms of amusement
30devices and games of skill, games of chance, raffles, and bingo
31games as defined in chapter 99B, and card game tournaments
32conducted under section 99B.27, that are operated or conducted
33within the state, the tax to be collected from the operator in
34the same manner as for the collection of taxes upon the sales
35price of tickets or admission as provided in this section.
-43-1Nothing in this subsection shall legalize any games of skill
2or chance or slot-operated devices which are now prohibited by
3law.
4   Sec. 115.  Section 423.2, subsection 5, Code 2019, is amended
5to read as follows:
   65.  There is imposed a tax of six eleven percent upon the
7sales price from the furnishing of services as defined in
8section 423.1.
9   Sec. 116.  Section 423.2, subsection 7, paragraph a,
10unnumbered paragraph 1, Code 2019, is amended to read as
11follows:
   12A tax of six eleven percent is imposed upon the sales
13price from the sales, furnishing, or service of solid waste
14collection and disposal service.
15   Sec. 117.  Section 423.2, subsection 8, paragraph a, Code
162019, is amended to read as follows:
   17a.  A tax of six eleven percent is imposed on the sales
18price from sales of bundled transactions. For the purposes of
19this subsection, a “bundled transaction” is the retail sale of
20two or more distinct and identifiable products, except real
21property and services to real property, which are sold for one
22nonitemized price. A “bundled transaction” does not include
23the sale of any products in which the sales price varies, or
24is negotiable, based on the selection by the purchaser of the
25products included in the transaction.
26   Sec. 118.  Section 423.2, subsection 9, Code 2019, is amended
27to read as follows:
   289.  A tax of six eleven percent is imposed upon the
29sales price from any mobile telecommunications service,
30including all paging services, that this state is allowed
31to tax pursuant to the provisions of the federal Mobile
32Telecommunications Sourcing Act, Pub.L. No.106-252, 4 U.S.C.
33§116 et seq. For purposes of this subsection, taxes on mobile
34telecommunications service, as defined under the federal Mobile
35Telecommunications Sourcing Act that are deemed to be provided
-44-1by the customer’s home service provider, shall be paid to
2the taxing jurisdiction whose territorial limits encompass
3the customer’s place of primary use, regardless of where the
4mobile telecommunications service originates, terminates,
5or passes through and shall in all other respects be taxed
6in conformity with the federal Mobile Telecommunications
7Sourcing Act. All other provisions of the federal Mobile
8Telecommunications Sourcing Act are adopted by the state of
9Iowa and incorporated into this subsection by reference. With
10respect to mobile telecommunications service under the federal
11Mobile Telecommunications Sourcing Act, the director shall, if
12requested, enter into agreements consistent with the provisions
13of the federal Act.
14   Sec. 119.  Section 423.2, subsection 10, paragraph a, Code
152019, is amended to read as follows:
   16a.  A tax of six eleven percent is imposed on the sales price
17of specified digital products sold at retail in the state. The
18tax applies whether the purchaser obtains permanent use or less
19than permanent use of the specified digital product, whether
20the sale is conditioned or not conditioned upon continued
21payment from the purchaser, and whether the sale is on a
22subscription basis or is not on a subscription basis.
23   Sec. 120.  Section 423.2, subsection 12, Code 2019, is
24amended to read as follows:
   2512.  The sales tax rate of six eleven percent is reduced to
26five ten percent on January 1, 2030.
27   Sec. 121.  Section 423.2A, subsection 2, paragraph c, Code
282019, is amended to read as follows:
   29c.  Transfer one-sixth nine and four thousand one hundred
30eighteen ten-thousandths percent
of the remaining revenues to
31the secure an advanced vision for education fund created in
32section 423F.2. This paragraph “c” is repealed December 31,
332029.
34   Sec. 122.  Section 423.5, subsection 1, unnumbered paragraph
351, Code 2019, is amended to read as follows:
-45-   1Except as provided in paragraph “c”, an excise tax at the
2rate of six eleven percent of the purchase price or installed
3purchase price is imposed on the following:
4   Sec. 123.  Section 423.5, subsection 4, Code 2019, is amended
5to read as follows:
   64.  The use tax rate of six eleven percent is reduced to five
7
 ten percent on January 1, 2030.
8   Sec. 124.  Section 423.43, subsection 1, paragraph b, Code
92019, is amended to read as follows:
   10b.  Subsequent to the deposit into the general fund of
11the state and after the transfer of such revenues collected
12under chapter 423B, the department shall transfer one-sixth
13
 one-eleventh of such remaining revenues to the secure an
14advanced vision for education fund created in section 423F.2.
15This paragraph is repealed December 31, 2029.
16   Sec. 125.  EFFECTIVE DATE.  This division of this Act takes
17effect January 1, 2021.
18DIVISION III
19FUTURE INDIVIDUAL INCOME TAX CHANGES — REPEAL
20   Sec. 126.  REPEAL.  2018 Iowa Acts, chapter 1161, sections 99
21through 127, 131, and 132, are repealed.
22   Sec. 127.  EFFECTIVE DATE.  This division of this Act takes
23effect January 1, 2021.
24DIVISION IV
25CORRESPONDING AMENDMENTS LEGISLATION
26   Sec. 128.  IMPLEMENTATION OF ACT.  Additional legislation
27is required to fully implement this Act. The director of the
28department of revenue shall, in compliance with section 2.16,
29prepare draft legislation for submission to the legislative
30services agency, as necessary, to implement the repeal of the
31individual income tax under this Act and under other provisions
32of law.
33EXPLANATION
34The inclusion of this explanation does not constitute agreement with
35the explanation’s substance by the members of the general assembly.
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   1This bill relates to state taxes by repealing the individual
2income tax and increasing the state sales and use tax rates.
   3Division I repeals the individual income tax and makes
4numerous conforming changes to the Code to remove references
5to the individual income tax and to update or move provisions
6of the individual income tax that are also applicable by
7reference to the corporate income tax and the franchise tax.
8The division also repeals the emergency medical services income
9surtax in Code chapter 422D, the instructional support income
10surtax in Code section 257.21, the educational improvement
11income surtax in Code section 257.29, and the physical plant
12and equipment income surtax in Code section 298.2, because
13income surtax revenues will no longer be generated without the
14state individual income tax.
   15The repeal of the individual income tax will also affect the
16industrial new jobs training program in Code chapter 260E, the
17accelerated career education program in Code chapter 260G, and
18the targeted jobs withholding credit in Code section 403.19A,
19because those programs rely on income tax amounts withheld from
20employee wages by employers.
   21The division provides that additional legislation is
22required to fully implement the division and requires the
23director of the department of revenue to prepare draft
24legislation in compliance with Code section 2.16 for submission
25to the legislative services agency to implement the repeal of
26the individual income tax.
   27The division takes effect January 1, 2021, and applies to tax
28years beginning on or after that date.
   29Division II increases the state sales and use tax rate to
3011 percent from 6 percent. By operation of law as provided in
31Article VII, section 10 of the Iowa Constitution, a portion
32(0.375 percent) of the state sales tax generated and collected
33from the rate increase provided in this division will be
34transferred to the natural resources and outdoor recreation
35trust fund in Code section 461.31. The division amends the
-47-1transfer of state sales tax revenues to the secure an advanced
2vision for education fund (SAVE) in Code section 423.2A from
3one-sixth (approximately 16.66 percent) of the revenues to
49.4118 percent of the revenues to ensure that SAVE receives
5approximately the same amounts of sales tax revenue as it did
6prior to the sales tax rate increase provided in the division.
   7The division takes effect January 1, 2021.
   8Division III strikes future contingent individual income tax
9changes in 2018 Iowa Acts, chapter 1161, due to the repeal of
10the individual income tax in the bill. Currently, the future
11individual income tax changes are set to begin in tax year 2023
12or in a later tax year, contingent upon the satisfaction of
13certain net general fund revenue amount and growth targets.
   14The division takes effect January 1, 2021, and applies to tax
15years beginning on or after that date.
   16Division IV requires the director of the department of
17revenue to prepare draft legislation for submission to the
18legislative services agency, as necessary, to implement the
19repeal of the individual income tax.
   20The division takes effect July 1, 2019.
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