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Senate File 631 - IntroducedA Bill ForAn Act 1relating to the administration of the tax and
2related laws by the department of revenue, including the
3administration and modification of certain tax credits
4and refunds, the individual and corporate income taxes,
5franchise taxes, franchise alternative minimum taxes, moneys
6and credits taxes, sales and use taxes, and automobile
7rental excise taxes, the assessment of property owned by
8certain long distance telephone companies, establishing
9a taxation and exemption of computers task force, and
10providing for other properly related matters, making
11penalties applicable, and including effective date and
12retroactive applicability provisions.
13BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2INCOME AND FRANCHISE TAX
3 Section 1. Section 422.4, subsection 16, paragraph e,
4unnumbered paragraph 1, Code 2019, is amended to read as
5follows:
6Add back the following percentage of the qualified business
7income deduction deductions under section 199A sections 199A(a)
8and 199A(g) of the Internal Revenue Code taken and allowable in
9calculating federal taxable income for the applicable tax year:
10 Sec. 2. Section 422.9, subsection 2A, paragraph a,
11unnumbered paragraph 1, Code 2019, is amended to read as
12follows:
13The following percentage of the qualified business income
14deduction deductions under section 199A sections 199A(a) and
15199A(g) of the Internal Revenue Code taken and allowable in
16calculating federal taxable income for the applicable tax year:
17 Sec. 3. Section 422.9, subsection 2A, paragraph b, Code
182019, is amended to read as follows:
19b. Notwithstanding paragraph “a”, and section 422.4,
20subsection 16, paragraph “e”, for an entity electing or
21required to file a composite return under section 422.13,
22subsection 5, the deduction allowed under this subsection for
23purposes of the composite return shall be an amount equal to
24the applicable percentage described in paragraph “a” of the
25deduction deductions that would be allowable for federal income
26tax purposes under section 199A sections 199A(a) and 199A(g) of
27the Internal Revenue Code by an individual taxpayer reporting
28the same items of income and loss that are included in the
29composite return.
30 Sec. 4. Section 422.11S, subsection 7, paragraph b, Code
312019, is amended to read as follows:
32b. The department shall authorize a school tuition
33organization to issue tax credit certificates for contributions
34made to the school tuition organization. The aggregate amount
35of tax credit certificates that the department shall authorize
-1-1for a school tuition organization for a tax calendar year shall
2be determined for that organization pursuant to subsection 8.
3However, a school tuition organization shall not be authorized
4to issue tax credit certificates unless the organization is
5controlled by a board of directors consisting of at least
6 seven members. The names and addresses of the members shall
7be provided to the department and shall be made available
8by the department to the public, notwithstanding any state
9confidentiality restrictions.
10 Sec. 5. Section 422.11S, subsection 8, paragraph a,
11subparagraph (2), Code 2019, is amended to read as follows:
12(2) “Total approved tax credits” means for the tax year
13beginning in the 2006 calendar year, two million five hundred
14thousand dollars, for the tax year beginning in the 2007
15calendar year, five million dollars, for tax calendar years
16beginning on or after January 1, 2008, but before January 1,
172012, seven million five hundred thousand dollars, for tax
18 calendar years beginning on or after January 1, 2012, but
19before January 1, 2014, eight million seven hundred fifty
20thousand dollars, and for tax calendar years beginning on or
21after January 1, 2014, but before January 1, 2019, twelve
22million dollars, and for tax calendar years beginning on or
23after January 1, 2019, thirteen million dollars.
24 Sec. 6. Section 422.11S, subsection 8, paragraph b,
25unnumbered paragraph 1, Code 2019, is amended to read as
26follows:
27Each year by December 1, the department shall authorize
28school tuition organizations to issue tax credit certificates
29for the following tax calendar year. However, for the tax year
30beginning in the 2006 calendar year only, the department, by
31September 1, 2006, shall authorize school tuition organizations
32to issue tax credit certificates for the 2006 calendar tax
33 year. For the tax year beginning in the 2006 calendar year
34only, each school served by a school tuition organization shall
35submit a participation form to the department by August 1,
-2-12006, providing the certified enrollment as of the third Friday
2of September 2005, along with the school tuition organization
3that represents the school. Tax credit certificates available
4for issue by each school tuition organization shall be
5determined in the following manner:
6 Sec. 7. Section 422.11S, subsection 9, unnumbered paragraph
71, Code 2019, is amended to read as follows:
8A school tuition organization that receives a voluntary cash
9or noncash contribution pursuant to this section shall report
10to the department, on a form prescribed by the department,
11by January 12 of each tax calendar year all of the following
12information:
13 Sec. 8. Section 422.11S, subsection 9, paragraphs b and c,
14Code 2019, are amended to read as follows:
15b. The total number and dollar value of contributions
16received and the total number and dollar value of the tax
17credits approved during the previous tax calendar year.
18c. A list of the individual donors for the previous tax
19 calendar year that includes the dollar value of each donation
20and the dollar value of each approved tax credit.
21 Sec. 9. Section 422.12C, subsection 4, Code 2019, is amended
22to read as follows:
234. Married taxpayers who have filed joint federal returns
24electing to file separate returns or to file separately on a
25combined return form must determine the child and dependent
26care credit under subsection 1 or the early childhood
27development tax credit under subsection 2 based upon their
28combined net income and allocate the total credit amount to
29each spouse in the proportion that each spouse’s respective net
30income bears to the total combined net income. Nonresidents or
31part-year residents of Iowa must determine their Iowa child and
32dependent care credit under subsection 1 or the early childhood
33development tax credit under subsection 2 in the ratio of
34their Iowa source net income to their all source net income.
35Nonresidents or part-year residents who are married and elect
-3-1to file separate returns or to file separately on a combined
2return form must allocate the Iowa child and dependent care
3credit under subsection 1 or the early childhood development
4tax credit under subsection 2 between the spouses in the ratio
5of each spouse’s Iowa source net income to the combined Iowa
6source net income of the taxpayers.
7 Sec. 10. Section 422.60, subsection 2, paragraph b, Code
82019, is amended by adding the following new subparagraph:
9 NEW SUBPARAGRAPH. (6) For purposes of this paragraph,
10“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
13the Internal Revenue Code of 1986 as amended and in effect on
14December 21, 2017. This definition shall not be construed to
15include any amendment to the Internal Revenue Code enacted
16after the date specified in the preceding sentence, including
17any amendment with retroactive applicability or effectiveness.
18 Sec. 11. LIKE-KIND EXCHANGES OF PERSONAL PROPERTY
19UNDER CORPORATE INCOME TAX AND FRANCHISE TAX FOR TAX YEAR
202019. Notwithstanding any other provision of law to the
21contrary, all of the following shall apply when computing net
22income for purposes of the corporation income tax or franchise
23tax under section 422.35 for tax years beginning during the
242019 calendar year:
251. The rules for nonrecognition of gain or loss from
26exchanges of real property held for productive use or
27investment and not held primarily for sale, as provided in
28section 1031 of the Internal Revenue Code, as amended up to and
29including March 24, 2018, apply for state income tax purposes
30with regard to exchanges of real property.
312. The rules for nonrecognition of gain or loss from
32exchanges of property other than real property held for
33productive use or investment as provided in section 1031 of the
34Internal Revenue Code, as amended up to and including December
3521, 2017, apply for state income tax purposes, notwithstanding
-4-1any other provision of law to the contrary. If the taxpayer’s
2federal taxable income includes gain or loss from property,
3other than real property described in subsection 1, and the
4taxpayer elects to have this subsection apply, the following
5adjustments shall be made:
6a. (1) Subtract the total amount of gain related to the
7sale or exchange of the property as properly reported for
8federal tax purposes under the Internal Revenue Code.
9(2) Add back any gain related to the sale or exchange of the
10property to the extent such gain does not qualify for deferral
11under section 1031 of the Internal Revenue Code, as amended
12up to and including December 21, 2017, which gain shall be
13calculated using the taxpayer’s adjusted basis in the property
14for state tax purposes.
15b. (1) Add the total amount of loss related to the sale or
16exchange of the property as properly reported for federal tax
17purposes under the Internal Revenue Code.
18(2) Subtract any loss related to the sale or exchange of the
19property to the extent such loss does not qualify for deferral
20under section 1031 of the Internal Revenue Code, as amended
21up to and including December 21, 2017, which loss shall be
22calculated using the taxpayer’s adjusted basis in the property
23for state tax purposes.
24c. Any other adjustments to gains, losses, deductions, or
25tax basis for the property given up or received in the sale or
26exchange pursuant to rules adopted by the director.
27 Sec. 12. REFUNDS — EARLY CHILDHOOD DEVELOPMENT TAX
28CREDIT. Notwithstanding any provision of law to the contrary,
29for tax years beginning prior to January 1, 2019, refunds of
30the early childhood development tax credit provided in section
31422.12C, subsection 2, requested on or after the effective
32date of the provision of this division of this Act amending
33section 422.12C, subsection 4, shall not exceed the amount
34allowed under section 422.12C, subsection 4, as amended by this
35division of this Act.
-5-1 Sec. 13. LEGISLATIVE INTENT. It is the intent of the
2general assembly that the provisions of this division of
3this Act amending section 422.11S are conforming amendments
4consistent with current state law, and that the amendments do
5not change the application of current law but instead reflect
6current law both before and after the enactment of this Act.
7 Sec. 14. EFFECTIVE DATE. The following, being deemed of
8immediate importance, take effect upon enactment:
91. The section of this division of this Act amending section
10422.12C, subsection 4.
112. The section of this division of this Act relating to
12refunds for the early childhood development tax credit.
133. The section of this division of this Act relating to
14like-kind exchanges of personal property under corporate income
15tax and franchise tax.
16 Sec. 15. RETROACTIVE APPLICABILITY. The following apply
17retroactively to January 1, 2019, for tax years beginning on
18or after that date:
191. The section of this division of this Act amending section
20422.4, subsection 16, paragraph “e”, unnumbered paragraph 1.
212. The sections of this division of this Act amending
22section 422.9, subsection 2A.
233. The section of this division of this Act amending section
24422.12C, subsection 4.
254. The section of this division of this Act amending section
26422.60, subsection 2, paragraph “b”.
27 Sec. 16. RETROACTIVE APPLICABILITY — LIKE-KIND EXCHANGES
28OF PERSONAL PROPERTY. The section of this division of this
29Act relating to like-kind exchanges of personal property under
30corporate income tax and franchise tax applies retroactively to
31January 1, 2019, for tax years beginning on or after that date,
32but before January 1, 2020.
33DIVISION II
34ADMINISTRATIVE PROVISIONS
35 Sec. 17. Section 422.20, Code 2019, is amended by adding the
-6-1following new subsection:
2 NEW SUBSECTION. 5. The department may permit, by rule, the
3disclosure of state tax information to a person a taxpayer has
4authorized to receive such state tax information, in the manner
5prescribed by the department.
6 Sec. 18. Section 422.72, Code 2019, is amended by adding the
7following new subsection:
8 NEW SUBSECTION. 8. The department may permit, by rule, the
9disclosure of state tax information to a person a taxpayer has
10authorized to receive such state tax information, in the manner
11prescribed by the department.
12DIVISION III
13SALES AND USE TAX
14 Sec. 19. Section 423.2, subsection 1, paragraph a,
15subparagraph (5), subparagraph division (a), Code 2019, is
16amended to read as follows:
17(a) If a service or warranty contract does not specify a fee
18amount for nontaxable services or taxable personal property,
19the tax imposed pursuant to this section shall be imposed upon
20an amount equal to one-half of the sales price of the contract.
21 Sec. 20. Section 423.2, subsection 6, paragraph k, Code
222019, is amended to read as follows:
23k. Carpentry repair and installation.
24 Sec. 21. Section 423.3, Code 2019, is amended by adding the
25following new subsection:
26 NEW SUBSECTION. 16A. a. The sales price from the sale of
27a grain bin, including material or replacement parts used to
28construct or repair a grain bin.
29b. For purposes of this subsection, “grain bin” means
30property that is vented and covered with corrugated metal or
31similar material, and that is primarily used to hold loose
32grain for drying or storage.
33 Sec. 22. Section 423.3, subsection 47, paragraph c,
34subparagraph (3), Code 2019, is amended by striking the
35subparagraph and inserting in lieu thereof the following:
-7- 1(3) The following within the scope of section 427A.1,
2subsection 1, paragraphs “h” and “i”:
3(a) Computers.
4(b) Machinery.
5(c) Equipment, including pollution control equipment.
6(d) Replacement parts.
7(e) Supplies.
8(f) Materials used to construct or self-construct the
9following:
10(i) Computers.
11(ii) Machinery.
12(iii) Equipment, including pollution control equipment.
13(iv) Replacement parts.
14(v) Supplies.
15 Sec. 23. Section 423.3, subsection 104, paragraph a, Code
162019, is amended to read as follows:
17a. The sales price of specified digital products and of
18prewritten computer software sold, and of enumerated services
19described in section 423.2, subsection 1, paragraph “a”,
20subparagraph (5), or section 423.2, subsection 6, paragraphs
21“bq”, “br”, “bs”, and “bu” furnished, to a commercial enterprise
22for use exclusively by the commercial enterprise. The use of
23prewritten computer software, a specified digital product, or
24service fails to qualify as a use exclusively by the commercial
25enterprise if its use for noncommercial purposes is more than
26de minimis.
27 Sec. 24. Section 423.14A, subsection 3, paragraph b, Code
282019, is amended by striking the paragraph.
29 Sec. 25. Section 423.14A, subsection 3, paragraph d,
30subparagraph (1), Code 2019, is amended to read as follows:
31(1) A marketplace facilitator that makes or facilitates
32Iowa sales on its own behalf or for one or more marketplace
33sellers equal to or exceeding one hundred thousand dollars,
34or in two hundred or more separate transactions, for an
35immediately preceding calendar year or a current calendar year.
-8-1 Sec. 26. Section 423.14A, subsection 3, paragraph e,
2subparagraph (1), unnumbered paragraph 1, Code 2019, is amended
3to read as follows:
4A referrer if, for any immediately preceding calendar year
5or a current calendar year, one hundred thousand dollars or
6more in Iowa sales or two hundred or more separate Iowa sales
7transactions result from referrals from a platform of the
8referrer. A referrer is not required to collect and remit
9sales and use tax pursuant to this paragraph if the referrer
10does all of the following:
11 Sec. 27. Section 423.14A, subsection 3, paragraph e,
12subparagraph (1), subparagraph division (c), unnumbered
13paragraph 1, Code 2019, is amended to read as follows:
14The referrer provides the department with monthly annual
15 reports in an electronic format and in the manner prescribed
16by the department, which monthly annual reports contain all of
17the following:
18 Sec. 28. Section 423.14A, subsection 3, paragraph e, Code
192019, is amended by adding the following new subparagraph:
20 NEW SUBPARAGRAPH. (5) This paragraph is subject to
21implementation by the department by rule and shall not require
22a referrer to collect tax or comply with the notice and
23reporting requirements and other provisions of this paragraph
24unless and until such administrative rules take effect.
25 Sec. 29. Section 423.48, subsection 2, paragraph c, Code
262019, is amended by striking the paragraph.
27 Sec. 30. TAXATION AND EXEMPTION OF COMPUTERS TASK FORCE. A
28taxation and exemption of computers task force is created. The
29department of revenue shall initiate and coordinate the task
30force and provide staff assistance. It is the intent of the
31general assembly that the task force include representatives of
32the department of revenue; a commercial enterprise that claims
33an exemption for computers under section 423.3, subsection
3447; an association that represents manufacturers and other
35industrial producers; and an association that represents
-9-1business tax issues. The director of revenue or the director’s
2designee shall serve as chairperson of the task force.
3The task force shall be charged with reviewing the
4definition of “computer” as used throughout the portions of the
5Iowa Code and the Iowa Administrative Code administered by the
6department of revenue including the exemption for computers
7provided in section 423.3, subsection 47, paragraph “a”,
8subparagraph (4). If the task force recommends modifications
9to the current definition of “computer” including the exemption
10for computers provided in section 423.3, subsection 47,
11paragraph “a”, subparagraph (4), the department of revenue
12shall provide any recommendations to the general assembly by
13January 1, 2020.
14 Sec. 31. REFUNDS. Refunds of taxes, interest, or penalties
15that arise from claims resulting from the enactment of section
16423.3, subsection 16A, for sales occurring between January
171, 2004, and the effective date of the enactment of section
18423.3, subsection 16A, shall be limited to twenty-five thousand
19dollars in the aggregate and shall not be allowed unless refund
20claims are filed prior to October 1, 2019, notwithstanding any
21other law to the contrary. If the amount of claims totals
22more than twenty-five thousand dollars in the aggregate, the
23department of revenue shall prorate the twenty-five thousand
24dollars among all claimants in relation to the amounts of the
25claimants’ valid claims.
26 Sec. 32. EFFECTIVE DATE. The following, being deemed of
27immediate importance, take effect upon enactment:
281. The section of this division of this Act enacting section
29423.3, subsection 16A.
302. The section of this division of this Act amending section
31423.3, subsection 47, paragraph “c”, subparagraph (3).
323. The section of this division of this Act relating to
33refunds that arise from claims resulting from the enactment of
34section 423.3, subsection 16A.
35 Sec. 33. RETROACTIVE APPLICABILITY. The following applies
-10-1retroactively to January 1, 2016, for tax years beginning on
2or after that date:
3The section of this division of this Act amending section
4423.3, subsection 47, paragraph “c”, subparagraph (3).
5 Sec. 34. RETROACTIVE APPLICABILITY. The following applies
6retroactively to tax years beginning on or after January 1,
72004:
8The section of this division of this Act enacting section
9423.3, subsection 16A.
10DIVISION IV
11AUTOMOBILE RENTAL EXCISE TAX
12 Sec. 35. Section 423.14A, subsection 1, paragraph b,
13subparagraph (3), Code 2019, is amended to read as follows:
14(3) A “rental platform”, as defined in section 423C.2, that
15meets the requirements described in person who is not required
16to collect and remit automobile rental excise tax pursuant to
17 section 423C.3, subsection 3, paragraph “c”, subparagraph (2),
18 shall not be considered a “marketplace facilitator” with respect
19to any sale of a transportation service under section 423.2,
20subsection 6, paragraph “bf”, or section 423.5, subsection 1,
21paragraph “e”, consisting of the rental of vehicles subject
22to registration which are registered for a gross weight of
23thirteen tons or less for a period of sixty days or less.
24 Sec. 36. Section 423C.2, subsection 3, paragraphs a and b,
25Code 2019, are amended to read as follows:
26a. A person or any affiliate of a person that owns or
27controls an automobile and makes the automobile available for
28rent through the person or any affiliate, or through a rental
29platform or rental facilitator any other person required to
30collect sales or use tax under chapter 423.
31b. A person or any affiliate of a person who possesses or
32acquires a right or interest in any automobile with an intent
33to rent the automobile to another person, or through the person
34or any affiliate, or through a rental platform or a rental
35facilitator any other person required to collect sales or use
-11-1tax under chapter 423.
2 Sec. 37. Section 423C.2, subsection 6, Code 2019, is amended
3to read as follows:
46. “Facilitation fee” means any consideration, by whatever
5name called, that a rental facilitator or a rental platform
6 person charges to a user for facilitating the user’s rental
7of an automobile. “Facilitation fee” does not include any
8commission an automobile provider pays to a rental facilitator
9or a rental platform person for facilitating the rental of an
10automobile.
11 Sec. 38. Section 423C.2, subsections 9 and 10, Code 2019,
12are amended by striking the subsections.
13 Sec. 39. Section 423C.2, subsection 11, Code 2019, is
14amended to read as follows:
1511. “Rental price” means all consideration charged for
16the renting and facilitation of renting of an automobile
17before taxes, including but not limited to facilitation fees,
18reservation fees, services fees, nonrefundable deposits, and
19any other direct or indirect charge made or consideration
20provided in connection with the renting or facilitation of
21renting of an automobile the same as “sales price” as defined
22in section 423.1, which term includes but is not limited
23to facilitation fees, reservation fees, services fees,
24nonrefundable deposits, and any other direct or indirect charge
25made or consideration provided in connection with the renting
26or facilitation of renting an automobile.
27 Sec. 40. Section 423C.3, Code 2019, is amended to read as
28follows:
29423C.3 Tax on rental of automobiles — collection and
30remittance of tax.
311. For purposes of this section:
32a. “Discount rental charge” means the amount an automobile
33provider charges to a rental facilitator for the rental of an
34automobile, excluding any applicable tax.
35b. “Travel package” means an automobile rental bundled
-12-1with one or more separate components such as lodging, air
2transportation, or similar items and charged for a single
3retail price.
42. 1. A tax of five percent is imposed upon the rental
5price of an automobile if the rental transaction is subject to
6the sales and services tax under chapter 423, subchapter II, or
7the use tax under chapter 423, subchapter III. The tax shall
8not be imposed on any rental transaction not taxable under the
9state sales and services tax, as provided in section 423.3, or
10the state use tax, as provided in section 423.6, on automobile
11rental receipts.
123. 2. This subsection shall govern the collection and
13remittance of the tax imposed under subsection 2 The tax
14imposed under subsection 1 shall be collected and remitted to
15the department by all persons required to collect state sales
16and use tax on the rental transaction under chapter 423.
17a. Unless otherwise provided in this subsection, the
18automobile provider shall collect the tax by adding the tax to
19the rental price of the automobile and the tax, when collected,
20shall be stated as a distinct item separate and apart from
21the rental price of the automobile and the sales and services
22tax imposed under chapter 423, subchapter II, or the use tax
23imposed under chapter 423, subchapter III.
24b. If a transaction for the rental of an automobile involves
25a rental facilitator, all of the following shall occur in the
26order prescribed:
27(1) The rental facilitator shall collect the tax on any
28rental price that the user pays to the rental facilitator in
29the same manner as an automobile provider under paragraph “a”.
30(2) (a) Unless otherwise required by rule or order of
31the department, the rental facilitator shall remit to the
32automobile provider that portion of the tax collected on the
33rental price that represents the discount rental charge.
34(b) No assessment shall be made against a rental facilitator
35for tax due on a discount rental charge if the rental
-13-1facilitator collected the tax and remitted it to an automobile
2provider that has a valid tax permit required under this
3chapter or under chapter 423. This subparagraph division shall
4not apply if the rental facilitator and automobile provider
5are affiliates, or if the department requires the rental
6facilitator to remit taxes collected on that portion of the
7sales price that represents the discount rental charge directly
8to the department.
9(3) The rental facilitator shall remit any remaining tax it
10collected to the department.
11(4) (a) The automobile provider shall collect and remit
12to the department any taxes the rental facilitator remitted to
13the automobile provider, and shall collect and remit to the
14department any taxes due on any amount of rental price the user
15paid to the automobile provider.
16(b) No assessment shall be made against an automobile
17provider for any tax due on a discount rental charge that
18was not remitted to the automobile provider by a rental
19facilitator. This subparagraph division shall not apply if the
20automobile provider and the rental facilitator are affiliates.
21(5) Notwithstanding any other provision of this paragraph
22to the contrary, if a rental facilitator and its affiliates
23facilitate total rentals under this chapter and chapter
24423A that are equal to or less than an aggregate amount of
25rental price and sales price of ten thousand dollars for an
26immediately preceding calendar year or a current calendar year,
27or in ten or fewer separate transactions for an immediately
28preceding calendar year or a current calendar year, the
29rental facilitator shall not be required to collect tax on the
30amount of sales price that represents the rental facilitator’s
31facilitation fee.
32c. (1) If a transaction for the rental of an automobile
33involves a rental platform, other than a rental platform
34described in subparagraph (2), the rental platform shall
35collect and remit the tax imposed under this chapter in the
-14-1same manner as an automobile provider under paragraph “a”.
2(2) 3. A rental platform person is not required to collect
3and remit the tax imposed under this chapter in the same manner
4as an automobile provider under paragraph “a” if the rental
5platform person meets all of the following requirements:
6a. The person or any affiliate of the person is not an
7automobile provider.
8b. The person or any affiliate of the person facilitates the
9renting of an automobile by doing all of the following:
10(1) The person owns, operates, or controls an automobile
11rental marketplace that allows an automobile provider who is
12not an affiliate of the person to offer or list an automobile
13for rent on the marketplace. For purposes of this paragraph,
14it is immaterial whether or not the automobile provider has
15a tax permit under this chapter or chapter 423 or whether
16the automobile is owned by a natural person or by a business
17entity.
18(2) The person or affiliate of the person collects or
19processes the rental price charged to the user.
20(a) c. The only sales the rental platform person and
21its affiliates of the person facilitate that are subject to
22tax under chapter 423 are sales of a transportation service
23under section 423.2, subsection 6, paragraph “bf”, or section
24423.5, subsection 1, paragraph “e”, consisting of the rental
25of vehicles subject to registration which are registered for
26a gross weight of thirteen tons or less for a period of sixty
27days or less.
28(b) d. The rental platform person operates a peer-to-peer
29automobile sharing marketplace.
30(3) 4. For any rental transaction for which the rental
31platform a person is required to or elects to collect and
32remit the tax under this chapter, the rental platform person
33 shall also be liable for the collection and remittance of any
34sales or use tax due on that transaction under section 423.2,
35subsection 6, paragraph “bf”, or section 423.5, subsection
-15-11, paragraph “e”, notwithstanding any other provision to the
2contrary in chapter 423.
3(4) 5. For any rental transaction for which the rental
4platform person is not required to collect and remit the
5tax under this chapter as provided under subparagraph (2)
6 subsection 3, the automobile provider shall be solely liable
7for any amount of uncollected or unremitted tax under this
8chapter and chapter 423.
9DIVISION V
10TELEPHONE COMPANY PROPERTY
11 Sec. 41. Section 476.1D, Code 2019, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 10. a. The board, at the request of a
14long distance telephone company, shall classify such company
15as a competitive long distance telephone company if more
16than half of the company’s revenues from its Iowa intrastate
17telecommunications services and facilities are received
18from services and facilities that the board has determined
19to be subject to effective competition, or if more than
20half of the company’s revenues from its Iowa intrastate
21telecommunications services and facilities are received from
22intralata interexchange services and facilities. For purposes
23of this subsection, “intralata interexchange services” means
24those interexchange services that originate and terminate
25within the same local access transport area.
26b. The board shall promptly notify the director of revenue
27that a long distance telephone company has been classified
28as a competitive long distance telephone company. Upon such
29notification by the board, the director of revenue shall assess
30the property of such competitive long distance telephone
31company, which property is first assessed for taxation in this
32state on or after January 1, 1996, in the same manner as all
33other property assessed as commercial property by the local
34assessor under chapters 427, 427A, 427B, 428, and 441. As used
35in this section, “long distance telephone company” means an
-16-1entity that provides telephone service and facilities between
2local exchanges, but does not include a cellular service
3provider or a local exchange utility holding a certificate
4issued under section 476.29, subsection 12.
5 Sec. 42. Section 476.1D, subsection 10, as enacted in this
6division of this Act, is amended by striking the subsection.
7 Sec. 43. EFFECTIVE DATE. The following, being deemed of
8immediate importance, takes effect upon enactment:
9The section of this division of this Act enacting section
10476.1D, subsection 10.
11 Sec. 44. RETROACTIVE APPLICABILITY. The following applies
12retroactively to July 1, 2018, for assessment years beginning
13on or after that date:
14The section of this division of this Act enacting section
15476.1D, subsection 10.
16 Sec. 45. EFFECTIVE DATE. The following takes effect July
171, 2021:
18The section of this division of this Act striking section
19476.1D, subsection 10.
20 Sec. 46. APPLICABILITY. The following applies to
21assessment years beginning on or after January 1, 2022:
22The section of this division of this Act striking section
23476.1D, subsection 10.
24DIVISION VI
25CHILD AND DEPENDENT CARE CREDIT AND EARLY CHILDHOOD DEVELOPMENT
26CREDIT
27 Sec. 47. Section 422.12C, subsection 1, Code 2019, is
28amended to read as follows:
291. The taxes imposed under this division, less the amounts
30of nonrefundable credits allowed under this division, shall
31be reduced by a child and dependent care credit equal to the
32following percentages of the federal child and dependent care
33credit provided in section 21 of the Internal Revenue Code,
34without regard to whether or not the federal credit was limited
35by the taxpayer’s federal tax liability:
-17- 1a. For a taxpayer with net income of less than ten twelve
2 thousand seven hundred fifty dollars, seventy-five percent.
3b. For a taxpayer with net income of ten twelve thousand
4seven hundred fifty dollars or more but less than twenty
5 twenty-five thousand four hundred ninety dollars, sixty-five
6percent.
7c. For a taxpayer with net income of twenty twenty-five
8 thousand four hundred ninety dollars or more but less than
9twenty-five thirty-one thousand eight hundred sixty dollars,
10fifty-five percent.
11d. For a taxpayer with net income of twenty-five thirty-one
12 thousand eight hundred sixty dollars or more but less than
13thirty-five forty-four thousand six hundred ten dollars, fifty
14percent.
15e. For a taxpayer with net income of thirty-five forty-four
16 thousand six hundred ten dollars or more but less than forty
17 fifty thousand nine hundred eighty dollars, forty percent.
18f. For a taxpayer with net income of forty fifty thousand
19nine hundred eighty dollars or more but less than forty-five
20 fifty-seven thousand three hundred sixty dollars, thirty
21percent.
22g. For a taxpayer with net income of forty-five fifty-seven
23 thousand three hundred sixty dollars or more, zero percent.
24 Sec. 48. Section 422.12C, subsection 2, paragraph a, Code
252019, is amended to read as follows:
26a. The taxes imposed under this division, less the amounts
27of nonrefundable credits allowed under this division, may be
28reduced by an early childhood development tax credit equal to
29twenty-five percent of the first one thousand dollars which
30the taxpayer has paid to others for each dependent, as defined
31in the Internal Revenue Code, ages three through five for
32early childhood development expenses. In determining the
33amount of early childhood development expenses for the tax year
34beginning in the 2006 calendar year only, such expenses paid
35during November and December of the previous tax year shall
-18-1be considered paid in the tax year for which the tax credit
2is claimed. This credit is available to a taxpayer whose net
3income is less than forty-five fifty-seven thousand three
4hundred sixty dollars. If the early childhood development
5tax credit is claimed for a tax year, the taxpayer and the
6taxpayer’s spouse shall not claim the child and dependent care
7credit under subsection 1.
8 Sec. 49. Section 422.12C, Code 2019, is amended by adding
9the following new subsection:
10 NEW SUBSECTION. 5. a. Upon determination of the latest
11cumulative inflation factor, the director shall multiply
12each net income level set forth in subsection 1 or 2 by this
13cumulative inflation factor, shall round off the resulting
14product to the nearest one dollar, and shall incorporate the
15result into the net income levels in subsection 1 or 2 for each
16tax year beginning on or after January 1, 2019.
17b. For purposes of this subsection, “cumulative inflation
18factor” means the product of the annual inflation factor for
19the 2019 calendar year and all annual inflation factors for
20subsequent calendar years as determined by section 422.4,
21subsection 1, paragraph “a”. The cumulative inflation factor
22applies to all tax years beginning on or after January 1 of
23the calendar year for which the latest annual inflation factor
24has been determined. Notwithstanding any other provision,
25the annual inflation factor for the 2019 calendar year is one
26hundred percent.
27 Sec. 50. EFFECTIVE DATE. This division of this Act, being
28deemed of immediate importance, takes effect upon enactment.
29 Sec. 51. RETROACTIVE APPLICABILITY. This division of this
30Act applies retroactively to tax years beginning on or after
31January 1, 2019.
32DIVISION VII
33APPOrtioNMENT OF CERTAIN BUSINESS INCOME OF AN AIRLINE
34 Sec. 52. Section 422.33, subsection 2, paragraph a,
35subparagraph (2), Code 2019, is amended by adding the following
-19-1new subparagraph divisions:
2 NEW SUBPARAGRAPH DIVISION. (0f) Notwithstanding
3subparagraph division (c), where income is derived by an
4airline from transportation operations, the part attributable
5to business within the state shall be in the proportion that
6the miles of the airline traveled in this state bears to the
7total miles of such airline traveled everywhere.
8 NEW SUBPARAGRAPH DIVISION. (00f) (i) Notwithstanding
9subparagraph division (c), where income is derived by a
10qualified air freight forwarder from transportation operations
11through an affiliated airline, such income shall be apportioned
12as follows:
13(A) For tax years beginning during the 2020 calendar year,
14ninety percent of such income shall be equitably apportioned
15as provided in subparagraph division (c), and of the remaining
16ten percent of such income, the part attributable to business
17within the state shall be in the proportion that the miles
18of the qualified air freight forwarder’s affiliated airline
19traveled in this state bears to the total miles of the
20affiliated airline traveled everywhere.
21(B) For tax years beginning during the 2021 calendar year,
22eighty percent of such income shall be equitably apportioned
23as provided in subparagraph division (c), and of the remaining
24twenty percent of such income, the part attributable to
25business within the state shall be in the proportion that the
26miles of the qualified air freight forwarder’s affiliated
27airline traveled in this state bears to the total miles of the
28affiliated airline traveled everywhere.
29(C) For tax years beginning during the 2022 calendar year,
30seventy percent of such income shall be equitably apportioned
31as provided in subparagraph division (c), and of the remaining
32thirty percent of such income, the part attributable to
33business within the state shall be in the proportion that the
34miles of the qualified air freight forwarder’s affiliated
35airline traveled in this state bears to the total miles of the
-20-1affiliated airline traveled everywhere.
2(D) For tax years beginning during the 2023 calendar year,
3sixty percent of such income shall be equitably apportioned as
4provided in subparagraph division (c), and of the remaining
5forty percent of such income, the part attributable to business
6within the state shall be in the proportion that the miles
7of the qualified air freight forwarder’s affiliated airline
8traveled in this state bears to the total miles of the
9affiliated airline traveled everywhere.
10(E) For tax years beginning during the 2024 calendar year,
11fifty percent of such income shall be equitably apportioned as
12provided in subparagraph division (c), and of the remaining
13fifty percent of such income, the part attributable to business
14within the state shall be in the proportion that the miles
15of the qualified air freight forwarder’s affiliated airline
16traveled in this state bears to the total miles of the
17affiliated airline traveled everywhere.
18(F) For tax years beginning during the 2025 calendar year,
19forty percent of such income shall be equitably apportioned as
20provided in subparagraph division (c), and of the remaining
21sixty percent of such income, the part attributable to business
22within the state shall be in the proportion that the miles
23of the qualified air freight forwarder’s affiliated airline
24traveled in this state bears to the total miles of the
25affiliated airline traveled everywhere.
26(G) For tax years beginning during the 2026 calendar year,
27thirty percent of such income shall be equitably apportioned
28as provided in subparagraph division (c), and of the remaining
29seventy percent of such income, the part attributable to
30business within the state shall be in the proportion that the
31miles of the qualified air freight forwarder’s affiliated
32airline traveled in this state bears to the total miles of the
33affiliated airline traveled everywhere.
34(H) For tax years beginning during the 2027 calendar year,
35twenty percent of such income shall be equitably apportioned
-21-1as provided in subparagraph division (c), and of the remaining
2eighty percent of such income, the part attributable to
3business within the state shall be in the proportion that the
4miles of the qualified air freight forwarder’s affiliated
5airline traveled in this state bears to the total miles of the
6affiliated airline traveled everywhere.
7(I) For tax years beginning during the 2028 calendar year,
8ten percent of such income shall be equitably apportioned as
9provided in subparagraph division (c), and of the remaining
10ninety percent of such income, the part attributable to
11business within the state shall be in the proportion that the
12miles of the qualified air freight forwarder’s affiliated
13airline traveled in this state bears to the total miles of the
14affiliated airline traveled everywhere.
15(J) For tax years beginning on or after January 1, 2029,
16the part attributable to business within the state shall be
17in the proportion that the miles of the qualified air freight
18forwarder’s affiliated airline traveled in this state bears to
19the total miles of the affiliated airline traveled everywhere.
20(ii) For purposes of this subparagraph division (00f),
21“qualified air freight forwarder” means a taxpayer who meets all
22of the following requirements:
23(A) The taxpayer is primarily engaged in the facilitation of
24the transportation of property by air.
25(B) The taxpayer does not itself operate aircraft.
26(C) The taxpayer is in the same affiliated group as an
27airline.
28 Sec. 53. Section 422.33, subsection 2, paragraph a,
29subparagraph (2), subparagraph division (g), Code 2019, is
30amended to read as follows:
31(g) Where income consists of more than one class of income
32as provided in subparagraph divisions (a) through (e) (00f)
33 of this subparagraph, it shall be reasonably apportioned by
34the business activity ratio provided in rules adopted by the
35director.
-22-1 Sec. 54. APPLICABILITY. This division of this Act applies
2to tax years beginning on or after January 1, 2020.
3DIVISION VIII
4BURIAL TRUSTS
5 Sec. 55. Section 422.7, Code 2019, is amended by adding the
6following new subsection:
7 NEW SUBSECTION. 6. Subtract, to the extent included, income
8from interest and earnings received from a burial trust fund
9as defined in section 523A.102.
10DIVISION IX
11ADOPTION TAX CREDIT
12 Sec. 56. Section 422.12A, subsection 2, Code 2019, is
13amended to read as follows:
142. The taxes imposed under this division, less the credits
15allowed under section 422.12, shall be reduced by an adoption
16tax credit equal to the amount of qualified adoption expenses
17paid or incurred by the taxpayer during the tax year in
18connection with the adoption of a child by the taxpayer, not to
19exceed five thousand dollars per adoption.
20 Sec. 57. Section 422.12A, Code 2019, is amended by adding
21the following new subsection:
22 NEW SUBSECTION. 3A. The credit under this section with
23respect to any qualified adoption expense shall be allowed
24during a tax year as follows:
25a. For any qualified adoption expense paid or incurred prior
26to or during the tax year in which the adoption becomes final,
27the tax year in which the adoption becomes final.
28b. For any qualified adoption expense paid or incurred after
29the tax year in which the adoption becomes final, the tax year
30in which an adoption expense is paid or incurred.
31 Sec. 58. RETROACTIVE APPLICABILITY. This division of this
32Act applies retroactively to January 1, 2019, for tax years
33beginning on or after that date.
34DIVISION X
35TARGETED JOBS WITHHOLDING CREDIT
-23-1 Sec. 59. Section 403.19A, subsection 3, paragraph c,
2subparagraph (2), Code 2019, is amended to read as follows:
3(2) The pilot project city and the economic development
4authority shall not enter into a withholding agreement after
5June 30, 2019 2023.
6 Sec. 60. EFFECTIVE DATE. This division of this Act, being
7deemed of immediate importance, takes effect upon enactment.
8DIVISION XI
9SCHOOL TUITION ORGANIZATION TAX CREDITS
10 Sec. 61. Section 422.11S, subsection 8, paragraph a,
11subparagraph (2), Code 2019, is amended to read as follows:
12(2) “Total approved tax credits” means for the tax year
13beginning in the 2006 calendar year, two million five hundred
14thousand dollars, for the tax year beginning in the 2007
15calendar year, five million dollars, for tax years beginning
16on or after January 1, 2008, but before January 1, 2012, seven
17million five hundred thousand dollars, for tax years beginning
18on or after January 1, 2012, but before January 1, 2014, eight
19million seven hundred fifty thousand dollars, and for tax years
20beginning on or after January 1, 2014, but before January 1,
212019, twelve million dollars, and for tax years beginning on
22or after January 1, 2019, but before January 1, 2020, thirteen
23million dollars, and for tax years beginning on or after
24January 1, 2020, seventeen million dollars.
25 Sec. 62. CONTINGENT CODE EDITOR DIRECTIVE. The Code editor
26is directed to harmonize the section of this division of this
27Act amending section 422.11S with the other division of this
28Act amending section 422.11S, if enacted, by changing tax year
29to calendar year where appropriate and to make other related
30changes, if necessary, to effectuate such changes.
31DIVISION XII
32DEDUCTING RESIDUAL FERTILIZER
33 Sec. 63. Section 422.7, Code 2019, is amended by adding the
34following new subsection:
35 NEW SUBSECTION. 60. a. For purposes of this subsection,
-24-1“residual fertilizer supply” means an asset or an improvement to
2land that meets all of the following requirements:
3(1) The asset or improvement consists of residual
4fertilizer or excess available nutrients that are incorporated
5into and inseparable from land.
6(2) The asset or improvement is sold or exchanged in
7conjunction with the sale or exchange of land upon which the
8asset or improvement is located.
9(3) Following the sale or exchange, an expense deduction,
10amortization deduction, or depreciation deduction is allowable
11for federal tax purposes under the Internal Revenue Code with
12respect to the asset or improvement in the hands of a taxpayer
13other than the seller.
14b. For any sale or exchange of a residual fertilizer supply
15executed on or after July 1, 2019, an expense deduction,
16depreciation deduction, or amortization deduction with respect
17to the residual fertilizer supply shall not be allowed under
18this division unless all of the following requirements are
19satisfied:
20(1) The expense deduction, depreciation deduction, or
21amortization deduction is allowable to the taxpayer under the
22Internal Revenue Code.
23(2) The residual fertilizer supply is part of a signed,
24written agreement between the seller and buyer that identifies
25the residual fertilizer supply and the consideration paid by
26the buyer for the residual fertilizer supply.
27c. If a taxpayer has taken a deduction in computing federal
28adjusted gross income that is disallowed under paragraph “b”,
29the taxpayer shall make the following adjustments:
30(1) Add back the total amount of the deduction in computing
31net income for state tax purposes.
32(2) Reallocate the amount of the deduction to the taxpayer’s
33basis, if any, in the land upon which the residual fertilizer
34supply is located.
35(3) Any other adjustments to gains, losses, deductions, or
-25-1tax basis of assets pursuant to rules adopted by the director.
2 Sec. 64. Section 422.35, Code 2019, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 26. a. For purposes of this subsection,
5“residual fertilizer supply” means an asset or an improvement to
6land that meets all of the following requirements:
7(1) The asset or improvement consists of residual
8fertilizer or excess available nutrients that are incorporated
9into and inseparable from land.
10(2) The asset or improvement is sold or exchanged in
11conjunction with the sale or exchange of land upon which the
12asset or improvement is located.
13(3) Following the sale or exchange, an expense deduction,
14amortization deduction, or depreciation deduction is allowable
15for federal tax purposes under the Internal Revenue Code with
16respect to the asset or improvement in the hands of a taxpayer
17other than the seller.
18b. For any sale or exchange of a residual fertilizer supply
19executed on or after July 1, 2019, an expense deduction,
20depreciation deduction, or amortization deduction with respect
21to the residual fertilizer supply shall not be allowed under
22this division unless all of the following requirements are
23satisfied:
24(1) The expense deduction, depreciation deduction, or
25amortization deduction is allowable to the taxpayer under the
26Internal Revenue Code.
27(2) The residual fertilizer supply is part of a signed,
28written agreement between the seller and buyer that identifies
29the residual fertilizer supply and the consideration paid by
30the buyer for the residual fertilizer supply.
31c. If a taxpayer has taken a deduction in computing federal
32taxable income that is disallowed under paragraph “b”, the
33taxpayer shall make the following adjustments:
34(1) Add back the total amount of the deduction in computing
35net income for state tax purposes.
-26- 1(2) Reallocate the amount of the deduction to the taxpayer’s
2basis, if any, in the land upon which the residual fertilizer
3supply is located.
4(3) Any other adjustments to gains, losses, deductions, or
5tax basis of assets pursuant to rules adopted by the director.
6DIVISION XIII
7FRANCHISE TAX — ALTERNATIVE MINIMUM TAX (amt) REPEAL
8 Sec. 65. Section 422.60, subsection 2, Code 2019, is amended
9by adding the following new paragraph:
10 NEW PARAGRAPH. c. This subsection is repealed January 1,
112021, for tax years beginning on or after that date.
12 Sec. 66. Section 422.60, subsection 3, Code 2019, is amended
13to read as follows:
143. a. (1) There For tax years beginning before January 1,
152022, there is allowed as a credit against the tax determined
16in section 422.63 for a tax year an amount equal to the minimum
17tax credit for that tax year.
18(2) The minimum tax credit for a tax year is the excess,
19if any, of the net minimum tax imposed for all prior tax years
20beginning on or after January 1, 1987, but before January
211, 2021, over the amount allowable as a credit under this
22subsection for those prior tax years.
23b. (1) The allowable credit under paragraph “a” for a tax
24year beginning before January 1, 2021, shall not exceed the
25excess, if any, of the tax determined in section 422.63 over
26the state alternative minimum tax as determined in subsection
272. The allowable credit under paragraph “a” for a tax year
28beginning in the 2021 calendar year shall not exceed the tax
29determined in section 422.63.
30(2) The net minimum tax for a tax year is the excess, if
31any, of the tax determined in subsection 2 for the tax year
32over the tax determined in section 422.63 for the tax year.
33c. This subsection is repealed January 1, 2022, for tax
34years beginning on or after that date.
35DIVISION XIV
-27-1FEDERAL RESEARCH CREDIT — INTERNAL REVENUE CODE
2 Sec. 67. Section 15.335, subsection 4, paragraph a, Code
32019, is amended to read as follows:
4a. In lieu of the credit amount computed in subsection 2, an
5eligible business may elect to compute the credit amount for
6qualified research expenses incurred in this state in a manner
7consistent with the alternative simplified credit described in
8section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The
9taxpayer may make this election regardless of the method used
10for the taxpayer’s federal income tax. The election made under
11this paragraph is for the tax year and the taxpayer may use
12another or the same method for any subsequent year.
13 Sec. 68. Section 15.335, subsection 4, paragraph b,
14unnumbered paragraph 1, Code 2019, is amended to read as
15follows:
16For purposes of the alternate credit computation method in
17paragraph “a”, the credit percentages applicable to qualified
18research expenses described in section 41(c)(5)(A) 41(c)(4)(A)
19 and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the
20Internal Revenue Code are as follows:
21 Sec. 69. Section 422.10, subsection 1, paragraphs c and d,
22Code 2019, are amended to read as follows:
23c. In lieu of the credit amount computed in paragraph “b”,
24subparagraph (1), subparagraph division (a), a taxpayer may
25elect to compute the credit amount for qualified research
26expenses incurred in this state in a manner consistent with the
27alternative simplified credit described in section 41(c)(5)
28 41(c)(4)of the Internal Revenue Code. The taxpayer may make
29this election regardless of the method used for the taxpayer’s
30federal income tax. The election made under this paragraph is
31for the tax year and the taxpayer may use another or the same
32method for any subsequent year.
33d. For purposes of the alternate credit computation
34method in paragraph “c”, the credit percentages applicable
35to qualified research expenses described in section
-28-141(c)(5)(A)41(c)(4)(A) and clause (ii) of section 41(c)(5)(B)
2 41(c)(4)(B) of the Internal Revenue Code are four and
3fifty-five hundredths percent and one and ninety-five
4hundredths percent, respectively.
5 Sec. 70. Section 422.33, subsection 5, paragraphs c and d,
6Code 2019, are amended to read as follows:
7c. In lieu of the credit amount computed in paragraph
8“a”, subparagraph (1), a corporation may elect to compute the
9credit amount for qualified research expenses incurred in this
10state in a manner consistent with the alternative simplified
11credit described in section 41(c)(5) 41(c)(4) of the Internal
12Revenue Code. The taxpayer may make this election regardless
13of the method used for the taxpayer’s federal income tax. The
14election made under this paragraph is for the tax year and the
15taxpayer may use another or the same method for any subsequent
16year.
17d. For purposes of the alternate credit computation
18method in paragraph “c”, the credit percentages applicable to
19qualified research expenses described in section 41(c)(5)(A)
20 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
21 of the Internal Revenue Code are four and fifty-five
22hundredths percent and one and ninety-five hundredths percent,
23respectively.
24 Sec. 71. RETROACTIVE APPLICABILITY. This division of this
25Act applies retroactively to January 1, 2019, for tax years
26beginning on or after that date.
27DIVISION XV
28RESEARCH ACTIVITIES TAX CREDIT
29 Sec. 72. Section 422.10, subsection 1, paragraph a,
30subparagraph (1), subparagraph division (a), Code 2019, is
31amended to read as follows:
32(a) The business is engaged in the manufacturing, life
33sciences, agriscience, agricultural animal production, software
34engineering, or aviation and aerospace industry.
35 Sec. 73. Section 422.10, subsection 1, paragraph a,
-29-1subparagraph (1), subparagraph division (b), unnumbered
2paragraph 1, Code 2019, is amended to read as follows:
3Persons that shall not be considered to be engaged in the
4manufacturing, life sciences, agriscience, agricultural animal
5production, software engineering, or aviation and aerospace
6industry, and thus are not eligible for the credit, include but
7are not limited to all of the following:
8 Sec. 74. Section 422.10, subsection 3, Code 2019, is amended
9by adding the following new paragraphs:
10 NEW PARAGRAPH. c. For purposes of this section,
11“agricultural animal” means an animal belonging to the bovine,
12caprine, equine, ovine, or porcine species; ostriches, rheas,
13or emus; farm deer as defined in section 170.1; or poultry.
14 NEW PARAGRAPH. d. For purposes of this section,
15“agricultural animal production” means activities related to
16producing or maintaining an agricultural animal.
17 Sec. 75. Section 422.33, subsection 5, paragraph e,
18subparagraph (1), subparagraph division (a), Code 2019, is
19amended to read as follows:
20(a) The business is engaged in the manufacturing, life
21sciences, agriscience, agricultural animal production, software
22engineering, or aviation and aerospace industry.
23 Sec. 76. Section 422.33, subsection 5, paragraph e,
24subparagraph (1), subparagraph division (b), unnumbered
25paragraph 1, Code 2019, is amended to read as follows:
26Persons that shall not be considered to be engaged in the
27manufacturing, life sciences, agriscience, agricultural animal
28production, software engineering, or aviation and aerospace
29industry, and thus are not eligible for the credit, include but
30are not limited to all of the following:
31 Sec. 77. Section 422.33, subsection 5, Code 2019, is amended
32by adding the following new paragraph:
33 NEW PARAGRAPH. 0g. As used in this subsection:
34(1) “Agricultural animal” means an animal belonging to the
35bovine, caprine, equine, ovine, or porcine species; ostriches,
-30-1rheas, or emus; farm deer as defined in section 170.1; or
2poultry.
3(2) “Agricultural animal production” means activities
4related to producing or maintaining an agricultural animal.
5 Sec. 78. EFFECTIVE DATE. This division of this Act, being
6deemed of immediate importance, takes effect upon enactment.
7 Sec. 79. RETROACTIVE APPLICABILITY. This division of this
8Act applies retroactively to January 1, 2017, for tax years
9beginning on or after that date.
10DIVISION XVI
11NEW JOBS CREDIT — FRANCHISE TAX
12 Sec. 80. Section 422.60, Code 2019, is amended by adding the
13following new subsection:
14 NEW SUBSECTION. 14. The taxes imposed under this division
15shall be reduced by a new jobs tax credit. An industry which
16has entered into an agreement under chapter 260E and which has
17increased its base employment level by at least ten percent
18within the time set in the agreement or, in the case of an
19industry without a base employment level, adds new jobs within
20the time set in the agreement is entitled to this new jobs
21tax credit for the tax year selected by the industry. In
22determining if the industry has increased its base employment
23level by ten percent or added new jobs, only those new jobs
24directly resulting from the project covered by the agreement
25and those directly related to those new jobs shall be counted.
26The amount of this credit is equal to the product of six
27percent of the taxable wages upon which an employer is required
28to contribute to the state unemployment compensation fund, as
29defined in section 96.19, subsection 37, times the number of
30new jobs existing in the tax year that directly result from
31the project covered by the agreement or new jobs that directly
32result from those new jobs. The tax year chosen by the
33industry shall either begin or end during the period beginning
34with the date of the agreement and ending with the date by
35which the project is to be completed under the agreement. Any
-31-1credit in excess of the tax liability for the tax year may be
2credited to the tax liability for the following ten tax years
3or until depleted in less than the ten years. For purposes
4of this subsection, “agreement”, “industry”, “new job”, and
5“project” mean the same as defined in section 260E.2 and “base
6employment level” means the number of full-time jobs an industry
7employs at the site which is covered by an agreement under
8chapter 260E on the date of that agreement.
9DIVISION XVII
10UTILITY REPLACEMENT TASK FORCE
11 Sec. 81. Section 437A.15, subsection 7, paragraph b, Code
122019, is amended to read as follows:
13b. The task force shall study the effects of the replacement
14taxes under this chapter and chapter 437B on local taxing
15authorities, local taxing districts, consumers, and taxpayers
16through January 1, 2019 2029. If the task force recommends
17modifications to the replacement tax that will further the
18purposes of tax neutrality for local taxing authorities, local
19taxing districts, taxpayers, and consumers, consistent with the
20stated purposes of this chapter, the department of management
21shall transmit those recommendations to the general assembly.
22DIVISION XVIII
23MONEYS AND CREDITS TAX ON STATE CREDIT UNIONS
24 Sec. 82. Section 533.329, subsection 2, paragraph a, Code
252019, is amended to read as follows:
26a. The moneys and credits tax on state credit unions is
27imposed at a rate of one-half cent on each dollar of the legal
28and special reserves that are required to be maintained by the
29state credit union under section 533.303, and shall be levied
30by the board of supervisors and placed upon the tax list and
31collected by the county treasurer. However, an exemption shall
32be given to each state credit union in the amount of forty
33thousand dollars.
34DIVISION XIX
35SALES AND USE TAX EXEMPTIONS RELATED TO MANUFACTURERS
-32-1 Sec. 83. Section 423.3, subsection 47, paragraph d,
2subparagraph (4), subparagraph division (c), unnumbered
3paragraph 1, Code 2019, is amended to read as follows:
4“Manufacturer” does not include persons who are not commonly
5understood as manufacturers, including but not limited to
6persons primarily engaged in any of the following activities:
7DIVISION XX
8SALES AND USE TAX — PARKING FACILITIES
9 Sec. 84. Section 423.2, subsection 6, paragraph ak, Code
102019, is amended to read as follows:
11ak. Parking Privately owned, for-profit parking facilities.
12DIVISION XXI
13SALES AND USE TAX EXEMPTIONS — MEDICAID
14 Sec. 85. Section 423.3, Code 2019, is amended by adding the
15following new subsection:
16 NEW SUBSECTION. 107. The sales price from sales of all
17tangible personal property, specified digital products, or
18services paid for or reimbursed by Medicaid, as defined in
19section 249A.2, subsection 7.
20DIVISION XXII
21Broadcasters — Apportionment of gross receipts
22 Sec. 86. 2015 Iowa Acts, chapter 86, section 3, is amended
23to read as follows:
24SEC. 3. RETROACTIVE APPLICABILITY. This Act applies
25retroactively to January 1, 2015 2013, for tax years beginning
26on or after that date.
27EXPLANATION
28The inclusion of this explanation does not constitute agreement with
29the explanation’s substance by the members of the general assembly.
30This bill relates to the administration of the tax and
31related laws by the department of revenue, including the
32administration and modification of certain taxes, tax credits,
33and refunds.
34DIVISION I — INCOME AND FRANCHISE TAX. The amendments to
35Code sections 422.4(16) and 422.9 modify Internal Revenue Code
-33-1references relating to the qualified business income deduction.
2The amendments to Code sections 422.4(16) and 422.9 apply
3retroactively for tax years beginning on or after January 1,
42019.
5The amendments to Code section 422.11S specify that school
6tuition organization tax credits shall be authorized by the
7department of revenue on a calendar year basis rather than
8a tax year basis. The amendments to Code section 422.11S
9also specify that a school tuition organization shall be
10controlled by a board of directors consisting of at least seven
11members. Under current law, the board of directors shall be
12seven members. The bill provides that it is the intent of the
13general assembly that the amendments to Code section 422.11S
14are conforming amendments consistent with current law, and that
15the amendments do not change the application of current law.
16The amendment to Code section 422.12C specifies that a
17nonresident or part-year resident shall determine their early
18childhood development tax credit in the ratio of the taxpayer’s
19Iowa source net income to their all source net income. The
20amendment to Code section 422.12C takes effect upon enactment
21and applies retroactively for tax years beginning on or
22after January 1, 2019. The bill specifies that for tax years
23beginning prior to January 1, 2019, refunds of the early
24childhood development tax credit requested on or after July 1,
252019, shall not exceed the amount allowed under Code section
26422.12C(4), as amended by the bill.
27The amendment to Code section 422.60 aligns the definition
28of “Internal Revenue Code” for franchise alternative minimum
29tax purposes with the definition of “Internal Revenue Code”
30for corporate alternative minimum tax purposes. The amendment
31to Code section 422.60 applies retroactively for tax years
32beginning on or after January 1, 2019.
33The bill provides for a deferral of a gain or loss resulting
34from exchanging of property (1031 exchange) that meet certain
35conditions. The federal Tax Cuts and Jobs Act of 2017 repealed
-34-11031 exchanges with respect to exchanges of personal property.
2The Iowa tax bill enacted last year (2018 Iowa Acts, chapter
31161) decouples, for Iowa individual tax purposes, from the
4federal repeal of 1031 exchanges relating to personal property,
5and permits individuals to defer gain or loss on qualifying
6personal property for tax year 2019 to the extent such deferral
7would have been permitted under federal law prior to its
8amendment by the federal Tax Cuts and Jobs Act of 2017. The
9bill permits a corporation or financial institution, for Iowa
10corporate income tax or franchise income tax purposes, the same
11deferral of gain or loss as individuals on qualifying personal
12property for tax year 2019 to the extent such deferral would
13have been permitted under federal law prior to its amendment
14by the federal Tax Cuts and Jobs Act of 2017. The 1031
15exchange provision takes effect upon enactment, and applies
16retroactively for tax years beginning January 1, 2019, but
17before January 1, 2020.
18DIVISION II — ADMINISTRATIVE PROVISIONS. The amendments
19to Code sections 422.20 and 422.72 permit the department of
20revenue, by rule, to disclose state tax information to a person
21a taxpayer has identified to receive such information in the
22manner prescribed by the department of revenue.
23DIVISION III — SALES AND USE TAX. The amendment to Code
24section 423.2(1) provides that if a service or warranty
25contract does not specify a fee amount for nontaxable services
26or taxable personal property, the sales tax shall be imposed
27upon an amount equal to the sales price of the contract.
28Currently, the sales tax is imposed upon an amount equal to
29one-half of the sales price of such a contract.
30The amendment to Code section 432.2(6) specifies that
31the sales price from the furnishing of carpentry repair and
32installation services are subject to the sales tax. Currently,
33carpentry services are subject to sales tax.
34The bill enacts new Code section 423.3(16A), exempting from
35the state sales and use tax the purchase price of a grain bin,
-35-1including material or replacement parts used to construct or
2repair a grain bin. “Grain bin” is defined to mean property
3that is vented and covered with corrugated metal or similar
4material, and that is primarily used to hold loose grain for
5drying or storage. This provision takes effect upon enactment
6and applies retroactively to January 1, 2004, and applies to
7tax years beginning on or after that date. The bill also
8provides for refunds of taxes, interest, or penalties that
9arise from claims resulting from the enactment of Code section
10423.3(16A) for sales occurring between January 1, 2004, and the
11effective date of the enactment of Code section 423.3(16A).
12 The bill limits the refunds to $25,000 in the aggregate.
13The amendment to Code section 423.3(47) changes the
14exclusions from the sales tax exemptions in that subsection by
15aligning the exclusions with the changes made to the exemptions
16enacted in 2016 Iowa Acts, chapter 1007. This provision takes
17effect upon enactment and applies retroactively to tax years
18beginning January 1, 2016, for tax years beginning on or after
19that date.
20The amendment to Code section 423.3(104) exempts from the
21sales tax the sales of optional service or warranty contracts
22for computer software maintenance or support services furnished
23to a commercial enterprise used exclusively by the commercial
24enterprise. “Commercial enterprise” is defined in Code section
25423.3(104).
26Currently, a retailer making Iowa sales, as defined in Code
27section 423.14A(1)(a), shall collect and remit sales, use, and
28local option taxes, if the retailer has gross revenue from
29Iowa sales equal to or exceeding $100,000 for an immediately
30preceding calendar year or a current calendar year, or has 200
31or more separate transactions for an immediately preceding
32calendar year or a current calendar year. The bill amends
33Code section 423.14A(3)(b) by striking the requirement that
34retailers making Iowa sales collect such taxes if the retailer
35has 200 or more separate transactions for an immediately
-36-1preceding calendar year or a current calendar year.
2The bill amends Code section 423.14A(3)(d) by striking
3the requirement that a marketplace facilitator, as defined
4in Code section 423.14A(1)(b), making Iowa sales, as defined
5in Code section 423.14A(1)(a), collect sales, use, and local
6option taxes if the marketplace facilitator has 200 or more
7separate transactions for an immediately preceding calendar
8year or a current calendar year. The bill does not strike the
9requirement that a marketplace facilitator collect such taxes
10if the marketplace facilitator makes or facilitates Iowa sales
11on its own behalf or for one or more marketplace sellers equal
12to or exceeding $100,000.
13The bill amends Code section 423.14A(3)(e) by striking
14the requirement that a referrer, as defined in Code section
15423.14A(3)(e)(3), making Iowa sales, as defined in Code section
16423.14A(1)(a), collect sales, use, and local option taxes if
17the referrer has 200 or more separate transactions for an
18immediately preceding calendar year or a current calendar
19year. The bill does not strike the requirement that a referrer
20collect such taxes if the referrer has Iowa sales equal to or
21exceeding $100,000.
22Currently, a referrer is required to provide the department
23of revenue, on a monthly basis, a list of marketplace sellers
24who collect and remit Iowa sales and use tax on the platform
25of the referrer. Otherwise, the referrer is required to
26collect and remit Iowa sales and use tax. The amendment to
27Code section 423A.14A(3)(e)(1)(c) provides that a referrer may
28provide the department of revenue such a report on an annual
29basis, and avoid collecting the sales and use tax if other
30conditions in Code section 423.14(3)(e)(1) are met.
31The bill enacts new Code section 423.14A(3)(e)(5) specifying
32that the paragraph relating to “referrers” is subject to
33implementation by the department of revenue by rule, and shall
34not require a referrer to collect tax or comply with the notice
35and reporting requirements unless such administrative rules
-37-1take effect.
2The bill amends Code section 423.48(2)(c) by striking the
3paragraph specifying that registering under the streamlined
4sales and use tax agreement in another member state shall be
5considered to be registered in this state for purposes of the
6streamlined sales and use tax agreement.
7The bill establishes a taxation and exemption computers
8task force to be initiated, coordinated, and staffed by
9the department of revenue. The task force shall review the
10definition of “computer” as used throughout the portions of
11the Iowa Code and the Iowa Administrative Code administered
12by the department of revenue including the exemption for
13computers provided in Code section 423.3(47)(a)(4). If the
14task force recommends modifications to the current definition
15of “computer” including the exemption for computers provided in
16Code section 423.3(47)(a)(4), the department of revenue shall
17provide any recommendations to the general assembly by January
181, 2020.
19DIVISION IV — AUTOMOBILE RENTAL EXCISE TAX. The amendment
20to Code section 423.14A provides that a person who is not
21required to collect and remit automobile rental excise tax
22shall not be considered a “marketplace facilitator” with
23respect to the sale of certain transportation services.
24The amendment to Code section 423C.2 substitutes a person
25required to collect sales or use tax under Code chapter 423
26for “rental facilitator” and “rental platform” and strikes the
27definitions of “rental facilitator” and “rental platform” from
28Code section 423C.2.
29The amendment to Code section 423C.2(11) modifies the
30definition of “rental price” to mean the same as “sales price”
31defined in Code section 423.1, which includes facilitation
32fees, reservation fees, service fees, nonrefundable deposits,
33and any other direct or indirect charge made or consideration
34provided in connection with the renting or facilitation of
35renting automobiles.
-38- 1The amendment to Code section 423C.3 strikes the definitions
2of “discount rental charge” and “travel package”.
3The amendment to Code section 423C.3 specifies that the
4automobile rental excise tax shall be imposed upon the rental
5price of an automobile if the rental is subject to the state
6sales or use tax.
7The bill strikes numerous provisions in Code section 423C.3
8relating to the collection of the automobile rental excise tax
9by a “rental facilitator” and “rental platform” due to these
10definitions being stricken by another part of this division of
11the bill.
12The amendment to Code section 423C.3 requires that any
13person required to collect state sales and use tax on the
14rental transaction under Code chapter 423 shall collect the
15automobile rental excise tax as applicable. The amendment to
16Code section 423C.3 provides that a person is not required
17to collect and remit the automobile rental excise tax if the
18person meets certain circumstances. For any rental transaction
19for which the person is not required to collect and remit the
20automobile rental excise tax, the amendment to Code section
21423C.3 requires an automobile provider to be solely liable
22for any amount of uncollected or unremitted automobile rental
23excise tax and sales and use tax under Code chapter 423.
24DIVISION V — TELEPHONE COMPANY PROPERTY. Division V of
25the bill authorizes the Iowa utilities board to classify a
26long distance telephone company as a competitive long distance
27telephone company if certain revenue source criteria are
28met. In the event of such a classification, the board is
29required to promptly notify the director of revenue. Upon
30such notification by the board, the director of revenue is
31required to assess the property of such competitive long
32distance telephone company, which property is first assessed
33for taxation in this state on or after January 1, 1996, in
34the same manner as all other property assessed as commercial
35property by the local assessor. The provisions established in
-39-1the bill are the same as provisions repealed on July 1, 2018,
2by 2018 Iowa Acts, chapter 1160.
3The section of Division V of the bill enacting Code section
4476.1D, subsection 10, takes effect upon enactment and applies
5retroactively to July 1, 2018, for assessment years beginning
6on or after that date.
7Division V also strikes Code section 476.1D, subsection 10,
8as enacted in the bill, effective July 1, 2021. The future
9strike of Code section 476.1D, subsection 10, applies to
10assessment years beginning on or after January 1, 2022.
11DIVISION VI — CHILDHOOD AND DEPENDENT CARE CREDIT AND
12EARLY CHILDHOOD DEVELOPMENT CREDIT. The amendment to Code
13section 422.12C(4) increases the Iowa net income threshold
14levels for purposes of calculating the Iowa child and dependent
15child care tax credit and the early childhood development tax
16credit available against the individual income tax. The Iowa
17child and dependent care tax credit is a refundable credit
18calculated as a percentage of the nonrefundable federal child
19and dependent care tax credit, depending on the Iowa net income
20of the taxpayer. The early childhood development tax credit
21is a refundable credit equaling 25 percent of the first $1,000
22which the taxpayer has paid to others for each dependent ages
23three through five for early childhood development expenses.
24IOWA CHILD AND DEPENDENT CHILD CARE TAX CREDIT. Currently,
25there are seven graduated Iowa net income thresholds used to
26calculate the credit. The bill increases these graduated
27thresholds, but does not change the percentage of the
28nonrefundable federal child and dependent care tax credit
29used to calculate the Iowa child and dependent child care tax
30credit.
31Currently, the credit percentages in these seven Iowa
32net income thresholds range from a high of 75 percent of
33the federal credit for taxpayers with net income of less
34than $10,000, to a low of 30 percent of the federal credit
35for taxpayers with net income of $40,000 or more but less
-40-1than $45,000. Under the bill, the credit percentages in the
2thresholds range from a high of 75 percent of the federal
3credit for taxpayers with a net income of less than $12,750,
4to a low of 30 percent of the federal credit for taxpayers with
5net income of $50,980 or more but less than $57,360.
6The bill also adjusts the future amount of each of the Iowa
7net income amounts in the seven graduated Iowa net income
8thresholds by indexing the thresholds to inflation.
9EARLY CHILDHOOD DEVELOPMENT TAX CREDIT. The bill increases
10the income threshold determining the eligibility of a taxpayer
11for the early childhood development tax credit. The bill
12increases the eligibility threshold from a taxpayer earning
13$45,000 per year to $57,360 per year. By increasing the
14eligibility threshold, taxpayers earning less than $57,360 are
15now eligible to take the early childhood development tax credit
16equaling 25 percent of the first $1,000 which the taxpayer has
17paid to others for early childhood development expenses for
18each dependent ages three through five. The bill also adjusts
19the future amount of the net income threshold by indexing the
20threshold to inflation.
21EFFECTIVE DATE AND APPLICABILITY. The division takes effect
22upon enactment and applies retroactively to tax years beginning
23on or after January 1, 2019.
24DIVISION VII — APPORTIONMENT OF CERTAIN BUSINESS INCOME
25OF AN AIRLINE. The amendment to Code section 422.33(2)(a)(2)
26relates to the apportionment of income of an airline and of
27a qualified air freight forwarder for purposes of the Iowa
28corporate income tax.
29A corporation doing business both within and without Iowa is
30required to apportion its business income among Iowa and the
31other states in which it does business. The amount of business
32income apportioned to Iowa is generally in the same percentage
33as the business’s gross sales made within Iowa if the business
34involves the manufacture or sale of goods and products, or in
35the same percentage as the business’s gross receipts earned
-41-1within Iowa if the business involves something other than the
2manufacture or sale of goods and products. However, airlines
3and other specified industries have special rules provided
4by administrative rule for apportioning the income of those
5industries.
6Under current law pursuant to 701 Iowa administrative code,
7rule 54.7(2), an airline deriving income from transportation
8operations is required to apportion its business income to
9Iowa in the same proportion that its mileage traveled in Iowa
10bears to its total mileage traveled everywhere. The bill
11specifies that an airline shall apportion this business income
12in the same manner described above as required under 701 Iowa
13administrative code, rule 54.7(2).
14The bill also provides rules for apportioning income derived
15by a qualified air freight forwarder from transportation
16operations through an affiliated airline. The bill defines
17“qualified air freight forwarder” to be a taxpayer that is
18primarily engaged in the facilitation of the transportation of
19property by air, and that does not itself operate aircraft but
20that is in the same affiliated group as an airline.
21The bill states that the qualified air freight forwarder
22income derived from transportation operations shall be
23apportioned to Iowa either under the current rules of the
24director of revenue (current statutory rules), or in the
25same proportion that the miles of the qualified air freight
26forwarder’s affiliated airline traveled in this state bears to
27the total miles of the affiliated airline traveled everywhere
28(affiliated airline mileage rules), based on increasing
29percentages as enumerated in the bill over a number of tax
30years.
31The division applies to tax years beginning on or after
32January 1, 2020.
33DIVISION VIII — BURIAL TRUSTS. The bill enacts new Code
34section 422.7(6) by exempting from the individual income tax
35interest and earnings received from a burial trust fund.
-42- 1DIVISION IX — ADOPTION TAX CREDIT. The amendment to Code
2section 422.12A relates to claiming the adoption tax credit for
3qualified adoption expenses paid or incurred by an individual
4taxpayer during a tax year.
5Currently, in order to claim the adoption tax credit the
6taxpayer must pay or incur “qualified adoption expenses” during
7the tax year, which are unreimbursed, and connected with the
8adoption. The bill strikes the requirement that the “qualified
9adoption expenses” be paid or incurred by the taxpayer during
10the tax year.
11The bill specifies that if a qualified adoption expense is
12incurred prior to or during the tax year in which the adoption
13becomes final, the qualified adoption expense shall be allowed
14during the tax year in which the adoption becomes final.
15For qualified adoption expenses incurred after the tax year
16in which the adoption becomes final, the qualified adoption
17expense shall be allowed during the tax year such adoption
18expense was paid or incurred.
19The division applies retroactively to tax years beginning on
20or after January 1, 2019.
21DIVISION X — TARGETED JOBS WITHHOLDING CREDIT. The
22amendment to Code section 403.19A extends by four years the
23deadline for entering into withholding agreements under the
24targeted jobs withholding credit pilot project from June 30,
252019, to June 30, 2023. This amendment takes effect upon
26enactment.
27DIVISION XI — SCHOOL TUITION ORGANIZATION TAX CREDITS. The
28amendment to Code section 422.11S increases the total amount
29of school tuition organization tax credits that may be issued
30per tax year to $17 million from $13 million for tax years
31beginning on or after January 1, 2020.
32The Code editor is directed to harmonize the amendment to
33Code section 422.11S in this division with the amendments to
34Code section 422.11S in another division of the bill.
35DIVISION XII — DEDUCTING RESIDUAL FERTILIZER. The bill
-43-1enacts new Code section 422.7(60), which relates to deducting
2residual fertilizer supply in the soil for purposes of
3individual and corporate income taxes.
4The bill defines “residual fertilizer supply” to mean an
5asset or an improvement to land that meets all of the following
6requirements: the asset or improvement consists of residual
7fertilizer or excess available nutrients that are in the soil;
8the land upon which the asset or improvement is located is
9sold or exchanged; and following the sale or exchange of the
10land containing the residual fertilizer supply, an expense
11deduction, amortization deduction, or depreciation deduction is
12allowable for federal tax purposes with respect to the residual
13fertilizer in the hands of a taxpayer other than the seller of
14the land.
15The bill provides that for any sale or exchange of a land
16containing residual fertilizer supply executed on or after
17July 1, 2019, an expense deduction, depreciation deduction, or
18amortization deduction with respect to the residual fertilizer
19supply shall not be allowed for individual or corporate income
20tax purposes unless all of the following requirements are
21satisfied: the expense deduction, depreciation deduction, or
22amortization deduction is allowable to the taxpayer under the
23Internal Revenue Code; and the residual fertilizer supply is
24part of a written agreement between the seller and buyer that
25identifies the residual fertilizer supply and the consideration
26paid for the residual fertilizer supply.
27If a taxpayer has taken a deduction relating to residual
28fertilizer supply in computing federal adjusted gross income
29that is disallowed under the bill, the taxpayer shall make
30the following adjustments: add back the total amount of the
31deduction in computing net income for state tax purposes;
32reallocate the amount of the deduction to the taxpayer’s basis,
33if any, in the land upon which the residual fertilizer supply
34is located; and make any other adjustments to gains, losses,
35deductions, or tax basis of assets pursuant to rules adopted by
-44-1the director of revenue.
2DIVISION XIII — FRANCHISE TAX — ALTERNATIVE MINIMUM TAX
3(AMT) REPEAL. Current law imposes an AMT on a financial
4institution to the extent the AMT exceeds the financial
5institution’s regular tax liability. The AMT is generally
6calculated by adding certain “preference” items (deductions,
7exemptions, and other adjustments) back to taxable income,
8applying an exemption amount, and then multiplying the
9resulting income amount by an AMT rate. The amendments to Code
10section 422.60 repeal the AMT for the franchise tax beginning
11in tax year 2021.
12Current law also provides an alternative minimum tax credit,
13which allows AMT paid by a financial institution in prior tax
14years to be claimed against regular tax liability in future tax
15years if the financial institution is not subject to the AMT
16in that year. With the repeal of the franchise AMT in 2021,
17the bill allows a taxpayer to claim any remaining alternative
18minimum tax credit against the financial institution’s regular
19tax liability for the 2021 tax year, and the bill then repeals
20the alternative minimum tax credit beginning in tax year 2022.
21DIVISION XIV — FEDERAL RESEARCH CREDIT — INTERNAL REVENUE
22CODE. The Consolidated Appropriations Act of 2018 (Pub.L.
23No.115-141), which Iowa is conformed to for tax year 2019
24and beyond, struck and renumbered a provision of the federal
25research credit, which resulted in a renumbering of the
26simplified credit in the Internal Revenue Code. The amendments
27in the division change the Internal Revenue references in the
28Iowa Code to reflect the changes to the references in the
29Internal Revenue Code.
30The division applies retroactively to January 1, 2019, and
31applies to tax years beginning on or after that date.
32DIVISION XV — RESEARCH ACTIVITIES TAX CREDIT. The
33amendments to Code section 422.10(1)(a) specify that the
34research and activities tax credit is available against
35the individual income tax if an individual is engaged in
-45-1agriscience or agricultural animal production, and if
2certain conditions are met. The amendments to Code section
3422.33(5)(e)(1) specify that a corporation engaged in
4agriscience or agricultural animal production shall be eligible
5for the research activities tax credit if certain conditions
6are met.
7The bill defines “agricultural animal production” to mean
8activities related to producing or maintaining an agricultural
9animal.
10The division takes effect upon enactment and applies
11retroactively to tax years beginning on or after January 1,
122017.
13DIVISION XVI — NEW JOBS CREDIT — FRANCHISE TAX. The
14amendment to Code section 422.60 makes the new jobs tax credit
15under Code chapter 260E available against franchise taxes
16imposed on financial institutions.
17DIVISION XVII — UTILITY REPLACEMENT TASK FORCE. The
18amendment to Code section 437A.15 extends the utility
19replacement tax task force from January 1, 2019, to January
201, 2029. The task force is charged with studying the effects
21of the replacement taxes under Code chapter 437A (taxes on
22electricity and natural gas providers) and Code chapter 437B
23(taxes on rate-regulated water utilities) on local taxing
24authorities, local taxing districts, consumers, and taxpayers.
25DIVISION XVIII — MONEYS AND CREDITS TAX ON STATE CREDIT
26UNIONS. The amendment to Code section 533.329 strikes a
27provision requiring the board of supervisors to impose the
28moneys and credits tax on state credit unions and the county
29treasurer to collect such tax, and aligns the imposition and
30the collection of the tax with Code section 533.329(2)(b) and
31Code section 533.329(3).
32DIVISION XIX — SALES AND USE TAX EXEMPTIONS RELATED
33TO MANUFACTURERS. The amendment to Code section
34423.3(47)(d)(4)(c) modifies the definition of “manufacturer”
35relating to the sales and use tax exemption for machinery,
-46-1equipment, and other items used directly and primarily in
2processing by a manufacturer. The bill expands the definition
3of “manufacturer” by adding the word “primarily” to the
4exclusions of the definition of “manufacturer”, thereby
5allowing persons who do not primarily engage in certain
6activities to qualify as a “manufacturer”.
7DIVISION XX — SALES AND USE TAX — PARKING FACILITIES.
8 The amendment to Code section 423.2(6)(ak) specifies that the
9services provided by a privately owned, for-profit parking
10facility are subject to the sales and use tax. Currently, the
11services provided by any parking facility are subject to the
12sales and use tax.
13DIVISION XXI — SALES AND USE TAX EXEMPTIONS — MEDICAID.
14 The bill enacts new Code section 423.3(107), which exempts from
15the state sales and use tax the sales of all tangible personal
16property, specified digital products, or services paid for or
17reimbursed by Medicaid, as defined in Code section 249A.2(7).
18DIVISION XXII — BROADCASTERS — APPORTIONMENT OF GROSS
19RECEIPTS. The amendment to 2015 Iowa Acts, chapter 86, section
203, extends the retroactive applicability of the apportionment
21of the gross receipts of a broadcaster enacted during the 2015
22legislative session in Senate File 479, from January 1, 2015,
23to January 1, 2013.
-47-jm/jh
2related laws by the department of revenue, including the
3administration and modification of certain tax credits
4and refunds, the individual and corporate income taxes,
5franchise taxes, franchise alternative minimum taxes, moneys
6and credits taxes, sales and use taxes, and automobile
7rental excise taxes, the assessment of property owned by
8certain long distance telephone companies, establishing
9a taxation and exemption of computers task force, and
10providing for other properly related matters, making
11penalties applicable, and including effective date and
12retroactive applicability provisions.
13BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2INCOME AND FRANCHISE TAX
3 Section 1. Section 422.4, subsection 16, paragraph e,
4unnumbered paragraph 1, Code 2019, is amended to read as
5follows:
6Add back the following percentage of the qualified business
7income deduction deductions under section 199A sections 199A(a)
8and 199A(g) of the Internal Revenue Code taken and allowable in
9calculating federal taxable income for the applicable tax year:
10 Sec. 2. Section 422.9, subsection 2A, paragraph a,
11unnumbered paragraph 1, Code 2019, is amended to read as
12follows:
13The following percentage of the qualified business income
14deduction deductions under section 199A sections 199A(a) and
15199A(g) of the Internal Revenue Code taken and allowable in
16calculating federal taxable income for the applicable tax year:
17 Sec. 3. Section 422.9, subsection 2A, paragraph b, Code
182019, is amended to read as follows:
19b. Notwithstanding paragraph “a”, and section 422.4,
20subsection 16, paragraph “e”, for an entity electing or
21required to file a composite return under section 422.13,
22subsection 5, the deduction allowed under this subsection for
23purposes of the composite return shall be an amount equal to
24the applicable percentage described in paragraph “a” of the
25deduction deductions that would be allowable for federal income
26tax purposes under section 199A sections 199A(a) and 199A(g) of
27the Internal Revenue Code by an individual taxpayer reporting
28the same items of income and loss that are included in the
29composite return.
30 Sec. 4. Section 422.11S, subsection 7, paragraph b, Code
312019, is amended to read as follows:
32b. The department shall authorize a school tuition
33organization to issue tax credit certificates for contributions
34made to the school tuition organization. The aggregate amount
35of tax credit certificates that the department shall authorize
-1-1for a school tuition organization for a tax calendar year shall
2be determined for that organization pursuant to subsection 8.
3However, a school tuition organization shall not be authorized
4to issue tax credit certificates unless the organization is
5controlled by a board of directors consisting of at least
6 seven members. The names and addresses of the members shall
7be provided to the department and shall be made available
8by the department to the public, notwithstanding any state
9confidentiality restrictions.
10 Sec. 5. Section 422.11S, subsection 8, paragraph a,
11subparagraph (2), Code 2019, is amended to read as follows:
12(2) “Total approved tax credits” means for the tax year
13beginning in the 2006 calendar year, two million five hundred
14thousand dollars, for the tax year beginning in the 2007
15calendar year, five million dollars, for tax calendar years
16beginning on or after January 1, 2008, but before January 1,
172012, seven million five hundred thousand dollars, for tax
18 calendar years beginning on or after January 1, 2012, but
19before January 1, 2014, eight million seven hundred fifty
20thousand dollars, and for tax calendar years beginning on or
21after January 1, 2014, but before January 1, 2019, twelve
22million dollars, and for tax calendar years beginning on or
23after January 1, 2019, thirteen million dollars.
24 Sec. 6. Section 422.11S, subsection 8, paragraph b,
25unnumbered paragraph 1, Code 2019, is amended to read as
26follows:
27Each year by December 1, the department shall authorize
28school tuition organizations to issue tax credit certificates
29for the following tax calendar year. However, for the tax year
30beginning in the 2006 calendar year only, the department, by
31September 1, 2006, shall authorize school tuition organizations
32to issue tax credit certificates for the 2006 calendar tax
33 year. For the tax year beginning in the 2006 calendar year
34only, each school served by a school tuition organization shall
35submit a participation form to the department by August 1,
-2-12006, providing the certified enrollment as of the third Friday
2of September 2005, along with the school tuition organization
3that represents the school. Tax credit certificates available
4for issue by each school tuition organization shall be
5determined in the following manner:
6 Sec. 7. Section 422.11S, subsection 9, unnumbered paragraph
71, Code 2019, is amended to read as follows:
8A school tuition organization that receives a voluntary cash
9or noncash contribution pursuant to this section shall report
10to the department, on a form prescribed by the department,
11by January 12 of each tax calendar year all of the following
12information:
13 Sec. 8. Section 422.11S, subsection 9, paragraphs b and c,
14Code 2019, are amended to read as follows:
15b. The total number and dollar value of contributions
16received and the total number and dollar value of the tax
17credits approved during the previous tax calendar year.
18c. A list of the individual donors for the previous tax
19 calendar year that includes the dollar value of each donation
20and the dollar value of each approved tax credit.
21 Sec. 9. Section 422.12C, subsection 4, Code 2019, is amended
22to read as follows:
234. Married taxpayers who have filed joint federal returns
24electing to file separate returns or to file separately on a
25combined return form must determine the child and dependent
26care credit under subsection 1 or the early childhood
27development tax credit under subsection 2 based upon their
28combined net income and allocate the total credit amount to
29each spouse in the proportion that each spouse’s respective net
30income bears to the total combined net income. Nonresidents or
31part-year residents of Iowa must determine their Iowa child and
32dependent care credit under subsection 1 or the early childhood
33development tax credit under subsection 2 in the ratio of
34their Iowa source net income to their all source net income.
35Nonresidents or part-year residents who are married and elect
-3-1to file separate returns or to file separately on a combined
2return form must allocate the Iowa child and dependent care
3credit under subsection 1 or the early childhood development
4tax credit under subsection 2 between the spouses in the ratio
5of each spouse’s Iowa source net income to the combined Iowa
6source net income of the taxpayers.
7 Sec. 10. Section 422.60, subsection 2, paragraph b, Code
82019, is amended by adding the following new subparagraph:
9 NEW SUBPARAGRAPH. (6) For purposes of this paragraph,
10“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
13the Internal Revenue Code of 1986 as amended and in effect on
14December 21, 2017. This definition shall not be construed to
15include any amendment to the Internal Revenue Code enacted
16after the date specified in the preceding sentence, including
17any amendment with retroactive applicability or effectiveness.
18 Sec. 11. LIKE-KIND EXCHANGES OF PERSONAL PROPERTY
19UNDER CORPORATE INCOME TAX AND FRANCHISE TAX FOR TAX YEAR
202019. Notwithstanding any other provision of law to the
21contrary, all of the following shall apply when computing net
22income for purposes of the corporation income tax or franchise
23tax under section 422.35 for tax years beginning during the
242019 calendar year:
251. The rules for nonrecognition of gain or loss from
26exchanges of real property held for productive use or
27investment and not held primarily for sale, as provided in
28section 1031 of the Internal Revenue Code, as amended up to and
29including March 24, 2018, apply for state income tax purposes
30with regard to exchanges of real property.
312. The rules for nonrecognition of gain or loss from
32exchanges of property other than real property held for
33productive use or investment as provided in section 1031 of the
34Internal Revenue Code, as amended up to and including December
3521, 2017, apply for state income tax purposes, notwithstanding
-4-1any other provision of law to the contrary. If the taxpayer’s
2federal taxable income includes gain or loss from property,
3other than real property described in subsection 1, and the
4taxpayer elects to have this subsection apply, the following
5adjustments shall be made:
6a. (1) Subtract the total amount of gain related to the
7sale or exchange of the property as properly reported for
8federal tax purposes under the Internal Revenue Code.
9(2) Add back any gain related to the sale or exchange of the
10property to the extent such gain does not qualify for deferral
11under section 1031 of the Internal Revenue Code, as amended
12up to and including December 21, 2017, which gain shall be
13calculated using the taxpayer’s adjusted basis in the property
14for state tax purposes.
15b. (1) Add the total amount of loss related to the sale or
16exchange of the property as properly reported for federal tax
17purposes under the Internal Revenue Code.
18(2) Subtract any loss related to the sale or exchange of the
19property to the extent such loss does not qualify for deferral
20under section 1031 of the Internal Revenue Code, as amended
21up to and including December 21, 2017, which loss shall be
22calculated using the taxpayer’s adjusted basis in the property
23for state tax purposes.
24c. Any other adjustments to gains, losses, deductions, or
25tax basis for the property given up or received in the sale or
26exchange pursuant to rules adopted by the director.
27 Sec. 12. REFUNDS — EARLY CHILDHOOD DEVELOPMENT TAX
28CREDIT. Notwithstanding any provision of law to the contrary,
29for tax years beginning prior to January 1, 2019, refunds of
30the early childhood development tax credit provided in section
31422.12C, subsection 2, requested on or after the effective
32date of the provision of this division of this Act amending
33section 422.12C, subsection 4, shall not exceed the amount
34allowed under section 422.12C, subsection 4, as amended by this
35division of this Act.
-5-1 Sec. 13. LEGISLATIVE INTENT. It is the intent of the
2general assembly that the provisions of this division of
3this Act amending section 422.11S are conforming amendments
4consistent with current state law, and that the amendments do
5not change the application of current law but instead reflect
6current law both before and after the enactment of this Act.
7 Sec. 14. EFFECTIVE DATE. The following, being deemed of
8immediate importance, take effect upon enactment:
91. The section of this division of this Act amending section
10422.12C, subsection 4.
112. The section of this division of this Act relating to
12refunds for the early childhood development tax credit.
133. The section of this division of this Act relating to
14like-kind exchanges of personal property under corporate income
15tax and franchise tax.
16 Sec. 15. RETROACTIVE APPLICABILITY. The following apply
17retroactively to January 1, 2019, for tax years beginning on
18or after that date:
191. The section of this division of this Act amending section
20422.4, subsection 16, paragraph “e”, unnumbered paragraph 1.
212. The sections of this division of this Act amending
22section 422.9, subsection 2A.
233. The section of this division of this Act amending section
24422.12C, subsection 4.
254. The section of this division of this Act amending section
26422.60, subsection 2, paragraph “b”.
27 Sec. 16. RETROACTIVE APPLICABILITY — LIKE-KIND EXCHANGES
28OF PERSONAL PROPERTY. The section of this division of this
29Act relating to like-kind exchanges of personal property under
30corporate income tax and franchise tax applies retroactively to
31January 1, 2019, for tax years beginning on or after that date,
32but before January 1, 2020.
33DIVISION II
34ADMINISTRATIVE PROVISIONS
35 Sec. 17. Section 422.20, Code 2019, is amended by adding the
-6-1following new subsection:
2 NEW SUBSECTION. 5. The department may permit, by rule, the
3disclosure of state tax information to a person a taxpayer has
4authorized to receive such state tax information, in the manner
5prescribed by the department.
6 Sec. 18. Section 422.72, Code 2019, is amended by adding the
7following new subsection:
8 NEW SUBSECTION. 8. The department may permit, by rule, the
9disclosure of state tax information to a person a taxpayer has
10authorized to receive such state tax information, in the manner
11prescribed by the department.
12DIVISION III
13SALES AND USE TAX
14 Sec. 19. Section 423.2, subsection 1, paragraph a,
15subparagraph (5), subparagraph division (a), Code 2019, is
16amended to read as follows:
17(a) If a service or warranty contract does not specify a fee
18amount for nontaxable services or taxable personal property,
19the tax imposed pursuant to this section shall be imposed upon
20an amount equal to one-half of the sales price of the contract.
21 Sec. 20. Section 423.2, subsection 6, paragraph k, Code
222019, is amended to read as follows:
23k. Carpentry repair and installation.
24 Sec. 21. Section 423.3, Code 2019, is amended by adding the
25following new subsection:
26 NEW SUBSECTION. 16A. a. The sales price from the sale of
27a grain bin, including material or replacement parts used to
28construct or repair a grain bin.
29b. For purposes of this subsection, “grain bin” means
30property that is vented and covered with corrugated metal or
31similar material, and that is primarily used to hold loose
32grain for drying or storage.
33 Sec. 22. Section 423.3, subsection 47, paragraph c,
34subparagraph (3), Code 2019, is amended by striking the
35subparagraph and inserting in lieu thereof the following:
-7- 1(3) The following within the scope of section 427A.1,
2subsection 1, paragraphs “h” and “i”:
3(a) Computers.
4(b) Machinery.
5(c) Equipment, including pollution control equipment.
6(d) Replacement parts.
7(e) Supplies.
8(f) Materials used to construct or self-construct the
9following:
10(i) Computers.
11(ii) Machinery.
12(iii) Equipment, including pollution control equipment.
13(iv) Replacement parts.
14(v) Supplies.
15 Sec. 23. Section 423.3, subsection 104, paragraph a, Code
162019, is amended to read as follows:
17a. The sales price of specified digital products and of
18prewritten computer software sold, and of enumerated services
19described in section 423.2, subsection 1, paragraph “a”,
20subparagraph (5), or section 423.2, subsection 6, paragraphs
21“bq”, “br”, “bs”, and “bu” furnished, to a commercial enterprise
22for use exclusively by the commercial enterprise. The use of
23prewritten computer software, a specified digital product, or
24service fails to qualify as a use exclusively by the commercial
25enterprise if its use for noncommercial purposes is more than
26de minimis.
27 Sec. 24. Section 423.14A, subsection 3, paragraph b, Code
282019, is amended by striking the paragraph.
29 Sec. 25. Section 423.14A, subsection 3, paragraph d,
30subparagraph (1), Code 2019, is amended to read as follows:
31(1) A marketplace facilitator that makes or facilitates
32Iowa sales on its own behalf or for one or more marketplace
33sellers equal to or exceeding one hundred thousand dollars,
34or in two hundred or more separate transactions, for an
35immediately preceding calendar year or a current calendar year.
-8-1 Sec. 26. Section 423.14A, subsection 3, paragraph e,
2subparagraph (1), unnumbered paragraph 1, Code 2019, is amended
3to read as follows:
4A referrer if, for any immediately preceding calendar year
5or a current calendar year, one hundred thousand dollars or
6more in Iowa sales or two hundred or more separate Iowa sales
7transactions result from referrals from a platform of the
8referrer. A referrer is not required to collect and remit
9sales and use tax pursuant to this paragraph if the referrer
10does all of the following:
11 Sec. 27. Section 423.14A, subsection 3, paragraph e,
12subparagraph (1), subparagraph division (c), unnumbered
13paragraph 1, Code 2019, is amended to read as follows:
14The referrer provides the department with monthly annual
15 reports in an electronic format and in the manner prescribed
16by the department, which monthly annual reports contain all of
17the following:
18 Sec. 28. Section 423.14A, subsection 3, paragraph e, Code
192019, is amended by adding the following new subparagraph:
20 NEW SUBPARAGRAPH. (5) This paragraph is subject to
21implementation by the department by rule and shall not require
22a referrer to collect tax or comply with the notice and
23reporting requirements and other provisions of this paragraph
24unless and until such administrative rules take effect.
25 Sec. 29. Section 423.48, subsection 2, paragraph c, Code
262019, is amended by striking the paragraph.
27 Sec. 30. TAXATION AND EXEMPTION OF COMPUTERS TASK FORCE. A
28taxation and exemption of computers task force is created. The
29department of revenue shall initiate and coordinate the task
30force and provide staff assistance. It is the intent of the
31general assembly that the task force include representatives of
32the department of revenue; a commercial enterprise that claims
33an exemption for computers under section 423.3, subsection
3447; an association that represents manufacturers and other
35industrial producers; and an association that represents
-9-1business tax issues. The director of revenue or the director’s
2designee shall serve as chairperson of the task force.
3The task force shall be charged with reviewing the
4definition of “computer” as used throughout the portions of the
5Iowa Code and the Iowa Administrative Code administered by the
6department of revenue including the exemption for computers
7provided in section 423.3, subsection 47, paragraph “a”,
8subparagraph (4). If the task force recommends modifications
9to the current definition of “computer” including the exemption
10for computers provided in section 423.3, subsection 47,
11paragraph “a”, subparagraph (4), the department of revenue
12shall provide any recommendations to the general assembly by
13January 1, 2020.
14 Sec. 31. REFUNDS. Refunds of taxes, interest, or penalties
15that arise from claims resulting from the enactment of section
16423.3, subsection 16A, for sales occurring between January
171, 2004, and the effective date of the enactment of section
18423.3, subsection 16A, shall be limited to twenty-five thousand
19dollars in the aggregate and shall not be allowed unless refund
20claims are filed prior to October 1, 2019, notwithstanding any
21other law to the contrary. If the amount of claims totals
22more than twenty-five thousand dollars in the aggregate, the
23department of revenue shall prorate the twenty-five thousand
24dollars among all claimants in relation to the amounts of the
25claimants’ valid claims.
26 Sec. 32. EFFECTIVE DATE. The following, being deemed of
27immediate importance, take effect upon enactment:
281. The section of this division of this Act enacting section
29423.3, subsection 16A.
302. The section of this division of this Act amending section
31423.3, subsection 47, paragraph “c”, subparagraph (3).
323. The section of this division of this Act relating to
33refunds that arise from claims resulting from the enactment of
34section 423.3, subsection 16A.
35 Sec. 33. RETROACTIVE APPLICABILITY. The following applies
-10-1retroactively to January 1, 2016, for tax years beginning on
2or after that date:
3The section of this division of this Act amending section
4423.3, subsection 47, paragraph “c”, subparagraph (3).
5 Sec. 34. RETROACTIVE APPLICABILITY. The following applies
6retroactively to tax years beginning on or after January 1,
72004:
8The section of this division of this Act enacting section
9423.3, subsection 16A.
10DIVISION IV
11AUTOMOBILE RENTAL EXCISE TAX
12 Sec. 35. Section 423.14A, subsection 1, paragraph b,
13subparagraph (3), Code 2019, is amended to read as follows:
14(3) A “rental platform”, as defined in section 423C.2, that
15meets the requirements described in person who is not required
16to collect and remit automobile rental excise tax pursuant to
17 section 423C.3, subsection 3, paragraph “c”, subparagraph (2),
18 shall not be considered a “marketplace facilitator” with respect
19to any sale of a transportation service under section 423.2,
20subsection 6, paragraph “bf”, or section 423.5, subsection 1,
21paragraph “e”, consisting of the rental of vehicles subject
22to registration which are registered for a gross weight of
23thirteen tons or less for a period of sixty days or less.
24 Sec. 36. Section 423C.2, subsection 3, paragraphs a and b,
25Code 2019, are amended to read as follows:
26a. A person or any affiliate of a person that owns or
27controls an automobile and makes the automobile available for
28rent through the person or any affiliate, or through a rental
29platform or rental facilitator any other person required to
30collect sales or use tax under chapter 423.
31b. A person or any affiliate of a person who possesses or
32acquires a right or interest in any automobile with an intent
33to rent the automobile to another person, or through the person
34or any affiliate, or through a rental platform or a rental
35facilitator any other person required to collect sales or use
-11-1tax under chapter 423.
2 Sec. 37. Section 423C.2, subsection 6, Code 2019, is amended
3to read as follows:
46. “Facilitation fee” means any consideration, by whatever
5name called, that a rental facilitator or a rental platform
6 person charges to a user for facilitating the user’s rental
7of an automobile. “Facilitation fee” does not include any
8commission an automobile provider pays to a rental facilitator
9or a rental platform person for facilitating the rental of an
10automobile.
11 Sec. 38. Section 423C.2, subsections 9 and 10, Code 2019,
12are amended by striking the subsections.
13 Sec. 39. Section 423C.2, subsection 11, Code 2019, is
14amended to read as follows:
1511. “Rental price” means all consideration charged for
16the renting and facilitation of renting of an automobile
17before taxes, including but not limited to facilitation fees,
18reservation fees, services fees, nonrefundable deposits, and
19any other direct or indirect charge made or consideration
20provided in connection with the renting or facilitation of
21renting of an automobile the same as “sales price” as defined
22in section 423.1, which term includes but is not limited
23to facilitation fees, reservation fees, services fees,
24nonrefundable deposits, and any other direct or indirect charge
25made or consideration provided in connection with the renting
26or facilitation of renting an automobile.
27 Sec. 40. Section 423C.3, Code 2019, is amended to read as
28follows:
29423C.3 Tax on rental of automobiles — collection and
30remittance of tax.
311. For purposes of this section:
32a. “Discount rental charge” means the amount an automobile
33provider charges to a rental facilitator for the rental of an
34automobile, excluding any applicable tax.
35b. “Travel package” means an automobile rental bundled
-12-1with one or more separate components such as lodging, air
2transportation, or similar items and charged for a single
3retail price.
42. 1. A tax of five percent is imposed upon the rental
5price of an automobile if the rental transaction is subject to
6the sales and services tax under chapter 423, subchapter II, or
7the use tax under chapter 423, subchapter III. The tax shall
8not be imposed on any rental transaction not taxable under the
9state sales and services tax, as provided in section 423.3, or
10the state use tax, as provided in section 423.6, on automobile
11rental receipts.
123. 2. This subsection shall govern the collection and
13remittance of the tax imposed under subsection 2 The tax
14imposed under subsection 1 shall be collected and remitted to
15the department by all persons required to collect state sales
16and use tax on the rental transaction under chapter 423.
17a. Unless otherwise provided in this subsection, the
18automobile provider shall collect the tax by adding the tax to
19the rental price of the automobile and the tax, when collected,
20shall be stated as a distinct item separate and apart from
21the rental price of the automobile and the sales and services
22tax imposed under chapter 423, subchapter II, or the use tax
23imposed under chapter 423, subchapter III.
24b. If a transaction for the rental of an automobile involves
25a rental facilitator, all of the following shall occur in the
26order prescribed:
27(1) The rental facilitator shall collect the tax on any
28rental price that the user pays to the rental facilitator in
29the same manner as an automobile provider under paragraph “a”.
30(2) (a) Unless otherwise required by rule or order of
31the department, the rental facilitator shall remit to the
32automobile provider that portion of the tax collected on the
33rental price that represents the discount rental charge.
34(b) No assessment shall be made against a rental facilitator
35for tax due on a discount rental charge if the rental
-13-1facilitator collected the tax and remitted it to an automobile
2provider that has a valid tax permit required under this
3chapter or under chapter 423. This subparagraph division shall
4not apply if the rental facilitator and automobile provider
5are affiliates, or if the department requires the rental
6facilitator to remit taxes collected on that portion of the
7sales price that represents the discount rental charge directly
8to the department.
9(3) The rental facilitator shall remit any remaining tax it
10collected to the department.
11(4) (a) The automobile provider shall collect and remit
12to the department any taxes the rental facilitator remitted to
13the automobile provider, and shall collect and remit to the
14department any taxes due on any amount of rental price the user
15paid to the automobile provider.
16(b) No assessment shall be made against an automobile
17provider for any tax due on a discount rental charge that
18was not remitted to the automobile provider by a rental
19facilitator. This subparagraph division shall not apply if the
20automobile provider and the rental facilitator are affiliates.
21(5) Notwithstanding any other provision of this paragraph
22to the contrary, if a rental facilitator and its affiliates
23facilitate total rentals under this chapter and chapter
24423A that are equal to or less than an aggregate amount of
25rental price and sales price of ten thousand dollars for an
26immediately preceding calendar year or a current calendar year,
27or in ten or fewer separate transactions for an immediately
28preceding calendar year or a current calendar year, the
29rental facilitator shall not be required to collect tax on the
30amount of sales price that represents the rental facilitator’s
31facilitation fee.
32c. (1) If a transaction for the rental of an automobile
33involves a rental platform, other than a rental platform
34described in subparagraph (2), the rental platform shall
35collect and remit the tax imposed under this chapter in the
-14-1same manner as an automobile provider under paragraph “a”.
2(2) 3. A rental platform person is not required to collect
3and remit the tax imposed under this chapter in the same manner
4as an automobile provider under paragraph “a” if the rental
5platform person meets all of the following requirements:
6a. The person or any affiliate of the person is not an
7automobile provider.
8b. The person or any affiliate of the person facilitates the
9renting of an automobile by doing all of the following:
10(1) The person owns, operates, or controls an automobile
11rental marketplace that allows an automobile provider who is
12not an affiliate of the person to offer or list an automobile
13for rent on the marketplace. For purposes of this paragraph,
14it is immaterial whether or not the automobile provider has
15a tax permit under this chapter or chapter 423 or whether
16the automobile is owned by a natural person or by a business
17entity.
18(2) The person or affiliate of the person collects or
19processes the rental price charged to the user.
20(a) c. The only sales the rental platform person and
21its affiliates of the person facilitate that are subject to
22tax under chapter 423 are sales of a transportation service
23under section 423.2, subsection 6, paragraph “bf”, or section
24423.5, subsection 1, paragraph “e”, consisting of the rental
25of vehicles subject to registration which are registered for
26a gross weight of thirteen tons or less for a period of sixty
27days or less.
28(b) d. The rental platform person operates a peer-to-peer
29automobile sharing marketplace.
30(3) 4. For any rental transaction for which the rental
31platform a person is required to or elects to collect and
32remit the tax under this chapter, the rental platform person
33 shall also be liable for the collection and remittance of any
34sales or use tax due on that transaction under section 423.2,
35subsection 6, paragraph “bf”, or section 423.5, subsection
-15-11, paragraph “e”, notwithstanding any other provision to the
2contrary in chapter 423.
3(4) 5. For any rental transaction for which the rental
4platform person is not required to collect and remit the
5tax under this chapter as provided under subparagraph (2)
6 subsection 3, the automobile provider shall be solely liable
7for any amount of uncollected or unremitted tax under this
8chapter and chapter 423.
9DIVISION V
10TELEPHONE COMPANY PROPERTY
11 Sec. 41. Section 476.1D, Code 2019, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 10. a. The board, at the request of a
14long distance telephone company, shall classify such company
15as a competitive long distance telephone company if more
16than half of the company’s revenues from its Iowa intrastate
17telecommunications services and facilities are received
18from services and facilities that the board has determined
19to be subject to effective competition, or if more than
20half of the company’s revenues from its Iowa intrastate
21telecommunications services and facilities are received from
22intralata interexchange services and facilities. For purposes
23of this subsection, “intralata interexchange services” means
24those interexchange services that originate and terminate
25within the same local access transport area.
26b. The board shall promptly notify the director of revenue
27that a long distance telephone company has been classified
28as a competitive long distance telephone company. Upon such
29notification by the board, the director of revenue shall assess
30the property of such competitive long distance telephone
31company, which property is first assessed for taxation in this
32state on or after January 1, 1996, in the same manner as all
33other property assessed as commercial property by the local
34assessor under chapters 427, 427A, 427B, 428, and 441. As used
35in this section, “long distance telephone company” means an
-16-1entity that provides telephone service and facilities between
2local exchanges, but does not include a cellular service
3provider or a local exchange utility holding a certificate
4issued under section 476.29, subsection 12.
5 Sec. 42. Section 476.1D, subsection 10, as enacted in this
6division of this Act, is amended by striking the subsection.
7 Sec. 43. EFFECTIVE DATE. The following, being deemed of
8immediate importance, takes effect upon enactment:
9The section of this division of this Act enacting section
10476.1D, subsection 10.
11 Sec. 44. RETROACTIVE APPLICABILITY. The following applies
12retroactively to July 1, 2018, for assessment years beginning
13on or after that date:
14The section of this division of this Act enacting section
15476.1D, subsection 10.
16 Sec. 45. EFFECTIVE DATE. The following takes effect July
171, 2021:
18The section of this division of this Act striking section
19476.1D, subsection 10.
20 Sec. 46. APPLICABILITY. The following applies to
21assessment years beginning on or after January 1, 2022:
22The section of this division of this Act striking section
23476.1D, subsection 10.
24DIVISION VI
25CHILD AND DEPENDENT CARE CREDIT AND EARLY CHILDHOOD DEVELOPMENT
26CREDIT
27 Sec. 47. Section 422.12C, subsection 1, Code 2019, is
28amended to read as follows:
291. The taxes imposed under this division, less the amounts
30of nonrefundable credits allowed under this division, shall
31be reduced by a child and dependent care credit equal to the
32following percentages of the federal child and dependent care
33credit provided in section 21 of the Internal Revenue Code,
34without regard to whether or not the federal credit was limited
35by the taxpayer’s federal tax liability:
-17- 1a. For a taxpayer with net income of less than ten twelve
2 thousand seven hundred fifty dollars, seventy-five percent.
3b. For a taxpayer with net income of ten twelve thousand
4seven hundred fifty dollars or more but less than twenty
5 twenty-five thousand four hundred ninety dollars, sixty-five
6percent.
7c. For a taxpayer with net income of twenty twenty-five
8 thousand four hundred ninety dollars or more but less than
9twenty-five thirty-one thousand eight hundred sixty dollars,
10fifty-five percent.
11d. For a taxpayer with net income of twenty-five thirty-one
12 thousand eight hundred sixty dollars or more but less than
13thirty-five forty-four thousand six hundred ten dollars, fifty
14percent.
15e. For a taxpayer with net income of thirty-five forty-four
16 thousand six hundred ten dollars or more but less than forty
17 fifty thousand nine hundred eighty dollars, forty percent.
18f. For a taxpayer with net income of forty fifty thousand
19nine hundred eighty dollars or more but less than forty-five
20 fifty-seven thousand three hundred sixty dollars, thirty
21percent.
22g. For a taxpayer with net income of forty-five fifty-seven
23 thousand three hundred sixty dollars or more, zero percent.
24 Sec. 48. Section 422.12C, subsection 2, paragraph a, Code
252019, is amended to read as follows:
26a. The taxes imposed under this division, less the amounts
27of nonrefundable credits allowed under this division, may be
28reduced by an early childhood development tax credit equal to
29twenty-five percent of the first one thousand dollars which
30the taxpayer has paid to others for each dependent, as defined
31in the Internal Revenue Code, ages three through five for
32early childhood development expenses. In determining the
33amount of early childhood development expenses for the tax year
34beginning in the 2006 calendar year only, such expenses paid
35during November and December of the previous tax year shall
-18-1be considered paid in the tax year for which the tax credit
2is claimed. This credit is available to a taxpayer whose net
3income is less than forty-five fifty-seven thousand three
4hundred sixty dollars. If the early childhood development
5tax credit is claimed for a tax year, the taxpayer and the
6taxpayer’s spouse shall not claim the child and dependent care
7credit under subsection 1.
8 Sec. 49. Section 422.12C, Code 2019, is amended by adding
9the following new subsection:
10 NEW SUBSECTION. 5. a. Upon determination of the latest
11cumulative inflation factor, the director shall multiply
12each net income level set forth in subsection 1 or 2 by this
13cumulative inflation factor, shall round off the resulting
14product to the nearest one dollar, and shall incorporate the
15result into the net income levels in subsection 1 or 2 for each
16tax year beginning on or after January 1, 2019.
17b. For purposes of this subsection, “cumulative inflation
18factor” means the product of the annual inflation factor for
19the 2019 calendar year and all annual inflation factors for
20subsequent calendar years as determined by section 422.4,
21subsection 1, paragraph “a”. The cumulative inflation factor
22applies to all tax years beginning on or after January 1 of
23the calendar year for which the latest annual inflation factor
24has been determined. Notwithstanding any other provision,
25the annual inflation factor for the 2019 calendar year is one
26hundred percent.
27 Sec. 50. EFFECTIVE DATE. This division of this Act, being
28deemed of immediate importance, takes effect upon enactment.
29 Sec. 51. RETROACTIVE APPLICABILITY. This division of this
30Act applies retroactively to tax years beginning on or after
31January 1, 2019.
32DIVISION VII
33APPOrtioNMENT OF CERTAIN BUSINESS INCOME OF AN AIRLINE
34 Sec. 52. Section 422.33, subsection 2, paragraph a,
35subparagraph (2), Code 2019, is amended by adding the following
-19-1new subparagraph divisions:
2 NEW SUBPARAGRAPH DIVISION. (0f) Notwithstanding
3subparagraph division (c), where income is derived by an
4airline from transportation operations, the part attributable
5to business within the state shall be in the proportion that
6the miles of the airline traveled in this state bears to the
7total miles of such airline traveled everywhere.
8 NEW SUBPARAGRAPH DIVISION. (00f) (i) Notwithstanding
9subparagraph division (c), where income is derived by a
10qualified air freight forwarder from transportation operations
11through an affiliated airline, such income shall be apportioned
12as follows:
13(A) For tax years beginning during the 2020 calendar year,
14ninety percent of such income shall be equitably apportioned
15as provided in subparagraph division (c), and of the remaining
16ten percent of such income, the part attributable to business
17within the state shall be in the proportion that the miles
18of the qualified air freight forwarder’s affiliated airline
19traveled in this state bears to the total miles of the
20affiliated airline traveled everywhere.
21(B) For tax years beginning during the 2021 calendar year,
22eighty percent of such income shall be equitably apportioned
23as provided in subparagraph division (c), and of the remaining
24twenty percent of such income, the part attributable to
25business within the state shall be in the proportion that the
26miles of the qualified air freight forwarder’s affiliated
27airline traveled in this state bears to the total miles of the
28affiliated airline traveled everywhere.
29(C) For tax years beginning during the 2022 calendar year,
30seventy percent of such income shall be equitably apportioned
31as provided in subparagraph division (c), and of the remaining
32thirty percent of such income, the part attributable to
33business within the state shall be in the proportion that the
34miles of the qualified air freight forwarder’s affiliated
35airline traveled in this state bears to the total miles of the
-20-1affiliated airline traveled everywhere.
2(D) For tax years beginning during the 2023 calendar year,
3sixty percent of such income shall be equitably apportioned as
4provided in subparagraph division (c), and of the remaining
5forty percent of such income, the part attributable to business
6within the state shall be in the proportion that the miles
7of the qualified air freight forwarder’s affiliated airline
8traveled in this state bears to the total miles of the
9affiliated airline traveled everywhere.
10(E) For tax years beginning during the 2024 calendar year,
11fifty percent of such income shall be equitably apportioned as
12provided in subparagraph division (c), and of the remaining
13fifty percent of such income, the part attributable to business
14within the state shall be in the proportion that the miles
15of the qualified air freight forwarder’s affiliated airline
16traveled in this state bears to the total miles of the
17affiliated airline traveled everywhere.
18(F) For tax years beginning during the 2025 calendar year,
19forty percent of such income shall be equitably apportioned as
20provided in subparagraph division (c), and of the remaining
21sixty percent of such income, the part attributable to business
22within the state shall be in the proportion that the miles
23of the qualified air freight forwarder’s affiliated airline
24traveled in this state bears to the total miles of the
25affiliated airline traveled everywhere.
26(G) For tax years beginning during the 2026 calendar year,
27thirty percent of such income shall be equitably apportioned
28as provided in subparagraph division (c), and of the remaining
29seventy percent of such income, the part attributable to
30business within the state shall be in the proportion that the
31miles of the qualified air freight forwarder’s affiliated
32airline traveled in this state bears to the total miles of the
33affiliated airline traveled everywhere.
34(H) For tax years beginning during the 2027 calendar year,
35twenty percent of such income shall be equitably apportioned
-21-1as provided in subparagraph division (c), and of the remaining
2eighty percent of such income, the part attributable to
3business within the state shall be in the proportion that the
4miles of the qualified air freight forwarder’s affiliated
5airline traveled in this state bears to the total miles of the
6affiliated airline traveled everywhere.
7(I) For tax years beginning during the 2028 calendar year,
8ten percent of such income shall be equitably apportioned as
9provided in subparagraph division (c), and of the remaining
10ninety percent of such income, the part attributable to
11business within the state shall be in the proportion that the
12miles of the qualified air freight forwarder’s affiliated
13airline traveled in this state bears to the total miles of the
14affiliated airline traveled everywhere.
15(J) For tax years beginning on or after January 1, 2029,
16the part attributable to business within the state shall be
17in the proportion that the miles of the qualified air freight
18forwarder’s affiliated airline traveled in this state bears to
19the total miles of the affiliated airline traveled everywhere.
20(ii) For purposes of this subparagraph division (00f),
21“qualified air freight forwarder” means a taxpayer who meets all
22of the following requirements:
23(A) The taxpayer is primarily engaged in the facilitation of
24the transportation of property by air.
25(B) The taxpayer does not itself operate aircraft.
26(C) The taxpayer is in the same affiliated group as an
27airline.
28 Sec. 53. Section 422.33, subsection 2, paragraph a,
29subparagraph (2), subparagraph division (g), Code 2019, is
30amended to read as follows:
31(g) Where income consists of more than one class of income
32as provided in subparagraph divisions (a) through (e) (00f)
33 of this subparagraph, it shall be reasonably apportioned by
34the business activity ratio provided in rules adopted by the
35director.
-22-1 Sec. 54. APPLICABILITY. This division of this Act applies
2to tax years beginning on or after January 1, 2020.
3DIVISION VIII
4BURIAL TRUSTS
5 Sec. 55. Section 422.7, Code 2019, is amended by adding the
6following new subsection:
7 NEW SUBSECTION. 6. Subtract, to the extent included, income
8from interest and earnings received from a burial trust fund
9as defined in section 523A.102.
10DIVISION IX
11ADOPTION TAX CREDIT
12 Sec. 56. Section 422.12A, subsection 2, Code 2019, is
13amended to read as follows:
142. The taxes imposed under this division, less the credits
15allowed under section 422.12, shall be reduced by an adoption
16tax credit equal to the amount of qualified adoption expenses
17paid or incurred by the taxpayer during the tax year in
18connection with the adoption of a child by the taxpayer, not to
19exceed five thousand dollars per adoption.
20 Sec. 57. Section 422.12A, Code 2019, is amended by adding
21the following new subsection:
22 NEW SUBSECTION. 3A. The credit under this section with
23respect to any qualified adoption expense shall be allowed
24during a tax year as follows:
25a. For any qualified adoption expense paid or incurred prior
26to or during the tax year in which the adoption becomes final,
27the tax year in which the adoption becomes final.
28b. For any qualified adoption expense paid or incurred after
29the tax year in which the adoption becomes final, the tax year
30in which an adoption expense is paid or incurred.
31 Sec. 58. RETROACTIVE APPLICABILITY. This division of this
32Act applies retroactively to January 1, 2019, for tax years
33beginning on or after that date.
34DIVISION X
35TARGETED JOBS WITHHOLDING CREDIT
-23-1 Sec. 59. Section 403.19A, subsection 3, paragraph c,
2subparagraph (2), Code 2019, is amended to read as follows:
3(2) The pilot project city and the economic development
4authority shall not enter into a withholding agreement after
5June 30, 2019 2023.
6 Sec. 60. EFFECTIVE DATE. This division of this Act, being
7deemed of immediate importance, takes effect upon enactment.
8DIVISION XI
9SCHOOL TUITION ORGANIZATION TAX CREDITS
10 Sec. 61. Section 422.11S, subsection 8, paragraph a,
11subparagraph (2), Code 2019, is amended to read as follows:
12(2) “Total approved tax credits” means for the tax year
13beginning in the 2006 calendar year, two million five hundred
14thousand dollars, for the tax year beginning in the 2007
15calendar year, five million dollars, for tax years beginning
16on or after January 1, 2008, but before January 1, 2012, seven
17million five hundred thousand dollars, for tax years beginning
18on or after January 1, 2012, but before January 1, 2014, eight
19million seven hundred fifty thousand dollars, and for tax years
20beginning on or after January 1, 2014, but before January 1,
212019, twelve million dollars, and for tax years beginning on
22or after January 1, 2019, but before January 1, 2020, thirteen
23million dollars, and for tax years beginning on or after
24January 1, 2020, seventeen million dollars.
25 Sec. 62. CONTINGENT CODE EDITOR DIRECTIVE. The Code editor
26is directed to harmonize the section of this division of this
27Act amending section 422.11S with the other division of this
28Act amending section 422.11S, if enacted, by changing tax year
29to calendar year where appropriate and to make other related
30changes, if necessary, to effectuate such changes.
31DIVISION XII
32DEDUCTING RESIDUAL FERTILIZER
33 Sec. 63. Section 422.7, Code 2019, is amended by adding the
34following new subsection:
35 NEW SUBSECTION. 60. a. For purposes of this subsection,
-24-1“residual fertilizer supply” means an asset or an improvement to
2land that meets all of the following requirements:
3(1) The asset or improvement consists of residual
4fertilizer or excess available nutrients that are incorporated
5into and inseparable from land.
6(2) The asset or improvement is sold or exchanged in
7conjunction with the sale or exchange of land upon which the
8asset or improvement is located.
9(3) Following the sale or exchange, an expense deduction,
10amortization deduction, or depreciation deduction is allowable
11for federal tax purposes under the Internal Revenue Code with
12respect to the asset or improvement in the hands of a taxpayer
13other than the seller.
14b. For any sale or exchange of a residual fertilizer supply
15executed on or after July 1, 2019, an expense deduction,
16depreciation deduction, or amortization deduction with respect
17to the residual fertilizer supply shall not be allowed under
18this division unless all of the following requirements are
19satisfied:
20(1) The expense deduction, depreciation deduction, or
21amortization deduction is allowable to the taxpayer under the
22Internal Revenue Code.
23(2) The residual fertilizer supply is part of a signed,
24written agreement between the seller and buyer that identifies
25the residual fertilizer supply and the consideration paid by
26the buyer for the residual fertilizer supply.
27c. If a taxpayer has taken a deduction in computing federal
28adjusted gross income that is disallowed under paragraph “b”,
29the taxpayer shall make the following adjustments:
30(1) Add back the total amount of the deduction in computing
31net income for state tax purposes.
32(2) Reallocate the amount of the deduction to the taxpayer’s
33basis, if any, in the land upon which the residual fertilizer
34supply is located.
35(3) Any other adjustments to gains, losses, deductions, or
-25-1tax basis of assets pursuant to rules adopted by the director.
2 Sec. 64. Section 422.35, Code 2019, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 26. a. For purposes of this subsection,
5“residual fertilizer supply” means an asset or an improvement to
6land that meets all of the following requirements:
7(1) The asset or improvement consists of residual
8fertilizer or excess available nutrients that are incorporated
9into and inseparable from land.
10(2) The asset or improvement is sold or exchanged in
11conjunction with the sale or exchange of land upon which the
12asset or improvement is located.
13(3) Following the sale or exchange, an expense deduction,
14amortization deduction, or depreciation deduction is allowable
15for federal tax purposes under the Internal Revenue Code with
16respect to the asset or improvement in the hands of a taxpayer
17other than the seller.
18b. For any sale or exchange of a residual fertilizer supply
19executed on or after July 1, 2019, an expense deduction,
20depreciation deduction, or amortization deduction with respect
21to the residual fertilizer supply shall not be allowed under
22this division unless all of the following requirements are
23satisfied:
24(1) The expense deduction, depreciation deduction, or
25amortization deduction is allowable to the taxpayer under the
26Internal Revenue Code.
27(2) The residual fertilizer supply is part of a signed,
28written agreement between the seller and buyer that identifies
29the residual fertilizer supply and the consideration paid by
30the buyer for the residual fertilizer supply.
31c. If a taxpayer has taken a deduction in computing federal
32taxable income that is disallowed under paragraph “b”, the
33taxpayer shall make the following adjustments:
34(1) Add back the total amount of the deduction in computing
35net income for state tax purposes.
-26- 1(2) Reallocate the amount of the deduction to the taxpayer’s
2basis, if any, in the land upon which the residual fertilizer
3supply is located.
4(3) Any other adjustments to gains, losses, deductions, or
5tax basis of assets pursuant to rules adopted by the director.
6DIVISION XIII
7FRANCHISE TAX — ALTERNATIVE MINIMUM TAX (amt) REPEAL
8 Sec. 65. Section 422.60, subsection 2, Code 2019, is amended
9by adding the following new paragraph:
10 NEW PARAGRAPH. c. This subsection is repealed January 1,
112021, for tax years beginning on or after that date.
12 Sec. 66. Section 422.60, subsection 3, Code 2019, is amended
13to read as follows:
143. a. (1) There For tax years beginning before January 1,
152022, there is allowed as a credit against the tax determined
16in section 422.63 for a tax year an amount equal to the minimum
17tax credit for that tax year.
18(2) The minimum tax credit for a tax year is the excess,
19if any, of the net minimum tax imposed for all prior tax years
20beginning on or after January 1, 1987, but before January
211, 2021, over the amount allowable as a credit under this
22subsection for those prior tax years.
23b. (1) The allowable credit under paragraph “a” for a tax
24year beginning before January 1, 2021, shall not exceed the
25excess, if any, of the tax determined in section 422.63 over
26the state alternative minimum tax as determined in subsection
272. The allowable credit under paragraph “a” for a tax year
28beginning in the 2021 calendar year shall not exceed the tax
29determined in section 422.63.
30(2) The net minimum tax for a tax year is the excess, if
31any, of the tax determined in subsection 2 for the tax year
32over the tax determined in section 422.63 for the tax year.
33c. This subsection is repealed January 1, 2022, for tax
34years beginning on or after that date.
35DIVISION XIV
-27-1FEDERAL RESEARCH CREDIT — INTERNAL REVENUE CODE
2 Sec. 67. Section 15.335, subsection 4, paragraph a, Code
32019, is amended to read as follows:
4a. In lieu of the credit amount computed in subsection 2, an
5eligible business may elect to compute the credit amount for
6qualified research expenses incurred in this state in a manner
7consistent with the alternative simplified credit described in
8section 41(c)(5) 41(c)(4) of the Internal Revenue Code. The
9taxpayer may make this election regardless of the method used
10for the taxpayer’s federal income tax. The election made under
11this paragraph is for the tax year and the taxpayer may use
12another or the same method for any subsequent year.
13 Sec. 68. Section 15.335, subsection 4, paragraph b,
14unnumbered paragraph 1, Code 2019, is amended to read as
15follows:
16For purposes of the alternate credit computation method in
17paragraph “a”, the credit percentages applicable to qualified
18research expenses described in section 41(c)(5)(A) 41(c)(4)(A)
19 and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B) of the
20Internal Revenue Code are as follows:
21 Sec. 69. Section 422.10, subsection 1, paragraphs c and d,
22Code 2019, are amended to read as follows:
23c. In lieu of the credit amount computed in paragraph “b”,
24subparagraph (1), subparagraph division (a), a taxpayer may
25elect to compute the credit amount for qualified research
26expenses incurred in this state in a manner consistent with the
27alternative simplified credit described in section 41(c)(5)
28 41(c)(4)of the Internal Revenue Code. The taxpayer may make
29this election regardless of the method used for the taxpayer’s
30federal income tax. The election made under this paragraph is
31for the tax year and the taxpayer may use another or the same
32method for any subsequent year.
33d. For purposes of the alternate credit computation
34method in paragraph “c”, the credit percentages applicable
35to qualified research expenses described in section
-28-141(c)(5)(A)41(c)(4)(A) and clause (ii) of section 41(c)(5)(B)
2 41(c)(4)(B) of the Internal Revenue Code are four and
3fifty-five hundredths percent and one and ninety-five
4hundredths percent, respectively.
5 Sec. 70. Section 422.33, subsection 5, paragraphs c and d,
6Code 2019, are amended to read as follows:
7c. In lieu of the credit amount computed in paragraph
8“a”, subparagraph (1), a corporation may elect to compute the
9credit amount for qualified research expenses incurred in this
10state in a manner consistent with the alternative simplified
11credit described in section 41(c)(5) 41(c)(4) of the Internal
12Revenue Code. The taxpayer may make this election regardless
13of the method used for the taxpayer’s federal income tax. The
14election made under this paragraph is for the tax year and the
15taxpayer may use another or the same method for any subsequent
16year.
17d. For purposes of the alternate credit computation
18method in paragraph “c”, the credit percentages applicable to
19qualified research expenses described in section 41(c)(5)(A)
20 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
21 of the Internal Revenue Code are four and fifty-five
22hundredths percent and one and ninety-five hundredths percent,
23respectively.
24 Sec. 71. RETROACTIVE APPLICABILITY. This division of this
25Act applies retroactively to January 1, 2019, for tax years
26beginning on or after that date.
27DIVISION XV
28RESEARCH ACTIVITIES TAX CREDIT
29 Sec. 72. Section 422.10, subsection 1, paragraph a,
30subparagraph (1), subparagraph division (a), Code 2019, is
31amended to read as follows:
32(a) The business is engaged in the manufacturing, life
33sciences, agriscience, agricultural animal production, software
34engineering, or aviation and aerospace industry.
35 Sec. 73. Section 422.10, subsection 1, paragraph a,
-29-1subparagraph (1), subparagraph division (b), unnumbered
2paragraph 1, Code 2019, is amended to read as follows:
3Persons that shall not be considered to be engaged in the
4manufacturing, life sciences, agriscience, agricultural animal
5production, software engineering, or aviation and aerospace
6industry, and thus are not eligible for the credit, include but
7are not limited to all of the following:
8 Sec. 74. Section 422.10, subsection 3, Code 2019, is amended
9by adding the following new paragraphs:
10 NEW PARAGRAPH. c. For purposes of this section,
11“agricultural animal” means an animal belonging to the bovine,
12caprine, equine, ovine, or porcine species; ostriches, rheas,
13or emus; farm deer as defined in section 170.1; or poultry.
14 NEW PARAGRAPH. d. For purposes of this section,
15“agricultural animal production” means activities related to
16producing or maintaining an agricultural animal.
17 Sec. 75. Section 422.33, subsection 5, paragraph e,
18subparagraph (1), subparagraph division (a), Code 2019, is
19amended to read as follows:
20(a) The business is engaged in the manufacturing, life
21sciences, agriscience, agricultural animal production, software
22engineering, or aviation and aerospace industry.
23 Sec. 76. Section 422.33, subsection 5, paragraph e,
24subparagraph (1), subparagraph division (b), unnumbered
25paragraph 1, Code 2019, is amended to read as follows:
26Persons that shall not be considered to be engaged in the
27manufacturing, life sciences, agriscience, agricultural animal
28production, software engineering, or aviation and aerospace
29industry, and thus are not eligible for the credit, include but
30are not limited to all of the following:
31 Sec. 77. Section 422.33, subsection 5, Code 2019, is amended
32by adding the following new paragraph:
33 NEW PARAGRAPH. 0g. As used in this subsection:
34(1) “Agricultural animal” means an animal belonging to the
35bovine, caprine, equine, ovine, or porcine species; ostriches,
-30-1rheas, or emus; farm deer as defined in section 170.1; or
2poultry.
3(2) “Agricultural animal production” means activities
4related to producing or maintaining an agricultural animal.
5 Sec. 78. EFFECTIVE DATE. This division of this Act, being
6deemed of immediate importance, takes effect upon enactment.
7 Sec. 79. RETROACTIVE APPLICABILITY. This division of this
8Act applies retroactively to January 1, 2017, for tax years
9beginning on or after that date.
10DIVISION XVI
11NEW JOBS CREDIT — FRANCHISE TAX
12 Sec. 80. Section 422.60, Code 2019, is amended by adding the
13following new subsection:
14 NEW SUBSECTION. 14. The taxes imposed under this division
15shall be reduced by a new jobs tax credit. An industry which
16has entered into an agreement under chapter 260E and which has
17increased its base employment level by at least ten percent
18within the time set in the agreement or, in the case of an
19industry without a base employment level, adds new jobs within
20the time set in the agreement is entitled to this new jobs
21tax credit for the tax year selected by the industry. In
22determining if the industry has increased its base employment
23level by ten percent or added new jobs, only those new jobs
24directly resulting from the project covered by the agreement
25and those directly related to those new jobs shall be counted.
26The amount of this credit is equal to the product of six
27percent of the taxable wages upon which an employer is required
28to contribute to the state unemployment compensation fund, as
29defined in section 96.19, subsection 37, times the number of
30new jobs existing in the tax year that directly result from
31the project covered by the agreement or new jobs that directly
32result from those new jobs. The tax year chosen by the
33industry shall either begin or end during the period beginning
34with the date of the agreement and ending with the date by
35which the project is to be completed under the agreement. Any
-31-1credit in excess of the tax liability for the tax year may be
2credited to the tax liability for the following ten tax years
3or until depleted in less than the ten years. For purposes
4of this subsection, “agreement”, “industry”, “new job”, and
5“project” mean the same as defined in section 260E.2 and “base
6employment level” means the number of full-time jobs an industry
7employs at the site which is covered by an agreement under
8chapter 260E on the date of that agreement.
9DIVISION XVII
10UTILITY REPLACEMENT TASK FORCE
11 Sec. 81. Section 437A.15, subsection 7, paragraph b, Code
122019, is amended to read as follows:
13b. The task force shall study the effects of the replacement
14taxes under this chapter and chapter 437B on local taxing
15authorities, local taxing districts, consumers, and taxpayers
16through January 1, 2019 2029. If the task force recommends
17modifications to the replacement tax that will further the
18purposes of tax neutrality for local taxing authorities, local
19taxing districts, taxpayers, and consumers, consistent with the
20stated purposes of this chapter, the department of management
21shall transmit those recommendations to the general assembly.
22DIVISION XVIII
23MONEYS AND CREDITS TAX ON STATE CREDIT UNIONS
24 Sec. 82. Section 533.329, subsection 2, paragraph a, Code
252019, is amended to read as follows:
26a. The moneys and credits tax on state credit unions is
27imposed at a rate of one-half cent on each dollar of the legal
28and special reserves that are required to be maintained by the
29state credit union under section 533.303, and shall be levied
30by the board of supervisors and placed upon the tax list and
31collected by the county treasurer. However, an exemption shall
32be given to each state credit union in the amount of forty
33thousand dollars.
34DIVISION XIX
35SALES AND USE TAX EXEMPTIONS RELATED TO MANUFACTURERS
-32-1 Sec. 83. Section 423.3, subsection 47, paragraph d,
2subparagraph (4), subparagraph division (c), unnumbered
3paragraph 1, Code 2019, is amended to read as follows:
4“Manufacturer” does not include persons who are not commonly
5understood as manufacturers, including but not limited to
6persons primarily engaged in any of the following activities:
7DIVISION XX
8SALES AND USE TAX — PARKING FACILITIES
9 Sec. 84. Section 423.2, subsection 6, paragraph ak, Code
102019, is amended to read as follows:
11ak. Parking Privately owned, for-profit parking facilities.
12DIVISION XXI
13SALES AND USE TAX EXEMPTIONS — MEDICAID
14 Sec. 85. Section 423.3, Code 2019, is amended by adding the
15following new subsection:
16 NEW SUBSECTION. 107. The sales price from sales of all
17tangible personal property, specified digital products, or
18services paid for or reimbursed by Medicaid, as defined in
19section 249A.2, subsection 7.
20DIVISION XXII
21Broadcasters — Apportionment of gross receipts
22 Sec. 86. 2015 Iowa Acts, chapter 86, section 3, is amended
23to read as follows:
24SEC. 3. RETROACTIVE APPLICABILITY. This Act applies
25retroactively to January 1, 2015 2013, for tax years beginning
26on or after that date.
27EXPLANATION
28The inclusion of this explanation does not constitute agreement with
29the explanation’s substance by the members of the general assembly.
30This bill relates to the administration of the tax and
31related laws by the department of revenue, including the
32administration and modification of certain taxes, tax credits,
33and refunds.
34DIVISION I — INCOME AND FRANCHISE TAX. The amendments to
35Code sections 422.4(16) and 422.9 modify Internal Revenue Code
-33-1references relating to the qualified business income deduction.
2The amendments to Code sections 422.4(16) and 422.9 apply
3retroactively for tax years beginning on or after January 1,
42019.
5The amendments to Code section 422.11S specify that school
6tuition organization tax credits shall be authorized by the
7department of revenue on a calendar year basis rather than
8a tax year basis. The amendments to Code section 422.11S
9also specify that a school tuition organization shall be
10controlled by a board of directors consisting of at least seven
11members. Under current law, the board of directors shall be
12seven members. The bill provides that it is the intent of the
13general assembly that the amendments to Code section 422.11S
14are conforming amendments consistent with current law, and that
15the amendments do not change the application of current law.
16The amendment to Code section 422.12C specifies that a
17nonresident or part-year resident shall determine their early
18childhood development tax credit in the ratio of the taxpayer’s
19Iowa source net income to their all source net income. The
20amendment to Code section 422.12C takes effect upon enactment
21and applies retroactively for tax years beginning on or
22after January 1, 2019. The bill specifies that for tax years
23beginning prior to January 1, 2019, refunds of the early
24childhood development tax credit requested on or after July 1,
252019, shall not exceed the amount allowed under Code section
26422.12C(4), as amended by the bill.
27The amendment to Code section 422.60 aligns the definition
28of “Internal Revenue Code” for franchise alternative minimum
29tax purposes with the definition of “Internal Revenue Code”
30for corporate alternative minimum tax purposes. The amendment
31to Code section 422.60 applies retroactively for tax years
32beginning on or after January 1, 2019.
33The bill provides for a deferral of a gain or loss resulting
34from exchanging of property (1031 exchange) that meet certain
35conditions. The federal Tax Cuts and Jobs Act of 2017 repealed
-34-11031 exchanges with respect to exchanges of personal property.
2The Iowa tax bill enacted last year (2018 Iowa Acts, chapter
31161) decouples, for Iowa individual tax purposes, from the
4federal repeal of 1031 exchanges relating to personal property,
5and permits individuals to defer gain or loss on qualifying
6personal property for tax year 2019 to the extent such deferral
7would have been permitted under federal law prior to its
8amendment by the federal Tax Cuts and Jobs Act of 2017. The
9bill permits a corporation or financial institution, for Iowa
10corporate income tax or franchise income tax purposes, the same
11deferral of gain or loss as individuals on qualifying personal
12property for tax year 2019 to the extent such deferral would
13have been permitted under federal law prior to its amendment
14by the federal Tax Cuts and Jobs Act of 2017. The 1031
15exchange provision takes effect upon enactment, and applies
16retroactively for tax years beginning January 1, 2019, but
17before January 1, 2020.
18DIVISION II — ADMINISTRATIVE PROVISIONS. The amendments
19to Code sections 422.20 and 422.72 permit the department of
20revenue, by rule, to disclose state tax information to a person
21a taxpayer has identified to receive such information in the
22manner prescribed by the department of revenue.
23DIVISION III — SALES AND USE TAX. The amendment to Code
24section 423.2(1) provides that if a service or warranty
25contract does not specify a fee amount for nontaxable services
26or taxable personal property, the sales tax shall be imposed
27upon an amount equal to the sales price of the contract.
28Currently, the sales tax is imposed upon an amount equal to
29one-half of the sales price of such a contract.
30The amendment to Code section 432.2(6) specifies that
31the sales price from the furnishing of carpentry repair and
32installation services are subject to the sales tax. Currently,
33carpentry services are subject to sales tax.
34The bill enacts new Code section 423.3(16A), exempting from
35the state sales and use tax the purchase price of a grain bin,
-35-1including material or replacement parts used to construct or
2repair a grain bin. “Grain bin” is defined to mean property
3that is vented and covered with corrugated metal or similar
4material, and that is primarily used to hold loose grain for
5drying or storage. This provision takes effect upon enactment
6and applies retroactively to January 1, 2004, and applies to
7tax years beginning on or after that date. The bill also
8provides for refunds of taxes, interest, or penalties that
9arise from claims resulting from the enactment of Code section
10423.3(16A) for sales occurring between January 1, 2004, and the
11effective date of the enactment of Code section 423.3(16A).
12 The bill limits the refunds to $25,000 in the aggregate.
13The amendment to Code section 423.3(47) changes the
14exclusions from the sales tax exemptions in that subsection by
15aligning the exclusions with the changes made to the exemptions
16enacted in 2016 Iowa Acts, chapter 1007. This provision takes
17effect upon enactment and applies retroactively to tax years
18beginning January 1, 2016, for tax years beginning on or after
19that date.
20The amendment to Code section 423.3(104) exempts from the
21sales tax the sales of optional service or warranty contracts
22for computer software maintenance or support services furnished
23to a commercial enterprise used exclusively by the commercial
24enterprise. “Commercial enterprise” is defined in Code section
25423.3(104).
26Currently, a retailer making Iowa sales, as defined in Code
27section 423.14A(1)(a), shall collect and remit sales, use, and
28local option taxes, if the retailer has gross revenue from
29Iowa sales equal to or exceeding $100,000 for an immediately
30preceding calendar year or a current calendar year, or has 200
31or more separate transactions for an immediately preceding
32calendar year or a current calendar year. The bill amends
33Code section 423.14A(3)(b) by striking the requirement that
34retailers making Iowa sales collect such taxes if the retailer
35has 200 or more separate transactions for an immediately
-36-1preceding calendar year or a current calendar year.
2The bill amends Code section 423.14A(3)(d) by striking
3the requirement that a marketplace facilitator, as defined
4in Code section 423.14A(1)(b), making Iowa sales, as defined
5in Code section 423.14A(1)(a), collect sales, use, and local
6option taxes if the marketplace facilitator has 200 or more
7separate transactions for an immediately preceding calendar
8year or a current calendar year. The bill does not strike the
9requirement that a marketplace facilitator collect such taxes
10if the marketplace facilitator makes or facilitates Iowa sales
11on its own behalf or for one or more marketplace sellers equal
12to or exceeding $100,000.
13The bill amends Code section 423.14A(3)(e) by striking
14the requirement that a referrer, as defined in Code section
15423.14A(3)(e)(3), making Iowa sales, as defined in Code section
16423.14A(1)(a), collect sales, use, and local option taxes if
17the referrer has 200 or more separate transactions for an
18immediately preceding calendar year or a current calendar
19year. The bill does not strike the requirement that a referrer
20collect such taxes if the referrer has Iowa sales equal to or
21exceeding $100,000.
22Currently, a referrer is required to provide the department
23of revenue, on a monthly basis, a list of marketplace sellers
24who collect and remit Iowa sales and use tax on the platform
25of the referrer. Otherwise, the referrer is required to
26collect and remit Iowa sales and use tax. The amendment to
27Code section 423A.14A(3)(e)(1)(c) provides that a referrer may
28provide the department of revenue such a report on an annual
29basis, and avoid collecting the sales and use tax if other
30conditions in Code section 423.14(3)(e)(1) are met.
31The bill enacts new Code section 423.14A(3)(e)(5) specifying
32that the paragraph relating to “referrers” is subject to
33implementation by the department of revenue by rule, and shall
34not require a referrer to collect tax or comply with the notice
35and reporting requirements unless such administrative rules
-37-1take effect.
2The bill amends Code section 423.48(2)(c) by striking the
3paragraph specifying that registering under the streamlined
4sales and use tax agreement in another member state shall be
5considered to be registered in this state for purposes of the
6streamlined sales and use tax agreement.
7The bill establishes a taxation and exemption computers
8task force to be initiated, coordinated, and staffed by
9the department of revenue. The task force shall review the
10definition of “computer” as used throughout the portions of
11the Iowa Code and the Iowa Administrative Code administered
12by the department of revenue including the exemption for
13computers provided in Code section 423.3(47)(a)(4). If the
14task force recommends modifications to the current definition
15of “computer” including the exemption for computers provided in
16Code section 423.3(47)(a)(4), the department of revenue shall
17provide any recommendations to the general assembly by January
181, 2020.
19DIVISION IV — AUTOMOBILE RENTAL EXCISE TAX. The amendment
20to Code section 423.14A provides that a person who is not
21required to collect and remit automobile rental excise tax
22shall not be considered a “marketplace facilitator” with
23respect to the sale of certain transportation services.
24The amendment to Code section 423C.2 substitutes a person
25required to collect sales or use tax under Code chapter 423
26for “rental facilitator” and “rental platform” and strikes the
27definitions of “rental facilitator” and “rental platform” from
28Code section 423C.2.
29The amendment to Code section 423C.2(11) modifies the
30definition of “rental price” to mean the same as “sales price”
31defined in Code section 423.1, which includes facilitation
32fees, reservation fees, service fees, nonrefundable deposits,
33and any other direct or indirect charge made or consideration
34provided in connection with the renting or facilitation of
35renting automobiles.
-38- 1The amendment to Code section 423C.3 strikes the definitions
2of “discount rental charge” and “travel package”.
3The amendment to Code section 423C.3 specifies that the
4automobile rental excise tax shall be imposed upon the rental
5price of an automobile if the rental is subject to the state
6sales or use tax.
7The bill strikes numerous provisions in Code section 423C.3
8relating to the collection of the automobile rental excise tax
9by a “rental facilitator” and “rental platform” due to these
10definitions being stricken by another part of this division of
11the bill.
12The amendment to Code section 423C.3 requires that any
13person required to collect state sales and use tax on the
14rental transaction under Code chapter 423 shall collect the
15automobile rental excise tax as applicable. The amendment to
16Code section 423C.3 provides that a person is not required
17to collect and remit the automobile rental excise tax if the
18person meets certain circumstances. For any rental transaction
19for which the person is not required to collect and remit the
20automobile rental excise tax, the amendment to Code section
21423C.3 requires an automobile provider to be solely liable
22for any amount of uncollected or unremitted automobile rental
23excise tax and sales and use tax under Code chapter 423.
24DIVISION V — TELEPHONE COMPANY PROPERTY. Division V of
25the bill authorizes the Iowa utilities board to classify a
26long distance telephone company as a competitive long distance
27telephone company if certain revenue source criteria are
28met. In the event of such a classification, the board is
29required to promptly notify the director of revenue. Upon
30such notification by the board, the director of revenue is
31required to assess the property of such competitive long
32distance telephone company, which property is first assessed
33for taxation in this state on or after January 1, 1996, in
34the same manner as all other property assessed as commercial
35property by the local assessor. The provisions established in
-39-1the bill are the same as provisions repealed on July 1, 2018,
2by 2018 Iowa Acts, chapter 1160.
3The section of Division V of the bill enacting Code section
4476.1D, subsection 10, takes effect upon enactment and applies
5retroactively to July 1, 2018, for assessment years beginning
6on or after that date.
7Division V also strikes Code section 476.1D, subsection 10,
8as enacted in the bill, effective July 1, 2021. The future
9strike of Code section 476.1D, subsection 10, applies to
10assessment years beginning on or after January 1, 2022.
11DIVISION VI — CHILDHOOD AND DEPENDENT CARE CREDIT AND
12EARLY CHILDHOOD DEVELOPMENT CREDIT. The amendment to Code
13section 422.12C(4) increases the Iowa net income threshold
14levels for purposes of calculating the Iowa child and dependent
15child care tax credit and the early childhood development tax
16credit available against the individual income tax. The Iowa
17child and dependent care tax credit is a refundable credit
18calculated as a percentage of the nonrefundable federal child
19and dependent care tax credit, depending on the Iowa net income
20of the taxpayer. The early childhood development tax credit
21is a refundable credit equaling 25 percent of the first $1,000
22which the taxpayer has paid to others for each dependent ages
23three through five for early childhood development expenses.
24IOWA CHILD AND DEPENDENT CHILD CARE TAX CREDIT. Currently,
25there are seven graduated Iowa net income thresholds used to
26calculate the credit. The bill increases these graduated
27thresholds, but does not change the percentage of the
28nonrefundable federal child and dependent care tax credit
29used to calculate the Iowa child and dependent child care tax
30credit.
31Currently, the credit percentages in these seven Iowa
32net income thresholds range from a high of 75 percent of
33the federal credit for taxpayers with net income of less
34than $10,000, to a low of 30 percent of the federal credit
35for taxpayers with net income of $40,000 or more but less
-40-1than $45,000. Under the bill, the credit percentages in the
2thresholds range from a high of 75 percent of the federal
3credit for taxpayers with a net income of less than $12,750,
4to a low of 30 percent of the federal credit for taxpayers with
5net income of $50,980 or more but less than $57,360.
6The bill also adjusts the future amount of each of the Iowa
7net income amounts in the seven graduated Iowa net income
8thresholds by indexing the thresholds to inflation.
9EARLY CHILDHOOD DEVELOPMENT TAX CREDIT. The bill increases
10the income threshold determining the eligibility of a taxpayer
11for the early childhood development tax credit. The bill
12increases the eligibility threshold from a taxpayer earning
13$45,000 per year to $57,360 per year. By increasing the
14eligibility threshold, taxpayers earning less than $57,360 are
15now eligible to take the early childhood development tax credit
16equaling 25 percent of the first $1,000 which the taxpayer has
17paid to others for early childhood development expenses for
18each dependent ages three through five. The bill also adjusts
19the future amount of the net income threshold by indexing the
20threshold to inflation.
21EFFECTIVE DATE AND APPLICABILITY. The division takes effect
22upon enactment and applies retroactively to tax years beginning
23on or after January 1, 2019.
24DIVISION VII — APPORTIONMENT OF CERTAIN BUSINESS INCOME
25OF AN AIRLINE. The amendment to Code section 422.33(2)(a)(2)
26relates to the apportionment of income of an airline and of
27a qualified air freight forwarder for purposes of the Iowa
28corporate income tax.
29A corporation doing business both within and without Iowa is
30required to apportion its business income among Iowa and the
31other states in which it does business. The amount of business
32income apportioned to Iowa is generally in the same percentage
33as the business’s gross sales made within Iowa if the business
34involves the manufacture or sale of goods and products, or in
35the same percentage as the business’s gross receipts earned
-41-1within Iowa if the business involves something other than the
2manufacture or sale of goods and products. However, airlines
3and other specified industries have special rules provided
4by administrative rule for apportioning the income of those
5industries.
6Under current law pursuant to 701 Iowa administrative code,
7rule 54.7(2), an airline deriving income from transportation
8operations is required to apportion its business income to
9Iowa in the same proportion that its mileage traveled in Iowa
10bears to its total mileage traveled everywhere. The bill
11specifies that an airline shall apportion this business income
12in the same manner described above as required under 701 Iowa
13administrative code, rule 54.7(2).
14The bill also provides rules for apportioning income derived
15by a qualified air freight forwarder from transportation
16operations through an affiliated airline. The bill defines
17“qualified air freight forwarder” to be a taxpayer that is
18primarily engaged in the facilitation of the transportation of
19property by air, and that does not itself operate aircraft but
20that is in the same affiliated group as an airline.
21The bill states that the qualified air freight forwarder
22income derived from transportation operations shall be
23apportioned to Iowa either under the current rules of the
24director of revenue (current statutory rules), or in the
25same proportion that the miles of the qualified air freight
26forwarder’s affiliated airline traveled in this state bears to
27the total miles of the affiliated airline traveled everywhere
28(affiliated airline mileage rules), based on increasing
29percentages as enumerated in the bill over a number of tax
30years.
31The division applies to tax years beginning on or after
32January 1, 2020.
33DIVISION VIII — BURIAL TRUSTS. The bill enacts new Code
34section 422.7(6) by exempting from the individual income tax
35interest and earnings received from a burial trust fund.
-42- 1DIVISION IX — ADOPTION TAX CREDIT. The amendment to Code
2section 422.12A relates to claiming the adoption tax credit for
3qualified adoption expenses paid or incurred by an individual
4taxpayer during a tax year.
5Currently, in order to claim the adoption tax credit the
6taxpayer must pay or incur “qualified adoption expenses” during
7the tax year, which are unreimbursed, and connected with the
8adoption. The bill strikes the requirement that the “qualified
9adoption expenses” be paid or incurred by the taxpayer during
10the tax year.
11The bill specifies that if a qualified adoption expense is
12incurred prior to or during the tax year in which the adoption
13becomes final, the qualified adoption expense shall be allowed
14during the tax year in which the adoption becomes final.
15For qualified adoption expenses incurred after the tax year
16in which the adoption becomes final, the qualified adoption
17expense shall be allowed during the tax year such adoption
18expense was paid or incurred.
19The division applies retroactively to tax years beginning on
20or after January 1, 2019.
21DIVISION X — TARGETED JOBS WITHHOLDING CREDIT. The
22amendment to Code section 403.19A extends by four years the
23deadline for entering into withholding agreements under the
24targeted jobs withholding credit pilot project from June 30,
252019, to June 30, 2023. This amendment takes effect upon
26enactment.
27DIVISION XI — SCHOOL TUITION ORGANIZATION TAX CREDITS. The
28amendment to Code section 422.11S increases the total amount
29of school tuition organization tax credits that may be issued
30per tax year to $17 million from $13 million for tax years
31beginning on or after January 1, 2020.
32The Code editor is directed to harmonize the amendment to
33Code section 422.11S in this division with the amendments to
34Code section 422.11S in another division of the bill.
35DIVISION XII — DEDUCTING RESIDUAL FERTILIZER. The bill
-43-1enacts new Code section 422.7(60), which relates to deducting
2residual fertilizer supply in the soil for purposes of
3individual and corporate income taxes.
4The bill defines “residual fertilizer supply” to mean an
5asset or an improvement to land that meets all of the following
6requirements: the asset or improvement consists of residual
7fertilizer or excess available nutrients that are in the soil;
8the land upon which the asset or improvement is located is
9sold or exchanged; and following the sale or exchange of the
10land containing the residual fertilizer supply, an expense
11deduction, amortization deduction, or depreciation deduction is
12allowable for federal tax purposes with respect to the residual
13fertilizer in the hands of a taxpayer other than the seller of
14the land.
15The bill provides that for any sale or exchange of a land
16containing residual fertilizer supply executed on or after
17July 1, 2019, an expense deduction, depreciation deduction, or
18amortization deduction with respect to the residual fertilizer
19supply shall not be allowed for individual or corporate income
20tax purposes unless all of the following requirements are
21satisfied: the expense deduction, depreciation deduction, or
22amortization deduction is allowable to the taxpayer under the
23Internal Revenue Code; and the residual fertilizer supply is
24part of a written agreement between the seller and buyer that
25identifies the residual fertilizer supply and the consideration
26paid for the residual fertilizer supply.
27If a taxpayer has taken a deduction relating to residual
28fertilizer supply in computing federal adjusted gross income
29that is disallowed under the bill, the taxpayer shall make
30the following adjustments: add back the total amount of the
31deduction in computing net income for state tax purposes;
32reallocate the amount of the deduction to the taxpayer’s basis,
33if any, in the land upon which the residual fertilizer supply
34is located; and make any other adjustments to gains, losses,
35deductions, or tax basis of assets pursuant to rules adopted by
-44-1the director of revenue.
2DIVISION XIII — FRANCHISE TAX — ALTERNATIVE MINIMUM TAX
3(AMT) REPEAL. Current law imposes an AMT on a financial
4institution to the extent the AMT exceeds the financial
5institution’s regular tax liability. The AMT is generally
6calculated by adding certain “preference” items (deductions,
7exemptions, and other adjustments) back to taxable income,
8applying an exemption amount, and then multiplying the
9resulting income amount by an AMT rate. The amendments to Code
10section 422.60 repeal the AMT for the franchise tax beginning
11in tax year 2021.
12Current law also provides an alternative minimum tax credit,
13which allows AMT paid by a financial institution in prior tax
14years to be claimed against regular tax liability in future tax
15years if the financial institution is not subject to the AMT
16in that year. With the repeal of the franchise AMT in 2021,
17the bill allows a taxpayer to claim any remaining alternative
18minimum tax credit against the financial institution’s regular
19tax liability for the 2021 tax year, and the bill then repeals
20the alternative minimum tax credit beginning in tax year 2022.
21DIVISION XIV — FEDERAL RESEARCH CREDIT — INTERNAL REVENUE
22CODE. The Consolidated Appropriations Act of 2018 (Pub.L.
23No.115-141), which Iowa is conformed to for tax year 2019
24and beyond, struck and renumbered a provision of the federal
25research credit, which resulted in a renumbering of the
26simplified credit in the Internal Revenue Code. The amendments
27in the division change the Internal Revenue references in the
28Iowa Code to reflect the changes to the references in the
29Internal Revenue Code.
30The division applies retroactively to January 1, 2019, and
31applies to tax years beginning on or after that date.
32DIVISION XV — RESEARCH ACTIVITIES TAX CREDIT. The
33amendments to Code section 422.10(1)(a) specify that the
34research and activities tax credit is available against
35the individual income tax if an individual is engaged in
-45-1agriscience or agricultural animal production, and if
2certain conditions are met. The amendments to Code section
3422.33(5)(e)(1) specify that a corporation engaged in
4agriscience or agricultural animal production shall be eligible
5for the research activities tax credit if certain conditions
6are met.
7The bill defines “agricultural animal production” to mean
8activities related to producing or maintaining an agricultural
9animal.
10The division takes effect upon enactment and applies
11retroactively to tax years beginning on or after January 1,
122017.
13DIVISION XVI — NEW JOBS CREDIT — FRANCHISE TAX. The
14amendment to Code section 422.60 makes the new jobs tax credit
15under Code chapter 260E available against franchise taxes
16imposed on financial institutions.
17DIVISION XVII — UTILITY REPLACEMENT TASK FORCE. The
18amendment to Code section 437A.15 extends the utility
19replacement tax task force from January 1, 2019, to January
201, 2029. The task force is charged with studying the effects
21of the replacement taxes under Code chapter 437A (taxes on
22electricity and natural gas providers) and Code chapter 437B
23(taxes on rate-regulated water utilities) on local taxing
24authorities, local taxing districts, consumers, and taxpayers.
25DIVISION XVIII — MONEYS AND CREDITS TAX ON STATE CREDIT
26UNIONS. The amendment to Code section 533.329 strikes a
27provision requiring the board of supervisors to impose the
28moneys and credits tax on state credit unions and the county
29treasurer to collect such tax, and aligns the imposition and
30the collection of the tax with Code section 533.329(2)(b) and
31Code section 533.329(3).
32DIVISION XIX — SALES AND USE TAX EXEMPTIONS RELATED
33TO MANUFACTURERS. The amendment to Code section
34423.3(47)(d)(4)(c) modifies the definition of “manufacturer”
35relating to the sales and use tax exemption for machinery,
-46-1equipment, and other items used directly and primarily in
2processing by a manufacturer. The bill expands the definition
3of “manufacturer” by adding the word “primarily” to the
4exclusions of the definition of “manufacturer”, thereby
5allowing persons who do not primarily engage in certain
6activities to qualify as a “manufacturer”.
7DIVISION XX — SALES AND USE TAX — PARKING FACILITIES.
8 The amendment to Code section 423.2(6)(ak) specifies that the
9services provided by a privately owned, for-profit parking
10facility are subject to the sales and use tax. Currently, the
11services provided by any parking facility are subject to the
12sales and use tax.
13DIVISION XXI — SALES AND USE TAX EXEMPTIONS — MEDICAID.
14 The bill enacts new Code section 423.3(107), which exempts from
15the state sales and use tax the sales of all tangible personal
16property, specified digital products, or services paid for or
17reimbursed by Medicaid, as defined in Code section 249A.2(7).
18DIVISION XXII — BROADCASTERS — APPORTIONMENT OF GROSS
19RECEIPTS. The amendment to 2015 Iowa Acts, chapter 86, section
203, extends the retroactive applicability of the apportionment
21of the gross receipts of a broadcaster enacted during the 2015
22legislative session in Senate File 479, from January 1, 2015,
23to January 1, 2013.
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