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House Study Bill 696 - IntroducedA Bill ForAn Act 1relating to state taxation and related laws of the
2state, including the administration by the department of
3revenue of certain tax credits and refunds, income taxes,
4moneys and credits taxes, sales and use taxes, partnership
5and pass-through entity audits, and by modifying provisions
6relating to the reinstatement of business entities,
7the assessment and valuation of property, and providing
8penalties, and including effective date and retroactive
9applicability provisions.
10BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2ADMINISTRATION AND PENALTY PROVISIONS
3 Section 1. Section 331.603, subsection 5, Code 2020, is
4amended to read as follows:
55. a. The governing board of the county land record
6information system may enter into an agreement, including but
7not limited to an agreement pursuant to chapter 28E, with a
8public agency, as defined in section 28E.2, to provide access
9to electronic documents or records on a batch basis. Access to
10electronic documents or records may be provided for a fee if
11permitted in the agreement between the governing board and the
12public agency.
13b. The governing board of the county land record information
14system shall not enter into an agreement other than as provided
15in paragraph “a” to provide access to electronic documents or
16records on a batch basis. The county recorder may collect
17reasonable fees for access to electronic documents and records
18pursuant to an agreement. The fees shall not exceed the
19actual cost of providing access to the electronic documents
20and records. “Actual cost” means only those expenses directly
21attributable to providing access to electronic documents
22and records. “Actual cost” shall not include costs such as
23employment benefits, depreciation, maintenance, electricity,
24or insurance associated with the administration of the office
25of the county recorder or the county land record information
26system.
27b. c. Electronic documents and records made available
28under this subsection shall not include personally identifiable
29information and shall be subjected to a redaction process prior
30to the transfer of the electronic documents or records to
31another person pursuant to an agreement under paragraph “a”.
32 Sec. 2. Section 421.6, Code 2020, is amended to read as
33follows:
34421.6 Definition of return.
35For purposes of this title, unless the context otherwise
-1-1requires, “return” means any tax or information return, amended
2return, declaration of estimated tax, or claim for refund
3that is required by, provided for, or permitted under, the
4provisions of this title or section 533.329, and which is filed
5with the department by, on behalf of, or with respect to any
6person. “Return” includes any amendment or supplement to these
7items, including supporting schedules, attachments, or lists
8which are supplemental to or part of the filed return.
9 Sec. 3. Section 421.17, Code 2020, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 36. To enter into an agreement pursuant
12to chapter 28E with the state fair organized under chapter 173
13or with a fair defined in section 174.1, to collect and remit
14taxes and fees from sellers making sales at retail on property
15owned, controlled, or operated by a fair or through events
16conducted by a fair.
17 Sec. 4. Section 421.27, subsection 1, Code 2020, is amended
18to read as follows:
191. Failure to timely file a return or deposit form.
20a. If a person fails to file with the department on or
21before the due date a return or deposit form there shall be
22added to the tax shown due or required to be shown due a penalty
23of ten percent of the tax shown due or required to be shown due.
24b. In the case of a specified business with no tax shown
25due or required to be shown due that fails to timely file an
26income return, the specified business shall pay the greater of
27the following penalty amounts:
28(1) Two hundred dollars.
29(2) An amount equal to ten percent of the imputed Iowa
30liability of the specified business, not to exceed twenty-five
31thousand dollars.
32c. The penalty, if assessed pursuant to paragraph “a” or
33“b”, shall be waived by the department upon a showing of any of
34the following conditions:
35a. (1) At An amount of tax greater than zero is required to
-2-1be shown due and at least ninety percent of the tax required to
2be shown due has been paid by the due date of the tax.
3b. (2) Those taxpayers who are required to file quarterly
4returns, or monthly or semimonthly deposit forms may have one
5late return or deposit form within a three-year period. The
6use of any other penalty exception will not count as a late
7return or deposit form for purposes of this exception.
8c. (3) The death of a taxpayer, death of a member of
9the immediate family of the taxpayer, or death of the person
10directly responsible for filing the return and paying the tax,
11when the death interferes with timely filing.
12d. (4) The onset of serious, long-term illness or
13hospitalization of the taxpayer, of a member of the immediate
14family of the taxpayer, or of the person directly responsible
15for filing the return and paying the tax.
16e. (5) Destruction of records by fire, flood, or other act
17of God.
18f. (6) The taxpayer presents proof that the taxpayer
19relied upon applicable, documented, written advice specifically
20made to the taxpayer, to the taxpayer’s preparer, or to an
21association representative of the taxpayer from the department,
22state department of transportation, county treasurer, or
23federal internal revenue service, whichever is appropriate,
24that has not been superseded by a court decision, ruling by a
25quasi-judicial body, or the adoption, amendment, or repeal of
26a rule or law.
27g. (7) Reliance upon results in a previous audit was a
28direct cause for the failure to file where the previous audit
29expressly and clearly addressed the issue and the previous
30audit results have not been superseded by a court decision, or
31the adoption, amendment, or repeal of a rule or law.
32h. (8) Under rules prescribed by the director, the taxpayer
33presents documented proof of substantial authority to rely
34upon a particular position or upon proof that all facts and
35circumstances are disclosed on a return or deposit form.
-3- 1i. (9) The return, deposit form, or payment is timely,
2but erroneously, mailed with adequate postage to the internal
3revenue service, another state agency, or a local government
4agency and the taxpayer provides proof of timely mailing with
5adequate postage.
6j. (10) The tax has been paid by the wrong licensee and the
7payments were timely remitted to the department for one or more
8tax periods prior to notification by the department.
9k. (11) The failure to file was discovered through a
10sanctioned self-audit program conducted by the department.
11l. (12) If the availability of funds in payment of tax
12required to be made through electronic funds transfer is
13delayed and the delay of availability is due to reasons beyond
14the control of the taxpayer. “Electronic funds transfer” means
15any transfer of funds, other than a transaction originated
16by check, draft, or similar paper instrument, that is
17initiated through an electronic terminal telephone, computer,
18magnetic tape, or similar device for the purpose of ordering,
19instructing, or authorizing a financial institution to debit or
20credit an account.
21m. (13) The failure to file a timely inheritance tax return
22resulting solely from a disclaimer that required the personal
23representative to file an inheritance tax return. The penalty
24shall be waived if such return is filed and any tax due is paid
25within the later of nine months from the date of death or sixty
26days from the delivery or filing of the disclaimer pursuant to
27section 633E.12.
28n. (14) That an Iowa inheritance tax return is filed for
29an estate within the later of nine months from the date of
30death or sixty days from the filing of a disclaimer by the
31beneficiary of the estate refusing to take the property or
32right or interest in the property.
33 Sec. 5. Section 421.27, subsections 4 and 6, Code 2020, are
34amended to read as follows:
354. Willful failure to file or deposit.
-4- 1a. (1) In case of willful failure to file a return
2or deposit form with the intent to evade tax or a filing
3requirement, or in case of willfully filing a false return
4or deposit form with the intent to evade tax, in lieu of the
5penalties otherwise provided in this section, a penalty of
6seventy-five percent shall be added to the amount shown due or
7required to be shown as tax on the return or deposit form.
8(2) In case of a willful failure by a specified business to
9file an income return with no tax shown due or required to be
10shown due with intent to evade a filing requirement, or in case
11of willfully filing a false income return with no tax shown due
12or required to be shown due with the intent to evade reporting
13of Iowa-source income, the penalty imposed shall be the greater
14of the following amounts:
15(a) One thousand five hundred dollars.
16(b) An amount equal to seventy-five percent of the imputed
17Iowa liability of the specified business.
18(3) If penalties are applicable for failure to file a
19return or deposit form and failure to pay the tax shown due or
20required to be shown due on the return or deposit form, the
21penalty provision for failure to file shall be in lieu of the
22penalty provisions for failure to pay the tax shown due or
23required to be shown due on the return or deposit form, except
24in the case of willful failure to file a return or deposit form
25or willfully filing a false return or deposit form with intent
26to evade tax.
27b. The penalties imposed under this subsection are not
28subject to waiver.
296. Improper receipt of payments Liability — fraudulent
30practice. A person who makes an erroneous application for
31refund, credit, reimbursement, rebate, or other payment shall
32be liable for any overpayment received or tax liability reduced
33plus interest at the rate in effect under section 421.7.
34a. In addition, a person who willfully commits a fraudulent
35practice and is liable for a penalty equal to seventy-five
-5-1percent of the refund, credit, exemption, reimbursement,
2rebate, or other payment or benefit being claimed if the person
3does any of the following:
4(1) Willfullymakes a false or frivolous application for
5refund, credit, exemption, reimbursement, rebate, or other
6payment or benefit with intent to evade tax or with intent to
7receive a refund, credit, exemption, reimbursement, rebate,
8or other payment or benefit, to which the person is not
9entitled is guilty of a fraudulent practice and is liable for a
10penalty equal to seventy-five percent of the refund, credit,
11reimbursement, rebate, or other payment being claimed.
12(2) Willfully submits any false information, document,
13or document containing false information in support of an
14application for refund, credit, exemption, reimbursement,
15rebate, or other payment or benefit with the intent to evade
16tax.
17(3) Willfully submits with any false information, document,
18or document containing false information in support of an
19application for refund with the intent to receive a refund,
20credit, exemption, reimbursement, rebate, or other payment
21benefit, to which the person is not entitled.
22b. Payments, penalties, and interest due under this
23subsection may be collected and enforced in the same manner as
24the tax imposed.
25 Sec. 6. Section 421.27, Code 2020, is amended by adding the
26following new subsections:
27 NEW SUBSECTION. 8. Definitions. As used in this section:
28a. “Imputed Iowa liability” means any of the following:
29(1) In the case of corporations doing business in Iowa
30other than corporations described in section 422.34 or section
31422.36, subsection 5, the corporation’s Iowa net income after
32the application of the Iowa business activity ration, if
33applicable, multiplied by the top income tax rate imposed under
34section 422.33 for the tax year.
35(2) In the case of financial institutions as defined
-6-1in section 422.61 doing business in Iowa, the financial
2institution’s Iowa net income after the application of the
3Iowa business activity ratio, if applicable, multiplied by the
4franchise tax rate imposed under section 422.63 for the tax
5year.
6(3) In the case of all other entities doing business in
7Iowa or deriving income from sources within Iowa, including
8corporations described in section 422.36, subsection 5, and all
9other entities required to file an information return under
10section 422.15, subsection 2, the entity’s Iowa net income
11after the application of the Iowa business activity ratio, if
12applicable, multiplied by the top income tax rate imposed under
13section 422.5A for the tax year.
14b. “Income return” means an income tax return or information
15return required under section 422.15, subsection 2, or section
16422.36, 422.37, or 422.62.
17c. “Specified business” means a partnership or other entity
18required to file an information return under section 422.15,
19subsection 2, a corporation required to file a return under
20section 422.36 or 422.37, or a financial institution required
21to file a return under section 422.62.
22 NEW SUBSECTION. 9. Additional penalty. In addition to the
23penalties imposed by this section, if a taxpayer fails to file
24a return within ninety days of written notice by the department
25that the taxpayer is required to do so, there shall be added to
26the amount shown due or required to be shown due a penalty in
27the amount of one thousand dollars.
28 Sec. 7. NEW SECTION. 421.27A Perjury.
291. For purposes of this title, a form, application, or any
30other documentation required or requested by the department
31shall be required to be certified under penalty of perjury that
32the information contained in the form, application, or other
33documentation is true and correct.
342. A person commits a class “D” felony under any of the
35following circumstances:
-7- 1a. The person makes a form, application, or other document
2containing false information in support of an application for
3refund, credit, exemption, reimbursement, rebate, or other
4payment or benefit with intent to evade tax.
5b. The person makes a form, application, or other document
6containing false information with intent to unlawfully receive
7a refund, credit, exemption, reimbursement, rebate, or other
8payment or benefit, to which the person is not entitled.
9c. The person knowingly makes any false affidavit.
10d. The person knowingly swears or affirms falsely to any
11matter or thing required by the terms of this title to be sworn
12to or affirmed.
13 Sec. 8. NEW SECTION. 421.59 Power of attorney — authority
14to act on behalf of taxpayer.
151. a. A taxpayer may authorize an individual to act on
16behalf of the taxpayer by filing a power of attorney with the
17department, on a form prescribed by the department.
18b. A taxpayer may at any time revoke a power of attorney
19filed with the department pursuant to subsection 1. Upon
20processing of the taxpayer’s revocation of a power of attorney,
21the department shall cease honoring the power of attorney.
222. The department may authorize the following persons to act
23and receive information on behalf of and exercise all of the
24rights of a taxpayer, regardless of whether a power of attorney
25has been filed pursuant to subsection 1:
26a. A guardian, conservator, or custodian appointed by a
27court, if a taxpayer has been deemed legally incompetent by a
28court. The authority of the appointee to act on behalf of the
29taxpayer shall be limited to the extent specifically stated in
30the order of appointment.
31(1) Upon request, a guardian, conservator, or custodian of
32a taxpayer shall submit to the department a copy of the court
33order appointing the guardian, conservator, or custodian.
34(2) The department may petition the court that appointed the
35guardian, conservator, or custodian to verify the appointment
-8-1or to determine the scope of the appointment.
2b. A receiver appointed pursuant to chapter 680. An
3appointed receiver shall be limited to act on behalf of the
4taxpayer by the authority stated in the order of appointment.
5(1) Upon the request of the department, a receiver shall
6submit to the department a copy of the court order appointing
7the receiver.
8(2) The department may petition the court that appointed the
9receiver to verify the appointment or to determine the scope
10of the appointment.
11c. An individual who has been named as an authorized
12representative on a fiduciary return of income filed under
13section 422.14 or a tax return filed under chapter 450.
14d. (1) An individual holding the following title or
15position within a corporation, association, partnership, or
16other business entity:
17(a) A president or chief executive officer, or any other
18officer of the corporation or association if the president or
19chief executive officer certifies that the officer has the
20authority to legally bind the corporation or association.
21(b) A designated partner duly authorized to act on behalf
22of the partnership.
23(c) A person authorized to act on behalf of a limited
24liability company in tax matters pursuant to a valid statement
25of authority.
26(2) An individual seeking to act on behalf of a taxpayer
27pursuant to this paragraph shall file an affidavit with the
28department attesting to the identity and qualifications of the
29individual and any necessary certifications required under this
30paragraph. The department may require any documents or other
31evidence to demonstrate the individual has authority to act on
32behalf of the taxpayer before the department.
33e. A licensed attorney who has appeared on behalf of the
34taxpayer or the taxpayer’s estate in a court proceeding.
35Authorization under this paragraph is limited to those matters
-9-1within the scope of the representation.
2f. A parent or guardian of a taxpayer who has not reached
3the age of majority where the parent or guardian has signed the
4taxpayer’s return on behalf of the taxpayer. Authorization
5under this paragraph is limited to those matters relating to
6the return signed by the parent or guardian. Authorization
7under this paragraph automatically terminates when the taxpayer
8reaches the age of majority pursuant to section 599.1.
93. a. In lieu of executing a power of attorney pursuant
10to subsection 1, the department may enter into a memorandum of
11understanding with the taxpayer for each employee, officer,
12or member of a third-party entity engaged with or otherwise
13hired by a taxpayer to manage the tax matters of the taxpayer,
14to permit the disclosure of confidential tax information to
15the third-party entity and the authority to act on behalf of
16the taxpayer. The memorandum of understanding shall adhere to
17requirements as established by the director.
18b. The memorandum of understanding shall be signed by
19the director, the taxpayer, and the third-party entity or an
20authorized representative of the third-party entity.
21c. At any time, a taxpayer may unilaterally revoke
22a memorandum of understanding entered into pursuant to
23this subsection by filing a notice of revocation with the
24department. Upon the filing of such a revocation by the
25taxpayer, the department shall cease honoring the memorandum
26of understanding.
274. The department shall adopt rules pursuant to chapter 17A
28to administer this section.
29 Sec. 9. Section 421.60, subsection 2, paragraph a,
30subparagraph (2), Code 2020, is amended to read as follows:
31(2) The statement prepared in accordance with this
32paragraph shall be available on the department’s internet site.
33The internet site for this information shall be distributed by
34the department to all taxpayers at the first contact by the
35department with respect to the determination or collection of
-10-1any tax, except in the case of simply providing tax forms.
2 Sec. 10. Section 421.60, Code 2020, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 11. Electronic communication.
5Notwithstanding any provision of the law to the contrary, for
6purposes of this title and sections 321.105A and 533.329, a
7taxpayer may elect to receive any notices, correspondence,
8or other communication electronically that the department is
9required to send by regular mail. The director may establish
10procedures and limitations for obtaining this election from the
11taxpayer.
12 Sec. 11. Section 421.62, subsection 1, Code 2020, is amended
13by adding the following new paragraph:
14 NEW PARAGRAPH. 0b. “Income tax return or claim for refund”
15means any tax return or claim for refund under chapter 422,
16excluding withholding returns under section 422.16.
17 Sec. 12. Section 421.62, subsection 1, paragraph c,
18subparagraph (1), Code 2020, is amended to read as follows:
19(1) “Tax return preparer” means any individual who, for
20a fee or other consideration, prepares ten or more income
21 tax returns or claims for refund under chapter 422 during
22a calendar year, or who assumes final responsibility for
23completed work on such income tax returns or claims for refund
24under chapter 422 on which preliminary work has been done by
25another individual.
26 Sec. 13. Section 421.62, subsection 2, paragraph a, Code
272020, is amended to read as follows:
28a. On or after January 1, 2020, a tax return preparer
29is required to include the tax return preparer’s PTIN on
30any income tax return or claim for refund prepared by the
31tax return preparer and filed under chapter 422 with the
32department.
33 Sec. 14. Section 421.64, subsection 1, Code 2020, is amended
34to read as follows:
351. For purposes of this section, “tax return preparer” means
-11-1the same as defined in section 421.61 421.62.
2 Sec. 15. Section 422.20, subsections 1 and 2, Code 2020, are
3amended to read as follows:
41. It shall be unlawful for any present or former officer
5or employee of the state to willfully or recklessly divulge or
6to make known in any manner whatever not provided by law to
7any person the amount or source of income, profits, losses,
8expenditures, or any particular thereof, set forth or disclosed
9in any income return, or to permit any income return or copy
10thereof or any book containing any abstract or particulars
11thereof to be seen or examined by any person except as provided
12by law; and it shall be unlawful for any person to willfully or
13recklessly print or publish in any manner whatever not provided
14by law any income return, or any part thereof or source of
15income, profits, losses, or expenditures appearing in any
16income return; and any person committing an offense against the
17foregoing provision shall be guilty of a serious misdemeanor.
18If the offender is an officer or employee of the state, such
19person shall also be dismissed from office or discharged from
20employment. Nothing herein shall prohibit turning over to duly
21authorized officers of the United States or tax officials of
22other states state information and income returns pursuant
23to agreement between the director and the secretary of the
24treasury of the United States or the secretary’s delegate or
25pursuant to a reciprocal agreement with another state.
262. It is unlawful for an officer, employee, or agent, or
27former officer, employee, or agent of the state to willfully
28or recklessly disclose to any person, except as authorized
29in subsection 1 of this section, any federal tax return
30or return information as defined in section 6103(b) of the
31Internal Revenue Code. It is unlawful for a person to whom
32any federal tax return or return information, as defined in
33section 6103(b) of the Internal Revenue Code, is disclosed
34in a manner unauthorized by subsection 1 of this section
35to thereafter willfully or recklessly print or publish in
-12-1any manner not provided by law any such return or return
2information. A person violating this provision is guilty of
3a serious misdemeanor.
4 Sec. 16. Section 422.20, subsection 3, paragraph a, Code
52020, is amended to read as follows:
6a. Unless otherwise expressly permitted by section 8A.504,
7section 8G.4, section 11.41, section 96.11, subsection 6,
8section 421.17, subsections 22, 23, and 26, section 421.17,
9subsection 27, paragraph “k”, section 421.17, subsection 31,
10section 252B.9, section 321.40, subsection 6, sections 321.120,
11421.19, 421.28, 421.59, 422.72, and 452A.63, this section, or
12another provision of law, a tax return, return information, or
13investigative or audit information shall not be divulged to any
14person or entity, other than the taxpayer, the department, or
15internal revenue service for use in a matter unrelated to tax
16administration.
17 Sec. 17. Section 422.20, Code 2020, is amended by adding the
18following new subsections:
19 NEW SUBSECTION. 3A. The director may disclose the tax
20return of a partnership, limited liability company, or S
21corporation, any such return information, or any investigative
22information related to the return, to any person who was a
23partner, shareholder, or member of such an entity during any
24part of the period covered by the return.
25 NEW SUBSECTION. 3B. a. Prior to being made available for
26public inspection, the department shall redact from the record
27in an appeal or contested case the following information from
28any pleading, exhibit, attachment, motion, written evidence,
29final order, decision, or opinion:
30(1) A financial account number.
31(2) An account number generated by the department to
32identify an audit or examination.
33(3) A social security number.
34(4) A federal employer identification number.
35(5) The name of a minor.
-13- 1(6) A medical record or other medical information.
2b. Upon a motion filed by the taxpayer, the department
3may redact from the record in an appeal or contested case any
4other information from a pleading, exhibit, attachment, motion,
5or written evidence, if the taxpayer proves by clear and
6convincing evidence that the release of such information would
7disclose a trade secret or be a clear, unwarranted invasion of
8personal privacy.
9c. Notwithstanding paragraph “a”, when making final orders,
10decisions, or opinions available for public inspection, the
11department may disclose the items in paragraph “a” if the
12department determines such information is necessary to the
13resolution or decision of the appeal or case.
14d. Except as described in paragraphs “a” and “b”, all
15information contained in a pleading, exhibit, attachment,
16motion, written evidence, final order, decision, opinion,
17and the record in an appeal or contested case is subject to
18examination to the extent provided by chapter 22.
19 Sec. 18. Section 422.25, subsection 1, Code 2020, is amended
20by adding the following new paragraph:
21 NEW PARAGRAPH. c. The period of examination and
22determination is unlimited under this title in the case of
23any action by the department to recover or rescind any tax
24expenditure as defined by section 2.48, subsection 1, or any
25other incentive or assistance, due to a failure to meet or
26maintain the requirements of a program administered by the
27economic development authority.
28 Sec. 19. Section 422.72, subsection 1, paragraph a,
29subparagraph (1), Code 2020, is amended to read as follows:
30(1) It is unlawful for the director, or any person having
31an administrative duty under this chapter, or any present or
32former officer or other employee of the state authorized by the
33director to examine returns, to willfully or recklessly divulge
34in any manner whatever, the business affairs, operations, or
35information obtained by an investigation under this chapter of
-14-1records and equipment of any person visited or examined in the
2discharge of official duty, or the amount or source of income,
3profits, losses, expenditures or any particular thereof, set
4forth or disclosed in any return, or to willfully or recklessly
5 permit any return or copy of a return or any book containing
6any abstract or particulars thereof to be seen or examined by
7any person except as provided by law.
8 Sec. 20. Section 422.72, Code 2020, is amended by adding the
9following new subsection:
10 NEW SUBSECTION. 7A. a. Prior to being made available for
11public inspection, the department shall redact from the record
12in an appeal or contested case the following information from
13any pleading, exhibit, attachment, motion, written evidence,
14final order, decision, or opinion:
15(1) A financial account number.
16(2) An account number generated by the department to
17identify an audit or examination.
18(3) A social security number.
19(4) A federal employer identification number.
20(5) The name of a minor.
21(6) A medical record or other medical information.
22b. Upon a motion filed by the taxpayer, the department
23may redact from the record in an appeal or contested case any
24other information from a pleading, exhibit, attachment, motion,
25or written evidence, if the taxpayer proves by clear and
26convincing evidence that the release of such information would
27disclose a trade secret or be a clear, unwarranted invasion of
28personal privacy.
29c. Notwithstanding paragraph “a”, when making final orders,
30decisions, or opinions available for public inspection, the
31department may disclose the items in paragraph “a” if the
32department determines such information is necessary to the
33resolution or decision of the appeal or case.
34d. Except as described in paragraphs “a” and “b”, all
35information contained in a pleading, exhibit, attachment,
-15-1motion, written evidence, final order, decision, opinion,
2and the record in an appeal or contested case is subject to
3examination to the extent provided by chapter 22.
4 Sec. 21. Section 423.37, Code 2020, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 4. The period of limitation on examination
7and determination is unlimited under this title in the case
8of any action by the department to recover or rescind any tax
9expenditure as defined by section 2.48, subsection 1, or any
10other incentive or assistance, due to a failure to meet or
11maintain the requirements of a program administered by the
12economic development authority.
13 Sec. 22. Section 428A.1, subsections 2 and 3, Code 2020, are
14amended to read as follows:
152. When each deed, instrument, or writing by which any real
16property in this state is granted, assigned, transferred, or
17otherwise conveyed is presented for recording to the county
18recorder, a declaration of value signed by at least one of the
19sellers or one of the buyers or their agents shall be submitted
20to the county recorder. However, if the deed, instrument, or
21writing contains multiple parcels some of which are located
22in more than one county, separate declarations of value
23shall be submitted on the parcels located in each county and
24submitted to the county recorder of that county when paying
25the tax as provided in section 428A.5. A declaration of value
26is not required for those instruments described in section
27428A.2, subsections 2 to 5, 7 to 13, and 16 to through 21, or
28described in section 428A.2, subsection 6, except in the case
29of a federal agency or instrumentality, or if a transfer is
30the result of acquisition of lands, whether by contract or
31condemnation, for public purposes through an exercise of the
32power of eminent domain.
333. The declaration of value shall state the full
34consideration paid for the real property transferred. If
35agricultural land, as defined in section 9H.1, is purchased by
-16-1a corporation, limited partnership, trust, alien or nonresident
2alien, the declaration of value shall include the name and
3address of the buyer, the name and address of the seller, a
4legal description of the agricultural land, and identify the
5buyer as a corporation, limited partnership, trust, alien,
6or nonresident alien. The county recorder shall not record
7the declaration of value, but shall not charge a recording
8fee. The county recorder shall enter on the declaration of
9value information the director of revenue requires for the
10production of the sales/assessment ratio study and transmit
11all declarations of value to the city or county assessor in
12whose jurisdiction the property is located. The city or county
13assessor shall enter on the declaration of value provide the
14information the director of revenue requires for the production
15of the sales/assessment ratio study and transmit one copy of
16each declaration of value to the director of revenue, at times
17as directed by the director of revenue. The assessor shall
18retain one copy of each declaration of value for three years
19from December 31 of the year in which the transfer of realty
20for which the declaration was filed took place. The director
21of revenue shall, upon receipt of the information required to
22be filed under this chapter by the city or county assessor,
23send to the office of the secretary of state that part of the
24declaration of value which identifies a corporation, limited
25partnership, trust, alien, or nonresident alien as a purchaser
26of agricultural land as defined in section 9H.1.
27 Sec. 23. Section 441.48, Code 2020, is amended to read as
28follows:
29441.48 Notice of adjustment.
301. Before the department of revenue shall adjust the
31valuation of any class of property any such percentage, the
32department shall first serve ten days’ notice by mail, on the
33county auditor of the county whose valuation is proposed to be
34adjusted. The department shall hold an adjourned meeting after
35such
-17- 12. If the county or assessing jurisdiction intends to
2protest the proposed adjustment, the board of supervisors or
3city council, as applicable, shall provide the department with
4notice of intent to protest prior to expiration of the ten
5days’ notice.
63. After expiration of theten days’ notice, at which time
7 the county or assessing jurisdiction may appear by its city
8council or board of supervisors, city or county attorney, and
9other assessing jurisdiction, or city or county officials, and
10make written or oral protest against such proposed adjustment.
114. The protest shall consist simply of a statement of the
12error, or errors, complained of with such facts as may lead to
13their correction. At the adjourned meeting
145. After written protest is received, or an oral protest
15is heard, thefinal action may be taken in reference to the
16proposed adjustment.
17 Sec. 24. Section 489.706, subsection 2, Code 2020, is
18amended to read as follows:
192. The secretary of state shall refer the federal tax
20identification number contained in the application for
21reinstatement to the departments department of revenue and
22 workforce development. The departments department of revenue
23and workforce development shall report to the secretary of
24state the tax status of the limited liability company. If
25either the department reports to the secretary of state that
26a filing delinquency or liability exists against the limited
27liability company, the secretary of state shall not cancel the
28declaration of dissolution until the filing delinquency or
29liability is satisfied.
30 Sec. 25. Section 490.1422, subsection 2, paragraph a, Code
312020, is amended to read as follows:
32a. The secretary of state shall refer the federal tax
33identification number contained in the application for
34reinstatement to the departments department of revenue and
35 workforce development. The departments department of revenue
-18-1and workforce development shall report to the secretary
2of state the tax status of the corporation. If either the
3 department reports to the secretary of state that a filing
4delinquency or liability exists against the corporation,
5the secretary of state shall not cancel the certificate of
6dissolution until the filing delinquency or liability is
7satisfied.
8 Sec. 26. Section 501.813, subsection 2, paragraph a, Code
92020, is amended to read as follows:
10a. The secretary of state shall refer the federal tax
11identification number contained in the application for
12reinstatement to the departments department of revenue and
13 workforce development. The departments department of revenue
14and workforce development shall report to the secretary
15of state the tax status of the cooperative. If either the
16 department reports to the secretary of state that a filing
17delinquency or liability exists against the cooperative,
18the secretary of state shall not cancel the certificate of
19dissolution until the filing delinquency or liability is
20satisfied.
21 Sec. 27. Section 504.1423, subsection 2, paragraph a, Code
222020, is amended to read as follows:
23a. The secretary of state shall refer the federal tax
24identification number contained in the application for
25reinstatement to the departments department of revenue and
26 workforce development. The departments department of revenue
27and workforce development shall report to the secretary
28of state the tax status of the corporation. If either the
29 department reports to the secretary of state that a filing
30delinquency or liability exists against the corporation,
31the secretary of state shall not cancel the certificate of
32dissolution until the filing delinquency or liability is
33satisfied.
34 Sec. 28. Section 533.329, Code 2020, is amended by adding
35the following new subsection:
-19-1 NEW SUBSECTION. 03. Returns shall be in the form the
2director of revenue prescribes, and shall be filed with the
3department of revenue on or before the last day of the fourth
4month after the expiration of the tax year. The moneys and
5credits tax is due and payable on the last day of the fourth
6month after the expiration of the tax year.
7 Sec. 29. Section 533.329, subsection 3, Code 2020, is
8amended to read as follows:
93. The department of revenue shall administer and enforce
10the provisions of this section, and except as explicitly
11provided in this section or another provision of law, shall
12apply all applicable penalty, interest, and administrative
13provisions of chapters 421 and 422 as nearly as possible in
14administering and enforcing the moneys and credits tax imposed
15by this section.
16 Sec. 30. LEGISLATIVE INTENT. It is the intent of the
17general assembly that the sections of this division amending
18Code sections 422.25 and 423.37 are conforming amendments
19consistent with current state law, and that the amendments
20do not change the application of current law but instead
21reflect current law both before and after the enactment of this
22division of this Act.
23 Sec. 31. EFFECTIVE DATE. The following, being deemed of
24immediate importance, take effect upon enactment:
251. The section of this division of this Act amending section
26422.25.
272. The section of this division of this Act amending section
28423.37.
29 Sec. 32. APPLICABILITY. The following apply to tax years
30beginning on or after January 1, 2022:
31The sections of this division of this Act amending section
32421.27.
33DIVISION II
34SALES AND USE TAX
35 Sec. 33. Section 321G.4, subsection 2, Code 2020, is amended
-20-1to read as follows:
22. a. The owner of the snowmobile shall file an application
3for registration with the department through the county
4recorder of the county of residence in the manner established
5by the commission. The application shall be completed by the
6owner and shall be accompanied by a fee of fifteen dollars and
7a writing fee as provided in section 321G.27. A snowmobile
8shall not be registered by the county recorder until the
9county recorder is presented with receipts, bills of sale,
10or other satisfactory evidence that the sales or use tax has
11been paid for the purchase of the snowmobile or that the
12owner is exempt from paying the tax. A snowmobile that has
13an expired registration certificate from another state may be
14registered in this state upon proper application, payment of
15all applicable registration and writing fees, and payment of a
16penalty of five dollars.
17b. If the owner of the snowmobile is unable to present
18satisfactory evidence that the sales or use tax has been paid,
19the county recorder shall collect the tax. On or before the
20tenth day of each month, the county recorder shall remit to
21the department of revenue the amount of the taxes collected
22during the preceding month, together with an itemized statement
23on forms furnished by the department of revenue showing the
24name of each taxpayer, the make and purchase price of each
25snowmobile, the amount of tax paid, and such other information
26as the department of revenue requires.
27 Sec. 34. Section 321I.4, subsection 2, Code 2020, is amended
28to read as follows:
292. a. The owner of the all-terrain vehicle shall file an
30application for registration with the department through the
31county recorder of the county of residence, or in the case
32of a nonresident owner, in the county of primary use, in the
33manner established by the commission. The application shall
34be completed by the owner and shall be accompanied by a fee
35of fifteen dollars and a writing fee as provided in section
-21-1321I.29. An all-terrain vehicle shall not be registered by the
2county recorder until the county recorder is presented with
3receipts, bills of sale, or other satisfactory evidence that
4the sales or use tax has been paid for the purchase of the
5all-terrain vehicle or that the owner is exempt from paying the
6tax. An all-terrain vehicle that has an expired registration
7certificate from another state may be registered in this state
8upon proper application, payment of all applicable registration
9and writing fees, and payment of a penalty of five dollars.
10b. If the owner of the all-terrain vehicle is unable to
11present satisfactory evidence that the sales or use tax has
12been paid, the county recorder shall collect the tax. On or
13before the tenth day of each month, the county recorder shall
14remit to the department of revenue the amount of the taxes
15collected during the preceding month, together with an itemized
16statement on forms furnished by the department of revenue
17showing the name of each taxpayer, the make and purchase price
18of each all-terrain vehicle, the amount of tax paid, and such
19other information as the department of revenue requires.
20 Sec. 35. Section 423.2, subsection 6, paragraph bs, Code
212020, is amended to read as follows:
22bs. Services arising from or related to installing,
23maintaining, servicing, repairing, operating, upgrading, or
24enhancing either specified digital products or software sold
25as tangible personal property.
26 Sec. 36. Section 423.2, subsection 8, paragraph d,
27subparagraph (1), Code 2020, is amended to read as follows:
28(1) The retail sale of tangible personal property or
29specified digital product and a service, where the tangible
30personal property or specified digital product is essential
31to the use of the service, and is provided exclusively in
32connection with the service, and the true object of the
33transaction is the service.
34 Sec. 37. Section 423.3, subsection 3A, Code 2020, is amended
35to read as follows:
-22- 13A. The sales price from the sale of a commercial recreation
2service offering the opportunity to hunt a preserve whitetail
3as defined in section 484C.1 if the sale occurred between July
41, 2005, and December 31, 2015.
5 Sec. 38. Section 423.3, subsection 31, unnumbered paragraph
61, Code 2020, is amended to read as follows:
7The sales price of tangible personal property or specified
8digital products sold to and of services furnished to a tribal
9government as defined in 216A.161, or the sales price of
10tangible personal property or specified digital products sold
11to and of services furnished, and used for public purposes
12sold to a tax-certifying or tax-levying body of the state or a
13governmental subdivision of the state, including the following:
14 regional transit systems, as defined in section 324A.1,;
15 the state board of regents,; department of human services,;
16 state department of transportation,; any municipally owned
17solid waste facility which sells all or part of its processed
18waste as fuel to a municipally owned public utility,; and all
19divisions, boards, commissions, agencies, or instrumentalities
20of state, federal, county, or municipal government, or tribal
21government which have no earnings going to the benefit of an
22equity investor or stockholder, except any of the following:
23 Sec. 39. Section 423.3, Code 2020, is amended by adding the
24following new subsection:
25 NEW SUBSECTION. 60A. The sales price from sales of diapers
26eligible for medical assistance as defined in section 249A.2.
27 Sec. 40. Section 423.3, subsection 80, paragraphs b and c,
28Code 2020, are amended to read as follows:
29b. Subject to the limitations in paragraph “c”, if a
30contractor, subcontractor, or builder is to use building
31materials, supplies, and equipment, or services in the
32performance of a written construction contract with a
33designated exempt entity, the person shall purchase such
34items of tangible personal property or services without
35liability for the tax if such property or services will be
-23-1used in the performance of the written construction contract
2and a purchasing agent authorization letter and an exemption
3certificate, issued by the designated exempt entity, are
4presented to the retailer.
5c. (1) With regard to a written construction contract
6with a designated exempt entity described in paragraph “a”,
7subparagraph (1), the sales price of building materials,
8supplies, or equipment, or services is exempt from tax by this
9subsection only to the extent the building materials, supplies,
10or equipment, or services are completely consumed in the
11performance of the construction contract with the designated
12exempt entity, and only if the property that is the subject
13of the construction project becomes public property or the
14property of the designated exempt entity.
15(2) With regard to a written construction contract with
16a designated exempt entity described in paragraph “a”,
17subparagraph (2), the sales price of building materials,
18supplies, or equipment, or services is exempt from tax by this
19subsection only to the extent the building materials, supplies,
20or equipment, or services are completely consumed in the
21performance of a construction contract to construct a project,
22as defined in section 15J.2, subsection 10, which project has
23been approved by the economic development authority board in
24accordance with chapter 15J.
25 Sec. 41. Section 423.4, subsection 1, Code 2020, is amended
26to read as follows:
271. a. For purposes of this subsection, a “designated exempt
28entity” means any of the following:
29(1) A private nonprofit educational institution in this
30state,.
31(2) Anonprofit Iowa affiliate of a nonprofit international
32organization whose primary activity is the promotion of the
33construction, remodeling, or rehabilitation of one-family or
34two-family dwellings for low-income families,.
35(3) Anonprofit private museum in this state,.
-24- 1(4) Atax-certifying or tax-levying body or governmental
2subdivision of the state, including the state board of regents,
3state department of human services, state department of
4transportation, a.
5(5) Amunicipally owned solid waste facility which sells all
6or part of its processed waste as fuel to a municipally owned
7public utility, and all.
8(6) The state of Iowa.
9(7) Any political subdivision of the state.
10(8) Alldivisions, boards, commissions, agencies, or
11instrumentalities of state, federal, county, or municipal
12government which do not have earnings going to the benefit of
13an equity investor or stockholder,.
14(9) A tribal government as defined in section 216A.161,
15and any instrumentalities of the tribal government which do
16not have earnings going to the benefit of an equity investor
17or stockholder.
18b. A designated exempt entitymay make application apply
19 to the department for the refund of the sales or use tax upon
20the sales price of all sales of goods, wares, or merchandise
21 building materials, supplies, equipment, or from services
22furnished to a contractor, used in the fulfillment performance
23 of a written contract with the state of Iowa, any political
24subdivision of the state, or a division, board, commission,
25agency, or instrumentality of the state or a political
26subdivision, a private nonprofit educational institution in
27this state, a nonprofit Iowa affiliate described in this
28subsection, or a nonprofit private museum in this state if the
29property becomes an integral part of the project under contract
30and at the completion of the project becomes public property,
31is devoted to educational uses, becomes part of a low-income
32one-family or two-family dwelling in the state, or becomes a
33nonprofit private museum; except goods, wares, or merchandise,
34 designated exempt entity if all of the following apply:
35(1) The building materials, supplies, equipment, or
-25-1services are completely consumed in the performance of a
2construction project with the designated entity.
3(2) The property that is subject of the construction project
4becomes public property or the property of an exempt entity.
5(3) The building materials, supplies, equipment,or
6services furnished which are not used in the performance of
7any contract in connection with the operation of any municipal
8utility engaged in selling gas, electricity, or heat to
9the general public or in connection with the operation of a
10municipal pay television system; and except goods, wares, and
11merchandise are not used in the performance of a contract for a
12“project” under chapter 419 as defined in that chapter other
13than goods, wares, or merchandise used in the performance of
14a contract for a “project” under chapter 419 for which a bond
15issue was approved by a municipality prior to July 1, 1968, or
16for which the goods, wares, or merchandise becomes an integral
17part of the project under contract and at the completion of the
18project becomes public property or is devoted to educational
19uses.
20a. c. Such A contractor shall state under oath, on forms
21provided by the department, the amount of such sales of goods,
22wares, or merchandise, or services furnished and used in the
23performance of such contract, and upon which sales or use tax
24has been paid, and shall file such forms with the governmental
25unit, private nonprofit educational institution, nonprofit Iowa
26affiliate, or nonprofit private museum designated exempt entity
27 which has made any written contract for performance by the
28contractor. The forms shall be filed by the contractor with
29the governmental unit, educational institution, nonprofit Iowa
30affiliate, or nonprofit private museum designated exempt entity
31 before final settlement is made.
32b. d. Such governmental unit, educational institution,
33nonprofit Iowa affiliate, or nonprofit private museum A
34designated exempt entity shall, not more than one year after
35the final settlement has been made, make application apply
-26-1 to the department for any refund of the amount of the sales
2or use tax which shall have been paid upon any goods, wares,
3or merchandise building materials, supplies, equipment,
4or services furnished, the application to be made in the
5manner and upon forms to be provided by the department,
6and the department shall forthwith audit the claim and, if
7approved, issue a warrant to the governmental unit, educational
8institution, nonprofit Iowa affiliate, or nonprofit private
9museum designated exempt entity in the amount of the sales or
10use tax which has been paid to the state of Iowa under the
11contract.
12c. e. Refunds authorized under this subsection shall accrue
13interest in accordance with section 421.60, subsection 2,
14paragraph “e”.
15d. f. Any contractor who willfully makes a false report of
16tax paid under the provisions of this subsection is guilty of
17a simple misdemeanor and in addition shall be liable for the
18payment of the tax and any applicable penalty and interest.
19 Sec. 42. Section 423.4, subsection 2, paragraphs a and b,
20Code 2020, are amended to read as follows:
21a. A contractor awarded a contract for a transportation
22construction project is considered the consumer of all building
23materials, building supplies, and equipment, and services and
24shall pay sales tax to the supplier or remit consumer use tax
25directly to the department.
26b. The contractor is not required to file information with
27the state department of transportation stating the amount of
28goods, wares, or merchandise, or services rendered, furnished,
29or performed and building materials, supplies, equipment, or
30services used in the performance of the contract or the amount
31of sales or use tax paid.
32 Sec. 43. Section 423.4, subsection 6, paragraph a,
33subparagraph (1), Code 2020, is amended to read as follows:
34(1) The owner of a collaborative educational facility
35in this state may make application to the department for the
-27-1refund of the sales or use tax upon the sales price of all sales
2of goods, wares, or merchandise building materials, supplies,
3equipment, or from services furnished to a contractor, used
4in the fulfillment of a written construction contract with
5the owner of the collaborative educational facility for the
6original construction, or additions or modifications to, a
7building or structure to be used as part of the collaborative
8educational facility.
9 Sec. 44. Section 423.4, subsection 6, paragraphs b and c,
10Code 2020, are amended to read as follows:
11b. Such A contractor shall state under oath, on forms
12provided by the department, the amount of such sales of goods,
13wares, or merchandise building materials, supplies, equipment,
14or services furnished and used in the performance of such
15contract, and upon which sales or use tax has been paid, and
16shall file such forms with the owner of the collaborative
17educational facility which has made any written contract for
18performance by the contractor.
19c. (1) The owner of the collaborative educational facility
20shall, not more than one year after the final settlement has
21been made, make application to the department for any refund
22of the amount of the sales or use tax which shall have been
23paid upon any goods, wares, or merchandise building materials,
24supplies, equipment, or services furnished, the application
25to be made in the manner and upon forms to be provided by
26the department, and the department shall forthwith audit the
27claim and, if approved, issue a warrant to the owner of the
28collaborative educational facility in the amount of the sales
29or use tax which has been paid to the state of Iowa under the
30contract.
31(2) Refunds authorized under this subsection shall accrue
32interest in accordance with section 421.60, subsection 2,
33paragraph “e”.
34 Sec. 45. Section 423.5, subsection 1, paragraph b, Code
352020, is amended by striking the paragraph.
-28-1 Sec. 46. Section 423.29, subsection 1, Code 2020, is amended
2to read as follows:
31. Every seller who is a retailer and who is making taxable
4sales of tangible personal property or specified digital
5products in Iowa or who is a retailer maintaining a place
6of business in this state making taxable sales of tangible
7personal property or specified digital products shall, at
8the time of making the sale, collect the sales tax. Every
9seller who is a retailer that is not otherwise required to
10collect sales tax under the provisions of this chapter and who
11is selling tangible personal property or specified digital
12products for use in Iowa shall, at the time of making the sale,
13whether within or without the state, collect the use tax.
14 Sellers required to collect sales or use tax shall give to any
15purchaser a receipt for the tax collected in the manner and
16form prescribed by the director.
17 Sec. 47. Section 423.33, subsection 1, Code 2020, is amended
18to read as follows:
191. Liability of purchaser for sales tax and retailer.
20a. If a purchaser fails to pay sales tax to the retailer
21required to collect the tax, then in addition to all of the
22rights, obligations, and remedies provided, the a use tax
23is payable by the purchaser directly to the department, and
24sections 423.31, 423.32, 423.37, 423.38, 423.39, 423.40,
25423.41, and 423.42 apply to the purchaser.
26b. For failure to pay the sales or use tax as described
27in paragraph “a”, the retailer and purchaser are jointly
28 liable, unless the circumstances described in section 29C.24,
29subsection 3, paragraph “a”, subparagraph (2), section 421.60,
30subsection 2, paragraph “m”, section 423.34A, or section
31423.45, subsection 4, paragraph “b” or “e”, or subsection 5,
32paragraph “c” or “e”, are applicable.
33c. If the retailer fails to collect sales tax at the time
34of the transaction, the retailer shall thereafter remit the
35applicable sales tax, or the purchaser thereafter shall remit
-29-1the applicable use tax. If the purchaser remits all applicable
2use tax, the retailer remains liable for any local sales and
3services tax under chapter 423B that the retailer failed to
4collect.
5 Sec. 48. REFUNDS RELATED TO PRESERVE WHITETAIL DEER
6HUNTING. Refunds of taxes, interest, or penalties that arise
7from claims resulting from the amendment of section 423.3,
8subsection 3A, for sales occurring between July 1, 2005,
9and the effective date of the amendment to section 423.3,
10subsection 3A, shall not be allowed, notwithstanding any other
11law to the contrary.
12 Sec. 49. LEGISLATIVE INTENT.
131. It is the intent of the general assembly that the section
14of this division of this Act amending section 423.29 is a
15conforming amendment consistent with current state law, and
16that the amendment does not change the application of current
17law but instead reflects current law both before and after the
18enactment of this division of this Act.
192. It is the intent of the general assembly that the
20addition of “jointly” in the section of this division of
21this Act amending section 423.33 is a conforming amendment
22consistent with current state law, and that the amendment
23does not change the application of current law but instead
24reflects current law both before and after the enactment of
25this division of this Act.
26 Sec. 50. EFFECTIVE DATE. The following, being deemed of
27immediate importance, take effect upon enactment:
281. The section of this division of this Act amending section
29423.3A.
302. The section of this division of this Act relating
31to refunds for commercial recreation services offering an
32opportunity to hunt preserve whitetail deer.
33 Sec. 51. RETROACTIVE APPLICABILITY. The following applies
34retroactively to July 1, 2005:
35The section of this division of this Act amending section
-30-1423.3A.
2DIVISION III
3INCOME TAX
4 Sec. 52. Section 422.9, subsection 3, paragraph c, Code
52020, is amended by striking the paragraph and inserting in
6lieu thereof the following:
7c. A taxpayer may elect to waive the entire carryback period
8with respect to an Iowa net operating loss for any taxable year
9beginning on or after January 1, 2020. The election shall be
10made in the manner and form prescribed by the department, and
11shall be made by the due date for filing the taxpayer’s Iowa
12return, including extensions of time. After the election is
13made for any taxable year, the election shall be irrevocable
14for such taxable year. When an election has been properly
15made, the Iowa net operating loss shall be carried forward
16twenty taxable years.
17 Sec. 53. Section 422.9, subsection 3, paragraph d, Code
182020, is amended to read as follows:
19d. Notwithstanding paragraph “a”, for a taxpayer who is
20engaged in the trade or business of farming, which means the
21same as a “farming business” as defined in section 263A(e)(4) of
22the Internal Revenue Code, and has a farming loss from farming
23 as defined in section 172(b)(1)(B) of the Internal Revenue Code
24including modifications prescribed by rule by the director,
25the Iowa farming loss from the trade or business of farming is
26a net operating loss which may, at the time of the election of
27the taxpayer, be carried back five taxable years prior to the
28taxable year of the loss. The election shall be made in the
29manner and form prescribed by the department, and shall be made
30by the due date for filing the taxpayer’s return, including
31extensions of time. After the election is made for any taxable
32year, the election shall be irrevocable for such taxable year.
33 Sec. 54. APPLICABILITY. This division of this Act applies
34to tax years beginning on or after January 1, 2020.
35DIVISION IV
-31-1RESEARCH ACTIVITIES CREDIT
2 Sec. 55. Section 15.335, subsection 4, paragraph a, Code
32020, 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. 56. Section 15.335, subsection 4, paragraph b,
14unnumbered paragraph 1, Code 2020, 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. 57. Section 422.10, subsection 1, paragraphs c and d,
22Code 2020, 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 to
35qualified research expenses described in section 41(c)(5)(A)
-32-1 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
2 of the Internal Revenue Code are four and fifty-five
3hundredths percent and one and ninety-five hundredths percent,
4respectively.
5 Sec. 58. Section 422.33, subsection 5, paragraphs c and d,
6Code 2020, 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. 59. EFFECTIVE DATE. This division of this Act, being
25deemed of immediate importance, takes effect upon enactment.
26 Sec. 60. RETROACTIVE APPLICABILITY. This division of this
27Act applies retroactively to January 1, 2019, for tax years
28beginning on or after that date.
29DIVISION V
30PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF
31FEDERAL ADJUSTMENTS
32 Sec. 61. Section 421.27, subsection 2, paragraph c, Code
332020, is amended to read as follows:
34c. (1) The Except in the case of a final federal
35partnership adjustment governed by subparagraph (2), the
-33-1 taxpayer provides written notification to the department of a
2federal audit while it is in progress and voluntarily files an
3amended return which includes a copy of the federal document
4showing the final disposition or final federal adjustments
5within sixty days of the final disposition determination date
6 of the federal government’s audit. For purposes of this
7subparagraph, “final determination date” means the same as
8defined in section 422.25.
9(2) (a) In the case of a final federal partnership
10adjustment arising from a partnership level audit, all of the
11following conditions are satisfied:
12(i) The audited partnership provides written notification
13to the department of the partnership level audit while it is
14in progress.
15(ii) With respect to the audited partnership or a direct
16partner or indirect partner of the audited partnership, the
17audited partnership, direct partner, or indirect partner
18voluntarily and timely complies with its reporting and payment
19requirements under section 422.25A, subsection 4 or 5.
20(b) As used in this subparagraph, all words and phrases
21defined in section 422.25A shall have the same meaning given
22them by that section.
23 Sec. 62. Section 422.7, Code 2020, is amended by adding the
24following new subsection:
25 NEW SUBSECTION. 59. Any income subtracted from federal
26taxable income for an adjustment year pursuant to section 6225
27of the Internal Revenue Code and the regulations thereunder
28shall be added back in computing net income for state tax
29purposes for the adjustment year.
30 Sec. 63. Section 422.25, subsections 1 and 2, Code 2020,
31are amended by striking the subsections and inserting in lieu
32thereof the following:
331. a. For purposes of this subsection:
34(1) “Federal adjustment” means a change to an item or amount
35required to be determined under the Internal Revenue Code and
-34-1the regulations thereunder that is used by the taxpayer to
2compute state tax owed whether such change results from action
3by the internal revenue service, or the filing of a timely
4amended federal return or timely federal refund claim. A
5federal adjustment is positive to the extent that it increases
6Iowa taxable income as determined under this title and is
7negative to the extent that it decreases Iowa taxable income
8as determined under this title.
9(2) “Federal adjustments report” means the method or form
10required by the department by rule to report final federal
11adjustments or final federal partnership adjustments as defined
12in section 422.25A, and in the case of any entity taxed as a
13partnership or S corporation for federal income tax purposes,
14identifies all owners that hold an interest directly in such
15entity and provides the effect of the final federal adjustments
16on such owner’s Iowa income.
17(3) “Final determination date” means the following:
18(a) Except as provided in subparagraph divisions (b) and
19(c), for federal adjustments arising from an internal revenue
20service audit or other action by the internal revenue service,
21the final determination date is the first day on which no
22federal adjustments arising from that audit or other action
23remain to be finally determined, whether by internal revenue
24service decision with respect to which all rights of appeal
25have been waived or exhausted, by agreement, or, if appealed
26or contested, by a final decision with respect to which all
27rights of appeal have been waived or exhausted. For agreements
28required to be signed by the internal revenue service and the
29taxpayer, the final determination date is the date on which the
30last party signed the agreement.
31(b) For federal adjustments arising from an internal
32revenue service audit or other action by the internal revenue
33service, if the taxpayer filed as a member of a consolidated
34return under section 422.37, the final determination date
35is the first day on which no related federal adjustments
-35-1arising from that audit or other action remain to be finally
2determined, as described in subparagraph division (a), for the
3entire group.
4(c) For federal adjustments arising from a timely filed
5amended federal return or a timely filed federal refund
6claim, or if it is a federal adjustment reported on a timely
7amended federal return or other similar report filed pursuant
8to section 6225(c) of the Internal Revenue Code, the final
9determination date is the day on which the amended return,
10refund claim, or other similar report was filed.
11(4) “Final federal adjustment” means a federal adjustment
12after the final determination date for that federal adjustment
13has passed.
14b. Within three years after the return is filed or within
15three years after the return became due, including any
16extensions of time for filing, whichever time is the later,
17the department shall examine the return and determine the tax.
18However, if the taxpayer omits from income an amount which
19will, under the Internal Revenue Code, extend the statute of
20limitations for assessment of federal tax to six years under
21the federal law, the period for examination and determination
22is six years.
23c. The period for examination and determination of the
24correct amount of tax is unlimited in the case of a false or
25fraudulent return made with the intent to evade tax or in the
26case of a failure to file a return.
27d. In lieu of the period of limitation for any prior year
28for which an overpayment of tax or an elimination or reduction
29of an underpayment of tax due for that prior year results from
30the carryback to that prior year of a net operating loss or
31net capital loss, the period is the period of limitation for
32the taxable year of the net operating loss or net capital loss
33which results in the carryback.
34e. (1) In addition to the applicable period of limitation
35for examination and determination in paragraph “b”, “c”, or “d”,
-36-1the department may make an examination and determination at any
2time within one year from the date of receipt by the department
3of a federal adjustments report with respect to a final
4federal adjustment or final federal partnership adjustment
5as defined in section 422.25A for a particular tax year. In
6order to begin the running of the one-year period, the federal
7adjustments report related to the final federal adjustment or
8final federal partnership adjustment shall be transmitted to
9the department by the taxpayer in the form and manner specified
10by the department by rule.
11(2) The department in its discretion may adopt rules to
12establish a de minimis amount for which subparagraph (1) shall
13not apply and the taxpayer shall not be required to file a
14federal adjustments report.
15(3) The department may in its discretion and when
16administratively feasible adopt a process through rule by
17which a taxpayer may make estimated payments of tax expected
18to result from a pending internal revenue service audit
19prior to the filing of a federal adjustments report with the
20department. The process shall provide that the estimated
21tax payments shall be credited against any tax liability
22ultimately found to be due to the state from the internal
23revenue service audit and will limit the accrual of further
24statutory interest on that liability. The process shall also
25provide that if the estimated tax payments exceed the final
26tax liability and statutory interest ultimately determined to
27be due, the taxpayer is entitled to a refund or credit for
28the excess, without interest, provided the taxpayer files a
29federal adjustments report, or a claim for refund or credit of
30tax under section 422.73, no later than one year following the
31final determination date.
322. a. If the tax found due under subsection 1 is greater
33than the amount paid, the department shall compute the amount
34due, together with interest and penalties as provided in
35paragraph “b”, and shall mail a notice of assessment to the
-37-1taxpayer and, if applicable, to the taxpayer’s authorized
2representative of the total, which shall be computed as a sum
3certain, with interest computed to the last day of the month
4in which the notice is dated.
5b. In addition to the tax or additional tax determined
6by the department under subsection 1, the taxpayer shall pay
7interest on the tax or additional tax at the rate in effect
8under section 421.7 for each month counting each fraction of
9a month as an entire month, computed from the date the return
10was required to be filed. In addition to the tax or additional
11tax, the taxpayer shall pay a penalty as provided in section
12421.27.
13 Sec. 64. NEW SECTION. 422.25A Reporting and treatment of
14certain partnership adjustments.
151. Definitions. As used in this section and sections
16422.25B and 422.25C, unless the context otherwise requires:
17a. “Administrative adjustment request” means the same as
18provided in section 6227 of the Internal Revenue Code.
19b. “Audited partnership” means a partnership subject
20to a final federal partnership adjustment resulting from a
21partnership level audit.
22c. “C corporation” means an entity that elects to be taxed
23as a corporation under title 26, chapter 1, subchapter A, part
242, of the Internal Revenue Code.
25d. “Corporate partner” means a C corporation partner that is
26subject to tax pursuant to section 422.33.
27e. “Direct partner” means a person that holds an interest
28directly in a partnership or pass-through entity.
29f. “Exempt partner” means a partner that is exempt from
30taxation pursuant to section 422.34.
31g. “Federal adjustments report” means the same as defined
32in section 422.25.
33h. “Federal partnership adjustment” means a change to an
34item or amount required to be determined under the Internal
35Revenue Code and the regulations thereunder that is used by a
-38-1partnership and its direct and indirect partners to compute
2state tax owed for the reviewed year where such change results
3from a partnership level audit or an administrative adjustment
4request. A federal partnership adjustment is positive to the
5extent that it increases Iowa taxable income as determined
6under this title and is negative to the extent that it
7decreases Iowa taxable income as determined under this title.
8A federal adjustment reported on an amended federal return
9or other similar report filed pursuant to section 6225(c) of
10the Internal Revenue Code shall not be considered a federal
11partnership adjustment for purposes of this section.
12i. “Federal partnership representative” means the person
13the partnership designates for the taxable year as the
14partnership’s representative, or the person the internal
15revenue service has appointed to act as the federal partnership
16representative, pursuant to section 6223(a) of the Internal
17Revenue Code and the regulations thereunder.
18j. “Fiduciary partner” means a partner that is a fiduciary
19that is subject to tax pursuant to sections 422.5 and 422.6.
20k. “Final determination date” means any one of the following
21dates:
22(1) In the case of a federal partnership adjustment that
23arises from a partnership level audit, the first day on which
24no federal adjustments arising from that audit remain to be
25finally determined, whether by agreement, or, if appealed
26or contested, by a final decision with respect to which all
27rights of appeal have been waived or exhausted. For agreements
28required to be signed by the internal revenue service and the
29audited partnership, the final determination date is the date
30on which the last party signed the agreement.
31(2) In the case of a federal partnership adjustment that
32results from a timely filed administrative adjustment request,
33the day on which the administrative adjustment request was
34filed with the internal revenue service.
35l. “Final federal partnership adjustment” means a federal
-39-1partnership adjustment after the final determination date for
2that federal partnership adjustment has passed.
3m. “Indirect partner” means a partner in a partnership or
4pass-through entity where such partnership or pass-through
5entity itself holds an interest directly, or through another
6indirect partner, in a partnership or pass-through entity.
7n. “Individual partner” means a partner who is a natural
8person that is subject to tax pursuant to section 422.5.
9o. “Nonresident partner” means a partner that is not a
10resident partner as defined in this subsection.
11p. “Partner” means a person that holds an interest, directly
12or indirectly, in a partnership or pass-through entity.
13q. “Partnership” means an entity subject to taxation
14under subchapter K of the Internal Revenue Code and the
15regulations thereunder and includes but is not limited to a
16syndicate, group, pool, joint venture, or other unincorporated
17organization through or by means of which any business,
18financial operation, or venture is carried on and which is
19not, within the meaning of this chapter, a trust, estate, or
20corporation.
21r. “Partnership level audit” means an examination by the
22internal revenue service at the partnership level pursuant to
23subchapter C, title 26, subtitle F, chapter 63, of the Internal
24Revenue Code, as enacted by the Bipartisan Budget Act of 2015,
25Pub.L. No.114-74, and as amended, which results in final
26federal partnership adjustments initiated and made by the
27internal revenue service.
28s. “Pass-through entity” means an entity, other than
29a partnership, that is not subject to tax under section
30422.33 for C corporations but excluding an exempt partner.
31“Pass-through entity” includes but is not limited to S
32corporations, estates, and trusts, and other grantor trusts.
33t. “Reallocation adjustment” means a final federal
34partnership adjustment that changes the shares of items of
35partnership income, gain, loss, expense, or credit allocated
-40-1to a partner that holds an interest directly in a partnership
2or pass-through entity. A positive reallocation adjustment
3means the portion of a reallocation adjustment that would
4increase Iowa taxable income for such partners, and a negative
5reallocation adjustment means the portion of a reallocation
6adjustment that would decrease Iowa taxable income for such
7partners.
8u. “Resident partner” means any of the following:
9(1) For an individual partner, a “resident” as defined in
10section 422.4.
11(2) For a fiduciary partner, one with situs in Iowa.
12(3) For all other partners, a partner whose headquarters or
13principal place of business is located in Iowa.
14v. “Reviewed year” means the taxable year of a partnership
15that is subject to a partnership level audit from which final
16federal partnership adjustments arise, or otherwise means the
17taxable year of the partnership or pass-through entity that is
18the subject of a state partnership audit.
19w. “State partnership audit” means an examination by the
20director at the partnership or pass-through entity level which
21results in adjustments to partnership or pass-through entity
22related items or reallocations of income, gains, losses,
23expenses, credits, and other attributes among such partners for
24the reviewed year.
25x. “Tiered partner” means any partner that is a partnership
26or pass-through entity.
27y. “Unrelated business income” means the income which is
28defined in section 512 of the Internal Revenue Code and the
29regulations thereunder.
302. Application. Partnerships and their direct partners
31and indirect partners shall report final federal partnership
32adjustments as provided in this section.
333. State partnership representative. Notwithstanding any
34other law to the contrary, the state partnership representative
35for the reviewed year shall have the sole authority to act on
-41-1behalf of the partnership or pass-through entity with respect
2to an action required or permitted to be taken by a partnership
3or pass-through entity under this section or section 422.28 or
4422.29 with respect to final federal partnership adjustments
5arising from a partnership level audit or an administrative
6adjustment request, and its direct partners and indirect
7partners shall be bound by those actions.
84. Reporting and payment requirements for audited
9partnerships and their partners subject to final federal
10partnership adjustments.
11a. Unless an audited partnership makes the election in
12subsection 5, the audited partnership shall do all of the
13following for all final federal partnership adjustments no
14later than ninety days after the final determination date of
15the audited partnership:
16(1) File a completed federal adjustments report.
17(2) Notify each direct partner of such partner’s
18distributive share of the adjustments in the manner and form
19prescribed by the department by rule.
20(3) File an amended composite return under section 422.13
21if one was originally filed, and if applicable for withholding
22from partners, file an amended withholding report under
23section 422.16, and pay the additional amount under this title
24that would have been due had the final federal partnership
25adjustments been reported properly as required, including any
26applicable interest and penalties.
27b. Unless an audited partnership paid an amount on behalf
28of the direct partners of the audited partnership pursuant to
29subsection 5, all direct partners of the audited partnership
30shall do all of the following no later than one hundred
31eighty days after the final determination date of the audited
32partnership:
33(1) File a completed federal adjustments report reporting
34the direct partner’s distributive share of the adjustments
35required to be reported to such partners under paragraph “a”.
-42- 1(2) If the direct partner is a tiered partner, notify all
2partners that hold an interest directly in the tiered partner
3of such partner’s distributive share of the adjustments in the
4manner and form prescribed by the department by rule.
5(3) If the direct partner is a tiered partner and subject to
6section 422.13, file an amended composite return under section
7422.13 if such return was originally filed, and if applicable
8for withholding from partners file an amended withholding
9report under section 422.16 if one was originally required to
10be filed.
11(4) Pay any additional amount under this title that would
12have been due had the final federal partnership adjustments
13been reported properly as required, including any applicable
14penalty and interest.
15c. Unless a partnership or tiered partner paid an amount on
16behalf of the partners pursuant to subsection 5, each indirect
17partner shall do all of the following:
18(1) Within ninety days after the time for filing and
19furnishing statements to tiered partners and their partners
20as established by section 6226 of the Internal Revenue Code
21and the regulations thereunder, file a completed federal
22adjustments report.
23(2) If the indirect partner is a tiered partner, within
24ninety days after the time for filing and furnishing statements
25to tiered partners and their partners as established by
26section 6226 of the Internal Revenue Code and the regulations
27thereunder but within sufficient time for all indirect partners
28to also complete the requirements of this subsection, notify
29all of the partners that hold an interest directly in the
30tiered partner of such partner’s distributive share of the
31adjustments in the manner and form prescribed by the department
32by rule.
33(3) Within ninety days after the time for filing and
34furnishing statements to tiered partners and their partners
35as established by section 6226 of the Internal Revenue Code
-43-1and the regulations thereunder, if the indirect partner
2is a tiered partner and subject to section 422.13, file an
3amended composite return under section 422.13 if such return
4was originally filed, and if applicable for withholding from
5partners, file an amended withholding report under section
6422.16 if one was originally required to be filed.
7(4) Within ninety days after the time for filing and
8furnishing statements to tiered partners and the partners of
9the tiered partners as established by section 6226 of the
10Internal Revenue Code and the regulations thereunder, pay any
11additional amount due under this title, including any penalty
12and interest that would have been due had the final federal
13partnership adjustments been reported properly as required.
145. Election for partnership or tiered partners to pay.
15a. An audited partnership, or a tiered partner that receives
16a notification of a final federal partnership adjustment under
17subsection 4, may make an election to pay as provided under
18this subsection.
19b. An audited partnership or tiered partner makes an
20election to pay under this subsection by filing a completed
21federal adjustments report, notifying the department in the
22manner and form prescribed by the department that it is making
23the election under this subsection, notifying each of the
24direct partners of such partner’s distributive share of the
25adjustments, and paying on behalf of its partners an amount
26calculated in paragraph “c”, including any applicable penalty
27and interest. These requirements shall all be fulfilled within
28one of the following time periods:
29(1) For the audited partnership, no later than ninety days
30after the final determination date of the audited partnership.
31(2) For a direct tiered partner, no later than one hundred
32eighty days after the final determination date of the audited
33partnership.
34(3) For an indirect tiered partner, within ninety days
35after the time for filing and furnishing statements to a
-44-1tiered partner and the partner of the tiered partner, as
2established by section 6226 of the Internal Revenue Code and
3the regulations thereunder.
4c. The amount due under this subsection from an audited
5partnership or tiered partner shall be calculated as follows:
6(1) Exclude from final federal partnership adjustments and
7any positive reallocation adjustments the distributive share
8of such adjustments reported to an exempt partner that holds
9an interest directly in the audited partnership if the audited
10partnership is making the election or that holds an interest
11directly in the tiered partner if the tiered partner is making
12the election, but only to the extent the distributive share is
13not unrelated business income.
14(2) Determine the total distributive share of all final
15federal partnership adjustments and positive reallocation
16adjustments as modified by this title that are reported to
17corporate partners, and to exempt partners to the extent the
18distributive share is unrelated business income, and allocate
19and apportion such adjustments as provided in section 422.33
20at the partnership or tiered partner level, and multiply the
21resulting amount by the maximum state corporate income tax rate
22pursuant to section 422.33 for the reviewed year.
23(3) Determine the total distributive share of all final
24federal partnership adjustments and positive reallocation
25adjustments as modified by this title that are reported to
26nonresident individual partners and nonresident fiduciary
27partners and allocate and apportion such adjustments as
28provided in section 422.33 at the partnership or tiered
29partner level, and multiply the resulting amount by the maximum
30individual income tax rate pursuant to section 422.5A for the
31reviewed year.
32(4) For the total distributive share of all final federal
33partnership adjustments and positive reallocation adjustments
34as modified by this title that are reported to tiered partners:
35(a) Determine the amount of such adjustments which are of a
-45-1type that would be subject to sourcing to Iowa under section
2422.8, subsection 2, paragraph “a”, as a nonresident, and then
3determine the portion of this amount that would be sourced to
4Iowa under those provisions as if the tiered partner were a
5nonresident.
6(b) Determine the amount of such adjustments which are of
7a type that would not be subject to sourcing to Iowa under
8section 422.8, subsection 2, paragraph “a”, as a nonresident.
9(c) Determine the portion of the amount in subparagraph
10division (b) that can be established, as prescribed by the
11department by rule, to be properly allocable to indirect
12partners that are nonresident partners or other partners not
13subject to tax on the adjustments.
14(d) Multiply the total of the amounts determined in
15subparagraph divisions (a) and (b), reduced by any amount
16determined in subparagraph division (c), by the highest
17individual income tax rate pursuant to section 422.5A for the
18reviewed year.
19(5) For the total distributive share of all final federal
20partnership adjustments and positive reallocation adjustments
21as modified by this title that are reported to resident
22individual partners and resident fiduciary partners, multiply
23that amount by the highest individual income tax rate pursuant
24to section 422.5A for the reviewed year.
25(6) Total the amounts computed pursuant to subparagraphs
26(2) through (5) and calculate any interest and penalty as
27provided under this title. Notwithstanding any provision of
28law to the contrary, interest and penalties on the amount due
29by the audited partnership or tiered partner shall be computed
30from the day after the due date of the reviewed year return
31without extension, and shall be imposed as if the audited
32partnership or tiered partner was required to pay tax or show
33tax due on the original return for the reviewed year.
34d. Adjustments subject to the election in this subsection
35do not include any adjustments arising from an administrative
-46-1adjustment request.
2e. An audited partnership or tiered partner not otherwise
3subject to any reporting or payment obligation to Iowa that
4makes an election under this subsection consents to be subject
5to the Iowa laws related to reporting, assessment, collection,
6and payment of Iowa tax, interest, and penalties calculated
7under the election.
86. Modified reporting and payment method. The department may
9adopt procedures for an audited partnership or tiered partner
10to enter into an agreement with the department to use an
11alternative reporting and payment method, including applicable
12time requirements or any other provision of this section. The
13audited partnership or tiered partner must demonstrate that
14the requested method will reasonably provide for the reporting
15and payment of taxes, penalties, and interest due under the
16provisions of this section. Application for approval of an
17alternative reporting and payment method must be made by the
18audited partnership or tiered partner within the time for
19making an election to pay under subsection 5 and in the manner
20prescribed by the department. Approval of such an alternative
21reporting and payment method shall be at the discretion of the
22department.
237. Effect of election by partnership or tiered partner and
24payment of amount due.
25a. The election made under subsection 5 is irrevocable,
26unless in the discretion of the director, the director
27determines otherwise.
28b. The amount determined in subsection 5, when properly
29reported and paid by the audited partnership or tiered partner,
30shall be treated as paid on behalf of the partners of such
31audited partnership or tiered partner on the same final federal
32partnership adjustments, provided, however, that no partner may
33take any deduction or credit for the amount, claim a refund of
34the amount, or include the amount on such partner’s Iowa return
35in any manner.
-47- 1c. In the event another state offers to an audited
2partnership or tiered partner a similar election to pay state
3tax resulting from final federal partnership adjustments,
4nothing in this subsection shall prohibit a resident who holds
5an interest directly in that audited partnership or tiered
6partner, as the case may be, from claiming a credit for taxes
7paid by the resident to another state under section 422.8,
8subsection 1, for any amounts paid by the audited partnership
9or tiered partner on such resident partner’s behalf to another
10state, provided such payment otherwise meets the requirements
11of section 422.8, subsection 1.
12d. Nothing in this section shall prohibit the department
13from assessing direct partners and indirect partners for taxes
14they owe in the event that an audited partnership or tiered
15partner fails to timely make any report or payment required by
16this section for any reason.
178. Assessments of additional Iowa income tax, interest, and
18penalties, and claims for refund, arising from final federal
19partnership adjustments.
20a. The department shall assess additional Iowa income
21tax, interest, and penalties arising from final federal
22partnership adjustments in the same manner as provided in
23this title unless a different treatment is provided by this
24subsection. Since final federal partnership adjustments are
25determined at the audited partnership level, any assessment
26issued to partners shall not be appealable by the partner.
27The department may assess any taxes, including on-behalf-of
28amounts, interest, and penalties arising from the final federal
29partnership adjustments if it issues a notice of assessment to
30the audited partnership, tiered partner, or other direct or
31indirect partner on or before the expiration of the applicable
32limitations period specified in section 422.25.
33b. In addition to the period for claiming a refund or credit
34provided in section 422.73, subsection 1, paragraph “a”, and
35notwithstanding section 422.73, subsection 1, paragraph “b”,
-48-1a partnership, tiered partner, or other direct or indirect
2partner, as the case may be, may file a claim for refund of
3Iowa income tax arising directly or indirectly from a final
4federal partnership adjustment arising from a partnership level
5audit on or before the date which is one year from the date the
6federal adjustments report for that final federal partnership
7adjustment was required to be filed by such person under this
8section.
99. Rules. The department may adopt any rules pursuant to
10chapter 17A to implement this section.
11 Sec. 65. NEW SECTION. 422.25B State partnership
12representative.
131. As used in this section, all words and phrases defined
14in section 422.25A shall have the same meaning given them by
15that section.
162. The state partnership representative for the reviewed
17year for a partnership shall be the partnership’s federal
18partnership representative with respect to an action required
19or permitted to be taken by a state partnership representative
20under this chapter for a reviewed year, unless the partnership
21designates in writing another person as the state partnership
22representative as provided in subsection 3. The state
23partnership representative for the reviewed year for a
24pass-through entity is the person designated in subsection 3.
253. The department may establish reasonable qualifications
26for a person to be a state partnership representative. If
27a partnership desires to designate a person other than the
28federal partnership representative, the partnership shall
29designate such person in the manner and form prescribed by the
30department. A pass-through entity shall designate a person as
31the state partnership representative in the manner and form
32prescribed by the department. A partnership or pass-through
33entity shall be allowed to change such designation by notifying
34the department at the time the change occurs in the manner and
35form prescribed by the department.
-49- 14. The department may adopt any rules pursuant to chapter
217A to implement this section.
3 Sec. 66. NEW SECTION. 422.25C Partnership and pass-through
4entity audits and examinations — consistent treatment of
5entity-level items — binding actions — amended returns.
61. As used in this section, all words and phrases defined
7in section 422.25A shall have the same meaning given them by
8that section.
92. For tax years beginning on or after January 1, 2020, any
10adjustments to a partnership’s or pass-through entity’s items
11of income, gain, loss, expense, or credit, or an adjustment
12to such items allocated to a partner that holds an interest
13in a partnership or pass-through entity for the reviewed year
14by the department as a result of a state partnership audit,
15shall be determined at the partnership level or pass-through
16entity level in the same manner as provided by section 6221(a)
17of the Internal Revenue Code and the regulations thereunder
18unless a different treatment is specifically provided in this
19title. The provisions of sections 6222, 6223, and 6227 of the
20Internal Revenue Code and the regulations thereunder shall also
21apply to a partnership or pass-through entity and its direct
22or indirect partners in the same manner as provided in such
23sections unless a different treatment is specifically provided
24in this title. For purposes of applying such sections, due
25account shall be made for differences in federal and Iowa
26terminology. The adjustment provided by section 6221(a) of
27the Internal Revenue Code shall be determined as provided in
28such section but shall be based on Iowa taxable income or
29other tax attributes of the partnership as determined pursuant
30to this chapter for the reviewed year. The department shall
31issue a notice of adjustment to the partnership or pass-through
32entity. Such notice shall be treated as an assessment for
33the purposes of section 422.25, and the notice shall be
34appealable by the partnership or pass-through entity pursuant
35to sections 422.28 and 422.29 and shall be issued within the
-50-1time period provided by section 422.25. Once the adjustments
2to partnership-related or pass-through entity-related items or
3reallocations of income, gains, losses, expenses, credits, and
4other attributes among such partners for the reviewed year are
5finally determined, the partnership or pass-through entity and
6any direct partners or indirect partners shall then be subject
7to the provisions of section 422.25, subsection 1, paragraph
8“e”, and section 422.25A in the same manner as if the state
9partnership audit were a federal partnership level audit, and
10as if the final state partnership audit adjustment were a
11final federal partnership adjustment. The penalty exception
12in section 421.27, subsection 2, paragraph “c”, shall not apply
13to a state partnership audit.
143. The state partnership representative for the reviewed
15year as determined under section 422.25B shall have the sole
16authority to act on behalf of the partnership or pass-through
17entity with respect to an action required or permitted to
18be taken by a partnership or pass-through entity under this
19section, including proceedings under section 422.28 or 422.29,
20and the partnership’s or pass-through entity’s direct partners
21and indirect partners shall be bound by those actions.
224. If the department, the partnership or pass-through
23entity, and the partnership or pass-through entity owners
24agree, the provisions of this section may be applied to tax
25years beginning before January 1, 2020.
265. The department may adopt rules pursuant to chapter 17A to
27implement this section.
28 Sec. 67. Section 422.35, Code 2020, is amended by adding the
29following new subsection:
30 NEW SUBSECTION. 26. Any income subtracted from federal
31taxable income for an adjustment year pursuant to section 6225
32of the Internal Revenue Code and the regulations thereunder
33shall be added back in computing net income for state tax
34purposes for the adjustment year.
35 Sec. 68. Section 422.39, Code 2020, is amended by striking
-51-1the section and inserting in lieu thereof the following:
2422.39 Statutes applicable to corporations and corporation
3tax.
4All the provisions of sections 422.24 through 422.27
5of division II, respecting payment, collection, reporting,
6examination, and assessment, shall apply in respect to a
7corporation subject to the provisions of this division and to
8the tax due and payable by a corporation taxable under this
9division. This includes but is not limited to a corporation
10that is a pass-through entity as defined in section 422.25A.
11 Sec. 69. Section 422.73, Code 2020, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 01. For purposes of this section, “federal
14adjustment”, “final determination date”, and “final federal
15adjustment” all mean the same as defined in section 422.25.
16 Sec. 70. Section 422.73, subsections 1 and 3, Code 2020, are
17amended to read as follows:
181. a. If it appears that an amount of tax, penalty, or
19interest has been paid which was not due under division II,
20III or V of this chapter, then that amount shall be credited
21against any tax due on the books of the department by the
22person who made the excessive payment, or that amount shall be
23refunded to the person or with the person’s approval, credited
24to tax to become due. A claim for refund or credit that has
25not been filed with the department within three years after
26the return upon which a refund or credit claimed became due,
27or within one year after the payment of the tax upon which a
28refund or credit is claimed was made, whichever time is the
29later, shall not be allowed by the director. If, as a result of
30a carryback of a net operating loss or a net capital loss, the
31amount of tax in a prior period is reduced and an overpayment
32results, the claim for refund or credit of the overpayment
33shall be filed with the department within the three years after
34the return for the taxable year of the net operating loss or
35net capital loss became due.
-52- 1b. Notwithstanding the period of limitation specified in
2paragraph “a”, the taxpayer shall have six months one year from
3the day of final disposition final determination date of any
4income tax matter between the taxpayer and the internal revenue
5service final federal adjustment arising from an internal
6revenue service audit or other similar action by the internal
7revenue service with respect to the particular tax year to
8claim an income tax refund or credit arising from that final
9federal adjustment.
103. The department shall enter into an agreement with the
11internal revenue service for the transmission of federal income
12tax reports on individuals required to file an Iowa income tax
13return who have been involved in an income tax matter with the
14internal revenue service. After final disposition the final
15determination date of the income tax matter that involves a
16final federal adjustment between the taxpayer and the internal
17revenue service, the department shall determine whether the
18individual is due a state income tax refund as a result of that
19 final disposition of federal adjustment from such income tax
20matter. If the individual is due a state income tax refund,
21the department shall notify the individual within thirty days
22and request the individual to file a claim for refund or credit
23with the department.
24 Sec. 71. APPLICABILITY. This division of this Act applies
25to federal adjustments and federal partnership adjustments that
26have a final determination date after the effective date of
27this division of this Act.
28EXPLANATION
29The inclusion of this explanation does not constitute agreement with
30the explanation’s substance by the members of the general assembly.
31This bill relates to state taxation and related laws of
32the state, including the administration by the department of
33revenue (department) of certain tax credits and refunds, income
34taxes, moneys and credits taxes, sales and use taxes, and by
35modifying provisions relating to reinstatement of business
-53-1entities and to the assessment and valuation of property. The
2bill is organized into divisions.
3DIVISION I — ADMINISTRATION AND PENALTY PROVISIONS.
4 The amendment to Code section 336.603(5) provides that the
5governing board of a county land record information system may
6enter into an agreement with a public agency to provide access
7to electronic documents or records on a batch basis. The bill
8allows access to electronic documents to be provided for a fee.
9The bill prohibits any other types of agreements between the
10board and the public agency except as otherwise provided in the
11bill.
12The amendment to Code section 421.6 enhances the readability
13of the Code section by including in the definition of “return”
14the moneys and credits tax turn administered by the department
15under Code section 533.329.
16The bill enacts new Code section 421.17(36) which permits
17the director of revenue to enter into Code chapter 28E
18agreements with the state fair or a county or district fair
19to collect and remit sales taxes and fees from sellers making
20retail sales on the grounds owned by the fair or through events
21conducted by the fair.
22The amendment to Code section 421.27(1) provides that in
23the case of a specified business with no tax shown due or
24required to be shown due that fails to timely file their
25income tax return or information return shall pay the greater
26of the following penalty amounts: $200; or an amount equal
27to 10 percent of the imputed Iowa liability of the specified
28business, not to exceed $25,000.
29The amendment to Code section 421.27(1) provides that the
30penalty for individuals or specified businesses that fail to
31timely file a return may be waived under certain circumstances.
32The amendment to Code section 421.27(4) provides that the
33penalty for a specified business that willfully fails to file a
34return with no tax shown due or required to be shown due with
35the intent to evade such a filing requirement or reporting
-54-1Iowa-source income, the penalty imposed shall be the greater
2of $1,500 or an amount equal to 75 percent of the imputed Iowa
3liability of the specified business.
4The amendment to Code section 421.27(4) expands penalty
5provisions by providing that a person who willfully fails to
6file a return or deposit form with intent to evade a filing
7requirement shall be subject to a penalty of 75 percent of the
8tax added to the amount of tax shown due or required to be shown
9due, in lieu of other penalties.
10The amendment to Code section 421.27(6) makes numerous
11changes to the criminal offense of fraudulent practice
12by expanding the criminal offense to include a person who
13willfully makes a false application for an exemption or benefit
14with the intent to receive the exemption or benefit to which
15the person is not entitled.
16The amendment to Code section 421.27(6) also expands the
17fraudulent practice criminal offense to include when a person
18willfully submits any false information, document, or document
19containing false information in support of an application
20for a refund, credit, exemption, reimbursement, rebate, or
21other payment or benefit with the intent to evade taxes;
22and to include when a person willfully submits any false
23information, document, or document containing false information
24in support of an application for a refund, credit, exemption,
25reimbursement, rebate, or other payment or benefit to which the
26person is not entitled.
27The sections of this division amending Code section 421.27
28apply to tax years beginning on or after January 1, 2022.
29A person who commits fraudulent practice under Code section
30421.76(6), in addition to the criminal penalties, is liable for
31a penalty equal to 75 percent of the refund, credit, exemption,
32reimbursement, rebate, or other payment or benefit being
33fraudulently claimed.
34The bill enacts new Code section 421.27(8) which defines
35“imputed Iowa liability” and “specified business”.
-55- 1The bill enacts new Code section 421.27(9) by adding an
2additional penalty under Code section 421.27 in the amount
3of $1,000 if a taxpayer fails to file a tax return within 90
4days of written notice by the department that the taxpayer is
5required to file such a return.
6The bill enacts new Code section 421.27A by creating a
7criminal offense for perjury. Currently, a different perjury
8criminal offense exists in Code section 720.2. A person
9commits perjury under the following circumstances in the bill:
10the person makes a document containing false information in
11support of an application for refund, credit, exemption,
12reimbursement, rebate, or other payment or benefit with intent
13to evade tax; the person makes a document containing false
14information with intent to unlawfully receive a refund, credit,
15exemption, reimbursement, rebate, or other payment or benefit,
16to which the person is not entitled; the person knowingly makes
17any false affidavit; the person knowingly swears or affirms
18falsely to any matter or thing required by the terms of title X
19of the Code (financial resources) to be sworn to or affirmed.
20A person who commits the criminal offense of perjury under new
21Code section 421.27A commits a class “D” felony. A class “D”
22felony is punishable by confinement for no more than five years
23and a fine of at least $750 but not more than $7,500.
24The bill enacts new Code section 421.59 relating to a
25power of attorney or other authority to act on behalf of the
26taxpayer. The bill formalizes a process for the following
27persons to act and receive information on behalf of and
28exercise all of the rights of a taxpayer, regardless of whether
29a power of attorney has been filed with the department: a
30guardian, conservator, or custodian appointed by the court; a
31receiver appointed pursuant to Code chapter 680; an individual
32who has been named as an authorized representative on a
33fiduciary return filed under Code section 422.14 (fiduciary
34return) or Code chapter 450 (inheritance tax); an individual
35holding a title or position within a corporation, association,
-56-1partnership, or other business entity; a licensed attorney
2who has appeared on behalf of the taxpayer or the taxpayer’s
3estate; and a parent or legal guardian of the taxpayer who has
4not reached the age of majority.
5New Code section 421.59 also authorizes the department to
6enter into a memorandum of understanding with the taxpayer
7for each employee, officer, or member of a third-party entity
8engaged with or otherwise hired by a taxpayer to manage
9the taxpayer’s tax matters, in lieu of requiring a power of
10attorney for each person.
11The bill enacts new Code section 421.60(11) which allows a
12taxpayer to elect to receive correspondence electronically from
13the department rather than by regular mail.
14The amendments to Code section 421.62 provide that the
15regulations relating to tax return preparers apply to an
16income tax return or claim or refund under Code chapter 422
17(individual, corporate, and franchise taxes), but do not apply
18to withholding returns under Code section 422.16.
19The amendment to Code section 421.64 enhances the
20readability of the Code section.
21The amendment to Code section 422.20(1) adds an intent
22element “willfully or recklessly” to the criminal offense
23related to the unlawful disclosure of tax return information
24by state personnel or former state personnel. A person who
25commits a violation under Code section 422.20(1) commits a
26serious misdemeanor. A serious misdemeanor is punishable by
27confinement for no more than one year and a fine of at least
28$315 but not more than $1,875.
29The amendment to Code section 422.20(3) provides that tax
30return information may be disclosed to authorized individuals
31pursuant to new Code section 421.59 created in the bill.
32The bill enacts new Code section 422.20(3A) permitting the
33director of revenue to disclose the tax return information of
34a partnership, limited liability company, or S corporation to
35a person who was a partner, shareholder, or member of such an
-57-1entity during any part of the period covered by the tax return.
2The bill enacts new Code section 422.20(3B) specifying the
3information the department is required to redact prior to
4the disclosure of the record in an appeal or contested case.
5The bill specifies the department may also redact other tax
6information from the record in an appeal or contested case, if
7the taxpayer proves by clear and convincing evidence that the
8release of the tax information would disclose a trade secret
9or be an unwarranted invasion of personal privacy. The bill
10permits the department to disclose information that is required
11to be redacted if the department determines such information is
12necessary to the resolution or decision of the case.
13The bill enacts new Code section 422.25(1)(c) (income tax)
14that provides the period of examination and determination is
15unlimited under title X (financial resources) in any action
16by the department to recover or rescind a tax expenditure
17as defined in Code section 2.48, or any other incentive or
18assistance administered by the economic development authority.
19The amendment takes effect upon enactment. The bill also
20provides that it is the intent of the general assembly that the
21amendment to Code section 422.25(1) is a conforming amendment
22consistent with current law, and that the amendment does not
23change the application of current law. This provision takes
24effect upon enactment.
25The amendment to Code section 422.72(1)(a) adds the intent
26element of “willfully or recklessly” to the criminal offense
27related to the unlawful disclosure by state personnel or
28former state personnel of the business affairs, operations,
29or information obtained through a tax-related investigation.
30A person who unlawfully discloses such information commits a
31serious misdemeanor under Code section 422.72(4). A serious
32misdemeanor is punishable by confinement for no more than one
33year and a fine of at least $315 but not more than $1,875.
34The bill enacts new Code section 422.72(7A), a similar
35provision to new Code section 422.20(3B) in the bill. New Code
-58-1section 422.72(7A) specifies the information the department
2is required to redact prior to the disclosure to the general
3public of the record in an appeal or contested case. The
4bill specifies that the department may also redact other tax
5information from the record in an appeal or contested case, if
6the taxpayer proves by clear and convincing evidence that the
7release of the tax information would disclose a trade secret
8or be an unwarranted invasion of personal privacy. The bill
9permits the department to disclose information that is required
10to be redacted if the department determines such information is
11necessary to the resolution or decision of the case.
12The bill enacts new Code section 423.37(4)(sales and use
13tax) that provides the period of examination and determination
14is unlimited under title X (financial resources) in any action
15by the department to recover or rescind a tax expenditure
16as defined in Code section 2.48 or any other incentive or
17assistance administered by the economic development authority.
18The amendment takes effect upon enactment. The bill also
19provides that it is the intent of the general assembly that the
20amendment to Code section 423.37(4) is a conforming amendment
21consistent with current law, and that the amendment does not
22change the application of current law. This provision takes
23effect upon enactment.
24The amendment to Code section 428A.1 (real estate
25transfer tax) provides that a county recorder shall record
26the declaration of value but is prohibited from charging a
27recording fee for the filing.
28The amendment to Code section 441.48 enhances the
29readability of the Code section by specifying the board of
30supervisors or city council, as applicable, shall provide
31the department with notice of intent to protest prior to the
32expiration of the 10 days’ notice to adjust the valuation of
33any class of property issued by the department.
34The amendments to Code sections 489.706, 490.1422, 501.813,
35and 504.1423, remove the role of the department in the
-59-1application for reinstatement by a limited liability company,
2corporation, cooperative, or nonprofit corporation after the
3dissolution of such an entity.
4The bill enacts new Code section 533.329(03) by specifying
5that a money and credit tax return prepared by a credit union
6shall be on a form prepared by the department of revenue, and
7shall be filed with the department on or before the last day of
8April.
9The bill amends Code section 533.329(3) relating to
10enforcement of the moneys and credits tax paid by credit
11unions.
12DIVISION II — SALES AND USE TAX. The amendments to Code
13sections 321G.4 (snowmobiles) and 321I.4 (all-terrain vehicles)
14require the county recorder to collect sales or use tax if
15an owner of such a vehicle is unable to present satisfactory
16evidence that the sales or use tax has been paid.
17The amendment to Code section 423.2(6)(bs) specifies that
18any services arising from or related to software sold as
19tangible personal property are subject to the sales tax.
20The amendment to Code section 423.2(8)(d)(1) specifies that
21the following is not subject to the sales tax: the retail
22sale of a specified digital product and a service where the
23specified digital product is essential and exclusive to the use
24of the service, and the true object of the transaction is the
25service.
26The amendment to Code section 423.3(3A) provides that the
27sales price from the sale of a commercial recreation service
28offering the opportunity to hunt a preserve whitetail is
29exempt from the sales tax if the sale occurred between July
301, 2005, and December 31, 2015. This provision takes effect
31upon enactment an applies retroactively to July 1, 2005. The
32bill prohibits any refunds resulting from the amendment to Code
33section 423.3(3A).
34The amendment to Code section 423.3(31) specifies that
35the sales price of tangible personal property or specified
-60-1digital products sold to, or of services furnished to a
2tribal government as defined in Code section 216A.161, or the
3instrumentalities of such tribal government are exempt from the
4sales tax under most circumstances.
5The amendments to Code section 423.3(80)(b) and (c) specify
6that services performed pursuant to a written construction
7contract with a designated exempt entity as defined in Code
8section 423.3(80)(a)(1) are exempt from the sales tax.
9Currently, the construction contract is not required to be a
10written contract and only building materials, supplies, and
11equipment used in such a contract are exempt from the sales
12tax. The bill also provides that the building materials,
13supplies, equipment, and services are exempt from the sales
14tax only if the property that is subject to the construction
15project becomes public property or the property of a designated
16exempt entity, in addition to the requirement that the
17exempt items be completely consumed in the performance of the
18construction contract.
19The bill enacts new Code section 423.3(60A) exempting from
20the sales tax the sales price from sales of diapers eligible
21for medical assistance as defined in Code section 249A.2.
22The amendment to Code section 423.4(1), relating to refunds
23of sales or use taxes to tax-exempt entities, enhances the
24readability of the Code section by defining a “designated
25exempt entity” and thus removing repeated references to each
26exempt entity in the Code section. The bill also adds a tribal
27government to the definition of a designated exempt entity.
28The bill strikes the terms “goods, wares, and merchandise” and
29uses the terms “building materials, supplies, and equipment”
30for purposes of claiming the exemption, when a designated
31exempt entity makes an application to the department for the
32refund of the sales or use tax upon the sales price of all
33sales or services related to the performance of a written
34construction contract. Additionally, if the sales price of
35all building materials, supplies, equipment, or services
-61-1related to the performance of a written construction contract
2are to be exempt from the sales or use tax under the bill,
3all of the following must apply: the building materials,
4supplies, equipment, or services are completely consumed in the
5performance of a construction project; the property that is the
6subject of the construction project becomes public property or
7the property of an exempt entity; and the building materials,
8supplies, equipment, or services furnished are not used in
9the performance of a construction contract with a designated
10exempt entity in connection with the construction of certain
11facilities.
12The amendments to Code section 423.4(2)(a) and (b) relate
13to construction contracts for transportation projects by
14specifying the contractor shall pay sales or use tax for the
15services related to such contracts, and by making terminology
16more consistent in the subsection.
17The amendments to Code sections 423.4(2) and 423.4(6) make
18the terminology more consistent with other changes in the bill.
19The amendment to Code section 423.5(1)(b) strikes the
20imposition of a 6 percent excise tax on the use of manufactured
21housing, or the purchase price if such housing is sold in the
22form of tangible personal property, or the installed purchase
23price if such housing is sold in the form of realty.
24The amendment to Code section 423.29(1) provides that a
25retailer maintaining a place of business in this state and
26making taxable sales shall, at the time of making such sales,
27collect the sales tax. The bill also provides that it is
28the intent of the general assembly that the amendment to
29Code section 423.29(1) is a conforming amendment consistent
30with current law, and that the amendment does not change the
31application of current law.
32The amendment to Code section 423.33(1) enhances the
33readability of the Code section by specifying that if a
34purchaser fails to pay sales tax to a retailer required to
35collect the sales tax, then the purchaser shall pay a use
-62-1tax directly to the department. The bill specifies that the
2retailer and purchaser are jointly liable for the failure
3to pay either the sales or use tax in most circumstances.
4Additionally, the bill provides that it is the intent of the
5general assembly that the addition of “joint liability” is a
6conforming amendment consistent with current law, and that
7the amendment does not change the application of current law.
8The bill provides that if the purchaser pays the use tax,
9the retailer remains liable for any local option sales and
10services tax under Code chapter 423B that the retailer failed
11to collect.
12DIVISION III — INCOME TAX. The bill strikes and replaces
13Code section 422.9(3)(c). The bill provides that a taxpayer
14may elect to waive the entire carryback period with respect to
15an Iowa net operating loss for any taxable year, in the manner
16prescribed by the department, and by the due date for filing
17the taxpayer’s return, including extensions of time. After the
18election is made for any taxable year, the election shall be
19irrevocable for such taxable year. If an election has been
20properly made, the bill provides that the Iowa net operating
21loss shall be carried forward 20 taxable years.
22The amendment to Code section 422.9(3)(d) modifies the
23election for an Iowa farming loss, which may be carried back
24for five taxable years prior to the taxable year of the loss.
25The bill specifies that a farming business that has an Iowa
26farming loss may make an election to carry back the loss for
27five taxable years, in the manner prescribed by the department,
28and shall be made by the due date for filing the taxpayer’s
29return, including extensions of time. After the election is
30made for any taxable year, the bill provides the election shall
31be irrevocable for such taxable year.
32The division applies to tax years beginning on or after
33January 1, 2020.
34DIVISION IV — RESEARCH ACTIVITIES TAX CREDIT. The
35amendments to Code sections 15.335, 422.10, and 422.33
-63-1update references to the Internal Revenue Code relating to
2the alternative simplified credit for increasing research
3activities.
4The division takes effect upon enactment and applies
5retroactively to January 1, 2019, for tax years beginning on
6or after that date.
7DIVISION V — PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS
8AND REPORTING OF FEDERAL ADJUSTMENTS. The amendment to Code
9section 421.27(2)(c) specifies that a taxpayer is required
10to pay a penalty of 5 percent of the tax due, unless the
11taxpayer provides written notification to the department of a
12federal audit while it is in progress and voluntarily files
13an amended return which includes the final disposition of the
14audit and final federal adjustments to taxes paid within 60
15days of the final determination date. The bill defines “final
16determination date” to generally mean the first day on which no
17federal adjustments to taxes arising from the audit or other
18action remain to be finally determined. In cases of a final
19federal partnership adjustment arising from a partnership
20level audit, the taxpayer is required to pay a penalty of 5
21percent of the tax due, unless the taxpayer provides written
22notification to the department of the partnership level audit
23while it is in progress, or timely complies with reporting and
24payment requirements.
25The bill enacts new Code section 422.7(59) providing that
26any income subtracted from federal taxable income shall be
27added back in computing net income for state individual income
28tax purposes when federal adjustments are made to taxes in the
29adjustment year. The bill defines “adjustment year” to mean
30the year in which the final determination of the adjustment
31occurs.
32The amendment to Code section 422.25 adds definitions to the
33Code section for “federal adjustment”, “federal adjustments
34report”, “final determination date”, and “final federal
35adjustment”.
-64- 1The bill enacts new Code section 422.25A which creates a
2process for audited partnerships and their direct and indirect
3partners to report final federal partnership adjustments to
4the department. The bill provides that the state partnership
5representative for the reviewed year shall have sole authority
6to act on behalf of the partnership. The bill creates
7reporting and payment requirements for audited partnerships
8and their partners subject to final federal adjustments.
9The bill permits an audited partnership or a tiered partner
10(partner that is a partnership or pass-through entity) to make
11irrevocable elections about the payment of any adjustments,
12and specifies the consequences of making certain elections.
13The bill permits an audited partnership or tiered partner to
14enter into an agreement with the department to use alternative
15reporting and payment methods. The bill permits the department
16to assess additional Iowa income tax, interest, and penalties
17arising from a federal partnership adjustments in the same
18manner as provided in other tax-related provisions.
19The bill enacts new Code section 422.25B that requires
20the state partnership representative acting on behalf of the
21partnership for the reviewed year to be the partnership’s
22federal partnership representative with respect to an action
23required or permitted to be taken by a state partnership
24representative, unless the partnership designates in writing in
25the manner prescribed by the department another person to act
26as the state partnership representative.
27The bill enacts new Code section 422.25C relating to
28partnership or pass-through entity audits and examinations.
29The bill provides that for tax years beginning on or after
30January 1, 2020, any adjustments to a partnership’s or
31pass-through entity’s taxes or an adjustment allocated to a
32partner’s taxes as a result of a department audit shall be
33determined at the partnership or pass-through entity level in
34the same manner as provided by federal law. The bill specifies
35that the state partnership representative shall have the sole
-65-1authority to act on behalf of the partnership or pass-through
2entity with respect to any actions taken due to the audit,
3including appealing decisions to the director of revenue or
4seeking judicial review of the director’s decision. The
5provisions of new Code section 422.25C may be applied to tax
6years beginning before January 1, 2020, if the partnership or
7pass-through entity and the department agree.
8The bill enacts new Code section 422.35(26) providing that
9any income subtracted from federal taxable income shall be
10added back in computing net income for state corporate income
11tax purposes when federal adjustments are made to taxes in the
12adjustment year. The bill defines “adjustment year” to mean
13the year in which the final determination of the adjustment
14occurs.
15The bill amends Code section 422.39 by specifying that Code
16sections relating to payments of interest, computation of tax,
17liens, and final reports of fiduciaries apply to not just
18payments and collections but to reporting, examinations, and
19assessments with respect to corporations including pass-through
20entities organized as corporations.
21The amendment to Code section 422.73 relates to credits
22against taxes due because of errors. The bill changes the
23period of limitation (statute of limitations) for a claim for
24a refund of or a credit against individual income tax by a
25taxpayer to one year from the final determination date of any
26final adjustment with respect to the particular tax year to
27claim an income tax refund or credit. Currently, a claim for
28a refund of or a credit against the individual income tax by
29a taxpayer is six months from the final disposition of any
30income tax matter between the taxpayer and the internal revenue
31service. The bill makes other changes relating to agreements
32entered into by the department and the internal revenue
33service for the transmission of federal income tax reports on
34individuals who have been involved in an income tax matter with
35the internal revenue service.
-66- 1The division applies to federal adjustments and federal
2partnership adjustments that have a final determination date
3after the effective date of this division of this Act.
-67-jm/jh
2state, including the administration by the department of
3revenue of certain tax credits and refunds, income taxes,
4moneys and credits taxes, sales and use taxes, partnership
5and pass-through entity audits, and by modifying provisions
6relating to the reinstatement of business entities,
7the assessment and valuation of property, and providing
8penalties, and including effective date and retroactive
9applicability provisions.
10BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2ADMINISTRATION AND PENALTY PROVISIONS
3 Section 1. Section 331.603, subsection 5, Code 2020, is
4amended to read as follows:
55. a. The governing board of the county land record
6information system may enter into an agreement, including but
7not limited to an agreement pursuant to chapter 28E, with a
8public agency, as defined in section 28E.2, to provide access
9to electronic documents or records on a batch basis. Access to
10electronic documents or records may be provided for a fee if
11permitted in the agreement between the governing board and the
12public agency.
13b. The governing board of the county land record information
14system shall not enter into an agreement other than as provided
15in paragraph “a” to provide access to electronic documents or
16records on a batch basis. The county recorder may collect
17reasonable fees for access to electronic documents and records
18pursuant to an agreement. The fees shall not exceed the
19actual cost of providing access to the electronic documents
20and records. “Actual cost” means only those expenses directly
21attributable to providing access to electronic documents
22and records. “Actual cost” shall not include costs such as
23employment benefits, depreciation, maintenance, electricity,
24or insurance associated with the administration of the office
25of the county recorder or the county land record information
26system.
27b. c. Electronic documents and records made available
28under this subsection shall not include personally identifiable
29information and shall be subjected to a redaction process prior
30to the transfer of the electronic documents or records to
31another person pursuant to an agreement under paragraph “a”.
32 Sec. 2. Section 421.6, Code 2020, is amended to read as
33follows:
34421.6 Definition of return.
35For purposes of this title, unless the context otherwise
-1-1requires, “return” means any tax or information return, amended
2return, declaration of estimated tax, or claim for refund
3that is required by, provided for, or permitted under, the
4provisions of this title or section 533.329, and which is filed
5with the department by, on behalf of, or with respect to any
6person. “Return” includes any amendment or supplement to these
7items, including supporting schedules, attachments, or lists
8which are supplemental to or part of the filed return.
9 Sec. 3. Section 421.17, Code 2020, is amended by adding the
10following new subsection:
11 NEW SUBSECTION. 36. To enter into an agreement pursuant
12to chapter 28E with the state fair organized under chapter 173
13or with a fair defined in section 174.1, to collect and remit
14taxes and fees from sellers making sales at retail on property
15owned, controlled, or operated by a fair or through events
16conducted by a fair.
17 Sec. 4. Section 421.27, subsection 1, Code 2020, is amended
18to read as follows:
191. Failure to timely file a return or deposit form.
20a. If a person fails to file with the department on or
21before the due date a return or deposit form there shall be
22added to the tax shown due or required to be shown due a penalty
23of ten percent of the tax shown due or required to be shown due.
24b. In the case of a specified business with no tax shown
25due or required to be shown due that fails to timely file an
26income return, the specified business shall pay the greater of
27the following penalty amounts:
28(1) Two hundred dollars.
29(2) An amount equal to ten percent of the imputed Iowa
30liability of the specified business, not to exceed twenty-five
31thousand dollars.
32c. The penalty, if assessed pursuant to paragraph “a” or
33“b”, shall be waived by the department upon a showing of any of
34the following conditions:
35a. (1) At An amount of tax greater than zero is required to
-2-1be shown due and at least ninety percent of the tax required to
2be shown due has been paid by the due date of the tax.
3b. (2) Those taxpayers who are required to file quarterly
4returns, or monthly or semimonthly deposit forms may have one
5late return or deposit form within a three-year period. The
6use of any other penalty exception will not count as a late
7return or deposit form for purposes of this exception.
8c. (3) The death of a taxpayer, death of a member of
9the immediate family of the taxpayer, or death of the person
10directly responsible for filing the return and paying the tax,
11when the death interferes with timely filing.
12d. (4) The onset of serious, long-term illness or
13hospitalization of the taxpayer, of a member of the immediate
14family of the taxpayer, or of the person directly responsible
15for filing the return and paying the tax.
16e. (5) Destruction of records by fire, flood, or other act
17of God.
18f. (6) The taxpayer presents proof that the taxpayer
19relied upon applicable, documented, written advice specifically
20made to the taxpayer, to the taxpayer’s preparer, or to an
21association representative of the taxpayer from the department,
22state department of transportation, county treasurer, or
23federal internal revenue service, whichever is appropriate,
24that has not been superseded by a court decision, ruling by a
25quasi-judicial body, or the adoption, amendment, or repeal of
26a rule or law.
27g. (7) Reliance upon results in a previous audit was a
28direct cause for the failure to file where the previous audit
29expressly and clearly addressed the issue and the previous
30audit results have not been superseded by a court decision, or
31the adoption, amendment, or repeal of a rule or law.
32h. (8) Under rules prescribed by the director, the taxpayer
33presents documented proof of substantial authority to rely
34upon a particular position or upon proof that all facts and
35circumstances are disclosed on a return or deposit form.
-3- 1i. (9) The return, deposit form, or payment is timely,
2but erroneously, mailed with adequate postage to the internal
3revenue service, another state agency, or a local government
4agency and the taxpayer provides proof of timely mailing with
5adequate postage.
6j. (10) The tax has been paid by the wrong licensee and the
7payments were timely remitted to the department for one or more
8tax periods prior to notification by the department.
9k. (11) The failure to file was discovered through a
10sanctioned self-audit program conducted by the department.
11l. (12) If the availability of funds in payment of tax
12required to be made through electronic funds transfer is
13delayed and the delay of availability is due to reasons beyond
14the control of the taxpayer. “Electronic funds transfer” means
15any transfer of funds, other than a transaction originated
16by check, draft, or similar paper instrument, that is
17initiated through an electronic terminal telephone, computer,
18magnetic tape, or similar device for the purpose of ordering,
19instructing, or authorizing a financial institution to debit or
20credit an account.
21m. (13) The failure to file a timely inheritance tax return
22resulting solely from a disclaimer that required the personal
23representative to file an inheritance tax return. The penalty
24shall be waived if such return is filed and any tax due is paid
25within the later of nine months from the date of death or sixty
26days from the delivery or filing of the disclaimer pursuant to
27section 633E.12.
28n. (14) That an Iowa inheritance tax return is filed for
29an estate within the later of nine months from the date of
30death or sixty days from the filing of a disclaimer by the
31beneficiary of the estate refusing to take the property or
32right or interest in the property.
33 Sec. 5. Section 421.27, subsections 4 and 6, Code 2020, are
34amended to read as follows:
354. Willful failure to file or deposit.
-4- 1a. (1) In case of willful failure to file a return
2or deposit form with the intent to evade tax or a filing
3requirement, or in case of willfully filing a false return
4or deposit form with the intent to evade tax, in lieu of the
5penalties otherwise provided in this section, a penalty of
6seventy-five percent shall be added to the amount shown due or
7required to be shown as tax on the return or deposit form.
8(2) In case of a willful failure by a specified business to
9file an income return with no tax shown due or required to be
10shown due with intent to evade a filing requirement, or in case
11of willfully filing a false income return with no tax shown due
12or required to be shown due with the intent to evade reporting
13of Iowa-source income, the penalty imposed shall be the greater
14of the following amounts:
15(a) One thousand five hundred dollars.
16(b) An amount equal to seventy-five percent of the imputed
17Iowa liability of the specified business.
18(3) If penalties are applicable for failure to file a
19return or deposit form and failure to pay the tax shown due or
20required to be shown due on the return or deposit form, the
21penalty provision for failure to file shall be in lieu of the
22penalty provisions for failure to pay the tax shown due or
23required to be shown due on the return or deposit form, except
24in the case of willful failure to file a return or deposit form
25or willfully filing a false return or deposit form with intent
26to evade tax.
27b. The penalties imposed under this subsection are not
28subject to waiver.
296. Improper receipt of payments Liability — fraudulent
30practice. A person who makes an erroneous application for
31refund, credit, reimbursement, rebate, or other payment shall
32be liable for any overpayment received or tax liability reduced
33plus interest at the rate in effect under section 421.7.
34a. In addition, a person who willfully commits a fraudulent
35practice and is liable for a penalty equal to seventy-five
-5-1percent of the refund, credit, exemption, reimbursement,
2rebate, or other payment or benefit being claimed if the person
3does any of the following:
4(1) Willfullymakes a false or frivolous application for
5refund, credit, exemption, reimbursement, rebate, or other
6payment or benefit with intent to evade tax or with intent to
7receive a refund, credit, exemption, reimbursement, rebate,
8or other payment or benefit, to which the person is not
9entitled is guilty of a fraudulent practice and is liable for a
10penalty equal to seventy-five percent of the refund, credit,
11reimbursement, rebate, or other payment being claimed.
12(2) Willfully submits any false information, document,
13or document containing false information in support of an
14application for refund, credit, exemption, reimbursement,
15rebate, or other payment or benefit with the intent to evade
16tax.
17(3) Willfully submits with any false information, document,
18or document containing false information in support of an
19application for refund with the intent to receive a refund,
20credit, exemption, reimbursement, rebate, or other payment
21benefit, to which the person is not entitled.
22b. Payments, penalties, and interest due under this
23subsection may be collected and enforced in the same manner as
24the tax imposed.
25 Sec. 6. Section 421.27, Code 2020, is amended by adding the
26following new subsections:
27 NEW SUBSECTION. 8. Definitions. As used in this section:
28a. “Imputed Iowa liability” means any of the following:
29(1) In the case of corporations doing business in Iowa
30other than corporations described in section 422.34 or section
31422.36, subsection 5, the corporation’s Iowa net income after
32the application of the Iowa business activity ration, if
33applicable, multiplied by the top income tax rate imposed under
34section 422.33 for the tax year.
35(2) In the case of financial institutions as defined
-6-1in section 422.61 doing business in Iowa, the financial
2institution’s Iowa net income after the application of the
3Iowa business activity ratio, if applicable, multiplied by the
4franchise tax rate imposed under section 422.63 for the tax
5year.
6(3) In the case of all other entities doing business in
7Iowa or deriving income from sources within Iowa, including
8corporations described in section 422.36, subsection 5, and all
9other entities required to file an information return under
10section 422.15, subsection 2, the entity’s Iowa net income
11after the application of the Iowa business activity ratio, if
12applicable, multiplied by the top income tax rate imposed under
13section 422.5A for the tax year.
14b. “Income return” means an income tax return or information
15return required under section 422.15, subsection 2, or section
16422.36, 422.37, or 422.62.
17c. “Specified business” means a partnership or other entity
18required to file an information return under section 422.15,
19subsection 2, a corporation required to file a return under
20section 422.36 or 422.37, or a financial institution required
21to file a return under section 422.62.
22 NEW SUBSECTION. 9. Additional penalty. In addition to the
23penalties imposed by this section, if a taxpayer fails to file
24a return within ninety days of written notice by the department
25that the taxpayer is required to do so, there shall be added to
26the amount shown due or required to be shown due a penalty in
27the amount of one thousand dollars.
28 Sec. 7. NEW SECTION. 421.27A Perjury.
291. For purposes of this title, a form, application, or any
30other documentation required or requested by the department
31shall be required to be certified under penalty of perjury that
32the information contained in the form, application, or other
33documentation is true and correct.
342. A person commits a class “D” felony under any of the
35following circumstances:
-7- 1a. The person makes a form, application, or other document
2containing false information in support of an application for
3refund, credit, exemption, reimbursement, rebate, or other
4payment or benefit with intent to evade tax.
5b. The person makes a form, application, or other document
6containing false information with intent to unlawfully receive
7a refund, credit, exemption, reimbursement, rebate, or other
8payment or benefit, to which the person is not entitled.
9c. The person knowingly makes any false affidavit.
10d. The person knowingly swears or affirms falsely to any
11matter or thing required by the terms of this title to be sworn
12to or affirmed.
13 Sec. 8. NEW SECTION. 421.59 Power of attorney — authority
14to act on behalf of taxpayer.
151. a. A taxpayer may authorize an individual to act on
16behalf of the taxpayer by filing a power of attorney with the
17department, on a form prescribed by the department.
18b. A taxpayer may at any time revoke a power of attorney
19filed with the department pursuant to subsection 1. Upon
20processing of the taxpayer’s revocation of a power of attorney,
21the department shall cease honoring the power of attorney.
222. The department may authorize the following persons to act
23and receive information on behalf of and exercise all of the
24rights of a taxpayer, regardless of whether a power of attorney
25has been filed pursuant to subsection 1:
26a. A guardian, conservator, or custodian appointed by a
27court, if a taxpayer has been deemed legally incompetent by a
28court. The authority of the appointee to act on behalf of the
29taxpayer shall be limited to the extent specifically stated in
30the order of appointment.
31(1) Upon request, a guardian, conservator, or custodian of
32a taxpayer shall submit to the department a copy of the court
33order appointing the guardian, conservator, or custodian.
34(2) The department may petition the court that appointed the
35guardian, conservator, or custodian to verify the appointment
-8-1or to determine the scope of the appointment.
2b. A receiver appointed pursuant to chapter 680. An
3appointed receiver shall be limited to act on behalf of the
4taxpayer by the authority stated in the order of appointment.
5(1) Upon the request of the department, a receiver shall
6submit to the department a copy of the court order appointing
7the receiver.
8(2) The department may petition the court that appointed the
9receiver to verify the appointment or to determine the scope
10of the appointment.
11c. An individual who has been named as an authorized
12representative on a fiduciary return of income filed under
13section 422.14 or a tax return filed under chapter 450.
14d. (1) An individual holding the following title or
15position within a corporation, association, partnership, or
16other business entity:
17(a) A president or chief executive officer, or any other
18officer of the corporation or association if the president or
19chief executive officer certifies that the officer has the
20authority to legally bind the corporation or association.
21(b) A designated partner duly authorized to act on behalf
22of the partnership.
23(c) A person authorized to act on behalf of a limited
24liability company in tax matters pursuant to a valid statement
25of authority.
26(2) An individual seeking to act on behalf of a taxpayer
27pursuant to this paragraph shall file an affidavit with the
28department attesting to the identity and qualifications of the
29individual and any necessary certifications required under this
30paragraph. The department may require any documents or other
31evidence to demonstrate the individual has authority to act on
32behalf of the taxpayer before the department.
33e. A licensed attorney who has appeared on behalf of the
34taxpayer or the taxpayer’s estate in a court proceeding.
35Authorization under this paragraph is limited to those matters
-9-1within the scope of the representation.
2f. A parent or guardian of a taxpayer who has not reached
3the age of majority where the parent or guardian has signed the
4taxpayer’s return on behalf of the taxpayer. Authorization
5under this paragraph is limited to those matters relating to
6the return signed by the parent or guardian. Authorization
7under this paragraph automatically terminates when the taxpayer
8reaches the age of majority pursuant to section 599.1.
93. a. In lieu of executing a power of attorney pursuant
10to subsection 1, the department may enter into a memorandum of
11understanding with the taxpayer for each employee, officer,
12or member of a third-party entity engaged with or otherwise
13hired by a taxpayer to manage the tax matters of the taxpayer,
14to permit the disclosure of confidential tax information to
15the third-party entity and the authority to act on behalf of
16the taxpayer. The memorandum of understanding shall adhere to
17requirements as established by the director.
18b. The memorandum of understanding shall be signed by
19the director, the taxpayer, and the third-party entity or an
20authorized representative of the third-party entity.
21c. At any time, a taxpayer may unilaterally revoke
22a memorandum of understanding entered into pursuant to
23this subsection by filing a notice of revocation with the
24department. Upon the filing of such a revocation by the
25taxpayer, the department shall cease honoring the memorandum
26of understanding.
274. The department shall adopt rules pursuant to chapter 17A
28to administer this section.
29 Sec. 9. Section 421.60, subsection 2, paragraph a,
30subparagraph (2), Code 2020, is amended to read as follows:
31(2) The statement prepared in accordance with this
32paragraph shall be available on the department’s internet site.
33The internet site for this information shall be distributed by
34the department to all taxpayers at the first contact by the
35department with respect to the determination or collection of
-10-1any tax, except in the case of simply providing tax forms.
2 Sec. 10. Section 421.60, Code 2020, is amended by adding the
3following new subsection:
4 NEW SUBSECTION. 11. Electronic communication.
5Notwithstanding any provision of the law to the contrary, for
6purposes of this title and sections 321.105A and 533.329, a
7taxpayer may elect to receive any notices, correspondence,
8or other communication electronically that the department is
9required to send by regular mail. The director may establish
10procedures and limitations for obtaining this election from the
11taxpayer.
12 Sec. 11. Section 421.62, subsection 1, Code 2020, is amended
13by adding the following new paragraph:
14 NEW PARAGRAPH. 0b. “Income tax return or claim for refund”
15means any tax return or claim for refund under chapter 422,
16excluding withholding returns under section 422.16.
17 Sec. 12. Section 421.62, subsection 1, paragraph c,
18subparagraph (1), Code 2020, is amended to read as follows:
19(1) “Tax return preparer” means any individual who, for
20a fee or other consideration, prepares ten or more income
21 tax returns or claims for refund under chapter 422 during
22a calendar year, or who assumes final responsibility for
23completed work on such income tax returns or claims for refund
24under chapter 422 on which preliminary work has been done by
25another individual.
26 Sec. 13. Section 421.62, subsection 2, paragraph a, Code
272020, is amended to read as follows:
28a. On or after January 1, 2020, a tax return preparer
29is required to include the tax return preparer’s PTIN on
30any income tax return or claim for refund prepared by the
31tax return preparer and filed under chapter 422 with the
32department.
33 Sec. 14. Section 421.64, subsection 1, Code 2020, is amended
34to read as follows:
351. For purposes of this section, “tax return preparer” means
-11-1the same as defined in section 421.61 421.62.
2 Sec. 15. Section 422.20, subsections 1 and 2, Code 2020, are
3amended to read as follows:
41. It shall be unlawful for any present or former officer
5or employee of the state to willfully or recklessly divulge or
6to make known in any manner whatever not provided by law to
7any person the amount or source of income, profits, losses,
8expenditures, or any particular thereof, set forth or disclosed
9in any income return, or to permit any income return or copy
10thereof or any book containing any abstract or particulars
11thereof to be seen or examined by any person except as provided
12by law; and it shall be unlawful for any person to willfully or
13recklessly print or publish in any manner whatever not provided
14by law any income return, or any part thereof or source of
15income, profits, losses, or expenditures appearing in any
16income return; and any person committing an offense against the
17foregoing provision shall be guilty of a serious misdemeanor.
18If the offender is an officer or employee of the state, such
19person shall also be dismissed from office or discharged from
20employment. Nothing herein shall prohibit turning over to duly
21authorized officers of the United States or tax officials of
22other states state information and income returns pursuant
23to agreement between the director and the secretary of the
24treasury of the United States or the secretary’s delegate or
25pursuant to a reciprocal agreement with another state.
262. It is unlawful for an officer, employee, or agent, or
27former officer, employee, or agent of the state to willfully
28or recklessly disclose to any person, except as authorized
29in subsection 1 of this section, any federal tax return
30or return information as defined in section 6103(b) of the
31Internal Revenue Code. It is unlawful for a person to whom
32any federal tax return or return information, as defined in
33section 6103(b) of the Internal Revenue Code, is disclosed
34in a manner unauthorized by subsection 1 of this section
35to thereafter willfully or recklessly print or publish in
-12-1any manner not provided by law any such return or return
2information. A person violating this provision is guilty of
3a serious misdemeanor.
4 Sec. 16. Section 422.20, subsection 3, paragraph a, Code
52020, is amended to read as follows:
6a. Unless otherwise expressly permitted by section 8A.504,
7section 8G.4, section 11.41, section 96.11, subsection 6,
8section 421.17, subsections 22, 23, and 26, section 421.17,
9subsection 27, paragraph “k”, section 421.17, subsection 31,
10section 252B.9, section 321.40, subsection 6, sections 321.120,
11421.19, 421.28, 421.59, 422.72, and 452A.63, this section, or
12another provision of law, a tax return, return information, or
13investigative or audit information shall not be divulged to any
14person or entity, other than the taxpayer, the department, or
15internal revenue service for use in a matter unrelated to tax
16administration.
17 Sec. 17. Section 422.20, Code 2020, is amended by adding the
18following new subsections:
19 NEW SUBSECTION. 3A. The director may disclose the tax
20return of a partnership, limited liability company, or S
21corporation, any such return information, or any investigative
22information related to the return, to any person who was a
23partner, shareholder, or member of such an entity during any
24part of the period covered by the return.
25 NEW SUBSECTION. 3B. a. Prior to being made available for
26public inspection, the department shall redact from the record
27in an appeal or contested case the following information from
28any pleading, exhibit, attachment, motion, written evidence,
29final order, decision, or opinion:
30(1) A financial account number.
31(2) An account number generated by the department to
32identify an audit or examination.
33(3) A social security number.
34(4) A federal employer identification number.
35(5) The name of a minor.
-13- 1(6) A medical record or other medical information.
2b. Upon a motion filed by the taxpayer, the department
3may redact from the record in an appeal or contested case any
4other information from a pleading, exhibit, attachment, motion,
5or written evidence, if the taxpayer proves by clear and
6convincing evidence that the release of such information would
7disclose a trade secret or be a clear, unwarranted invasion of
8personal privacy.
9c. Notwithstanding paragraph “a”, when making final orders,
10decisions, or opinions available for public inspection, the
11department may disclose the items in paragraph “a” if the
12department determines such information is necessary to the
13resolution or decision of the appeal or case.
14d. Except as described in paragraphs “a” and “b”, all
15information contained in a pleading, exhibit, attachment,
16motion, written evidence, final order, decision, opinion,
17and the record in an appeal or contested case is subject to
18examination to the extent provided by chapter 22.
19 Sec. 18. Section 422.25, subsection 1, Code 2020, is amended
20by adding the following new paragraph:
21 NEW PARAGRAPH. c. The period of examination and
22determination is unlimited under this title in the case of
23any action by the department to recover or rescind any tax
24expenditure as defined by section 2.48, subsection 1, or any
25other incentive or assistance, due to a failure to meet or
26maintain the requirements of a program administered by the
27economic development authority.
28 Sec. 19. Section 422.72, subsection 1, paragraph a,
29subparagraph (1), Code 2020, is amended to read as follows:
30(1) It is unlawful for the director, or any person having
31an administrative duty under this chapter, or any present or
32former officer or other employee of the state authorized by the
33director to examine returns, to willfully or recklessly divulge
34in any manner whatever, the business affairs, operations, or
35information obtained by an investigation under this chapter of
-14-1records and equipment of any person visited or examined in the
2discharge of official duty, or the amount or source of income,
3profits, losses, expenditures or any particular thereof, set
4forth or disclosed in any return, or to willfully or recklessly
5 permit any return or copy of a return or any book containing
6any abstract or particulars thereof to be seen or examined by
7any person except as provided by law.
8 Sec. 20. Section 422.72, Code 2020, is amended by adding the
9following new subsection:
10 NEW SUBSECTION. 7A. a. Prior to being made available for
11public inspection, the department shall redact from the record
12in an appeal or contested case the following information from
13any pleading, exhibit, attachment, motion, written evidence,
14final order, decision, or opinion:
15(1) A financial account number.
16(2) An account number generated by the department to
17identify an audit or examination.
18(3) A social security number.
19(4) A federal employer identification number.
20(5) The name of a minor.
21(6) A medical record or other medical information.
22b. Upon a motion filed by the taxpayer, the department
23may redact from the record in an appeal or contested case any
24other information from a pleading, exhibit, attachment, motion,
25or written evidence, if the taxpayer proves by clear and
26convincing evidence that the release of such information would
27disclose a trade secret or be a clear, unwarranted invasion of
28personal privacy.
29c. Notwithstanding paragraph “a”, when making final orders,
30decisions, or opinions available for public inspection, the
31department may disclose the items in paragraph “a” if the
32department determines such information is necessary to the
33resolution or decision of the appeal or case.
34d. Except as described in paragraphs “a” and “b”, all
35information contained in a pleading, exhibit, attachment,
-15-1motion, written evidence, final order, decision, opinion,
2and the record in an appeal or contested case is subject to
3examination to the extent provided by chapter 22.
4 Sec. 21. Section 423.37, Code 2020, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 4. The period of limitation on examination
7and determination is unlimited under this title in the case
8of any action by the department to recover or rescind any tax
9expenditure as defined by section 2.48, subsection 1, or any
10other incentive or assistance, due to a failure to meet or
11maintain the requirements of a program administered by the
12economic development authority.
13 Sec. 22. Section 428A.1, subsections 2 and 3, Code 2020, are
14amended to read as follows:
152. When each deed, instrument, or writing by which any real
16property in this state is granted, assigned, transferred, or
17otherwise conveyed is presented for recording to the county
18recorder, a declaration of value signed by at least one of the
19sellers or one of the buyers or their agents shall be submitted
20to the county recorder. However, if the deed, instrument, or
21writing contains multiple parcels some of which are located
22in more than one county, separate declarations of value
23shall be submitted on the parcels located in each county and
24submitted to the county recorder of that county when paying
25the tax as provided in section 428A.5. A declaration of value
26is not required for those instruments described in section
27428A.2, subsections 2 to 5, 7 to 13, and 16 to through 21, or
28described in section 428A.2, subsection 6, except in the case
29of a federal agency or instrumentality, or if a transfer is
30the result of acquisition of lands, whether by contract or
31condemnation, for public purposes through an exercise of the
32power of eminent domain.
333. The declaration of value shall state the full
34consideration paid for the real property transferred. If
35agricultural land, as defined in section 9H.1, is purchased by
-16-1a corporation, limited partnership, trust, alien or nonresident
2alien, the declaration of value shall include the name and
3address of the buyer, the name and address of the seller, a
4legal description of the agricultural land, and identify the
5buyer as a corporation, limited partnership, trust, alien,
6or nonresident alien. The county recorder shall not record
7the declaration of value, but shall not charge a recording
8fee. The county recorder shall enter on the declaration of
9value information the director of revenue requires for the
10production of the sales/assessment ratio study and transmit
11all declarations of value to the city or county assessor in
12whose jurisdiction the property is located. The city or county
13assessor shall enter on the declaration of value provide the
14information the director of revenue requires for the production
15of the sales/assessment ratio study and transmit one copy of
16each declaration of value to the director of revenue, at times
17as directed by the director of revenue. The assessor shall
18retain one copy of each declaration of value for three years
19from December 31 of the year in which the transfer of realty
20for which the declaration was filed took place. The director
21of revenue shall, upon receipt of the information required to
22be filed under this chapter by the city or county assessor,
23send to the office of the secretary of state that part of the
24declaration of value which identifies a corporation, limited
25partnership, trust, alien, or nonresident alien as a purchaser
26of agricultural land as defined in section 9H.1.
27 Sec. 23. Section 441.48, Code 2020, is amended to read as
28follows:
29441.48 Notice of adjustment.
301. Before the department of revenue shall adjust the
31valuation of any class of property any such percentage, the
32department shall first serve ten days’ notice by mail, on the
33county auditor of the county whose valuation is proposed to be
34adjusted. The department shall hold an adjourned meeting after
35such
-17- 12. If the county or assessing jurisdiction intends to
2protest the proposed adjustment, the board of supervisors or
3city council, as applicable, shall provide the department with
4notice of intent to protest prior to expiration of the ten
5days’ notice.
63. After expiration of theten days’ notice, at which time
7 the county or assessing jurisdiction may appear by its city
8council or board of supervisors, city or county attorney, and
9other assessing jurisdiction, or city or county officials, and
10make written or oral protest against such proposed adjustment.
114. The protest shall consist simply of a statement of the
12error, or errors, complained of with such facts as may lead to
13their correction. At the adjourned meeting
145. After written protest is received, or an oral protest
15is heard, thefinal action may be taken in reference to the
16proposed adjustment.
17 Sec. 24. Section 489.706, subsection 2, Code 2020, is
18amended to read as follows:
192. The secretary of state shall refer the federal tax
20identification number contained in the application for
21reinstatement to the departments department of revenue and
22 workforce development. The departments department of revenue
23and workforce development shall report to the secretary of
24state the tax status of the limited liability company. If
25either the department reports to the secretary of state that
26a filing delinquency or liability exists against the limited
27liability company, the secretary of state shall not cancel the
28declaration of dissolution until the filing delinquency or
29liability is satisfied.
30 Sec. 25. Section 490.1422, subsection 2, paragraph a, Code
312020, is amended to read as follows:
32a. The secretary of state shall refer the federal tax
33identification number contained in the application for
34reinstatement to the departments department of revenue and
35 workforce development. The departments department of revenue
-18-1and workforce development shall report to the secretary
2of state the tax status of the corporation. If either the
3 department reports to the secretary of state that a filing
4delinquency or liability exists against the corporation,
5the secretary of state shall not cancel the certificate of
6dissolution until the filing delinquency or liability is
7satisfied.
8 Sec. 26. Section 501.813, subsection 2, paragraph a, Code
92020, is amended to read as follows:
10a. The secretary of state shall refer the federal tax
11identification number contained in the application for
12reinstatement to the departments department of revenue and
13 workforce development. The departments department of revenue
14and workforce development shall report to the secretary
15of state the tax status of the cooperative. If either the
16 department reports to the secretary of state that a filing
17delinquency or liability exists against the cooperative,
18the secretary of state shall not cancel the certificate of
19dissolution until the filing delinquency or liability is
20satisfied.
21 Sec. 27. Section 504.1423, subsection 2, paragraph a, Code
222020, is amended to read as follows:
23a. The secretary of state shall refer the federal tax
24identification number contained in the application for
25reinstatement to the departments department of revenue and
26 workforce development. The departments department of revenue
27and workforce development shall report to the secretary
28of state the tax status of the corporation. If either the
29 department reports to the secretary of state that a filing
30delinquency or liability exists against the corporation,
31the secretary of state shall not cancel the certificate of
32dissolution until the filing delinquency or liability is
33satisfied.
34 Sec. 28. Section 533.329, Code 2020, is amended by adding
35the following new subsection:
-19-1 NEW SUBSECTION. 03. Returns shall be in the form the
2director of revenue prescribes, and shall be filed with the
3department of revenue on or before the last day of the fourth
4month after the expiration of the tax year. The moneys and
5credits tax is due and payable on the last day of the fourth
6month after the expiration of the tax year.
7 Sec. 29. Section 533.329, subsection 3, Code 2020, is
8amended to read as follows:
93. The department of revenue shall administer and enforce
10the provisions of this section, and except as explicitly
11provided in this section or another provision of law, shall
12apply all applicable penalty, interest, and administrative
13provisions of chapters 421 and 422 as nearly as possible in
14administering and enforcing the moneys and credits tax imposed
15by this section.
16 Sec. 30. LEGISLATIVE INTENT. It is the intent of the
17general assembly that the sections of this division amending
18Code sections 422.25 and 423.37 are conforming amendments
19consistent with current state law, and that the amendments
20do not change the application of current law but instead
21reflect current law both before and after the enactment of this
22division of this Act.
23 Sec. 31. EFFECTIVE DATE. The following, being deemed of
24immediate importance, take effect upon enactment:
251. The section of this division of this Act amending section
26422.25.
272. The section of this division of this Act amending section
28423.37.
29 Sec. 32. APPLICABILITY. The following apply to tax years
30beginning on or after January 1, 2022:
31The sections of this division of this Act amending section
32421.27.
33DIVISION II
34SALES AND USE TAX
35 Sec. 33. Section 321G.4, subsection 2, Code 2020, is amended
-20-1to read as follows:
22. a. The owner of the snowmobile shall file an application
3for registration with the department through the county
4recorder of the county of residence in the manner established
5by the commission. The application shall be completed by the
6owner and shall be accompanied by a fee of fifteen dollars and
7a writing fee as provided in section 321G.27. A snowmobile
8shall not be registered by the county recorder until the
9county recorder is presented with receipts, bills of sale,
10or other satisfactory evidence that the sales or use tax has
11been paid for the purchase of the snowmobile or that the
12owner is exempt from paying the tax. A snowmobile that has
13an expired registration certificate from another state may be
14registered in this state upon proper application, payment of
15all applicable registration and writing fees, and payment of a
16penalty of five dollars.
17b. If the owner of the snowmobile is unable to present
18satisfactory evidence that the sales or use tax has been paid,
19the county recorder shall collect the tax. On or before the
20tenth day of each month, the county recorder shall remit to
21the department of revenue the amount of the taxes collected
22during the preceding month, together with an itemized statement
23on forms furnished by the department of revenue showing the
24name of each taxpayer, the make and purchase price of each
25snowmobile, the amount of tax paid, and such other information
26as the department of revenue requires.
27 Sec. 34. Section 321I.4, subsection 2, Code 2020, is amended
28to read as follows:
292. a. The owner of the all-terrain vehicle shall file an
30application for registration with the department through the
31county recorder of the county of residence, or in the case
32of a nonresident owner, in the county of primary use, in the
33manner established by the commission. The application shall
34be completed by the owner and shall be accompanied by a fee
35of fifteen dollars and a writing fee as provided in section
-21-1321I.29. An all-terrain vehicle shall not be registered by the
2county recorder until the county recorder is presented with
3receipts, bills of sale, or other satisfactory evidence that
4the sales or use tax has been paid for the purchase of the
5all-terrain vehicle or that the owner is exempt from paying the
6tax. An all-terrain vehicle that has an expired registration
7certificate from another state may be registered in this state
8upon proper application, payment of all applicable registration
9and writing fees, and payment of a penalty of five dollars.
10b. If the owner of the all-terrain vehicle is unable to
11present satisfactory evidence that the sales or use tax has
12been paid, the county recorder shall collect the tax. On or
13before the tenth day of each month, the county recorder shall
14remit to the department of revenue the amount of the taxes
15collected during the preceding month, together with an itemized
16statement on forms furnished by the department of revenue
17showing the name of each taxpayer, the make and purchase price
18of each all-terrain vehicle, the amount of tax paid, and such
19other information as the department of revenue requires.
20 Sec. 35. Section 423.2, subsection 6, paragraph bs, Code
212020, is amended to read as follows:
22bs. Services arising from or related to installing,
23maintaining, servicing, repairing, operating, upgrading, or
24enhancing either specified digital products or software sold
25as tangible personal property.
26 Sec. 36. Section 423.2, subsection 8, paragraph d,
27subparagraph (1), Code 2020, is amended to read as follows:
28(1) The retail sale of tangible personal property or
29specified digital product and a service, where the tangible
30personal property or specified digital product is essential
31to the use of the service, and is provided exclusively in
32connection with the service, and the true object of the
33transaction is the service.
34 Sec. 37. Section 423.3, subsection 3A, Code 2020, is amended
35to read as follows:
-22- 13A. The sales price from the sale of a commercial recreation
2service offering the opportunity to hunt a preserve whitetail
3as defined in section 484C.1 if the sale occurred between July
41, 2005, and December 31, 2015.
5 Sec. 38. Section 423.3, subsection 31, unnumbered paragraph
61, Code 2020, is amended to read as follows:
7The sales price of tangible personal property or specified
8digital products sold to and of services furnished to a tribal
9government as defined in 216A.161, or the sales price of
10tangible personal property or specified digital products sold
11to and of services furnished, and used for public purposes
12sold to a tax-certifying or tax-levying body of the state or a
13governmental subdivision of the state, including the following:
14 regional transit systems, as defined in section 324A.1,;
15 the state board of regents,; department of human services,;
16 state department of transportation,; any municipally owned
17solid waste facility which sells all or part of its processed
18waste as fuel to a municipally owned public utility,; and all
19divisions, boards, commissions, agencies, or instrumentalities
20of state, federal, county, or municipal government, or tribal
21government which have no earnings going to the benefit of an
22equity investor or stockholder, except any of the following:
23 Sec. 39. Section 423.3, Code 2020, is amended by adding the
24following new subsection:
25 NEW SUBSECTION. 60A. The sales price from sales of diapers
26eligible for medical assistance as defined in section 249A.2.
27 Sec. 40. Section 423.3, subsection 80, paragraphs b and c,
28Code 2020, are amended to read as follows:
29b. Subject to the limitations in paragraph “c”, if a
30contractor, subcontractor, or builder is to use building
31materials, supplies, and equipment, or services in the
32performance of a written construction contract with a
33designated exempt entity, the person shall purchase such
34items of tangible personal property or services without
35liability for the tax if such property or services will be
-23-1used in the performance of the written construction contract
2and a purchasing agent authorization letter and an exemption
3certificate, issued by the designated exempt entity, are
4presented to the retailer.
5c. (1) With regard to a written construction contract
6with a designated exempt entity described in paragraph “a”,
7subparagraph (1), the sales price of building materials,
8supplies, or equipment, or services is exempt from tax by this
9subsection only to the extent the building materials, supplies,
10or equipment, or services are completely consumed in the
11performance of the construction contract with the designated
12exempt entity, and only if the property that is the subject
13of the construction project becomes public property or the
14property of the designated exempt entity.
15(2) With regard to a written construction contract with
16a designated exempt entity described in paragraph “a”,
17subparagraph (2), the sales price of building materials,
18supplies, or equipment, or services is exempt from tax by this
19subsection only to the extent the building materials, supplies,
20or equipment, or services are completely consumed in the
21performance of a construction contract to construct a project,
22as defined in section 15J.2, subsection 10, which project has
23been approved by the economic development authority board in
24accordance with chapter 15J.
25 Sec. 41. Section 423.4, subsection 1, Code 2020, is amended
26to read as follows:
271. a. For purposes of this subsection, a “designated exempt
28entity” means any of the following:
29(1) A private nonprofit educational institution in this
30state,.
31(2) Anonprofit Iowa affiliate of a nonprofit international
32organization whose primary activity is the promotion of the
33construction, remodeling, or rehabilitation of one-family or
34two-family dwellings for low-income families,.
35(3) Anonprofit private museum in this state,.
-24- 1(4) Atax-certifying or tax-levying body or governmental
2subdivision of the state, including the state board of regents,
3state department of human services, state department of
4transportation, a.
5(5) Amunicipally owned solid waste facility which sells all
6or part of its processed waste as fuel to a municipally owned
7public utility, and all.
8(6) The state of Iowa.
9(7) Any political subdivision of the state.
10(8) Alldivisions, boards, commissions, agencies, or
11instrumentalities of state, federal, county, or municipal
12government which do not have earnings going to the benefit of
13an equity investor or stockholder,.
14(9) A tribal government as defined in section 216A.161,
15and any instrumentalities of the tribal government which do
16not have earnings going to the benefit of an equity investor
17or stockholder.
18b. A designated exempt entitymay make application apply
19 to the department for the refund of the sales or use tax upon
20the sales price of all sales of goods, wares, or merchandise
21 building materials, supplies, equipment, or from services
22furnished to a contractor, used in the fulfillment performance
23 of a written contract with the state of Iowa, any political
24subdivision of the state, or a division, board, commission,
25agency, or instrumentality of the state or a political
26subdivision, a private nonprofit educational institution in
27this state, a nonprofit Iowa affiliate described in this
28subsection, or a nonprofit private museum in this state if the
29property becomes an integral part of the project under contract
30and at the completion of the project becomes public property,
31is devoted to educational uses, becomes part of a low-income
32one-family or two-family dwelling in the state, or becomes a
33nonprofit private museum; except goods, wares, or merchandise,
34 designated exempt entity if all of the following apply:
35(1) The building materials, supplies, equipment, or
-25-1services are completely consumed in the performance of a
2construction project with the designated entity.
3(2) The property that is subject of the construction project
4becomes public property or the property of an exempt entity.
5(3) The building materials, supplies, equipment,or
6services furnished which are not used in the performance of
7any contract in connection with the operation of any municipal
8utility engaged in selling gas, electricity, or heat to
9the general public or in connection with the operation of a
10municipal pay television system; and except goods, wares, and
11merchandise are not used in the performance of a contract for a
12“project” under chapter 419 as defined in that chapter other
13than goods, wares, or merchandise used in the performance of
14a contract for a “project” under chapter 419 for which a bond
15issue was approved by a municipality prior to July 1, 1968, or
16for which the goods, wares, or merchandise becomes an integral
17part of the project under contract and at the completion of the
18project becomes public property or is devoted to educational
19uses.
20a. c. Such A contractor shall state under oath, on forms
21provided by the department, the amount of such sales of goods,
22wares, or merchandise, or services furnished and used in the
23performance of such contract, and upon which sales or use tax
24has been paid, and shall file such forms with the governmental
25unit, private nonprofit educational institution, nonprofit Iowa
26affiliate, or nonprofit private museum designated exempt entity
27 which has made any written contract for performance by the
28contractor. The forms shall be filed by the contractor with
29the governmental unit, educational institution, nonprofit Iowa
30affiliate, or nonprofit private museum designated exempt entity
31 before final settlement is made.
32b. d. Such governmental unit, educational institution,
33nonprofit Iowa affiliate, or nonprofit private museum A
34designated exempt entity shall, not more than one year after
35the final settlement has been made, make application apply
-26-1 to the department for any refund of the amount of the sales
2or use tax which shall have been paid upon any goods, wares,
3or merchandise building materials, supplies, equipment,
4or services furnished, the application to be made in the
5manner and upon forms to be provided by the department,
6and the department shall forthwith audit the claim and, if
7approved, issue a warrant to the governmental unit, educational
8institution, nonprofit Iowa affiliate, or nonprofit private
9museum designated exempt entity in the amount of the sales or
10use tax which has been paid to the state of Iowa under the
11contract.
12c. e. Refunds authorized under this subsection shall accrue
13interest in accordance with section 421.60, subsection 2,
14paragraph “e”.
15d. f. Any contractor who willfully makes a false report of
16tax paid under the provisions of this subsection is guilty of
17a simple misdemeanor and in addition shall be liable for the
18payment of the tax and any applicable penalty and interest.
19 Sec. 42. Section 423.4, subsection 2, paragraphs a and b,
20Code 2020, are amended to read as follows:
21a. A contractor awarded a contract for a transportation
22construction project is considered the consumer of all building
23materials, building supplies, and equipment, and services and
24shall pay sales tax to the supplier or remit consumer use tax
25directly to the department.
26b. The contractor is not required to file information with
27the state department of transportation stating the amount of
28goods, wares, or merchandise, or services rendered, furnished,
29or performed and building materials, supplies, equipment, or
30services used in the performance of the contract or the amount
31of sales or use tax paid.
32 Sec. 43. Section 423.4, subsection 6, paragraph a,
33subparagraph (1), Code 2020, is amended to read as follows:
34(1) The owner of a collaborative educational facility
35in this state may make application to the department for the
-27-1refund of the sales or use tax upon the sales price of all sales
2of goods, wares, or merchandise building materials, supplies,
3equipment, or from services furnished to a contractor, used
4in the fulfillment of a written construction contract with
5the owner of the collaborative educational facility for the
6original construction, or additions or modifications to, a
7building or structure to be used as part of the collaborative
8educational facility.
9 Sec. 44. Section 423.4, subsection 6, paragraphs b and c,
10Code 2020, are amended to read as follows:
11b. Such A contractor shall state under oath, on forms
12provided by the department, the amount of such sales of goods,
13wares, or merchandise building materials, supplies, equipment,
14or services furnished and used in the performance of such
15contract, and upon which sales or use tax has been paid, and
16shall file such forms with the owner of the collaborative
17educational facility which has made any written contract for
18performance by the contractor.
19c. (1) The owner of the collaborative educational facility
20shall, not more than one year after the final settlement has
21been made, make application to the department for any refund
22of the amount of the sales or use tax which shall have been
23paid upon any goods, wares, or merchandise building materials,
24supplies, equipment, or services furnished, the application
25to be made in the manner and upon forms to be provided by
26the department, and the department shall forthwith audit the
27claim and, if approved, issue a warrant to the owner of the
28collaborative educational facility in the amount of the sales
29or use tax which has been paid to the state of Iowa under the
30contract.
31(2) Refunds authorized under this subsection shall accrue
32interest in accordance with section 421.60, subsection 2,
33paragraph “e”.
34 Sec. 45. Section 423.5, subsection 1, paragraph b, Code
352020, is amended by striking the paragraph.
-28-1 Sec. 46. Section 423.29, subsection 1, Code 2020, is amended
2to read as follows:
31. Every seller who is a retailer and who is making taxable
4sales of tangible personal property or specified digital
5products in Iowa or who is a retailer maintaining a place
6of business in this state making taxable sales of tangible
7personal property or specified digital products shall, at
8the time of making the sale, collect the sales tax. Every
9seller who is a retailer that is not otherwise required to
10collect sales tax under the provisions of this chapter and who
11is selling tangible personal property or specified digital
12products for use in Iowa shall, at the time of making the sale,
13whether within or without the state, collect the use tax.
14 Sellers required to collect sales or use tax shall give to any
15purchaser a receipt for the tax collected in the manner and
16form prescribed by the director.
17 Sec. 47. Section 423.33, subsection 1, Code 2020, is amended
18to read as follows:
191. Liability of purchaser for sales tax and retailer.
20a. If a purchaser fails to pay sales tax to the retailer
21required to collect the tax, then in addition to all of the
22rights, obligations, and remedies provided, the a use tax
23is payable by the purchaser directly to the department, and
24sections 423.31, 423.32, 423.37, 423.38, 423.39, 423.40,
25423.41, and 423.42 apply to the purchaser.
26b. For failure to pay the sales or use tax as described
27in paragraph “a”, the retailer and purchaser are jointly
28 liable, unless the circumstances described in section 29C.24,
29subsection 3, paragraph “a”, subparagraph (2), section 421.60,
30subsection 2, paragraph “m”, section 423.34A, or section
31423.45, subsection 4, paragraph “b” or “e”, or subsection 5,
32paragraph “c” or “e”, are applicable.
33c. If the retailer fails to collect sales tax at the time
34of the transaction, the retailer shall thereafter remit the
35applicable sales tax, or the purchaser thereafter shall remit
-29-1the applicable use tax. If the purchaser remits all applicable
2use tax, the retailer remains liable for any local sales and
3services tax under chapter 423B that the retailer failed to
4collect.
5 Sec. 48. REFUNDS RELATED TO PRESERVE WHITETAIL DEER
6HUNTING. Refunds of taxes, interest, or penalties that arise
7from claims resulting from the amendment of section 423.3,
8subsection 3A, for sales occurring between July 1, 2005,
9and the effective date of the amendment to section 423.3,
10subsection 3A, shall not be allowed, notwithstanding any other
11law to the contrary.
12 Sec. 49. LEGISLATIVE INTENT.
131. It is the intent of the general assembly that the section
14of this division of this Act amending section 423.29 is a
15conforming amendment consistent with current state law, and
16that the amendment does not change the application of current
17law but instead reflects current law both before and after the
18enactment of this division of this Act.
192. It is the intent of the general assembly that the
20addition of “jointly” in the section of this division of
21this Act amending section 423.33 is a conforming amendment
22consistent with current state law, and that the amendment
23does not change the application of current law but instead
24reflects current law both before and after the enactment of
25this division of this Act.
26 Sec. 50. EFFECTIVE DATE. The following, being deemed of
27immediate importance, take effect upon enactment:
281. The section of this division of this Act amending section
29423.3A.
302. The section of this division of this Act relating
31to refunds for commercial recreation services offering an
32opportunity to hunt preserve whitetail deer.
33 Sec. 51. RETROACTIVE APPLICABILITY. The following applies
34retroactively to July 1, 2005:
35The section of this division of this Act amending section
-30-1423.3A.
2DIVISION III
3INCOME TAX
4 Sec. 52. Section 422.9, subsection 3, paragraph c, Code
52020, is amended by striking the paragraph and inserting in
6lieu thereof the following:
7c. A taxpayer may elect to waive the entire carryback period
8with respect to an Iowa net operating loss for any taxable year
9beginning on or after January 1, 2020. The election shall be
10made in the manner and form prescribed by the department, and
11shall be made by the due date for filing the taxpayer’s Iowa
12return, including extensions of time. After the election is
13made for any taxable year, the election shall be irrevocable
14for such taxable year. When an election has been properly
15made, the Iowa net operating loss shall be carried forward
16twenty taxable years.
17 Sec. 53. Section 422.9, subsection 3, paragraph d, Code
182020, is amended to read as follows:
19d. Notwithstanding paragraph “a”, for a taxpayer who is
20engaged in the trade or business of farming, which means the
21same as a “farming business” as defined in section 263A(e)(4) of
22the Internal Revenue Code, and has a farming loss from farming
23 as defined in section 172(b)(1)(B) of the Internal Revenue Code
24including modifications prescribed by rule by the director,
25the Iowa farming loss from the trade or business of farming is
26a net operating loss which may, at the time of the election of
27the taxpayer, be carried back five taxable years prior to the
28taxable year of the loss. The election shall be made in the
29manner and form prescribed by the department, and shall be made
30by the due date for filing the taxpayer’s return, including
31extensions of time. After the election is made for any taxable
32year, the election shall be irrevocable for such taxable year.
33 Sec. 54. APPLICABILITY. This division of this Act applies
34to tax years beginning on or after January 1, 2020.
35DIVISION IV
-31-1RESEARCH ACTIVITIES CREDIT
2 Sec. 55. Section 15.335, subsection 4, paragraph a, Code
32020, 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. 56. Section 15.335, subsection 4, paragraph b,
14unnumbered paragraph 1, Code 2020, 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. 57. Section 422.10, subsection 1, paragraphs c and d,
22Code 2020, 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 to
35qualified research expenses described in section 41(c)(5)(A)
-32-1 41(c)(4)(A) and clause (ii) of section 41(c)(5)(B) 41(c)(4)(B)
2 of the Internal Revenue Code are four and fifty-five
3hundredths percent and one and ninety-five hundredths percent,
4respectively.
5 Sec. 58. Section 422.33, subsection 5, paragraphs c and d,
6Code 2020, 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. 59. EFFECTIVE DATE. This division of this Act, being
25deemed of immediate importance, takes effect upon enactment.
26 Sec. 60. RETROACTIVE APPLICABILITY. This division of this
27Act applies retroactively to January 1, 2019, for tax years
28beginning on or after that date.
29DIVISION V
30PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS AND REPORTING OF
31FEDERAL ADJUSTMENTS
32 Sec. 61. Section 421.27, subsection 2, paragraph c, Code
332020, is amended to read as follows:
34c. (1) The Except in the case of a final federal
35partnership adjustment governed by subparagraph (2), the
-33-1 taxpayer provides written notification to the department of a
2federal audit while it is in progress and voluntarily files an
3amended return which includes a copy of the federal document
4showing the final disposition or final federal adjustments
5within sixty days of the final disposition determination date
6 of the federal government’s audit. For purposes of this
7subparagraph, “final determination date” means the same as
8defined in section 422.25.
9(2) (a) In the case of a final federal partnership
10adjustment arising from a partnership level audit, all of the
11following conditions are satisfied:
12(i) The audited partnership provides written notification
13to the department of the partnership level audit while it is
14in progress.
15(ii) With respect to the audited partnership or a direct
16partner or indirect partner of the audited partnership, the
17audited partnership, direct partner, or indirect partner
18voluntarily and timely complies with its reporting and payment
19requirements under section 422.25A, subsection 4 or 5.
20(b) As used in this subparagraph, all words and phrases
21defined in section 422.25A shall have the same meaning given
22them by that section.
23 Sec. 62. Section 422.7, Code 2020, is amended by adding the
24following new subsection:
25 NEW SUBSECTION. 59. Any income subtracted from federal
26taxable income for an adjustment year pursuant to section 6225
27of the Internal Revenue Code and the regulations thereunder
28shall be added back in computing net income for state tax
29purposes for the adjustment year.
30 Sec. 63. Section 422.25, subsections 1 and 2, Code 2020,
31are amended by striking the subsections and inserting in lieu
32thereof the following:
331. a. For purposes of this subsection:
34(1) “Federal adjustment” means a change to an item or amount
35required to be determined under the Internal Revenue Code and
-34-1the regulations thereunder that is used by the taxpayer to
2compute state tax owed whether such change results from action
3by the internal revenue service, or the filing of a timely
4amended federal return or timely federal refund claim. A
5federal adjustment is positive to the extent that it increases
6Iowa taxable income as determined under this title and is
7negative to the extent that it decreases Iowa taxable income
8as determined under this title.
9(2) “Federal adjustments report” means the method or form
10required by the department by rule to report final federal
11adjustments or final federal partnership adjustments as defined
12in section 422.25A, and in the case of any entity taxed as a
13partnership or S corporation for federal income tax purposes,
14identifies all owners that hold an interest directly in such
15entity and provides the effect of the final federal adjustments
16on such owner’s Iowa income.
17(3) “Final determination date” means the following:
18(a) Except as provided in subparagraph divisions (b) and
19(c), for federal adjustments arising from an internal revenue
20service audit or other action by the internal revenue service,
21the final determination date is the first day on which no
22federal adjustments arising from that audit or other action
23remain to be finally determined, whether by internal revenue
24service decision with respect to which all rights of appeal
25have been waived or exhausted, by agreement, or, if appealed
26or contested, by a final decision with respect to which all
27rights of appeal have been waived or exhausted. For agreements
28required to be signed by the internal revenue service and the
29taxpayer, the final determination date is the date on which the
30last party signed the agreement.
31(b) For federal adjustments arising from an internal
32revenue service audit or other action by the internal revenue
33service, if the taxpayer filed as a member of a consolidated
34return under section 422.37, the final determination date
35is the first day on which no related federal adjustments
-35-1arising from that audit or other action remain to be finally
2determined, as described in subparagraph division (a), for the
3entire group.
4(c) For federal adjustments arising from a timely filed
5amended federal return or a timely filed federal refund
6claim, or if it is a federal adjustment reported on a timely
7amended federal return or other similar report filed pursuant
8to section 6225(c) of the Internal Revenue Code, the final
9determination date is the day on which the amended return,
10refund claim, or other similar report was filed.
11(4) “Final federal adjustment” means a federal adjustment
12after the final determination date for that federal adjustment
13has passed.
14b. Within three years after the return is filed or within
15three years after the return became due, including any
16extensions of time for filing, whichever time is the later,
17the department shall examine the return and determine the tax.
18However, if the taxpayer omits from income an amount which
19will, under the Internal Revenue Code, extend the statute of
20limitations for assessment of federal tax to six years under
21the federal law, the period for examination and determination
22is six years.
23c. The period for examination and determination of the
24correct amount of tax is unlimited in the case of a false or
25fraudulent return made with the intent to evade tax or in the
26case of a failure to file a return.
27d. In lieu of the period of limitation for any prior year
28for which an overpayment of tax or an elimination or reduction
29of an underpayment of tax due for that prior year results from
30the carryback to that prior year of a net operating loss or
31net capital loss, the period is the period of limitation for
32the taxable year of the net operating loss or net capital loss
33which results in the carryback.
34e. (1) In addition to the applicable period of limitation
35for examination and determination in paragraph “b”, “c”, or “d”,
-36-1the department may make an examination and determination at any
2time within one year from the date of receipt by the department
3of a federal adjustments report with respect to a final
4federal adjustment or final federal partnership adjustment
5as defined in section 422.25A for a particular tax year. In
6order to begin the running of the one-year period, the federal
7adjustments report related to the final federal adjustment or
8final federal partnership adjustment shall be transmitted to
9the department by the taxpayer in the form and manner specified
10by the department by rule.
11(2) The department in its discretion may adopt rules to
12establish a de minimis amount for which subparagraph (1) shall
13not apply and the taxpayer shall not be required to file a
14federal adjustments report.
15(3) The department may in its discretion and when
16administratively feasible adopt a process through rule by
17which a taxpayer may make estimated payments of tax expected
18to result from a pending internal revenue service audit
19prior to the filing of a federal adjustments report with the
20department. The process shall provide that the estimated
21tax payments shall be credited against any tax liability
22ultimately found to be due to the state from the internal
23revenue service audit and will limit the accrual of further
24statutory interest on that liability. The process shall also
25provide that if the estimated tax payments exceed the final
26tax liability and statutory interest ultimately determined to
27be due, the taxpayer is entitled to a refund or credit for
28the excess, without interest, provided the taxpayer files a
29federal adjustments report, or a claim for refund or credit of
30tax under section 422.73, no later than one year following the
31final determination date.
322. a. If the tax found due under subsection 1 is greater
33than the amount paid, the department shall compute the amount
34due, together with interest and penalties as provided in
35paragraph “b”, and shall mail a notice of assessment to the
-37-1taxpayer and, if applicable, to the taxpayer’s authorized
2representative of the total, which shall be computed as a sum
3certain, with interest computed to the last day of the month
4in which the notice is dated.
5b. In addition to the tax or additional tax determined
6by the department under subsection 1, the taxpayer shall pay
7interest on the tax or additional tax at the rate in effect
8under section 421.7 for each month counting each fraction of
9a month as an entire month, computed from the date the return
10was required to be filed. In addition to the tax or additional
11tax, the taxpayer shall pay a penalty as provided in section
12421.27.
13 Sec. 64. NEW SECTION. 422.25A Reporting and treatment of
14certain partnership adjustments.
151. Definitions. As used in this section and sections
16422.25B and 422.25C, unless the context otherwise requires:
17a. “Administrative adjustment request” means the same as
18provided in section 6227 of the Internal Revenue Code.
19b. “Audited partnership” means a partnership subject
20to a final federal partnership adjustment resulting from a
21partnership level audit.
22c. “C corporation” means an entity that elects to be taxed
23as a corporation under title 26, chapter 1, subchapter A, part
242, of the Internal Revenue Code.
25d. “Corporate partner” means a C corporation partner that is
26subject to tax pursuant to section 422.33.
27e. “Direct partner” means a person that holds an interest
28directly in a partnership or pass-through entity.
29f. “Exempt partner” means a partner that is exempt from
30taxation pursuant to section 422.34.
31g. “Federal adjustments report” means the same as defined
32in section 422.25.
33h. “Federal partnership adjustment” means a change to an
34item or amount required to be determined under the Internal
35Revenue Code and the regulations thereunder that is used by a
-38-1partnership and its direct and indirect partners to compute
2state tax owed for the reviewed year where such change results
3from a partnership level audit or an administrative adjustment
4request. A federal partnership adjustment is positive to the
5extent that it increases Iowa taxable income as determined
6under this title and is negative to the extent that it
7decreases Iowa taxable income as determined under this title.
8A federal adjustment reported on an amended federal return
9or other similar report filed pursuant to section 6225(c) of
10the Internal Revenue Code shall not be considered a federal
11partnership adjustment for purposes of this section.
12i. “Federal partnership representative” means the person
13the partnership designates for the taxable year as the
14partnership’s representative, or the person the internal
15revenue service has appointed to act as the federal partnership
16representative, pursuant to section 6223(a) of the Internal
17Revenue Code and the regulations thereunder.
18j. “Fiduciary partner” means a partner that is a fiduciary
19that is subject to tax pursuant to sections 422.5 and 422.6.
20k. “Final determination date” means any one of the following
21dates:
22(1) In the case of a federal partnership adjustment that
23arises from a partnership level audit, the first day on which
24no federal adjustments arising from that audit remain to be
25finally determined, whether by agreement, or, if appealed
26or contested, by a final decision with respect to which all
27rights of appeal have been waived or exhausted. For agreements
28required to be signed by the internal revenue service and the
29audited partnership, the final determination date is the date
30on which the last party signed the agreement.
31(2) In the case of a federal partnership adjustment that
32results from a timely filed administrative adjustment request,
33the day on which the administrative adjustment request was
34filed with the internal revenue service.
35l. “Final federal partnership adjustment” means a federal
-39-1partnership adjustment after the final determination date for
2that federal partnership adjustment has passed.
3m. “Indirect partner” means a partner in a partnership or
4pass-through entity where such partnership or pass-through
5entity itself holds an interest directly, or through another
6indirect partner, in a partnership or pass-through entity.
7n. “Individual partner” means a partner who is a natural
8person that is subject to tax pursuant to section 422.5.
9o. “Nonresident partner” means a partner that is not a
10resident partner as defined in this subsection.
11p. “Partner” means a person that holds an interest, directly
12or indirectly, in a partnership or pass-through entity.
13q. “Partnership” means an entity subject to taxation
14under subchapter K of the Internal Revenue Code and the
15regulations thereunder and includes but is not limited to a
16syndicate, group, pool, joint venture, or other unincorporated
17organization through or by means of which any business,
18financial operation, or venture is carried on and which is
19not, within the meaning of this chapter, a trust, estate, or
20corporation.
21r. “Partnership level audit” means an examination by the
22internal revenue service at the partnership level pursuant to
23subchapter C, title 26, subtitle F, chapter 63, of the Internal
24Revenue Code, as enacted by the Bipartisan Budget Act of 2015,
25Pub.L. No.114-74, and as amended, which results in final
26federal partnership adjustments initiated and made by the
27internal revenue service.
28s. “Pass-through entity” means an entity, other than
29a partnership, that is not subject to tax under section
30422.33 for C corporations but excluding an exempt partner.
31“Pass-through entity” includes but is not limited to S
32corporations, estates, and trusts, and other grantor trusts.
33t. “Reallocation adjustment” means a final federal
34partnership adjustment that changes the shares of items of
35partnership income, gain, loss, expense, or credit allocated
-40-1to a partner that holds an interest directly in a partnership
2or pass-through entity. A positive reallocation adjustment
3means the portion of a reallocation adjustment that would
4increase Iowa taxable income for such partners, and a negative
5reallocation adjustment means the portion of a reallocation
6adjustment that would decrease Iowa taxable income for such
7partners.
8u. “Resident partner” means any of the following:
9(1) For an individual partner, a “resident” as defined in
10section 422.4.
11(2) For a fiduciary partner, one with situs in Iowa.
12(3) For all other partners, a partner whose headquarters or
13principal place of business is located in Iowa.
14v. “Reviewed year” means the taxable year of a partnership
15that is subject to a partnership level audit from which final
16federal partnership adjustments arise, or otherwise means the
17taxable year of the partnership or pass-through entity that is
18the subject of a state partnership audit.
19w. “State partnership audit” means an examination by the
20director at the partnership or pass-through entity level which
21results in adjustments to partnership or pass-through entity
22related items or reallocations of income, gains, losses,
23expenses, credits, and other attributes among such partners for
24the reviewed year.
25x. “Tiered partner” means any partner that is a partnership
26or pass-through entity.
27y. “Unrelated business income” means the income which is
28defined in section 512 of the Internal Revenue Code and the
29regulations thereunder.
302. Application. Partnerships and their direct partners
31and indirect partners shall report final federal partnership
32adjustments as provided in this section.
333. State partnership representative. Notwithstanding any
34other law to the contrary, the state partnership representative
35for the reviewed year shall have the sole authority to act on
-41-1behalf of the partnership or pass-through entity with respect
2to an action required or permitted to be taken by a partnership
3or pass-through entity under this section or section 422.28 or
4422.29 with respect to final federal partnership adjustments
5arising from a partnership level audit or an administrative
6adjustment request, and its direct partners and indirect
7partners shall be bound by those actions.
84. Reporting and payment requirements for audited
9partnerships and their partners subject to final federal
10partnership adjustments.
11a. Unless an audited partnership makes the election in
12subsection 5, the audited partnership shall do all of the
13following for all final federal partnership adjustments no
14later than ninety days after the final determination date of
15the audited partnership:
16(1) File a completed federal adjustments report.
17(2) Notify each direct partner of such partner’s
18distributive share of the adjustments in the manner and form
19prescribed by the department by rule.
20(3) File an amended composite return under section 422.13
21if one was originally filed, and if applicable for withholding
22from partners, file an amended withholding report under
23section 422.16, and pay the additional amount under this title
24that would have been due had the final federal partnership
25adjustments been reported properly as required, including any
26applicable interest and penalties.
27b. Unless an audited partnership paid an amount on behalf
28of the direct partners of the audited partnership pursuant to
29subsection 5, all direct partners of the audited partnership
30shall do all of the following no later than one hundred
31eighty days after the final determination date of the audited
32partnership:
33(1) File a completed federal adjustments report reporting
34the direct partner’s distributive share of the adjustments
35required to be reported to such partners under paragraph “a”.
-42- 1(2) If the direct partner is a tiered partner, notify all
2partners that hold an interest directly in the tiered partner
3of such partner’s distributive share of the adjustments in the
4manner and form prescribed by the department by rule.
5(3) If the direct partner is a tiered partner and subject to
6section 422.13, file an amended composite return under section
7422.13 if such return was originally filed, and if applicable
8for withholding from partners file an amended withholding
9report under section 422.16 if one was originally required to
10be filed.
11(4) Pay any additional amount under this title that would
12have been due had the final federal partnership adjustments
13been reported properly as required, including any applicable
14penalty and interest.
15c. Unless a partnership or tiered partner paid an amount on
16behalf of the partners pursuant to subsection 5, each indirect
17partner shall do all of the following:
18(1) Within ninety days after the time for filing and
19furnishing statements to tiered partners and their partners
20as established by section 6226 of the Internal Revenue Code
21and the regulations thereunder, file a completed federal
22adjustments report.
23(2) If the indirect partner is a tiered partner, within
24ninety days after the time for filing and furnishing statements
25to tiered partners and their partners as established by
26section 6226 of the Internal Revenue Code and the regulations
27thereunder but within sufficient time for all indirect partners
28to also complete the requirements of this subsection, notify
29all of the partners that hold an interest directly in the
30tiered partner of such partner’s distributive share of the
31adjustments in the manner and form prescribed by the department
32by rule.
33(3) Within ninety days after the time for filing and
34furnishing statements to tiered partners and their partners
35as established by section 6226 of the Internal Revenue Code
-43-1and the regulations thereunder, if the indirect partner
2is a tiered partner and subject to section 422.13, file an
3amended composite return under section 422.13 if such return
4was originally filed, and if applicable for withholding from
5partners, file an amended withholding report under section
6422.16 if one was originally required to be filed.
7(4) Within ninety days after the time for filing and
8furnishing statements to tiered partners and the partners of
9the tiered partners as established by section 6226 of the
10Internal Revenue Code and the regulations thereunder, pay any
11additional amount due under this title, including any penalty
12and interest that would have been due had the final federal
13partnership adjustments been reported properly as required.
145. Election for partnership or tiered partners to pay.
15a. An audited partnership, or a tiered partner that receives
16a notification of a final federal partnership adjustment under
17subsection 4, may make an election to pay as provided under
18this subsection.
19b. An audited partnership or tiered partner makes an
20election to pay under this subsection by filing a completed
21federal adjustments report, notifying the department in the
22manner and form prescribed by the department that it is making
23the election under this subsection, notifying each of the
24direct partners of such partner’s distributive share of the
25adjustments, and paying on behalf of its partners an amount
26calculated in paragraph “c”, including any applicable penalty
27and interest. These requirements shall all be fulfilled within
28one of the following time periods:
29(1) For the audited partnership, no later than ninety days
30after the final determination date of the audited partnership.
31(2) For a direct tiered partner, no later than one hundred
32eighty days after the final determination date of the audited
33partnership.
34(3) For an indirect tiered partner, within ninety days
35after the time for filing and furnishing statements to a
-44-1tiered partner and the partner of the tiered partner, as
2established by section 6226 of the Internal Revenue Code and
3the regulations thereunder.
4c. The amount due under this subsection from an audited
5partnership or tiered partner shall be calculated as follows:
6(1) Exclude from final federal partnership adjustments and
7any positive reallocation adjustments the distributive share
8of such adjustments reported to an exempt partner that holds
9an interest directly in the audited partnership if the audited
10partnership is making the election or that holds an interest
11directly in the tiered partner if the tiered partner is making
12the election, but only to the extent the distributive share is
13not unrelated business income.
14(2) Determine the total distributive share of all final
15federal partnership adjustments and positive reallocation
16adjustments as modified by this title that are reported to
17corporate partners, and to exempt partners to the extent the
18distributive share is unrelated business income, and allocate
19and apportion such adjustments as provided in section 422.33
20at the partnership or tiered partner level, and multiply the
21resulting amount by the maximum state corporate income tax rate
22pursuant to section 422.33 for the reviewed year.
23(3) Determine the total distributive share of all final
24federal partnership adjustments and positive reallocation
25adjustments as modified by this title that are reported to
26nonresident individual partners and nonresident fiduciary
27partners and allocate and apportion such adjustments as
28provided in section 422.33 at the partnership or tiered
29partner level, and multiply the resulting amount by the maximum
30individual income tax rate pursuant to section 422.5A for the
31reviewed year.
32(4) For the total distributive share of all final federal
33partnership adjustments and positive reallocation adjustments
34as modified by this title that are reported to tiered partners:
35(a) Determine the amount of such adjustments which are of a
-45-1type that would be subject to sourcing to Iowa under section
2422.8, subsection 2, paragraph “a”, as a nonresident, and then
3determine the portion of this amount that would be sourced to
4Iowa under those provisions as if the tiered partner were a
5nonresident.
6(b) Determine the amount of such adjustments which are of
7a type that would not be subject to sourcing to Iowa under
8section 422.8, subsection 2, paragraph “a”, as a nonresident.
9(c) Determine the portion of the amount in subparagraph
10division (b) that can be established, as prescribed by the
11department by rule, to be properly allocable to indirect
12partners that are nonresident partners or other partners not
13subject to tax on the adjustments.
14(d) Multiply the total of the amounts determined in
15subparagraph divisions (a) and (b), reduced by any amount
16determined in subparagraph division (c), by the highest
17individual income tax rate pursuant to section 422.5A for the
18reviewed year.
19(5) For the total distributive share of all final federal
20partnership adjustments and positive reallocation adjustments
21as modified by this title that are reported to resident
22individual partners and resident fiduciary partners, multiply
23that amount by the highest individual income tax rate pursuant
24to section 422.5A for the reviewed year.
25(6) Total the amounts computed pursuant to subparagraphs
26(2) through (5) and calculate any interest and penalty as
27provided under this title. Notwithstanding any provision of
28law to the contrary, interest and penalties on the amount due
29by the audited partnership or tiered partner shall be computed
30from the day after the due date of the reviewed year return
31without extension, and shall be imposed as if the audited
32partnership or tiered partner was required to pay tax or show
33tax due on the original return for the reviewed year.
34d. Adjustments subject to the election in this subsection
35do not include any adjustments arising from an administrative
-46-1adjustment request.
2e. An audited partnership or tiered partner not otherwise
3subject to any reporting or payment obligation to Iowa that
4makes an election under this subsection consents to be subject
5to the Iowa laws related to reporting, assessment, collection,
6and payment of Iowa tax, interest, and penalties calculated
7under the election.
86. Modified reporting and payment method. The department may
9adopt procedures for an audited partnership or tiered partner
10to enter into an agreement with the department to use an
11alternative reporting and payment method, including applicable
12time requirements or any other provision of this section. The
13audited partnership or tiered partner must demonstrate that
14the requested method will reasonably provide for the reporting
15and payment of taxes, penalties, and interest due under the
16provisions of this section. Application for approval of an
17alternative reporting and payment method must be made by the
18audited partnership or tiered partner within the time for
19making an election to pay under subsection 5 and in the manner
20prescribed by the department. Approval of such an alternative
21reporting and payment method shall be at the discretion of the
22department.
237. Effect of election by partnership or tiered partner and
24payment of amount due.
25a. The election made under subsection 5 is irrevocable,
26unless in the discretion of the director, the director
27determines otherwise.
28b. The amount determined in subsection 5, when properly
29reported and paid by the audited partnership or tiered partner,
30shall be treated as paid on behalf of the partners of such
31audited partnership or tiered partner on the same final federal
32partnership adjustments, provided, however, that no partner may
33take any deduction or credit for the amount, claim a refund of
34the amount, or include the amount on such partner’s Iowa return
35in any manner.
-47- 1c. In the event another state offers to an audited
2partnership or tiered partner a similar election to pay state
3tax resulting from final federal partnership adjustments,
4nothing in this subsection shall prohibit a resident who holds
5an interest directly in that audited partnership or tiered
6partner, as the case may be, from claiming a credit for taxes
7paid by the resident to another state under section 422.8,
8subsection 1, for any amounts paid by the audited partnership
9or tiered partner on such resident partner’s behalf to another
10state, provided such payment otherwise meets the requirements
11of section 422.8, subsection 1.
12d. Nothing in this section shall prohibit the department
13from assessing direct partners and indirect partners for taxes
14they owe in the event that an audited partnership or tiered
15partner fails to timely make any report or payment required by
16this section for any reason.
178. Assessments of additional Iowa income tax, interest, and
18penalties, and claims for refund, arising from final federal
19partnership adjustments.
20a. The department shall assess additional Iowa income
21tax, interest, and penalties arising from final federal
22partnership adjustments in the same manner as provided in
23this title unless a different treatment is provided by this
24subsection. Since final federal partnership adjustments are
25determined at the audited partnership level, any assessment
26issued to partners shall not be appealable by the partner.
27The department may assess any taxes, including on-behalf-of
28amounts, interest, and penalties arising from the final federal
29partnership adjustments if it issues a notice of assessment to
30the audited partnership, tiered partner, or other direct or
31indirect partner on or before the expiration of the applicable
32limitations period specified in section 422.25.
33b. In addition to the period for claiming a refund or credit
34provided in section 422.73, subsection 1, paragraph “a”, and
35notwithstanding section 422.73, subsection 1, paragraph “b”,
-48-1a partnership, tiered partner, or other direct or indirect
2partner, as the case may be, may file a claim for refund of
3Iowa income tax arising directly or indirectly from a final
4federal partnership adjustment arising from a partnership level
5audit on or before the date which is one year from the date the
6federal adjustments report for that final federal partnership
7adjustment was required to be filed by such person under this
8section.
99. Rules. The department may adopt any rules pursuant to
10chapter 17A to implement this section.
11 Sec. 65. NEW SECTION. 422.25B State partnership
12representative.
131. As used in this section, all words and phrases defined
14in section 422.25A shall have the same meaning given them by
15that section.
162. The state partnership representative for the reviewed
17year for a partnership shall be the partnership’s federal
18partnership representative with respect to an action required
19or permitted to be taken by a state partnership representative
20under this chapter for a reviewed year, unless the partnership
21designates in writing another person as the state partnership
22representative as provided in subsection 3. The state
23partnership representative for the reviewed year for a
24pass-through entity is the person designated in subsection 3.
253. The department may establish reasonable qualifications
26for a person to be a state partnership representative. If
27a partnership desires to designate a person other than the
28federal partnership representative, the partnership shall
29designate such person in the manner and form prescribed by the
30department. A pass-through entity shall designate a person as
31the state partnership representative in the manner and form
32prescribed by the department. A partnership or pass-through
33entity shall be allowed to change such designation by notifying
34the department at the time the change occurs in the manner and
35form prescribed by the department.
-49- 14. The department may adopt any rules pursuant to chapter
217A to implement this section.
3 Sec. 66. NEW SECTION. 422.25C Partnership and pass-through
4entity audits and examinations — consistent treatment of
5entity-level items — binding actions — amended returns.
61. As used in this section, all words and phrases defined
7in section 422.25A shall have the same meaning given them by
8that section.
92. For tax years beginning on or after January 1, 2020, any
10adjustments to a partnership’s or pass-through entity’s items
11of income, gain, loss, expense, or credit, or an adjustment
12to such items allocated to a partner that holds an interest
13in a partnership or pass-through entity for the reviewed year
14by the department as a result of a state partnership audit,
15shall be determined at the partnership level or pass-through
16entity level in the same manner as provided by section 6221(a)
17of the Internal Revenue Code and the regulations thereunder
18unless a different treatment is specifically provided in this
19title. The provisions of sections 6222, 6223, and 6227 of the
20Internal Revenue Code and the regulations thereunder shall also
21apply to a partnership or pass-through entity and its direct
22or indirect partners in the same manner as provided in such
23sections unless a different treatment is specifically provided
24in this title. For purposes of applying such sections, due
25account shall be made for differences in federal and Iowa
26terminology. The adjustment provided by section 6221(a) of
27the Internal Revenue Code shall be determined as provided in
28such section but shall be based on Iowa taxable income or
29other tax attributes of the partnership as determined pursuant
30to this chapter for the reviewed year. The department shall
31issue a notice of adjustment to the partnership or pass-through
32entity. Such notice shall be treated as an assessment for
33the purposes of section 422.25, and the notice shall be
34appealable by the partnership or pass-through entity pursuant
35to sections 422.28 and 422.29 and shall be issued within the
-50-1time period provided by section 422.25. Once the adjustments
2to partnership-related or pass-through entity-related items or
3reallocations of income, gains, losses, expenses, credits, and
4other attributes among such partners for the reviewed year are
5finally determined, the partnership or pass-through entity and
6any direct partners or indirect partners shall then be subject
7to the provisions of section 422.25, subsection 1, paragraph
8“e”, and section 422.25A in the same manner as if the state
9partnership audit were a federal partnership level audit, and
10as if the final state partnership audit adjustment were a
11final federal partnership adjustment. The penalty exception
12in section 421.27, subsection 2, paragraph “c”, shall not apply
13to a state partnership audit.
143. The state partnership representative for the reviewed
15year as determined under section 422.25B shall have the sole
16authority to act on behalf of the partnership or pass-through
17entity with respect to an action required or permitted to
18be taken by a partnership or pass-through entity under this
19section, including proceedings under section 422.28 or 422.29,
20and the partnership’s or pass-through entity’s direct partners
21and indirect partners shall be bound by those actions.
224. If the department, the partnership or pass-through
23entity, and the partnership or pass-through entity owners
24agree, the provisions of this section may be applied to tax
25years beginning before January 1, 2020.
265. The department may adopt rules pursuant to chapter 17A to
27implement this section.
28 Sec. 67. Section 422.35, Code 2020, is amended by adding the
29following new subsection:
30 NEW SUBSECTION. 26. Any income subtracted from federal
31taxable income for an adjustment year pursuant to section 6225
32of the Internal Revenue Code and the regulations thereunder
33shall be added back in computing net income for state tax
34purposes for the adjustment year.
35 Sec. 68. Section 422.39, Code 2020, is amended by striking
-51-1the section and inserting in lieu thereof the following:
2422.39 Statutes applicable to corporations and corporation
3tax.
4All the provisions of sections 422.24 through 422.27
5of division II, respecting payment, collection, reporting,
6examination, and assessment, shall apply in respect to a
7corporation subject to the provisions of this division and to
8the tax due and payable by a corporation taxable under this
9division. This includes but is not limited to a corporation
10that is a pass-through entity as defined in section 422.25A.
11 Sec. 69. Section 422.73, Code 2020, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 01. For purposes of this section, “federal
14adjustment”, “final determination date”, and “final federal
15adjustment” all mean the same as defined in section 422.25.
16 Sec. 70. Section 422.73, subsections 1 and 3, Code 2020, are
17amended to read as follows:
181. a. If it appears that an amount of tax, penalty, or
19interest has been paid which was not due under division II,
20III or V of this chapter, then that amount shall be credited
21against any tax due on the books of the department by the
22person who made the excessive payment, or that amount shall be
23refunded to the person or with the person’s approval, credited
24to tax to become due. A claim for refund or credit that has
25not been filed with the department within three years after
26the return upon which a refund or credit claimed became due,
27or within one year after the payment of the tax upon which a
28refund or credit is claimed was made, whichever time is the
29later, shall not be allowed by the director. If, as a result of
30a carryback of a net operating loss or a net capital loss, the
31amount of tax in a prior period is reduced and an overpayment
32results, the claim for refund or credit of the overpayment
33shall be filed with the department within the three years after
34the return for the taxable year of the net operating loss or
35net capital loss became due.
-52- 1b. Notwithstanding the period of limitation specified in
2paragraph “a”, the taxpayer shall have six months one year from
3the day of final disposition final determination date of any
4income tax matter between the taxpayer and the internal revenue
5service final federal adjustment arising from an internal
6revenue service audit or other similar action by the internal
7revenue service with respect to the particular tax year to
8claim an income tax refund or credit arising from that final
9federal adjustment.
103. The department shall enter into an agreement with the
11internal revenue service for the transmission of federal income
12tax reports on individuals required to file an Iowa income tax
13return who have been involved in an income tax matter with the
14internal revenue service. After final disposition the final
15determination date of the income tax matter that involves a
16final federal adjustment between the taxpayer and the internal
17revenue service, the department shall determine whether the
18individual is due a state income tax refund as a result of that
19 final disposition of federal adjustment from such income tax
20matter. If the individual is due a state income tax refund,
21the department shall notify the individual within thirty days
22and request the individual to file a claim for refund or credit
23with the department.
24 Sec. 71. APPLICABILITY. This division of this Act applies
25to federal adjustments and federal partnership adjustments that
26have a final determination date after the effective date of
27this division of this Act.
28EXPLANATION
29The inclusion of this explanation does not constitute agreement with
30the explanation’s substance by the members of the general assembly.
31This bill relates to state taxation and related laws of
32the state, including the administration by the department of
33revenue (department) of certain tax credits and refunds, income
34taxes, moneys and credits taxes, sales and use taxes, and by
35modifying provisions relating to reinstatement of business
-53-1entities and to the assessment and valuation of property. The
2bill is organized into divisions.
3DIVISION I — ADMINISTRATION AND PENALTY PROVISIONS.
4 The amendment to Code section 336.603(5) provides that the
5governing board of a county land record information system may
6enter into an agreement with a public agency to provide access
7to electronic documents or records on a batch basis. The bill
8allows access to electronic documents to be provided for a fee.
9The bill prohibits any other types of agreements between the
10board and the public agency except as otherwise provided in the
11bill.
12The amendment to Code section 421.6 enhances the readability
13of the Code section by including in the definition of “return”
14the moneys and credits tax turn administered by the department
15under Code section 533.329.
16The bill enacts new Code section 421.17(36) which permits
17the director of revenue to enter into Code chapter 28E
18agreements with the state fair or a county or district fair
19to collect and remit sales taxes and fees from sellers making
20retail sales on the grounds owned by the fair or through events
21conducted by the fair.
22The amendment to Code section 421.27(1) provides that in
23the case of a specified business with no tax shown due or
24required to be shown due that fails to timely file their
25income tax return or information return shall pay the greater
26of the following penalty amounts: $200; or an amount equal
27to 10 percent of the imputed Iowa liability of the specified
28business, not to exceed $25,000.
29The amendment to Code section 421.27(1) provides that the
30penalty for individuals or specified businesses that fail to
31timely file a return may be waived under certain circumstances.
32The amendment to Code section 421.27(4) provides that the
33penalty for a specified business that willfully fails to file a
34return with no tax shown due or required to be shown due with
35the intent to evade such a filing requirement or reporting
-54-1Iowa-source income, the penalty imposed shall be the greater
2of $1,500 or an amount equal to 75 percent of the imputed Iowa
3liability of the specified business.
4The amendment to Code section 421.27(4) expands penalty
5provisions by providing that a person who willfully fails to
6file a return or deposit form with intent to evade a filing
7requirement shall be subject to a penalty of 75 percent of the
8tax added to the amount of tax shown due or required to be shown
9due, in lieu of other penalties.
10The amendment to Code section 421.27(6) makes numerous
11changes to the criminal offense of fraudulent practice
12by expanding the criminal offense to include a person who
13willfully makes a false application for an exemption or benefit
14with the intent to receive the exemption or benefit to which
15the person is not entitled.
16The amendment to Code section 421.27(6) also expands the
17fraudulent practice criminal offense to include when a person
18willfully submits any false information, document, or document
19containing false information in support of an application
20for a refund, credit, exemption, reimbursement, rebate, or
21other payment or benefit with the intent to evade taxes;
22and to include when a person willfully submits any false
23information, document, or document containing false information
24in support of an application for a refund, credit, exemption,
25reimbursement, rebate, or other payment or benefit to which the
26person is not entitled.
27The sections of this division amending Code section 421.27
28apply to tax years beginning on or after January 1, 2022.
29A person who commits fraudulent practice under Code section
30421.76(6), in addition to the criminal penalties, is liable for
31a penalty equal to 75 percent of the refund, credit, exemption,
32reimbursement, rebate, or other payment or benefit being
33fraudulently claimed.
34The bill enacts new Code section 421.27(8) which defines
35“imputed Iowa liability” and “specified business”.
-55- 1The bill enacts new Code section 421.27(9) by adding an
2additional penalty under Code section 421.27 in the amount
3of $1,000 if a taxpayer fails to file a tax return within 90
4days of written notice by the department that the taxpayer is
5required to file such a return.
6The bill enacts new Code section 421.27A by creating a
7criminal offense for perjury. Currently, a different perjury
8criminal offense exists in Code section 720.2. A person
9commits perjury under the following circumstances in the bill:
10the person makes a document containing false information in
11support of an application for refund, credit, exemption,
12reimbursement, rebate, or other payment or benefit with intent
13to evade tax; the person makes a document containing false
14information with intent to unlawfully receive a refund, credit,
15exemption, reimbursement, rebate, or other payment or benefit,
16to which the person is not entitled; the person knowingly makes
17any false affidavit; the person knowingly swears or affirms
18falsely to any matter or thing required by the terms of title X
19of the Code (financial resources) to be sworn to or affirmed.
20A person who commits the criminal offense of perjury under new
21Code section 421.27A commits a class “D” felony. A class “D”
22felony is punishable by confinement for no more than five years
23and a fine of at least $750 but not more than $7,500.
24The bill enacts new Code section 421.59 relating to a
25power of attorney or other authority to act on behalf of the
26taxpayer. The bill formalizes a process for the following
27persons to act and receive information on behalf of and
28exercise all of the rights of a taxpayer, regardless of whether
29a power of attorney has been filed with the department: a
30guardian, conservator, or custodian appointed by the court; a
31receiver appointed pursuant to Code chapter 680; an individual
32who has been named as an authorized representative on a
33fiduciary return filed under Code section 422.14 (fiduciary
34return) or Code chapter 450 (inheritance tax); an individual
35holding a title or position within a corporation, association,
-56-1partnership, or other business entity; a licensed attorney
2who has appeared on behalf of the taxpayer or the taxpayer’s
3estate; and a parent or legal guardian of the taxpayer who has
4not reached the age of majority.
5New Code section 421.59 also authorizes the department to
6enter into a memorandum of understanding with the taxpayer
7for each employee, officer, or member of a third-party entity
8engaged with or otherwise hired by a taxpayer to manage
9the taxpayer’s tax matters, in lieu of requiring a power of
10attorney for each person.
11The bill enacts new Code section 421.60(11) which allows a
12taxpayer to elect to receive correspondence electronically from
13the department rather than by regular mail.
14The amendments to Code section 421.62 provide that the
15regulations relating to tax return preparers apply to an
16income tax return or claim or refund under Code chapter 422
17(individual, corporate, and franchise taxes), but do not apply
18to withholding returns under Code section 422.16.
19The amendment to Code section 421.64 enhances the
20readability of the Code section.
21The amendment to Code section 422.20(1) adds an intent
22element “willfully or recklessly” to the criminal offense
23related to the unlawful disclosure of tax return information
24by state personnel or former state personnel. A person who
25commits a violation under Code section 422.20(1) commits a
26serious misdemeanor. A serious misdemeanor is punishable by
27confinement for no more than one year and a fine of at least
28$315 but not more than $1,875.
29The amendment to Code section 422.20(3) provides that tax
30return information may be disclosed to authorized individuals
31pursuant to new Code section 421.59 created in the bill.
32The bill enacts new Code section 422.20(3A) permitting the
33director of revenue to disclose the tax return information of
34a partnership, limited liability company, or S corporation to
35a person who was a partner, shareholder, or member of such an
-57-1entity during any part of the period covered by the tax return.
2The bill enacts new Code section 422.20(3B) specifying the
3information the department is required to redact prior to
4the disclosure of the record in an appeal or contested case.
5The bill specifies the department may also redact other tax
6information from the record in an appeal or contested case, if
7the taxpayer proves by clear and convincing evidence that the
8release of the tax information would disclose a trade secret
9or be an unwarranted invasion of personal privacy. The bill
10permits the department to disclose information that is required
11to be redacted if the department determines such information is
12necessary to the resolution or decision of the case.
13The bill enacts new Code section 422.25(1)(c) (income tax)
14that provides the period of examination and determination is
15unlimited under title X (financial resources) in any action
16by the department to recover or rescind a tax expenditure
17as defined in Code section 2.48, or any other incentive or
18assistance administered by the economic development authority.
19The amendment takes effect upon enactment. The bill also
20provides that it is the intent of the general assembly that the
21amendment to Code section 422.25(1) is a conforming amendment
22consistent with current law, and that the amendment does not
23change the application of current law. This provision takes
24effect upon enactment.
25The amendment to Code section 422.72(1)(a) adds the intent
26element of “willfully or recklessly” to the criminal offense
27related to the unlawful disclosure by state personnel or
28former state personnel of the business affairs, operations,
29or information obtained through a tax-related investigation.
30A person who unlawfully discloses such information commits a
31serious misdemeanor under Code section 422.72(4). A serious
32misdemeanor is punishable by confinement for no more than one
33year and a fine of at least $315 but not more than $1,875.
34The bill enacts new Code section 422.72(7A), a similar
35provision to new Code section 422.20(3B) in the bill. New Code
-58-1section 422.72(7A) specifies the information the department
2is required to redact prior to the disclosure to the general
3public of the record in an appeal or contested case. The
4bill specifies that the department may also redact other tax
5information from the record in an appeal or contested case, if
6the taxpayer proves by clear and convincing evidence that the
7release of the tax information would disclose a trade secret
8or be an unwarranted invasion of personal privacy. The bill
9permits the department to disclose information that is required
10to be redacted if the department determines such information is
11necessary to the resolution or decision of the case.
12The bill enacts new Code section 423.37(4)(sales and use
13tax) that provides the period of examination and determination
14is unlimited under title X (financial resources) in any action
15by the department to recover or rescind a tax expenditure
16as defined in Code section 2.48 or any other incentive or
17assistance administered by the economic development authority.
18The amendment takes effect upon enactment. The bill also
19provides that it is the intent of the general assembly that the
20amendment to Code section 423.37(4) is a conforming amendment
21consistent with current law, and that the amendment does not
22change the application of current law. This provision takes
23effect upon enactment.
24The amendment to Code section 428A.1 (real estate
25transfer tax) provides that a county recorder shall record
26the declaration of value but is prohibited from charging a
27recording fee for the filing.
28The amendment to Code section 441.48 enhances the
29readability of the Code section by specifying the board of
30supervisors or city council, as applicable, shall provide
31the department with notice of intent to protest prior to the
32expiration of the 10 days’ notice to adjust the valuation of
33any class of property issued by the department.
34The amendments to Code sections 489.706, 490.1422, 501.813,
35and 504.1423, remove the role of the department in the
-59-1application for reinstatement by a limited liability company,
2corporation, cooperative, or nonprofit corporation after the
3dissolution of such an entity.
4The bill enacts new Code section 533.329(03) by specifying
5that a money and credit tax return prepared by a credit union
6shall be on a form prepared by the department of revenue, and
7shall be filed with the department on or before the last day of
8April.
9The bill amends Code section 533.329(3) relating to
10enforcement of the moneys and credits tax paid by credit
11unions.
12DIVISION II — SALES AND USE TAX. The amendments to Code
13sections 321G.4 (snowmobiles) and 321I.4 (all-terrain vehicles)
14require the county recorder to collect sales or use tax if
15an owner of such a vehicle is unable to present satisfactory
16evidence that the sales or use tax has been paid.
17The amendment to Code section 423.2(6)(bs) specifies that
18any services arising from or related to software sold as
19tangible personal property are subject to the sales tax.
20The amendment to Code section 423.2(8)(d)(1) specifies that
21the following is not subject to the sales tax: the retail
22sale of a specified digital product and a service where the
23specified digital product is essential and exclusive to the use
24of the service, and the true object of the transaction is the
25service.
26The amendment to Code section 423.3(3A) provides that the
27sales price from the sale of a commercial recreation service
28offering the opportunity to hunt a preserve whitetail is
29exempt from the sales tax if the sale occurred between July
301, 2005, and December 31, 2015. This provision takes effect
31upon enactment an applies retroactively to July 1, 2005. The
32bill prohibits any refunds resulting from the amendment to Code
33section 423.3(3A).
34The amendment to Code section 423.3(31) specifies that
35the sales price of tangible personal property or specified
-60-1digital products sold to, or of services furnished to a
2tribal government as defined in Code section 216A.161, or the
3instrumentalities of such tribal government are exempt from the
4sales tax under most circumstances.
5The amendments to Code section 423.3(80)(b) and (c) specify
6that services performed pursuant to a written construction
7contract with a designated exempt entity as defined in Code
8section 423.3(80)(a)(1) are exempt from the sales tax.
9Currently, the construction contract is not required to be a
10written contract and only building materials, supplies, and
11equipment used in such a contract are exempt from the sales
12tax. The bill also provides that the building materials,
13supplies, equipment, and services are exempt from the sales
14tax only if the property that is subject to the construction
15project becomes public property or the property of a designated
16exempt entity, in addition to the requirement that the
17exempt items be completely consumed in the performance of the
18construction contract.
19The bill enacts new Code section 423.3(60A) exempting from
20the sales tax the sales price from sales of diapers eligible
21for medical assistance as defined in Code section 249A.2.
22The amendment to Code section 423.4(1), relating to refunds
23of sales or use taxes to tax-exempt entities, enhances the
24readability of the Code section by defining a “designated
25exempt entity” and thus removing repeated references to each
26exempt entity in the Code section. The bill also adds a tribal
27government to the definition of a designated exempt entity.
28The bill strikes the terms “goods, wares, and merchandise” and
29uses the terms “building materials, supplies, and equipment”
30for purposes of claiming the exemption, when a designated
31exempt entity makes an application to the department for the
32refund of the sales or use tax upon the sales price of all
33sales or services related to the performance of a written
34construction contract. Additionally, if the sales price of
35all building materials, supplies, equipment, or services
-61-1related to the performance of a written construction contract
2are to be exempt from the sales or use tax under the bill,
3all of the following must apply: the building materials,
4supplies, equipment, or services are completely consumed in the
5performance of a construction project; the property that is the
6subject of the construction project becomes public property or
7the property of an exempt entity; and the building materials,
8supplies, equipment, or services furnished are not used in
9the performance of a construction contract with a designated
10exempt entity in connection with the construction of certain
11facilities.
12The amendments to Code section 423.4(2)(a) and (b) relate
13to construction contracts for transportation projects by
14specifying the contractor shall pay sales or use tax for the
15services related to such contracts, and by making terminology
16more consistent in the subsection.
17The amendments to Code sections 423.4(2) and 423.4(6) make
18the terminology more consistent with other changes in the bill.
19The amendment to Code section 423.5(1)(b) strikes the
20imposition of a 6 percent excise tax on the use of manufactured
21housing, or the purchase price if such housing is sold in the
22form of tangible personal property, or the installed purchase
23price if such housing is sold in the form of realty.
24The amendment to Code section 423.29(1) provides that a
25retailer maintaining a place of business in this state and
26making taxable sales shall, at the time of making such sales,
27collect the sales tax. The bill also provides that it is
28the intent of the general assembly that the amendment to
29Code section 423.29(1) is a conforming amendment consistent
30with current law, and that the amendment does not change the
31application of current law.
32The amendment to Code section 423.33(1) enhances the
33readability of the Code section by specifying that if a
34purchaser fails to pay sales tax to a retailer required to
35collect the sales tax, then the purchaser shall pay a use
-62-1tax directly to the department. The bill specifies that the
2retailer and purchaser are jointly liable for the failure
3to pay either the sales or use tax in most circumstances.
4Additionally, the bill provides that it is the intent of the
5general assembly that the addition of “joint liability” is a
6conforming amendment consistent with current law, and that
7the amendment does not change the application of current law.
8The bill provides that if the purchaser pays the use tax,
9the retailer remains liable for any local option sales and
10services tax under Code chapter 423B that the retailer failed
11to collect.
12DIVISION III — INCOME TAX. The bill strikes and replaces
13Code section 422.9(3)(c). The bill provides that a taxpayer
14may elect to waive the entire carryback period with respect to
15an Iowa net operating loss for any taxable year, in the manner
16prescribed by the department, and by the due date for filing
17the taxpayer’s return, including extensions of time. After the
18election is made for any taxable year, the election shall be
19irrevocable for such taxable year. If an election has been
20properly made, the bill provides that the Iowa net operating
21loss shall be carried forward 20 taxable years.
22The amendment to Code section 422.9(3)(d) modifies the
23election for an Iowa farming loss, which may be carried back
24for five taxable years prior to the taxable year of the loss.
25The bill specifies that a farming business that has an Iowa
26farming loss may make an election to carry back the loss for
27five taxable years, in the manner prescribed by the department,
28and shall be made by the due date for filing the taxpayer’s
29return, including extensions of time. After the election is
30made for any taxable year, the bill provides the election shall
31be irrevocable for such taxable year.
32The division applies to tax years beginning on or after
33January 1, 2020.
34DIVISION IV — RESEARCH ACTIVITIES TAX CREDIT. The
35amendments to Code sections 15.335, 422.10, and 422.33
-63-1update references to the Internal Revenue Code relating to
2the alternative simplified credit for increasing research
3activities.
4The division takes effect upon enactment and applies
5retroactively to January 1, 2019, for tax years beginning on
6or after that date.
7DIVISION V — PARTNERSHIP AND PASS-THROUGH ENTITY AUDITS
8AND REPORTING OF FEDERAL ADJUSTMENTS. The amendment to Code
9section 421.27(2)(c) specifies that a taxpayer is required
10to pay a penalty of 5 percent of the tax due, unless the
11taxpayer provides written notification to the department of a
12federal audit while it is in progress and voluntarily files
13an amended return which includes the final disposition of the
14audit and final federal adjustments to taxes paid within 60
15days of the final determination date. The bill defines “final
16determination date” to generally mean the first day on which no
17federal adjustments to taxes arising from the audit or other
18action remain to be finally determined. In cases of a final
19federal partnership adjustment arising from a partnership
20level audit, the taxpayer is required to pay a penalty of 5
21percent of the tax due, unless the taxpayer provides written
22notification to the department of the partnership level audit
23while it is in progress, or timely complies with reporting and
24payment requirements.
25The bill enacts new Code section 422.7(59) providing that
26any income subtracted from federal taxable income shall be
27added back in computing net income for state individual income
28tax purposes when federal adjustments are made to taxes in the
29adjustment year. The bill defines “adjustment year” to mean
30the year in which the final determination of the adjustment
31occurs.
32The amendment to Code section 422.25 adds definitions to the
33Code section for “federal adjustment”, “federal adjustments
34report”, “final determination date”, and “final federal
35adjustment”.
-64- 1The bill enacts new Code section 422.25A which creates a
2process for audited partnerships and their direct and indirect
3partners to report final federal partnership adjustments to
4the department. The bill provides that the state partnership
5representative for the reviewed year shall have sole authority
6to act on behalf of the partnership. The bill creates
7reporting and payment requirements for audited partnerships
8and their partners subject to final federal adjustments.
9The bill permits an audited partnership or a tiered partner
10(partner that is a partnership or pass-through entity) to make
11irrevocable elections about the payment of any adjustments,
12and specifies the consequences of making certain elections.
13The bill permits an audited partnership or tiered partner to
14enter into an agreement with the department to use alternative
15reporting and payment methods. The bill permits the department
16to assess additional Iowa income tax, interest, and penalties
17arising from a federal partnership adjustments in the same
18manner as provided in other tax-related provisions.
19The bill enacts new Code section 422.25B that requires
20the state partnership representative acting on behalf of the
21partnership for the reviewed year to be the partnership’s
22federal partnership representative with respect to an action
23required or permitted to be taken by a state partnership
24representative, unless the partnership designates in writing in
25the manner prescribed by the department another person to act
26as the state partnership representative.
27The bill enacts new Code section 422.25C relating to
28partnership or pass-through entity audits and examinations.
29The bill provides that for tax years beginning on or after
30January 1, 2020, any adjustments to a partnership’s or
31pass-through entity’s taxes or an adjustment allocated to a
32partner’s taxes as a result of a department audit shall be
33determined at the partnership or pass-through entity level in
34the same manner as provided by federal law. The bill specifies
35that the state partnership representative shall have the sole
-65-1authority to act on behalf of the partnership or pass-through
2entity with respect to any actions taken due to the audit,
3including appealing decisions to the director of revenue or
4seeking judicial review of the director’s decision. The
5provisions of new Code section 422.25C may be applied to tax
6years beginning before January 1, 2020, if the partnership or
7pass-through entity and the department agree.
8The bill enacts new Code section 422.35(26) providing that
9any income subtracted from federal taxable income shall be
10added back in computing net income for state corporate income
11tax purposes when federal adjustments are made to taxes in the
12adjustment year. The bill defines “adjustment year” to mean
13the year in which the final determination of the adjustment
14occurs.
15The bill amends Code section 422.39 by specifying that Code
16sections relating to payments of interest, computation of tax,
17liens, and final reports of fiduciaries apply to not just
18payments and collections but to reporting, examinations, and
19assessments with respect to corporations including pass-through
20entities organized as corporations.
21The amendment to Code section 422.73 relates to credits
22against taxes due because of errors. The bill changes the
23period of limitation (statute of limitations) for a claim for
24a refund of or a credit against individual income tax by a
25taxpayer to one year from the final determination date of any
26final adjustment with respect to the particular tax year to
27claim an income tax refund or credit. Currently, a claim for
28a refund of or a credit against the individual income tax by
29a taxpayer is six months from the final disposition of any
30income tax matter between the taxpayer and the internal revenue
31service. The bill makes other changes relating to agreements
32entered into by the department and the internal revenue
33service for the transmission of federal income tax reports on
34individuals who have been involved in an income tax matter with
35the internal revenue service.
-66- 1The division applies to federal adjustments and federal
2partnership adjustments that have a final determination date
3after the effective date of this division of this Act.
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